Registration No. 333-79379
Registration No. 811-07659
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-4/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No.
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 24 [X]
(Check appropriate box or boxes)
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SEPARATE ACCOUNT No. 49
of
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(Exact Name of Registrant)
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THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(Name of Depositor)
1290 Avenue of the Americas, New York, New York 10104
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (212) 554-1234
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MARY JOAN HOENE
VICE PRESIDENT and COUNSEL
The Equitable Life Assurance Society of the United States
1290 Avenue of the Americas, New York, New York 10104
(Name and Address of Agent for Service)
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Please send copies of all communications to:
PETER E. PANARITES
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W., Suite 825
Washington, D.C. 20036
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Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of the Registration
Statement.
It is proposed that this filing will become effective (check
appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485
On (date) pursuant to paragraph (b) of Rule 485.
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
[ ] On (date) pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for
previously filed post-effective amendment.
Title of Securities Being Registered:
Units of interest in Separate Account under variable annuity contracts.
The registrant hereby amends this registration statement on such 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 the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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Equitable Accumulator Express(SM)
A combination variable and fixed deferred
annuity contract
Prospectus dated , 1999
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. Also, at the end
of this prospectus you will find attached the
prospectuses for The Hudson River Trust and EQ
Advisors Trust, which contain important
information about their Portfolios.
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WHAT IS THE EQUITABLE ACCUMULATOR EXPRESS?
Equitable Accumulator Express is a deferred annuity contract issued by THE
EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES. It provides for the
accumulation of retirement savings and for income. The contract offers death
benefit protection. It 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 and the fixed maturity options ("investment options"). This
contract may not currently be available in all states.
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Variable investment options
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o Alliance Money Market o JPM Core Bond
o Alliance High Yield o Lazard Large Cap Value
o Alliance Common Stock o Lazard Small Cap Value
o Alliance Aggressive Stock o MFS Growth with Income
o Alliance Small Cap Growth o MFS Research
o EQ/Alliance Premier Growth o MFS Emerging Growth Companies
o BT Equity 500 Index o Merrill Lynch Basic Value Equity
o BT Small Company Index o Merrill Lynch World Strategy
o BT International Equity Index o Morgan Stanley Emerging Markets Equity
o Capital Guardian U.S. Equity o EQ/Putnam Growth & Income Value
o Capital Guardian Research o EQ/Putnam Investors Growth
o Capital Guardian International o EQ/Putnam International Equity
o EQ/Evergreen
o EQ/Evergreen Foundation
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You may allocate amounts to any of the variable investment options. They, in
turn, invest in a corresponding securities portfolio ("Portfolio") of The Hudson
River Trust or EQ Advisors Trust. Your investment results in a variable
investment option will depend on the investment performance of the related
Portfolio. Each variable investment option is a subaccount of our Separate
Account No. 49.
FIXED MATURITY OPTIONS. You may allocate amounts to one or more fixed maturity
options. These amounts will receive a fixed rate of interest for a specified
period. Interest is earned at a guaranteed rate we set. We make a market value
adjustment (up or down) if you make transfers or withdrawals from a fixed
maturity option before its maturity date.
TYPES OF CONTRACTS. We offer the contracts for use as:
o A nonqualified annuity ("NQ") for after-tax contributions only.
o An individual retirement annuity ("IRA"), either traditional IRA or Roth IRA.
We offer two versions of the traditional IRA: "Rollover IRA" and "Flexible
Premium IRA." We also offer two versions of the Roth IRA: "Roth Conversion IRA"
and "Flexible Premium Roth IRA."
A contribution of at least $50 is required to purchase a contract.
Registration statements relating to this offering have been filed with the
Securities and Exchange Commission ("SEC"). The statement of additional
information ("SAI") dated __________, 1999, is a part of one of the registration
statements. The SAI is available free of charge. You may request one by writing
to our Processing Office or calling 1-800-789-7771. The SAI has been
incorporated by reference into this prospectus. This prospectus and the SAI can
also be obtained from the SEC's Web site at http://www.sec.gov. The table of
contents for the SAI appears at the back of this prospectus.
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.
<PAGE>
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2 CONTENTS OF THIS PROSPECTUS
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Contents of this prospectus
EQUITABLE ACCUMULATOR EXPRESS(SM)
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Index of key words and phrases 4
Who is Equitable Life? 5
How to reach us 6
Equitable Accumulator Express at a
glance--key features 8
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FEE TABLE 10
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Examples 13
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1
CONTRACT FEATURES AND BENEFITS 15
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How you can purchase and contribute to your contract 15
Owner and annuitant requirements 17
How you can make your contributions 17
What are your investment options under the contract? 17
Allocating your contributions 21
Your right to cancel within a certain number of days 21
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2
DETERMINING YOUR CONTRACT'S VALUE 23
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Your account value 23
Your contract's value in the variable investment
options 23
Your contract's value in the fixed maturity
options 23
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3
TRANSFERRING YOUR MONEY AMONG INVESTMENT
OPTIONS 24
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Transferring your account value 24
Dollar cost averaging 24
Rebalancing your account value 24
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"We", "our" and "us" refer to Equitable Life.
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.
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CONTENTS OF THIS PROSPECTUS 3
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4
ACCESSING YOUR MONEY 26
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Withdrawing your account value 26
How withdrawals are taken from your account value 27
Surrendering your contract to receive its cash value 27
When to expect payments 27
Choosing your annuity payout options 28
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5
CHARGES AND EXPENSES 31
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Charges that Equitable Life deducts 31
Charges that the trusts deduct 32
Group or sponsored arrangements 33
Other distribution arrangements 33
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6
PAYMENT OF DEATH BENEFIT 34
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Your beneficiary and payment of benefit 34
How death benefit payment is made 34
Beneficiary continuation option for Rollover IRA and
Flexible Premium IRA contracts 35
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7
TAX INFORMATION 36
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Overview 36
Transfers among investment options 36
Taxation of nonqualified annuities 36
Special rules for NQ contracts issued in Puerto Rico 37
Individual retirement arrangements (IRAs) 38
Federal and state income tax withholding and information
reporting 48
Impact of taxes to Equitable Life 49
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8
MORE INFORMATION 50
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About our Separate Account No. 49 50
About The Hudson River Trust and EQ Advisors Trust 50
About our fixed maturity options 51
About the general account 53
About other methods of payment 53
Dates and prices at which contract events occur 54
About your voting rights 54
About our year 2000 progress 55
About legal proceedings 55
About our independent accountants 56
Transfers of ownership, collateral assignments, loans,
and borrowing 56
Distribution of the contracts 56
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9
INVESTMENT PERFORMANCE 57
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Benchmarks 57
Communicating performance data 66
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10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 68
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APPENDIX
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Market value adjustment example A-1
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STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS
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4 INDEX OF KEY WORDS AND PHRASES
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Index of key words and phrases
This index should help you locate more information on the terms used in this
prospectus.
PAGE
account value 23
annuitant 15
annuity payout options 28
beneficiary 34
business day 54
cash value 23
conduit IRA 42
contract date 9
contract date anniversary 9
contract year 9
contributions to Roth IRAs 45
regular contributions 45
rollover contributions 46
conversion contributions 46
direct custodian-to-custodian
transfers 46
contributions to traditional IRAs 38
regular contributions 39
rollover contributions 41
direct custodian-to-custodian
transfers 41
fixed maturity amount 20
fixed maturity options 20
Flexible Premium IRA cover
Flexible Premium Roth IRA cover
IRA 38
IRS 36
investment options 17
market adjusted amount 20
market value adjustment 20
maturity value 20
minimum death benefit 34
NQ 36
Portfolio cover
Processing Office 6
rate to maturity 20
Required Beginning Date 42
Rollover IRA cover
Roth Conversion IRA cover
Roth IRA 45
SAI cover
SEC cover
Substitution 50
TOPS 6
traditional IRA 38
unit 23
variable investment options 17
To make this prospectus easier to read, we sometimes use different words than in
the contract or supplemental materials. This is illustrated below. Although we
use different words, they have the same meaning in this prospectus as in the
contract or supplemental materials. Your registered representative can provide
further explanation about your contract.
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PROSPECTUS CONTRACT OR SUPPLEMENTAL MATERIALS
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fixed maturity options Guarantee Periods (Guaranteed fixed
Interest Accounts in supplemental materials)
variable investment options Investment Funds
account value Annuity Account Value
rate to maturity Guaranteed Rates
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WHO IS EQUITABLE LIFE? 5
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Who is Equitable Life?
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We are The Equitable Life Assurance Society of the United States ("Equitable
Life"), a New York stock life insurance corporation. We have been doing business
since 1859. Equitable Life is a wholly owned subsidiary of The Equitable
Companies Incorporated ("Equitable Companies"), whose majority shareholder is
AXA, a French holding company for an international group of insurance and
related financial services companies. As a majority shareholder, and under its
other arrangements with Equitable Life and Equitable Life's parent, AXA
exercises significant influence over the operations and capital structure of
Equitable Life and its parent. No company other than Equitable Life, however,
has any legal responsibility to pay amounts that Equitable Life owes under the
contract. During 1999, Equitable Companies plans to change its name to AXA
Financial, Inc.
Equitable Companies and its consolidated subsidiaries managed approximately
$390.8 billion in assets as of June 30, 1999. For over 100 years we have 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, N.Y. 10104.
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6 WHO IS EQUITABLE LIFE?
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HOW TO REACH US
You may communicate with our Processing Office as listed below for any of the
following purposes:
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FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
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Equitable Accumulator Express
P.O. Box 13014
Newark, NJ 07188-0014
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FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY:
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Equitable Accumulator Express
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
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FOR ALL OTHER COMMUNICATIONS (E.G.,
REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY REGULAR MAIL:
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Equitable Accumulator Express
P.O. Box 1547
Secaucus, NJ 07096-1547
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FOR ALL OTHER COMMUNICATIONS (E.G.,
REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY EXPRESS DELIVERY:
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Equitable Accumulator Express
200 Plaza Drive, 4th Floor
Secaucus, NJ 07094
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REPORTS WE PROVIDE:
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o written confirmation of financial transactions;
o statement of your contract values at the close of each calendar quarter
(four per year);
o annual statement of your contract values as of the close of the contract
year.
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TELEPHONE OPERATED PROGRAM SUPPORT
("TOPS") SYSTEM:
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TOPS is designed to provide you with up-to-date information via touch-tone
telephone. You can obtain information on:
o your current account value;
o your current allocation percentages;
o the number of units you have in the variable investment options;
o rates to maturity for the fixed maturity options; and
o the daily unit values for the variable investment options.
You can also:
o change your allocation percentages and/or transfer among the investment
options; and
o obtain or change your personal identification number (PIN).
TOPS is normally available seven days a week, 24 hours a day, by calling toll
free 1-888-909-7770. Of course, for reasons beyond our control, the service may
sometimes be unavailable.
We have established procedures to reasonably confirm that the instructions
communicated by telephone are genuine. For example, we will require certain
personal identification information before we will act on telephone instructions
and we will provide written confirmation of your transfers. We will not be
liable for following telephone instructions we reasonably believe to be genuine.
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BY INTERNET:
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You can also access information about your contract on the
Internet. Please visit our Web site at http://www.equitable.com,
and click on EQAccess.
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WHO IS EQUITABLE LIFE? 7
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CUSTOMER SERVICE REPRESENTATIVE:
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You may also use our toll-free number (1-800-789-7771) to speak
with one of our customer service representatives. Our customer
service representatives are available on any business day from
8:30 a.m. until 5:30 p.m., Eastern Time.
You should send all contributions, notices, and requests to our
Processing Office at the address above.
WE REQUIRE THAT THE FOLLOWING TYPES OF COMMUNICATIONS BE ON
SPECIFIC FORMS WE PROVIDE FOR THAT PURPOSE:
(1) authorization for telephone transfers by your registered
representative;
(2) conversion of a traditional IRA to a Roth Conversion IRA or
Flexible Premium Roth IRA contract;
(3) election of the automatic investment program;
(4) election of the rebalancing program;
(5) withdrawal requests;
(6) tax withholding election; and
(7) election of the beneficiary continuation option.
WE ALSO HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE
FOLLOWING TYPES OF REQUESTS:
(1) address changes;
(2) beneficiary changes;
(3) transfers between investment options; and
(4) 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) automatic investment program;
(2) dollar cost averaging;
(3) rebalancing;
(4) substantially equal withdrawals;
(5) systematic withdrawals; and
(6) the date annuity payments are to begin.
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.
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8 EQUITABLE ACCUMULATOR EXPRESS AT A GLANCE -- KEY FEATURES
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Equitable Accumulator
Express at a glance -- key
features
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<TABLE>
<CAPTION>
<S> <C> <C>
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PROFESSIONAL Equitable Accumulator Express' variable investment options invest in 26 different Portfolios
INVESTMENT managed by professional investment advisers.
MANAGEMENT
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FIXED MATURITY o 10 fixed maturity options with maturities ranging from approximately 1 to 10 years.
OPTIONS o Each fixed maturity option offers a guarantee of principal and interest rate if you hold
it to maturity.
o Principal guarantees.
-- If you make withdrawals or transfers from a fixed maturity option before maturity,
there will be a market value adjustment due to differences in interest rates. This may
increase or decrease any value that you have left in that fixed
maturity option. If you surrender your contract, a market value adjustment may
also apply.
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TAX ADVANTAGES o On earnings inside No tax on any dividends, interest or capital gains
the contract until you make withdrawals from your contract or
receive annuity payments.
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o On transfers inside No tax on transfers among investment options.
the contract
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If you are buying a contract to fund a retirement plan that already provides tax deferral
under sections of the Internal Revenue Code (IRA), you should do so for the contract's
features and benefits other than tax deferral. In such situations, the tax deferral of the
contract does not provide additional benefits.
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CONTRIBUTION AMOUNTS Minimum: $50 ($20 under our automatic investment program)
Maximum contribution limitations may apply.
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ACCESS TO YOUR MONEY o Lump sum withdrawals
o Several withdrawal options on a periodic basis
o Contract surrender
You may incur a withdrawal charge for certain withdrawals or if you surrender your contract.
You may also incur income tax and a tax penalty.
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PAYOUT ALTERNATIVES o Annuity payout options
o Income Manager(R) payout annuity options
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ADDITIONAL FEATURES o Dollar cost averaging
o Automatic investment program
o Account value rebalancing (quarterly, semiannually, and annually)
o Unlimited free transfers
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</TABLE>
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EQUITABLE ACCUMULATOR EXPRESS AT A GLANCE -- KEY FEATURES 9
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<TABLE>
<CAPTION>
<S> <C>
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FEES AND CHARGES
o Daily charges on amounts invested in variable investment options for mortality and expense
risks and administrative charges at an annual rate of 0.95%.
o If your account value at the end of the contract year is less than $25,000 for NQ
contracts (or less than $20,000 for IRA contracts ), we deduct an annual administrative
charge equal to $30 or during the first two contract years 2% of your account value, if
less. If your account value is $25,000 or more for NQ contracts (or $20,000 or more for
IRA contracts), we will not deduct the charge.
o No sales charge deducted at the time you make contributions.
o During the first seven contract years following a contribution, a charge will be deducted
from amounts that you withdraw that exceed 10 % of your account value. We use the account
value on the most recent contract date anniversary to calculate the 10% amount available.
The charge begins at 7% in the first contract year following a contribution. It declines
each year to 1% in the seventh contract year. There is no withdrawal charge in the eighth
and later contract years following a contribution.
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The 12-month period beginning on your contract date and each 12-month period after that date
is a "contract year." The end of each 12-month period is your "contract date anniversary."
The "contract date" is the effective date of a contract. This usually is the business day we
receive your initial contribution. Your contract date will be shown in your contract.
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o We deduct a charge for taxes such as premium taxes that may be imposed in your state. This
charge is generally deducted from the amount applied to an annuity payout option.
o We generally deduct a $350 annuity administrative fee from amounts applied to purchase
certain life annuity payout options.
o Annual expenses of The Hudson River Trust and EQ Advisors Trust Portfolios are calculated
as a percentage of the average daily net assets invested in each Portfolio. These expenses
include management and advisory fees ranging from 0.25% to 1.15% annually, 12b-1 fees of
0.25% annually, and other expenses.
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ANNUITANT ISSUE AGES NQ: 0-83
Rollover IRA, Flexible Premium Roth IRA, and Roth Conversion IRA: 20-83
Flexible Premium IRA: 20-70
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</TABLE>
THE ABOVE IS NOT A COMPLETE DESCRIPTION OF ALL MATERIAL PROVISIONS OF THE
CONTRACT. IN SOME CASES RESTRICTIONS OR EXCEPTIONS APPLY. ALSO,
ALL FEATURES OF THE CONTRACT ARE NOT NECESSARILY AVAILABLE IN YOUR STATE OR AT
CERTAIN AGES.
For more detailed information we urge you to read the contents of this
prospectus, as well as your contract. Please feel free to speak with your
registered representative, or call us, if you have any questions.
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10 FEE TABLE
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Fee table
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The fee table below will help you understand the various charges and expenses
that apply to your contract. The table reflects charges you will directly incur
under the contract, as well as charges and expenses of the Portfolios that you
will bear indirectly. Charges for taxes, such as premium taxes, may also apply.
Also, an annuity administrative fee may apply when your annuity payments are to
begin. Each of the charges and expenses is more fully described under "Charges
and expenses" later in this prospectus. For a complete description of Portfolio
charges and expenses, please see the attached prospectuses for The Hudson River
Trust and EQ Advisors Trust.
The fixed maturity options are not covered by the fee table and examples.
However, the annual administrative charge and the withdrawal charge do apply to
the fixed maturity options. A market value adjustment (up or down) may apply as
a result of a withdrawal, transfer or surrender of amounts from a fixed maturity
option.
<TABLE>
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CHARGES WE DEDUCT FROM YOUR VARIABLE INVESTMENT OPTIONS EXPRESSED AS AN
ANNUAL PERCENTAGE OF DAILY NET ASSETS
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Mortality and expense risks(1) 0.70%
Administrative(2) 0.25%
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Total annual expenses 0.95%
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CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE ON EACH CONTRACT DATE ANNIVERSARY
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Maximum annual administrative charge(3)
If your account value on a contract date anniversary is less than $25,000 for NQ contracts
(or less than $20,000 for IRA contracts) $30
If your account value on a contract date anniversary is $25,000 or more for NQ contracts
(or $20,000 or more for IRA contracts) $0
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CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE AT THE TIME YOU REQUEST CERTAIN TRANSACTIONS
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WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted if you surrender Contract
your contract or make certain withdrawals. The withdrawal charge percentage we year
use is determined by the contract year in which you make the withdrawal or 1 .... 7.00%
surrender your contract. For each contribution, we consider the contract year in 2 .... 6.00%
which we receive that contribution to be "contract year 1")(4) 3..... 5.00%
4 .... 4.00%
5 .... 3.00%
6 .... 2.00%
7 .... 1.00%
8+ .. 0.00%
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</TABLE>
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FEE TABLE 11
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THE HUDSON RIVER TRUST ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
<TABLE>
<CAPTION>
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TOTAL
ANNUAL
INVESTMENT EXPENSES
MANAGEMENT OTHER (AFTER EXPENSE
ADVISORY FEES 12B-1 FEES(5) EXPENSES LIMITATION)(5)(6)
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<S> <C> <C> <C> <C>
Alliance Money Market 0.35% 0.25% 0.02% 0.62%
Alliance High Yield 0.60% 0.25% 0.03% 0.88%
Alliance Common Stock 0.36% 0.25% 0.03% 0.64%
Alliance Aggressive Stock 0.54% 0.25% 0.03% 0.82%
Alliance Small Cap Growth 0.90% 0.24% 0.06% 1.20%
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</TABLE>
EQ ADVISORS TRUST ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
<TABLE>
<CAPTION>
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TOTAL
INVESTMENT OTHER ANNUAL
MANAGEMENT & EXPENSES EXPENSES
ADVISORY (AFTER EXPENSE (AFTER EXPENSE
FEES(6) 12B-1 FEES(5) LIMITATION)(6) LIMITATION)(7)
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<S> <C> <C> <C> <C>
EQ/Alliance Premier Growth 0.90% 0.25% 0.00% 1.15%
BT Equity 500 Index 0.25% 0.25% 0.05% 0.55%
BT Small Company Index 0.25% 0.25% 0.25% 0.75%
BT International Equity Index 0.35% 0.25% 0.40% 1.00%
Capital Guardian U.S. Equity 0.65% 0.25% 0.05% 0.95%
Capital Guardian Research 0.65% 0.25% 0.05% 0.95%
Capital Guardian International 0.75% 0.25% 0.20% 1.20%
EQ/Evergreen 0.75% 0.25% 0.05% 1.05%
EQ/Evergreen Foundation 0.63% 0.25% 0.07% 0.95%
JPM Core Bond 0.45% 0.25% 0.10% 0.80%
Lazard Large Cap Value 0.55% 0.25% 0.15% 0.95%
Lazard Small Cap Value 0.80% 0.25% 0.15% 1.20%
MFS Growth with Income 0.55% 0.25% 0.05% 0.85%
MFS Research 0.55% 0.25% 0.05% 0.85%
MFS Emerging Growth Companies 0.55% 0.25% 0.05% 0.85%
Merrill Lynch Basic Value Equity 0.55% 0.25% 0.05% 0.85%
Merrill Lynch World Strategy 0.70% 0.25% 0.25% 1.20%
Morgan Stanley Emerging Markets Equity 1.15% 0.25% 0.35% 1.75%
EQ/Putnam Growth & Income Value 0.55% 0.25% 0.05% 0.85%
EQ/Putnam Investors Growth 0.55% 0.25% 0.15% 0.95%
EQ/Putnam International Equity 0.70% 0.25% 0.25% 1.20%
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</TABLE>
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Notes:
(1) A portion of this charge is for providing the death benefit.
(2) We reserve the right to increase this charge to a maximum annual rate of
0.35%.
<PAGE>
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12 FEE TABLE
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(3) During the first two contract years this charge is equal to the lesser of
$30 or 2% of your account value if it applies. Thereafter, the charge is
$30 for each contract year.
(4) Deducted upon a withdrawal of amounts in excess of the 10% free withdrawal
amount, and upon surrender of a contract.
(5) Portfolio shares are all subject to fees imposed under distribution plans
(the "Rule 12b-1 Plans") adopted by The Hudson River Trust and EQ Advisors
Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended. The 12b-1 fee will not be increased for the life of the contracts.
The Rule 12b-1 Plan for the Alliance Small Cap Growth Portfolio provides
that Equitable Distributors, Inc. ("EDI") will receive an annual fee not to
exceed the lesser of (a) 0.25% of the average daily net assets of the
Portfolio attributable to Class IB shares and (b) an amount that, when
added to certain other expenses of the Class IB shares, would result in the
ratio of expenses to average daily net assets attributable to Class IB
shares equaling 1.20%. Absent the expense limitation, the total annual
expenses for 1998 for the Alliance Small Cap Growth Portfolio would have
been 1.21%.
(6) The fees and expenses shown for all Portfolios are for the year ended
December 31, 1998. The investment management and advisory fees for each
Portfolio of The Hudson River Trust may vary from year to year depending
upon the average daily net assets of the respective Portfolio. The maximum
investment management and advisory fees, however, cannot be increased
without a vote of that Portfolio's shareholders. See the prospectus for The
Hudson River Trust. The other direct operating expenses will also fluctuate
from year to year depending on actual expenses.
(7) The investment management and advisory fees for each Portfolio of EQ
Advisors Trust cannot be increased without a vote of that Portfolio's
shareholders. The amounts shown as "Other Expenses" will fluctuate from
year to year depending on actual expenses. However, EQ Financial
Consultants, Inc. ("EQF"), EQ Advisors Trust's manager, has entered into an
expense limitation agreement with respect to each Portfolio. Under this
agreement EQF has agreed to waive or limit its fees and assume other
expenses. Under the expense limitation agreement, total annual operating
expenses of each Portfolio (other than interest, taxes, brokerage
commissions, capitalized expenditures, extraordinary expenses, and 12b-1
fees) are limited for the average daily net assets of each Portfolio as
follows: 0.90% for EQ/Alliance Premier Growth; 0.30% for BT Equity 500
Index; 0.50% for BT Small Company Index; 0.75% for BT International Equity
Index; 0.70% for Capital Guardian U.S. Equity and Capital Guardian
Research; 0.95% for Capital Guardian International; 0.80% for EQ/Evergreen;
0.70% for EQ/Evergreen Foundation; 0.55% for JPM Core Bond; 0.70% for
Lazard Large Cap Value; 0.95% for Lazard Small Cap Value; 0.60% for MFS
Growth with Income, MFS Research, and MFS Emerging Growth Companies, and
Merrill Lynch Basic Value Equity; 0.95% for Merrill Lynch World Strategy;
1.50% for Morgan Stanley Emerging Markets Equity; 0.60% for EQ/Putnam
Growth & Income Value; 0.70% for EQ/Putnam Investors Growth; and 0.95% for
EQ/Putnam International Equity. The expenses shown for the BT International
Equity Index, BT Small Company Index, EQ/Putnam Investors Growth, and
Lazard Large Cap Value Portfolios reflect an increase effective on May 1,
1999. During 1999, EQF plans to change its name to AXA Advisors, LLC.
Absent the expense limitation, the "Other Expenses" for 1998 on an
annualized basis for each of the Portfolios would have been as follows:
0.33% for BT Equity 500 Index; 1.31% for BT Small Company Index; 0.89% for
BT International Equity Index; 0.33% for JPM Core Bond; 0.40% for Lazard
Large Cap Value; 0.49% for Lazard Small Cap Value; 0.25% for MFS Research;
0.24% for MFS Emerging Growth Companies; 0.26% for Merrill Lynch Basic
Value Equity; 0.66% for Merrill Lynch World Strategy; 1.23% for Morgan
Stanley Emerging Markets Equity; 0.24% for EQ/Putnam Growth & Income Value;
0.29% for EQ/Putnam Investors Growth; and 0.51% for EQ/Putnam International
Equity. For the following Portfolios, the "Other Expenses" for 1999, absent
the expense limitation, are estimated to be as follows: 0.74% for
EQ/Alliance Premier Growth; 0.74% for Capital Guardian U.S. Equity and
Capital Guardian Research; 1.03% for Capital Guardian International; 0.76%
for EQ/Evergreen; 0.86% for EQ/Evergreen Foundation; and 0.59% for MFS
Growth with Income. Initial seed capital was invested on December 31, 1998
for the EQ/Evergreen, EQ/Evergreen Foundation, and MFS Growth with Income
Portfolios. The EQ/Alliance Premier Growth, Capital Guardian U.S. Equity,
Capital Guardian Research, and Capital Guardian International Portfolios
commenced operations on May 1, 1999.
Each Portfolio may at a later date make a reimbursement to EQF for any of
the management fees waived or limited and other expenses assumed and paid
by EQF pursuant to the expense limitation agreement provided that, among
other things, such Portfolio has reached sufficient size to permit such
reimbursement to be made and provided that the Portfolio's current annual
operating expenses do not exceed the operating expense limit determined for
such Portfolio.
<PAGE>
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FEE TABLE 13
- --------------------------------------------------------------------------------
EXAMPLES
The examples below show the expenses that a hypothetical contract owner would
pay in the situations illustrated. We assume that a $1,000 contribution is
invested in one of the variable investment options listed and a 5% annual return
is earned on the assets in that option.(1) The annual administrative charge is
based on the charges applicable to a mix of estimated contract sizes resulting
in an administrative charge of $0.57 per $1,000.
These examples should not be considered a representation of past or future
expenses for each 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.
IF YOU SURRENDER IF YOU DO NOT
YOUR CONTRACT AT SURRENDER YOUR
THE END OF CONTRACT AT THE END
EACH PERIOD SHOWN, OF EACH PERIOD
THE EXPENSES WOULD SHOWN, THE EXPENSES
BE: WOULD BE:
------------------- -------------------
1 YEAR 3 YEARS 1 YEAR 3 YEARS
- -------------------------------------------------------------------------------
The Hudson River Trust Options
- -------------------------------------------------------------------------------
Alliance Money Market $87.08 $102.93 $17.08 $52.93
Alliance High Yield $89.80 $111.23 $19.80 $61.23
Alliance Common Stock $87.29 $103.57 $17.29 $53.57
Alliance Aggressive Stock $89.17 $109.32 $19.17 $59.32
Alliance Small Cap Growth $93.16 $121.37 $23.16 $71.37
- -------------------------------------------------------------------------------
EQ Advisors Trust Options
- -------------------------------------------------------------------------------
EQ/Alliance Premier Growth $92.64 $119.79 $22.64 $69.79
BT Equity 500 Index $86.34 $100.69 $16.34 $50.69
BT Small Company Index $88.44 $107.09 $18.44 $57.09
BT International Equity Index $91.06 $115.04 $21.06 $65.04
Capital Guardian U.S. Equity $90.54 $113.45 $20.54 $63.45
Capital Guardian Research $90.54 $113.45 $20.54 $63.45
Capital Guardian International $93.16 $121.37 $23.16 $71.37
EQ/Evergreen $91.59 $116.62 $21.59 $66.62
EQ/Evergreen Foundation $90.54 $113.45 $20.54 $63.45
JPM Core Bond $88.97 $108.68 $18.97 $58.68
Lazard Large Cap Value $90.54 $113.45 $20.54 $63.45
Lazard Small Cap Value $93.16 $121.37 $23.16 $71.37
MFS Growth with Income $89.49 $110.27 $19.49 $60.27
MFS Research $89.49 $110.27 $19.49 $60.27
MFS Emerging Growth Companies $89.49 $110.27 $19.49 $60.27
- -------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
14 FEE TABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
IF YOU SURRENDER IF YOU DO NOT
YOUR CONTRACT AT SURRENDER YOUR
THE END OF CONTRACT AT THE END
EACH PERIOD SHOWN, OF EACH PERIOD
THE EXPENSES WOULD SHOWN, THE EXPENSES
BE: WOULD BE:
------------------- -------------------
1 YEAR 3 YEARS 1 YEAR 3 YEARS
- -------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity $89.49 $110.27 $19.49 $60.27
Merrill Lynch World Strategy $93.16 $121.37 $23.16 $71.37
Morgan Stanley Emerging Markets Equity $98.93 $138.64 $28.93 $88.64
EQ/Putnam Growth & Income Value $89.49 $110.27 $19.49 $60.27
EQ/Putnam Investors Growth $90.54 $113.45 $20.54 $63.45
EQ/Putnam International Equity $93.16 $121.37 $23.16 $71.37
- -------------------------------------------------------------------------------
- ------------
(1) The amount accumulated from the $1,000 contribution could not be paid in
the form of an annuity payout option at the end of any of the periods
shown in the examples. This is because if the amount applied to purchase
an annuity payout option is less than $2,000, or the initial payment is
less than $20, we may pay the amount to you in a single sum instead of as
payments under an annuity payout option. See "Accessing your money."
IF YOU ELECT AN ANNUITY PAYOUT OPTION:
Assuming an annuity payout option could be issued (see note (1) above), and you
elect a life annuity payout option, the expenses shown in the example for "if
you do not surrender your contract" would, in each case, be increased by $4.43
based on the average amount applied to annuity payout options in 1998. See
"Annuity administrative fee" under "Charges and expenses."
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT FEATURES AND BENEFITS 15
- --------------------------------------------------------------------------------
1
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 require a minimum contribution amount of $50 to purchase a
contract. The minimum contribution amount under our automatic investment program
is $20. We discuss the automatic investment program under "About other methods
of payment" later in this prospectus. The following table summarizes our rules
regarding contributions to your contract. All ages in the table refer to the age
of the annuitant named in the contract.
- --------------------------------------------------------------------------------
The "annuitant" is the person who is the measuring life for determining contract
benefits. The annuitant is not necessarily the contract owner.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
AVAILABLE FOR
CONTRACT ANNUITANT ISSUE
TYPE AGES SOURCE OF CONTRIBUTIONS LIMITATIONS ON CONTRIBUTIONS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NQ 0 through 83 o After-tax money. o No additional contributions after
o Paid to us by check or transfer of age 84.
contract value in a tax-deferred
exchange under Section 1035 of the
Internal Revenue Code.
- --------------------------------------------------------------------------------------------------------------------------------
Flexible Premium 20 through 70 o "Regular" traditional IRA o No regular IRA contributions in the
IRA contributions. calendar IRA year you turn age 70 1/2
1/2 and thereafter.
o Rollovers from a qualified plan.
o Total regular contributions may not
o Rollovers from a TSA. exceed $2,000 for a year.
o Rollovers from another traditional o No additional rollover or direct
individual retirement arrangement. transfer contributions after age
71.
o Direct custodian-to-custodian transfers
from another traditional individual o Rollover and direct transfer
retirement arrangement. contributions after age 70 1/2 must
be net of required minimum
distributions.
Although we accept rollover and direct transfer contributions under the Flexible Premium
IRA contract, we intend that this contract be used for ongoing regular contributions.
- --------------------------------------------------------------------------------------------------------------------------------
Rollover IRA 20 through 83 o Rollovers from a qualified plan. o No rollover or direct transfer
o Rollovers from a TSA. contributions after age 84.
o Rollovers from another traditional o Contributions after age 70 1/2 must
individual retirement arrangement. be net of required minimum
o Direct custodian-to-custodian transfers distributions.
from another traditional individual o Regular IRA contributions are not
retirement arrangement. permitted.
Only rollover and direct transfer contributions are permitted under the Rollover IRA
contract.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
16 CONTRACT FEATURES AND BENEFITS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
AVAILABLE FOR
CONTRACT ANNUITANT ISSUE
TYPE AGES SOURCE OF CONTRIBUTIONS LIMITATIONS ON CONTRIBUTIONS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Flexible Premium 20 through 83 o Regular after-tax contributions. o No additional regular after-tax
Roth IRA o Rollovers from another Roth IRA. contributions after age 84.
o Conversion rollovers from a traditional o No additional rollover or direct
IRA. transfer contributions after age
o Direct transfers from another Roth IRA. 84.
o Contributions are subject to income
limits and other tax rules. See
"Tax information--Contributions to
Roth IRAs."
Although we accept rollover and direct transfer contributions under the Flexible
Premium Roth IRA contract, we intend that this contract be used for ongoing regular
contributions.
- --------------------------------------------------------------------------------------------------------------------------------
Roth Conversion 20 through 83 o Rollovers from another Roth IRA. o No additional rollover or direct
IRA o Conversion rollovers from a traditional transfer contributions after age
o Direct transfers from another Roth IRA. o Conversion rollovers after age 70 1/2
must be net of required minimum
distributions for the traditional
IRA you are rolling over.
o You cannot roll over funds from a
traditional IRA if your adjusted
gross income is $100,000 or more.
o Regular after-tax contributions are
not permitted.
Only rollover and direct transfer contributions are permitted under the Roth Conversion
IRA contract.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See "Tax information" for a more detailed discussion of sources of contributions
and certain contribution limitations. We may refuse to accept any contribution
if the sum of all contributions under all Equitable Accumulator contracts with
the same annuitant would then total more than $1,500,000. We may also refuse to
accept any contribution if the sum of all contributions under all Equitable Life
annuity accumulation contracts that you own would then total more than
$2,500,000.
For information on when contributions are credited under your contract see
"Dates and prices at which contract events occur" under "More information" later
in this prospectus.
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT FEATURES AND BENEFITS 17
- --------------------------------------------------------------------------------
OWNER AND ANNUITANT REQUIREMENTS
Under NQ contracts, the annuitant can be different than the owner. A joint owner
may also be named. Only natural persons can be joint owners. This means that an
entity such as a corporation cannot be a joint owner.
Under all IRA contracts the owner and annuitant must be the same person.
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 Equitable Life. We do not accept third-party
checks endorsed to us except for rollover contributions, tax-free exchanges or
trustee checks that involve no refund. 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.
For your convenience, we will accept initial and additional contributions by
wire transmittal from certain broker-dealers who have agreements with us for
this purpose. Additional contributions may also be made under our automatic
investment program. These methods of payment are discussed in detail under "More
information" later in this prospectus.
Your initial contribution must generally be accompanied by an application and
any other form we need to process the payments. If any information is missing or
unclear, we will try to obtain that 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 registered representative
submitting the application on your behalf. We will then return the contribution
to you unless you specifically direct us to keep your contribution until we
receive the required information.
- --------------------------------------------------------------------------------
Our "business day" is any day the New York Stock Exchange is open for trading.
- --------------------------------------------------------------------------------
SECTION 1035 EXCHANGES
You may apply the value of an existing nonqualified deferred annuity contract
(or life insurance or endowment contract) to purchase an Equitable Accumulator
Express NQ contract in a tax-free exchange if you follow certain procedures as
shown in the form that we require you to use. Also see "Tax information" later
in this prospectus.
WHAT ARE YOUR INVESTMENT OPTIONS UNDER THE CONTRACT?
Your investment options are the variable investment options and the fixed
maturity options.
VARIABLE INVESTMENT OPTIONS
Your investment results in any one of the 26 variable investment options will
depend on the investment performance of the underlying Portfolios. Listed below
are the currently available Portfolios, their investment objectives, and their
advisers.
- --------------------------------------------------------------------------------
You can choose from among 26 variable investment options.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
18 CONTRACT FEATURES AND BENEFITS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF THE HUDSON RIVER TRUST
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Money Market High Level of current income while Alliance Capital Management L.P.
preserving assets and maintaining
liquidity
- ----------------------------------------------------------------------------------------------------------------------
Alliance High Yield High return by maximizing current Alliance Capital Management L.P.
income and, to the extent consistent
with that objective, capital
appreciation
- ----------------------------------------------------------------------------------------------------------------------
Alliance Common Stock Long-term growth of capital and Alliance Capital Management L.P.
increasing income
- ----------------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF EQ ADVISORS TRUST
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQ/Alliance Premier Growth Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index Replicate as closely as possible Bankers Trust Company
(before deduction of Portfolio
expenses) the total return of the
Standard & Poor's 500 Composite Stock
Price Index
- ----------------------------------------------------------------------------------------------------------------------
BT Small Company Index Replicate as closely as possible Bankers Trust Company
(before deduction of Portfolio
expenses) the total return of the
Russell 2000 Index
- ----------------------------------------------------------------------------------------------------------------------
BT International Equity Index Replicate as closely as possible Bankers Trust Company
(before deduction of Portfolio
expenses) the total return of the
Morgan Stanley Capital International
Europe, Australia, Far East Index
- ----------------------------------------------------------------------------------------------------------------------
Capital Guardian U.S. Equity* Long-term growth of capital Capital Guardian Trust Company
- ----------------------------------------------------------------------------------------------------------------------
Capital Guardian Research* Long-term growth of capital Capital Guardian Trust Company
- ----------------------------------------------------------------------------------------------------------------------
Capital Guardian International* Long-term growth of capital by Capital Guardian Trust Company
investing primarily in non-United
States equity securities
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT FEATURES AND BENEFITS 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF EQ ADVISORS TRUST
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQ/Evergreen Capital appreciation Evergreen Asset Management Corp.
- ----------------------------------------------------------------------------------------------------------------------
EQ/Evergreen Foundation In order of priority, reasonable Evergreen Asset Management Corp.
income, conservation of capital, and
capital appreciation
- ----------------------------------------------------------------------------------------------------------------------
JPM Core Bond High total return consistent with J. P. Morgan Investment Management
moderate risk of capital and Inc.
maintenance of liquidity
- ----------------------------------------------------------------------------------------------------------------------
Lazard Large Cap Value Capital appreciation Lazard Asset Management
- ----------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Value Capital appreciation Lazard Asset Management
- ----------------------------------------------------------------------------------------------------------------------
MFS Growth with Income Reasonable current income and Massachusetts Financial Services
long-term growth of capital and Company
income
- ----------------------------------------------------------------------------------------------------------------------
MFS Research Long-term growth of capital and Massachusetts Financial Services
future income Company
- ----------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies Long-term capital growth Massachusetts Financial Services
Company
- ----------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity Capital appreciation and secondarily, Merrill Lynch Asset Management, L.P.
income
- ----------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy High total investment return Merrill Lynch Asset Management, L.P.
- ----------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Long-term capital appreciation Morgan Stanley Asset Management
Equity
- ----------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value Capital growth, current income is a Putnam Investment Management, Inc.
secondary objective
- ----------------------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth Long-term growth of capital and any Putnam Investment Management, Inc.
increased income that results from
this growth
- ----------------------------------------------------------------------------------------------------------------------
EQ/Putnam International Equity Capital appreciation Putnam Investment Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* May not currently be available in all states.
Other important information about the Portfolios is included in the separate
prospectuses for The Hudson River Trust and EQ Advisors Trust attached at the
end of this prospectus.
See "Proposed substitution of Portfolios" under "More information" for
information regarding the proposed substitution of newly created Portfolios of
EQ Advisors Trust for the Portfolios of The Hudson River Trust currently
available under the variable investment options.
<PAGE>
- --------------------------------------------------------------------------------
20 CONTRACT FEATURES AND BENEFITS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FIXED MATURITY OPTIONS
We offer fixed maturity options with maturity dates ranging from one to ten
years. You can allocate your contributions to one or more of these fixed
maturity options. These amounts become part of our general account assets. They
will accumulate interest at the "rate to maturity" for each fixed maturity
option. The total amount you allocate to and accumulate in each fixed maturity
option is called the "fixed maturity amount." The fixed maturity options are not
available in contracts issued in Maryland.
- --------------------------------------------------------------------------------
Fixed maturity options ranging from one to ten years to maturity
- --------------------------------------------------------------------------------
The rate to maturity you will receive for each fixed maturity option is the rate
to maturity in effect for new contributions allocated to that fixed maturity
option on the date we apply your contribution. This rate will never be less than
3%. If you make any withdrawals or transfers from a fixed maturity option before
the maturity date, we will make a "market value adjustment" that may increase or
decrease any fixed maturity amount you have left in that fixed maturity option.
We will discuss the market value adjustment below and in greater detail later in
this prospectus under "More information."
On the maturity date of a fixed maturity option your fixed maturity amount,
assuming you have not made any withdrawals or transfers, will equal your
contribution to that fixed maturity option plus interest, at the rate to
maturity for that contribution, to the date of the calculation. This is the
fixed maturity option's "maturity value." Before maturity, the current value we
will report for your fixed maturity amounts will reflect a market value
adjustment. Your current value will reflect the market value adjustment that we
would make if you were to withdraw all of your fixed maturity amounts on the
date of the report. We call this your "market adjusted amount."
FIXED MATURITY OPTIONS AND MATURITY DATES. We currently offer fixed maturity
options ending on February 15th for each of the maturity years 2000 through
2009. Not all of these fixed maturity options will be available for annuitant
ages 76 and older. See "Allocating your contributions" below. As fixed maturity
options expire, we expect to add maturity years so that generally 10 fixed
maturity options are available at any time.
We will not accept allocations to a fixed maturity option if on the date
the contribution is to be applied:
o the fixed maturity option's maturity date is within the current calendar
year; or
o the rate to maturity is 3%; or
o for annuitants ages 76 or older, the fixed maturity option's maturity date
is later than the February 15th immediately following the date annuity
payments are to begin.
YOUR CHOICES AT THE MATURITY DATE. We will notify you on or before December 31st
of the year before each of your fixed maturity options is scheduled to mature.
At that time, you may choose to have one of the following take place on the
maturity date, as long as none of the conditions listed above or in "Allocating
your contributions," below would apply:
(a) transfer the maturity value into another available fixed maturity option,
or into any of the variable investment options; or
(b) withdraw the maturity value (there may be a withdrawal charge).
If we do not receive your choice on or before the fixed maturity option's
maturity date, we will automatically transfer your maturity value into the fixed
maturity option that will mature next.
MARKET VALUE ADJUSTMENT. If you make any withdrawals (including transfers,
surrender of your contract or when we make deductions for charges) from a fixed
maturity option before it matures we will make a market value adjustment, which
will increase or decrease any fixed maturity amount you have in that fixed
maturity option. The amount of the adjustment will depend on two factors:
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT FEATURES AND BENEFITS 21
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(a) the difference between the rate to maturity that applies to the amount
being withdrawn and the rate to maturity in effect at that time for new
allocations to that same fixed maturity option, and
(b) the length of time remaining until the maturity date.
In general, if interest rates rise from the time that you originally allocate an
amount to a fixed maturity option to the time that you take a withdrawal, the
market value adjustment will be negative. Likewise, if interest rates drop at
the end of that time, the market value adjustment will be positive. Also, the
amount of the market value adjustment, either up or down, will be greater the
longer the time remaining until the fixed maturity option's maturity date.
Therefore, it is possible that the market value adjustment could greatly reduce
your value in the fixed maturity options, particularly in the fixed maturity
options with later maturity dates.
We provide an illustration of the market adjusted amount of specified maturity
values, an explanation of how we calculate the market value adjustment, and
information concerning our general account and investments purchased with
amounts allocated to the fixed maturity options, under "More information" later
in this prospectus. The Appendix to this prospectus provides an example of how
the market value adjustment is calculated.
ALLOCATING YOUR CONTRIBUTIONS
You may choose from among two ways to allocate your contributions under your
contract: self-directed and principal assurance.
SELF-DIRECTED ALLOCATION
You may allocate your contributions to one or more, or all, of the variable
investment options and fixed maturity options. Allocations must be in whole
percentages and you may change your allocations at any time. However, the total
of your allocations must equal 100%. If the annuitant is age 76 or older, you
may allocate contributions to fixed maturity options if their maturities are
five years or less. Also, you may not allocate amounts to fixed maturity options
with maturity dates that are later than the February 15th immediately following
the date annuity payments are to begin.
PRINCIPAL ASSURANCE ALLOCATION
You can elect this allocation program with a minimum initial contribution of
$5,000. You select a fixed maturity option and we specify the portion of your
initial contribution to be allocated to that fixed maturity option in an amount
that will cause the maturity value to equal the amount of your entire initial
contribution on the fixed maturity option's maturity date. The maturity date you
select generally may not be later than 10 years, or earlier than 7 years from
your contract date. You allocate the rest of your contribution to the variable
investment options however you choose.
For example, if your initial contribution is $10,000, and on July 15, 1999 you
chose the fixed maturity option with a maturity date of February 15, 2009, since
the rate to maturity was 5.56% on July 15, 1999, we would have allocated
$5,949.36 to that fixed maturity option and the balance to your choice of
variable investment options. On the maturity date your value in the fixed
maturity option would be $10,000.
The principal assurance allocation is only available for annuitant ages 75 or
younger when the contract is issued. If you are purchasing a Rollover IRA or
Flexible Premium IRA contract, before you select a maturity year that would
extend beyond the year in which you will reach age 70 1/2, you should consider
whether your value in the variable investment options, or your other traditional
IRA funds are sufficient to meet your required minimum distributions. See "Tax
information."
YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS
If for any reason you are not satisfied with your contract, you may return it to
us for a refund. To exercise this cancellation right you must mail the contract
directly to our Processing Office within 10 days after you receive it. In some
states, this "free look" period may be longer.
<PAGE>
- --------------------------------------------------------------------------------
22 CONTRACT FEATURES AND BENEFITS
- --------------------------------------------------------------------------------
Generally, your refund will equal your account value under the contract and will
reflect (i) any investment gain or loss in the variable investment options
(less the daily charges we deduct), and (ii) any positive or negative market
value adjustments in the fixed maturity options through the date we receive your
contract. However, some states require that we refund the full amount of your
contribution (not reflecting (i) and (ii) above). 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.
We may require that you wait six months before you may apply for a contract with
us again if:
o you cancel your contract during the free look period; or
o you change your mind before you receive your contract whether we have
received your contribution or not.
Please see "Tax information" for possible consequences of cancelling your
contract.
If you fully convert an existing traditional IRA contract to a Roth Conversion
IRA or Flexible Premium Roth IRA contract, you may cancel your Roth Conversion
IRA or Flexible Premium Roth IRA contract and return to a Rollover IRA or
Flexible Premium IRA contract, whichever applies. Our Processing Office, or your
registered representative, can provide you with the cancellation instructions.
<PAGE>
- --------------------------------------------------------------------------------
DETERMINING YOUR CONTRACT'S VALUE 23
- --------------------------------------------------------------------------------
2
Determining your contract's
value
- --------------------------------------------------------------------------------
YOUR ACCOUNT VALUE
Your "account value" is the total of the values you have in the variable
investment options and the market adjusted amounts in the fixed maturity
options. These amounts are subject to certain fees and charges discussed under
"Charges and expenses."
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 the annual
administrative charge and less any withdrawal charge that may apply if you
surrender your contract. The 10% free withdrawal amount does not apply if you
surrender your contract. Please see "Surrendering your contract to receive its
cash value" under "Accessing your money."
YOUR CONTRACT'S VALUE IN THE VARIABLE INVESTMENT OPTIONS
Each variable investment option 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 mortality and expense risks
and administrative expenses. On any day, your value in any variable investment
option equals the number of units credited to 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 you make additional
contributions, make a withdrawal, or transfer amounts among investment options.
In addition, when we deduct the annual administrative charge and any withdrawal
charge the number of units credited to your contract will be reduced. A
description of how unit values are calculated is found in the SAI.
YOUR CONTRACT'S VALUE IN THE FIXED MATURITY OPTIONS
Your value in each fixed maturity option at any time before the maturity date is
the market adjusted amount in each option. This is equivalent to your fixed
maturity amount increased or decreased by the market value adjustment. Your
value, therefore, may be higher or lower than your contributions (less
withdrawals) accumulated at the rate to maturity. At the maturity date, your
value in the fixed maturity option will equal its maturity value.
<PAGE>
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24 TRANSFERRING YOUR MONEY AMONG INVESTMENT OPTIONS
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3
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:
o You may not transfer to a fixed maturity option that matures in the current
calendar year, or that has a rate to maturity of 3%.
o If the annuitant is 76 or older, you must limit your transfers to fixed
maturity options to those with maturities of five years or less. Also, the
maturity dates may be no later than the February 15th immediately following
the date annuity payments are to begin.
o If you make transfers out of a fixed maturity option other than at its
maturity date the transfer may cause a market value adjustment.
You may request a transfer in writing or by telephone using TOPS. You must send
in all written transfer requests directly to our Processing Office. Transfer
requests should specify:
(1) the contract number,
(2) the dollar amounts or percentages of your current account value to be
transferred, and
(3) the investment options to and from which you are transferring.
We may, at any time, restrict the use of market timers and other agents acting
under a power of attorney who are acting on behalf of more than one contract
owner. Any agreements to use market timing services to make transfers are
subject to our rules in effect at that time.
We will confirm all transfers in writing.
DOLLAR COST AVERAGING
Dollar cost averaging allows you to gradually transfer amounts from the Alliance
Money Market option to the other variable investment options by periodically
transferring approximately the same dollar amount to the other variable
investment options you select. This will cause you to purchase more units if the
unit's value is low and fewer units if the unit's value is high. Therefore, you
may get a lower average cost per unit over the long term. This plan of
investing, however, does not guarantee that you will earn a profit or be
protected against losses.
If your value in the Alliance Money Market option is at least $2,000, you may
choose, at any time, to have a specified dollar amount of your value transferred
from that option to the other variable investment options. You can select to
have transfers made on a monthly, quarterly or annual basis. The transfer date
will be the same calendar day of the month as the contract date, but not later
than the 28th day of the month. You can also specify the number of transfers or
instruct us to continue making the transfers until all amounts in the Alliance
Money Market option have been transferred out.
The minimum amount that we will transfer each time is $50. The maximum amount we
will transfer is equal to your value in the Alliance Money Market option at the
time the program is elected, divided by the number of transfers scheduled to be
made.
If, on any transfer date, your value in the Alliance Money Market option is
equal to or less than the amount you have elected to have transferred, the
entire amount will be transferred. The dollar cost averaging program will then
end. You may change the transfer amount once each contract year, or cancel this
program at any time.
---------------------
You may not elect dollar cost averaging if you are participating in the
rebalancing program.
REBALANCING YOUR ACCOUNT VALUE
We currently offer a rebalancing program that you can use to automatically
reallocate your account value among the variable investment options. You must
tell us:
(a) the percentage you want invested in each variable investment option (whole
percentages only), and
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TRANSFERRING YOUR MONEY AMONG INVESTMENT OPTIONS 25
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(b) how often you want the rebalancing to occur (quarterly, semiannually, or
annually on a contract year basis. Rebalancing will occur on the same day
of the month as the contract date).
While your rebalancing program is in effect, we will transfer amounts among each
variable investment option so that the percentage of your account value that you
specify is invested in each option at the end of each rebalancing date. You must
rebalance your entire account value in the variable investment options.
- --------------------------------------------------------------------------------
Rebalancing does not assure a profit or protect against loss. You should
periodically review your allocation percentages as your needs change. You may
want to discuss the rebalancing program with your registered representative or
other financial adviser before electing the program.
- --------------------------------------------------------------------------------
You may elect the rebalancing program at any time. You may also change your
allocation instructions or cancel the program at any time. If you request a
transfer while the rebalancing program is in effect, we will process the
transfer as requested and then cancel the rebalancing program.
You may not elect the rebalancing program if you are participating in the dollar
cost averaging program. Rebalancing is not available for amounts you have
allocated in the fixed maturity options.
<PAGE>
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26 ACCESSING YOUR MONEY
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4
Accessing your money
- --------------------------------------------------------------------------------
WITHDRAWING YOUR ACCOUNT VALUE
You have several 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 withdrawals, see
"Tax information."
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
METHOD OF WITHDRAWAL
- -------------------------------------------------------------------------------------
SUBSTANTIALLY MINIMUM
CONTRACT LUMP SUM SYSTEMATIC EQUAL DISTRIBUTION
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NQ Yes Yes No No
- -------------------------------------------------------------------------------------
Rollover IRA Yes Yes Yes Yes
- -------------------------------------------------------------------------------------
Flexible Premium
IRA Yes Yes Yes Yes
- -------------------------------------------------------------------------------------
Roth Conversion IRA Yes Yes Yes No
- -------------------------------------------------------------------------------------
Flexible Premium
Roth IRA Yes Yes Yes No
- -------------------------------------------------------------------------------------
</TABLE>
LUMP SUM WITHDRAWALS
(All contracts)
You may take lump sum withdrawals from your account value at any time. The
minimum amount you may withdraw is $300. If your account value is less than $500
after a withdrawal, we will treat it as a request to surrender the contract for
its cash value. See "Surrendering your contract to receive its cash value"
below.
Lump sum withdrawals in excess of the 10% free withdrawal amount may be subject
to a withdrawal charge.
SYSTEMATIC WITHDRAWALS
(All contracts)
You may take systematic withdrawals of a particular dollar amount or a
particular percentage of your account value.
You may take systematic withdrawals on a monthly, quarterly or annual basis as
long as the withdrawals do not exceed the following percentages of your account
value: 0.8% monthly, 2.4% quarterly, and 10.0% annually. The minimum amount you
may take in each systematic withdrawal is $250. If the amount withdrawn would be
less than $250 on the date a withdrawal is to be taken, we will not make a
payment and we will terminate your systematic withdrawal election.
We will make the withdrawals on any day of the month that you select as long as
it is not later than the 28th day of the month. If you do not select a date, we
will make the withdrawals on the same calendar day of the month as the contract
date. You must wait at least 28 days after your contract is issued before your
systematic withdrawals can begin.
You may elect to take systematic withdrawals at any time. If you own an IRA
contract, you may elect this withdrawal method only if you are between ages
59 1/2 and 70 1/2.
You may change the payment frequency, or the amount or percentage of your
systematic withdrawals, once each contract year. However, you may not change the
amount or percentage in any contract year in which you have already taken a lump
sum withdrawal. You can cancel the systematic withdrawal option at any time.
Systematic withdrawals are not subject to a withdrawal charge, except to the
extent that, when added to a lump sum withdrawal previously taken in the same
contract year, the systematic withdrawal exceeds the 10% free withdrawal amount.
SUBSTANTIALLY EQUAL WITHDRAWALS
(All IRA contracts)
The substantially equal withdrawals option allows you to receive distributions
from your account value without triggering the 10% additional federal tax
penalty, which normally applies to distributions made before age 59 1/2. See
"Tax information." Once you begin to take substantially equal withdrawals, you
should not stop them or change the pattern of your withdrawals until the later
of age 59 1/2 or five full years after the first withdrawal. If you stop or
change the withdrawals or take a lump sum withdrawal, you may be liable for the
10% federal tax penalty that would have otherwise been due on prior withdrawals
made under this option and for any interest on those withdrawals.
<PAGE>
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ACCESSING YOUR MONEY 27
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You may elect to take substantially equal withdrawals at any time before age
59 1/2. We will make the withdrawal on any day of the month that you select as
long as it is not later than the 28th day of the month. You may not elect to
receive the first payment in the same contract year in which you took a lump sum
withdrawal. We will calculate the amount of your substantially equal
withdrawals. The payments will be made monthly, quarterly or annually as you
select. These payments will continue until we receive written notice from you to
cancel this option or you take a lump sum withdrawal. You may elect to start
receiving substantially equal withdrawals again, but the payments may not
restart in the same contract year in which you took a lump sum withdrawal. We
will calculate the new withdrawal amount.
Substantially equal withdrawals are not subject to a withdrawal charge.
MINIMUM DISTRIBUTION WITHDRAWALS
(Rollover IRA and Flexible Premium IRA contracts only -- See "Tax information")
We offer the minimum distribution withdrawal option to help you meet required
minimum distributions under federal income tax rules. You may elect this option
in the year in which you reach age 70 1/2. The minimum amount we will pay out is
$250, or if less your account value. If your account value is less than $500
after the withdrawal, we will treat it as a request to surrender the contract
for its cash value. See "Surrendering your contract to receive its cash value"
below. You may elect the method you want us to use to calculate your minimum
distribution withdrawals from the choices we offer. Currently, minimum
distribution withdrawal payments will be made annually.
We do not impose a withdrawal charge on minimum distribution withdrawals except
if when added to a lump sum withdrawal previously taken in the same contract
year, the minimum distribution withdrawal exceeds the 10% free withdrawal
amount.
We will calculate your annual payment based on your account value at the end of
the prior calendar year based on the method you choose.
- --------------------------------------------------------------------------------
For Rollover IRA and Flexible Premium IRA contracts, we will send a form
outlining the distribution options available before you reach age 70 1/2 (if you
have not begun your annuity payments before that time).
- --------------------------------------------------------------------------------
HOW WITHDRAWALS ARE TAKEN FROM YOUR ACCOUNT VALUE
Unless you specify otherwise, we will subtract your withdrawals on a pro rata
basis from your value in the variable investment options. If there is
insufficient value or no value in the variable investment options, any
additional amount of the withdrawal required or the total amount of the
withdrawal will be withdrawn from the fixed maturity options in order of the
earliest maturity date(s) first. A market value adjustment may apply.
SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE
You may surrender your contract to receive its cash value at any time 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. All benefits under the contract will
terminate as of that date.
You may receive your cash value in a single sum payment or apply it to one or
more of the annuity payout options. See "Choosing your annuity payout options"
below. We will usually pay the cash value within seven calendar days, but we may
delay payment as described in "When to expect payments" below. For the tax
consequences of surrenders, see "Tax information."
WHEN TO EXPECT PAYMENTS
Generally, we will fulfill requests for payments out of the variable investment
options within seven calendar days after the date of the transaction to which
the request relates. These transactions may include applying proceeds to a
variable annuity, payment of a death benefit, payment of any
<PAGE>
- --------------------------------------------------------------------------------
28 ACCESSING YOUR MONEY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
amount you withdraw (less any withdrawal charge) and, upon surrender, 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,
(2) sales of securities or determination of the fair value of a variable
investment option's assets is not reasonably practicable because of an
emergency, or
(3) the SEC, by order, permits us to defer payment to protect people remaining
in the variable investment options.
We can defer payment of any portion of your value in the fixed maturity options
(other than for death benefits) for up to six months while you are living. We
also may defer payments for a reasonable amount of time (not to exceed 15 days)
while we are waiting for a contribution check to clear.
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 service at your expense.
CHOOSING YOUR ANNUITY PAYOUT OPTIONS
Equitable Accumulator Express offers you several choices for receiving
retirement income. Each choice enables you to receive fixed or, in some cases,
variable annuity payments.
You can choose from among the six different annuity payout options listed below.
Restrictions apply, depending on the type of contract you own.
- ------------------------------------------------------------
Annuity payout options Life annuity
- ------------------------------------------------------------
Life annuity -- period certain
Life annuity -- refund certain
Period certain annuity
- ------------------------------------------------------------
Income Manager payout Life annuity with a period
options certain
Period certain annuity
- ------------------------------------------------------------
ANNUITY PAYOUT OPTIONS
You can choose from among the following annuity payout options:
o 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.
o Life annuity -- 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. A life annuity with a
period certain of 10 years is the normal form of annuity under the
contracts. The period certain cannot extend beyond the annuitant's life
expectancy.
o Life annuity -- 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. This payout
option is available only as a fixed annuity.
o Period certain annuity: An annuity that guarantees payments for a specific
period of time, usually 5, 10, 15 or 20 years. This option does not
guarantee payments for the rest of the annuitant's life. It does not permit
any repayment of the unpaid principal, so you cannot elect to receive part
of the payments as a single sum payment with the rest paid in monthly
annuity payments. Currently, this payout option is available only as a
fixed annuity.
All of the above payout options are available as fixed annuities. With fixed
annuities, we guarantee fixed annuity payments that will be based either on the
tables of guaranteed annuity payments in your contract or on our then current
annuity rates, whichever is more favorable for you.
<PAGE>
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ACCESSING YOUR MONEY 29
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- --------------------------------------------------------------------------------
The life annuity, life annuity -- period certain, and life annuity -- 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.
The following annuity payout options are available as variable annuities:
o Life annuity (except in New York).
o Life annuity -- period certain.
o Joint and survivor life annuity (100% to survivor).
o Joint and survivor life period certain annuity (100% to survivor).
Variable annuities may be funded through your choice of variable investment
options investing in Portfolios of The Hudson River Trust. The contract also
offers a fixed annuity payout option that can be elected in combination with the
variable annuity payout options. The amount of each variable annuity payment
will fluctuate, depending upon the performance of the variable investment
options, and whether the actual rate of investment return is higher or lower
than an assumed base rate. Please see "Annuity Unit Values" in the SAI.
We may offer other payout options not outlined here. Your registered
representative can provide details.
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 life annuity with a certain period of 10 years.
You can choose the date annuity payments begin but it may not be earlier than
one year from the contract date. You can change the date your annuity payments
are to begin anytime before that date as long as you do not choose a date later
than the 28th day of any month. Also, that date may not be later than the
contract date anniversary that follows the annuitant's 90th birthday. This may
be different in some states.
Before your annuity payments are to begin, we will notify you by letter that the
annuity payout options are available. Once you have selected a payout option and
payments have begun, no change can be made other than transfers (if permitted in
the future) among the variable investment options if a variable annuity is
selected.
The amount of the annuity payments will depend on the amount applied to purchase
the annuity, the type of annuity chosen and whether it is fixed or variable, in
the case of a life annuity, the annuitant's age (or the annuitant's and joint
annuitant's ages) and in certain instances, the sex of the annuitant(s).
The amount we apply to provide annuity payments will depend on the type of
payout option you select. If you select a payout option that provides for
payments for the rest of the annuitant's life, then we will apply your account
value. If you select a payout option that provides for payments for a period
certain, then we will apply your cash value. However, if the period certain is
more than five years, we will apply not less than 95% of the account value.
Amounts in the fixed maturity options that are applied to a payout option before
a maturity date will result in a market value adjustment.
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.
INCOME MANAGER PAYOUT OPTIONS
Two Income Manager payout options are also available. These are the Income
Manager (Life Annuity with a Period Certain) and the Income Manager (Period
Certain).
The Income Manager (Life Annuity with a Period Certain) provides guaranteed
payments for the annuitant's life or for
<PAGE>
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30 ACCESSING YOUR MONEY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the annuitant's life and the life of a joint annuitant. The Income Manager
(Period Certain) provides payments for a specified period. The contract owner
and annuitant must meet the issue age and payment requirements. Both Income
Manager annuities provide guaranteed level payments (NQ and IRA contracts). The
Income Manager (Life Annuity with a Period Certain) also provides guaranteed
increasing payments (NQ contracts only).
If you apply only part of the account value of your contract to either of the
Income Manager payout annuities we will consider it a withdrawal and may deduct
a withdrawal charge. We will not deduct a withdrawal charge if you apply all of
your account value at a time when the dollar amount of the withdrawal charge is
greater than 2% of remaining contributions (after withdrawals). However, a new
withdrawal charge schedule will apply under the Income Manager annuity. For
purposes of the withdrawal charge schedule, the year in which your account value
is applied under the Income Manager annuity will be "contract year 1." In
addition, we will not deduct a withdrawal charge if you apply all of your
account value from your Equitable Accumulator Express contract when the dollar
amount of the withdrawal charge under such contract is 2% or less. This means
that no withdrawal charge schedule will apply under the Income Manager payout
annuity contract.
You should consider the timing of your purchase as it relates to the potential
for withdrawal charges under the Income Manager annuity. No additional
contributions will be permitted under an Income Manager (Life Annuity with a
Period Certain).
You also may apply your account value to an Income Manager (Period Certain)
annuity once withdrawal charges are no longer in effect under your contract. No
withdrawal charges will apply under that Income Manager annuity.
The Income Manager annuities are described in a separate prospectus. Copies of
the most current version are available from your registered representative. To
purchase an Income Manager annuity we also require the return of your contract.
We will issue an Income Manager annuity to put one of the payout annuities into
effect. Depending upon your circumstances, this may be done on a tax-free basis.
Please consult your tax adviser.
<PAGE>
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CHARGES AND EXPENSES 31
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5
Charges and expenses
- --------------------------------------------------------------------------------
CHARGES THAT EQUITABLE LIFE DEDUCTS
We deduct the following charges each day from the net assets of each variable
investment option. These charges are reflected in the unit values of each
variable investment option.
o A mortality and expense risks charge
o An administrative charge
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. When we deduct these charges from the fixed maturity
options, a market value adjustment may apply.
o On each contract date anniversary -- an annual administrative charge, if
applicable.
o At the time you make certain withdrawals or surrender your contract -- a
withdrawal charge.
o At the time annuity payments are to begin -- charges for state premium and
other taxes. An annuity administrative fee may also apply.
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 registered
representative for more information.
MORTALITY AND EXPENSE RISKS CHARGE
We deduct a daily charge from the net assets in each variable investment option
to compensate us for mortality and expense risks, including the minimum death
benefit. The daily charge is equivalent to an annual rate of 0.70% of the net
assets in each variable investment option.
The mortality risk we assume is the risk that annuitants as a group will live
for a longer time than our actuarial tables predict. If that happens, we would
be paying more in annuity income than we planned. We also assume a risk that the
mortality assumptions reflected in our guaranteed annuity payment tables, shown
in each contract, will differ from actual mortality experience. Lastly, we
assume a mortality risk to the extent that at the time of death, the minimum
death benefit exceeds the cash value of the contract. The expense risk we assume
is the risk that it will cost us more to issue and administer the contracts than
we expect.
ADMINISTRATIVE CHARGE
We deduct a daily charge from the net assets in each variable investment option.
The charge, together with the annual administrative charges described below, is
to compensate us for administrative expenses under the contracts. The daily
charge is equivalent to an annual rate of 0.25% of the net assets in each
variable investment option. We reserve the right under the contracts to increase
this charge to an annual rate of 0.35%.
ANNUAL ADMINISTRATIVE CHARGE
We deduct an administrative charge from your account value on each contract date
anniversary. We deduct the charge if your account value on the last business day
of the contract year, is less than $25,000 under NQ contracts and $20,000 under
IRA contracts. If your account value on such date is $25,000 or more for NQ
($20,000 or more for IRA) contracts, we do not deduct the charge. During the
first two contract years, the charge is equal to $30 or, if less, 2% of your
account value. The charge is $30 for contract years three and later.
We will deduct this charge from your value in the variable investment options on
a pro rata basis. If there is not enough value in the variable investment
options, we will deduct all or a portion of the charge from the fixed maturity
options in order of the earliest maturity date(s) first. If you surrender your
contract during the contract year we will deduct a pro rata portion of the
charge.
<PAGE>
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32 CHARGES AND EXPENSES
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WITHDRAWAL CHARGE
A withdrawal charge applies in two circumstances: (1) if you make one or more
withdrawals during a contract year that, in total, exceed the 10% free
withdrawal amount, described below, or (2) if you surrender your contract to
receive its cash value.
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 8+
- --------------------------------------------------------------------------------
Percentage of
contribution 7% 6% 5% 4% 3% 2% 1% 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 up to
the free withdrawal amount are not considered withdrawal 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 your contract as withdrawn first. See "Tax information."
In order to give you the exact dollar amount of the withdrawal you request, we
deduct the amount of the withdrawal and the withdrawal charge from your account
value. Any amount deducted to pay withdrawal charges is also subject to a
withdrawal charge. We deduct the charge in proportion to the amount of the
withdrawal subtracted from each investment option. The withdrawal charge helps
cover our sales expenses.
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 on the most recent contract date
anniversary, minus any other withdrawals made during the contract year. The 10%
free withdrawal amount does not apply if you surrender your contract.
Note the following special rule for NQ contracts issued to a charitable
remainder trust, the free withdrawal amount will equal the greater of: (1) the
current account value, less contributions that have not been withdrawn (earnings
in the contract), and (2) the 10% free withdrawal amount defined above.
MINIMUM DISTRIBUTIONS. The withdrawal charge does not apply to withdrawals taken
under our minimum distribution withdrawal option. However, those withdrawals are
counted towards the 10% free withdrawal amount if you also make a lump sum
withdrawal in any contract year.
CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES
We deduct a charge for applicable taxes such as premium taxes that may be
imposed in your state. Generally, we deduct the charge from the amount applied
to provide an annuity payout option. The current tax charge that might be
imposed varies by state and ranges from 0% to 3.5% (1% in Puerto Rico and 5% in
the U.S. Virgin Islands).
ANNUITY ADMINISTRATIVE FEE
We generally deduct a fee of up to $350 from the amount to be applied to
purchase a life annuity payout option.
CHARGES THAT THE TRUSTS DEDUCT
The Hudson River Trust and EQ Advisors Trust each deducts charges for the
following types of fees and expenses:
o Investment advisory fees ranging from 0.25% to 1.15%.
o 12b-1 fees of 0.25%.
o Operating expenses, such as trustees' fees, independent auditors' fees,
legal counsel fees, administrative service fees, custodian fees, and
liability insurance.
<PAGE>
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CHARGES AND EXPENSES 33
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o Investment-related expenses, such as brokerage commissions.
These charges are reflected in the daily share price of each Portfolio. Since
shares of each 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 Hudson River Trust and EQ Advisors Trust
following this prospectus.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the withdrawal charge
or the mortality and expense risks charge, or change the minimum contribution
requirements. We also may change the minimum death benefit or offer variable
investment options that invest in shares of The Hudson River Trust or EQ
Advisors 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 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, administration, and mortality 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 also may establish different rates to maturity for the fixed maturity options
under different classes of contracts for group or sponsored arrangements.
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 result
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 would be
unfairly discriminatory.
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34 PAYMENT OF DEATH BENEFIT
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6
Payment of death benefit
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YOUR BENEFICIARY AND PAYMENT OF BENEFIT
You designate your beneficiary when you apply for your contract. You may change
your beneficiary at any time. 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. Under
jointly owned contracts, the surviving owner is considered the beneficiary, and
will take the place of any other beneficiary.
The death benefit is equal to your account value, or, if greater, the minimum
death benefit. The minimum death benefit is equal to your total contributions
less withdrawals. We determine the amount of the death benefit as of the date we
receive satisfactory proof of the annuitant's death and any required
instructions for the method of payment.
EFFECT OF THE ANNUITANT'S DEATH
If the annuitant dies before the annuity payments begin, we will pay the death
benefit to your beneficiary.
Generally, the death of the annuitant terminates the contract. However, a
beneficiary who is the surviving spouse of the owner/annuitant can choose to be
treated as the successor owner/annuitant and continue the contract. Only a
spouse can be a successor owner/annuitant.
For Rollover IRA and Flexible Premium IRA contracts, a beneficiary who is not a
surviving spouse may be able to have limited ownership as discussed under
"Beneficiary continuation option for Rollover IRA and Flexible Premium IRA
contracts" below.
WHEN AN NQ CONTRACT OWNER DIES BEFORE THE ANNUITANT
Under certain conditions the owner can change after the original owner's death.
When you are not the annuitant under an NQ contract and you die before annuity
payments begin, the beneficiary named to receive the death benefit upon the
annuitant's death will automatically become the successor owner. If you do not
want the beneficiary to be the successor owner, you should name a successor
owner. You may name a specific successor owner at any time by sending
satisfactory notice to our Processing Office. If the contract is jointly owned
and the first owner to die is not the annuitant, the surviving owner becomes the
sole contract owner. This person will be considered the successor owner for
purposes of the distribution rules described in this section. The surviving
owner automatically takes the place of any other beneficiary designation.
Unless the surviving spouse of the owner who has died (or in the case of a joint
ownership situation, the surviving spouse of the first owner to die) is the
successor owner for this purpose, the entire interest in the contract must be
distributed under the following rules:
o The cash value of the contract must be fully paid to the designated
beneficiary (new owner) by December 31st of the fifth calendar year after
your death (or in a joint ownership situation, the death of the first owner
to die).
o The successor owner may instead elect to receive the cash value as a life
annuity (or payments for a period certain of not longer than the new
owner's life expectancy). Payments must begin no later than December 31st
following the calendar year of the non-annuitant owner's death. Unless this
alternative is elected, we will pay any cash value on December 31st of the
fifth calendar year following the year of your death (or the death of the
first owner to die).
o If the surviving spouse is the successor owner or joint owner, the spouse
may elect to continue the contract. No distributions are required as long
as the surviving spouse and annuitant are living.
HOW DEATH BENEFIT PAYMENT IS MADE
We will pay the death benefit to the beneficiary in the form of the annuity
payout option you have chosen. If you have not chosen an annuity payout option
as of the time of the annuitant's death, the beneficiary will receive the death
benefit in a single sum. However, subject to any exceptions in the contract, our
rules and any applicable requirements under federal income tax rules, the
beneficiary may elect to apply the death benefit to one or more annuity payout
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PAYMENT OF DEATH BENEFIT 35
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options we offer at the time. See "Choosing your annuity payout options" earlier
in this prospectus. Please note that if you are both the contract owner and the
annuitant, you may elect only a life annuity or an annuity that does not extend
beyond the life expectancy of the beneficiary.
SUCCESSOR OWNER AND ANNUITANT
If you are both the contract owner and the annuitant, and your spouse is the
sole beneficiary or the joint owner, then your spouse may elect to receive the
death benefit or continue the contract as successor owner/annuitant.
If your surviving spouse decides to continue the contract, then on the contract
date anniversary following your death, we will increase the account value to
equal your current minimum death benefit, if it is higher than the account
value. In determining whether the minimum death benefit will continue to grow,
we will use your surviving spouse's age (as of the contract date anniversary).
BENEFICIARY CONTINUATION OPTION FOR ROLLOVER IRA AND FLEXIBLE PREMIUM IRA
CONTRACTS
Upon your death under a Rollover IRA or Flexible Premium IRA contract, a
non-spouse beneficiary may generally elect to keep the contract in your name and
receive distributions under the contract instead of the death benefit being paid
in a single sum.
If you die AFTER the "Required Beginning Date" (see "Tax information") for
required minimum distributions, the contract will continue if:
(a) you were receiving minimum distribution withdrawals from this contract; and
(b) the pattern of minimum distribution withdrawals you chose was based in part
on the life of the designated beneficiary.
The withdrawals will then continue to be paid to the beneficiary on the same
basis as you chose before your death. We will be able to tell your beneficiary
whether this option is available to them. You should contact our Processing
Office for further information.
If you die BEFORE the Required Beginning Date (and therefore you were not taking
minimum distribution withdrawals under the contract), an eligible beneficiary
may take minimum distribution withdrawals under the contract. We will increase
the account value to equal the death benefit if the death benefit is greater
than the account value. That amount will be used to provide the withdrawals. If
the eligible beneficiary elects as described in the next paragraph, these
withdrawals will begin by December 31st of the calendar year following your
death. These withdrawals will be based on the beneficiary's life expectancy. If
there is more than one beneficiary, the shortest life expectancy is used. An
eligible beneficiary can choose instead to continue the contract in your name
without having to take annual withdrawals. If the beneficiary chooses this
option, all amounts must be distributed from the contract by December 31 of the
fifth calendar year following your death.
The designated beneficiary must be a natural person and of legal age at the time
of election. The beneficiary must elect this option within 30 days following the
date we receive proof of your death. If no election is made within 30 days to:
(1) receive the death benefit, or (2) continue the contract and take annual
withdrawals as described above, or (3) defer payment of the account value for up
to five years, the death benefit will be paid to the beneficiary according to
our standard procedures.
While the contract continues in your name, the beneficiary may make transfers
among the investment options. However, additional contributions will not be
permitted and the death benefit provisions will no longer be in effect. Although
the only withdrawals that will be permitted are minimum distribution
withdrawals, the beneficiary may choose at any time to withdraw all of the
account value and no withdrawal charges will apply.
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36 TAX INFORMATION
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7
Tax information
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OVERVIEW
In this part of the prospectus, we discuss the current federal income tax rules
that generally apply to Equitable Accumulator Express contracts owned by United
States taxpayers. The tax rules can differ, depending on the type of contract,
whether NQ, Rollover IRA, Flexible Premium IRA Roth Conversion IRA or Flexible
Premium Roth IRA. 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 Internal Revenue Service ("IRS")
interpretations of the Internal Revenue Code. These tax rules may change. We
cannot predict whether, when, or how these rules could change. Any change could
affect contracts purchased before the change.
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. Transfers of the contract, rights
under the contract, or payments under the contract may be subject to gift or
estate taxes. You should not rely only on this document, but should consult your
tax adviser before your purchase.
If you are buying a contract to fund a retirement plan that already provides tax
deferral under sections of the Internal Revenue Code (IRA), you should do so for
the contract's features and benefits other than tax deferral. In such
situations, the tax deferral of the contract does not provide additional
benefits.
TRANSFERS AMONG INVESTMENT OPTIONS
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:
o 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 the securities laws);
o if you transfer a contract, for example, as a gift to someone other than
your spouse (or former spouse);
o if you use a contract as security for a loan (in this case, the amount
pledged will be treated as a distribution); and
o if the owner is other than an individual (such as a corporation,
partnership, trust, or other non-natural person).
All nonqualified deferred annuity contracts that Equitable Life and its
affiliates issue to you during the same calendar year are linked together and
treated as one contract for calculating the taxable amount of any distribution
from any of those contracts.
ANNUITY PAYMENTS
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 "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
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TAX INFORMATION 37
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of the payment. For variable annuity payments, your investment in the contract
divided by the number of expected payments is your tax-free portion of each
payment.
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.
PAYMENTS 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
return of your investment in the contract and is not taxable.
CONTRACTS PURCHASED THROUGH EXCHANGES
You may purchase your NQ contract 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:
o The contract that is the source of the funds you are using to purchase the
NQ contract is another nonqualified deferred annuity contract (or life
insurance or endowment contract).
o The owner and the annuitant are the same under the source contract and the
Equitable Accumulator Express NQ contract. 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.
The tax basis of the source contract carries over to the Equitable Accumulator
Express NQ contract.
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" and
"When an NQ contract owner dies before the annuitant" 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.
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. The
extra penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o in the form of substantially equal periodic annuity payments for your life
(or life expectancy) or the joint lives (or joint life expectancy) of you
and a beneficiary.
SPECIAL RULES FOR NQ CONTRACTS ISSUED IN PUERTO RICO
Under current law we treat income from NQ contracts as U.S. source. A Puerto
Rico resident is subject to U.S. taxation on such U.S. source income. Only
Puerto Rico source income of Puerto Rico residents is excludable from U.S.
taxation. Income from NQ contracts is also subject to Puerto Rico tax. The
calculation of the taxable portion of amounts distributed from a contract may
differ in the two jurisdictions. Therefore, you might have to file both U.S. and
Puerto Rico tax returns, showing different amounts of income from the contract
for each tax return. Puerto Rico generally provides a credit against Puerto Rico
tax for U.S. tax paid. Depending on your
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38 TAX INFORMATION
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personal situation and the timing of the different tax liabilities, you may not
be able to take full advantage of this credit.
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 for the benefit of the IRA owner. The assets can include mutual funds and
certificates of deposit. In an individual retirement annuity, an insurance
company issues an annuity contract that serves as the IRA.
There are several types of IRAs, as follows:
o "traditional IRAs," typically funded on a pre-tax basis;
o Roth IRAs, first available in 1998, funded on an after-tax basis; and
o SEP-IRAs and SIMPLE-IRAs, issued and funded in connection with
employer-sponsored retirement plans.
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.
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
Publication 590 ("Individual Retirement Arrangements (IRAs)"). This publication
is usually updated annually, and can be obtained from any IRS district office or
the IRS Web site (http://www.irs.ustreas.gov).
Equitable Life designs its traditional IRA contracts to qualify as individual
retirement annuities under Section 408(b) of the Internal Revenue Code. You may
purchase the contract as a traditional IRA or Roth IRA. The traditional IRAs we
offer are the Rollover IRA and Flexible Premium IRA. The versions of the Roth
IRA available are the Roth Conversion IRA and Flexible Premium Roth IRA. This
prospectus contains the information that the IRS requires you to have before you
purchase an IRA. This section of the prospectus covers some of the special tax
rules that apply to IRAs. The next section covers Roth IRAs. Education IRAs are
not discussed in this prospectus because they are not available in individual
retirement annuity form.
The Equitable Accumulator Express IRA contract has been approved by the IRS as
to form for use as a traditional IRA. We have submitted the Roth IRA version for
formal IRS approval. 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. The IRS approval does not address every feature possibly
available under the Equitable Accumulator Express IRA contract.
CANCELLATION
You can cancel an Equitable Accumulator Express IRA contract by following the
directions under "Your right to cancel within a certain number of days" earlier
in the prospectus. You can cancel an Equitable Accumulator Express Roth
Conversion IRA contract issued as a result of a full conversion of an Equitable
Accumulator Express Rollover IRA or Flexible Premium IRA contract by following
the instructions in the request for full conversion form. The form is available
from our Processing Office or your registered representative. If you cancel an
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 a traditional IRA:
o regular contributions out of earned income or compensation; or
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TAX INFORMATION 39
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o tax-free "rollover" contributions; or
o direct custodian-to-custodian transfers from other traditional IRAs
("direct transfers").
Regular traditional IRA, direct transfer, and rollover contributions may be made
to a Flexible Premium IRA contract. We only permit direct transfer and rollover
contributions under a Rollover IRA contract. See "Rollovers and transfers"
below.
REGULAR CONTRIBUTIONS TO TRADITIONAL IRAS
LIMITS ON CONTRIBUTIONS. Generally, $2,000 is the maximum amount that you may
contribute to all IRAs (including Roth IRAs) in any taxable year. When your
earnings are below $2,000, your earned income or compensation for the year is
the most you can contribute. This $2,000 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 tax year in which
you reach age 70 1/2 or any tax year after that.
SPECIAL RULES FOR SPOUSES. 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 traditional IRAs
(and Roth IRAs discussed below). Even if one spouse has no compensation or
compensation under $2,000, married individuals filing jointly can contribute up
to $4,000 for any taxable 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 $2,000 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 $2,000 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.
DEDUCTIBILITY OF CONTRIBUTIONS. The amount of traditional IRA contributions that
you can deduct for a tax 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.
IF YOU ARE NOT COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, you can
make fully deductible contributions to your traditional IRAs for each tax year
up to $2,000 or, if less, your earned income.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
adjusted gross income (AGI) is BELOW THE LOWER DOLLAR FIGURE IN A PHASE-OUT
RANGE, you can make fully deductible contributions to your traditional IRAs. For
each tax year, your fully deductible contribution can be up to $2,000 or, if
less, your earned income.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
AGI falls within a PHASE-OUT range, you can make PARTIALLY DEDUCTIBLE
CONTRIBUTIONS to your traditional IRAs.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
AGI falls ABOVE THE HIGHER FIGURE IN THE PHASE-OUT RANGE, you may not deduct any
of your regular contributions to your traditional IRAs.
If you are single and covered by a retirement plan during any part of the
taxable year, the deduction for traditional IRA contributions phases out with
AGI between $31,000 and $41,000 in 1999. This range will increase every year
until 2005 when the range is $50,000-$60,000.
If you are married and file a joint return, and you are covered by a retirement
plan during any part of the taxable year, the deduction for traditional IRA
contributions phases out with AGI between $51,000 and $61,000 in 1999. This
range will increase every year until 2007 when the range is $80,000-$100,000.
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40 TAX INFORMATION
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Married individuals filing separately and living apart at all times are not
considered married for purposes of this deductible contribution calculation.
Generally, the active participation in an employer-sponsored retirement plan of
an individual is determined independently for each spouse. Where spouses have
"married filing jointly" status, however, the maximum deductible traditional IRA
contribution for an individual who is not an active participant (but whose
spouse is an active participant) is phased out for taxpayers with AGI of between
$150,000 and $160,000.
To determine the deductible amount of the contribution in 1999, you determine
AGI and subtract $31,000 if you are single, or $51,000 if you are married and
file a joint return with your spouse. The resulting amount is your excess AGI.
You then determine the limit on the deduction for traditional IRA contributions
using the following formula:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
the adjusted
deductible
($10,000-excess AGI) times $2,000 (or earned Equals contribution
divided by $10,000 x income, if less) = limit
--------- --------------------- ---------- ----------------
</TABLE>
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
$2,000 per person limit. See "Excess contributions" below. 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.
EXCESS CONTRIBUTIONS
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:
o regular contributions of more than $2,000; or
o regular contributions of more than earned incom/e for the year, if that
amount is under $2,000; or
o regular contributions to a traditional IRA made after you reach age 70 1/2;
or
o rollover contributions of amounts which are not eligible to be rolled over.
For example, after-tax contributions to a qualified plan or minimum
distributions required to be made after age 70 1/2.
You can avoid the excise tax by withdrawing an excess contribution (rollover or
regular) before the due date (including extensions) for filing your federal
income tax return for the year. If it is an excess regular traditional IRA
contribution, you cannot take a tax deduction for the amount withdrawn. You do
not have to include the excess contribution withdrawn as part of your income. It
is also not subject to the 10% additional penalty tax on early distributions,
discussed below under "Early distribution penalty tax." You do have to withdraw
any earnings that are attributed to the excess contribution. The withdrawn
earnings would be included in your gross income and could be subject to the 10%
penalty tax.
Even after the due date for filing your return, you may withdraw an excess
rollover contribution, without income inclusion or 10% penalty, if:
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TAX INFORMATION 41
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(1) the rollover was from a qualified retirement plan to a traditional IRA;
(2) the excess contribution was due to incorrect information that the plan
provided; and
(3) you took no tax deduction for the excess contribution.
RECHARACTERIZATIONS
You may also change your mind about amounts contributed as Roth IRA funds to
traditional IRA funds, in accordance with special federal income tax rules, if
you use the forms we prescribe. This is referred to as having "recharacterized"
your contribution.
ROLLOVERS AND TRANSFERS
Rollover contributions may be made to a traditional IRA from these sources:
o qualified plans;
o TSAs (including Internal Revenue Code Section 403(b)(7) custodial
accounts); and
o other traditional IRAs.
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 QUALIFIED PLANS OR TSAS
There are two ways to do rollovers:
o Do it yourself
You actually 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 qualified plan or TSA 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.
o Direct rollover
You tell your qualified plan trustee or TSA
issuer/custodian/fiduciary 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 TSA or qualified plan are eligible rollover
distributions, unless the distribution is:
o only after-tax contributions you made to the plan; or
o required minimum distributions after age 70 1/2 or separation from
service; or
o 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
o a hardship withdrawal; or
o substantially equal periodic payments made for a specified period of 10
years or more; or
o corrective distributions that fit specified technical tax rules; or
o loans that are treated as distributions; or
o a death benefit payment to a beneficiary who is not your surviving spouse;
or
o a qualified domestic relations order distribution to a beneficiary who is
not your current spouse or former spouse.
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. 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.
The surviving spouse beneficiary of a deceased individual can roll over or
directly transfer an inherited traditional IRA to one or more other traditional
IRAs. Also, in some cases, traditional IRAs can be transferred on a tax-free
basis
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42 TAX INFORMATION
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between spouses or former spouses as a result of a court-ordered divorce or
separation decree.
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. Earnings in traditional IRAs are not subject to federal
income tax until you or your beneficiary receives 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. 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 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. You must keep permanent tax records of all of your
nondeductible contributions to traditional IRAs. 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.
In addition, a distribution is not taxable if:
o the amount received is a withdrawal of excess contributions, as described
under "Excess contributions" above; or
o the entire amount received is rolled over to another traditional IRA (see
"Rollovers and transfers" above); or
o in certain limited circumstances, where the traditional IRA acts as a
"conduit," you roll over the entire amount into a qualified plan or TSA
that accepts rollover contributions. To get this conduit traditional IRA
treatment:
o the source of funds you used to establish the traditional IRA must
have been a rollover contribution from a qualified plan, and
o the entire amount received from the traditional IRA (including any
earnings on the rollover contribution) must be rolled over into
another qualified plan within 60 days of the date received.
Similar rules apply in the case of a TSA.
However, you may lose conduit treatment, if you make an eligible rollover
distribution contribution to a traditional IRA and you commingle this
contribution with other contributions. In that case, you may not be able to roll
over these eligible rollover distribution contributions and earnings to another
qualified plan or TSA at a future date. The Rollover IRA contract can be used as
a conduit IRA if amounts are not commingled.
Distributions from a traditional IRA are not eligible for favorable five-year
averaging (or, in some cases, ten-year averaging and long-term capital gain
treatment) available to certain distributions from qualified plans.
REQUIRED MINIMUM DISTRIBUTIONS
LIFETIME REQUIRED MINIMUM DISTRIBUTIONS. You must start taking annual
distributions from your traditional IRAs beginning at age 70 1/2.
WHEN YOU HAVE TO TAKE THE FIRST 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
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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
life expectancy factor from IRS tables. This gives you the required minimum
distribution amount for that particular IRA for that year. The required minimum
distribution amount will vary each year as the account value and your life
expectancy factors change.
You have a choice of life expectancy factors, depending on whether you choose a
method based only on your life expectancy, or the joint life expectancies of you
and another individual. You can decide to "recalculate" your life expectancy
every year by using your current life expectancy factor. You can decide instead
to use the "term certain" method, where you reduce your life expectancy by one
every year after the initial year. If your spouse is your designated beneficiary
for the purpose of calculating annual account-based required minimum
distributions, you can also annually recalculate your spouse's life expectancy
if you want. If you choose someone who is not your spouse as your designated
beneficiary for the purpose of calculating annual account-based required minimum
distributions, you have to use the term certain method of calculating that
person's life expectancy. If you pick a nonspouse designated beneficiary, you
may also have to do another special calculation.
You can later apply your traditional IRA funds to a life annuity-based payout.
You can only do this if you already chose to recalculate your life expectancy
annually (and your spouse's life expectancy if you select a spousal joint
annuity). For example, if you anticipate exercising your guaranteed minimum
income benefit or selecting any other form of life annuity payout after you are
age 70 1/2, you must have elected to recalculate life expectancies.
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.
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 and a different beneficiary 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? No, unless you affirmatively select an annuity payout
option or an account-based withdrawal option such as our minimum distribution
withdrawal option. Because the options we offer do not cover every option
permitted under federal income tax rules, you may prefer to do your own required
minimum distribution calculations for one or more of your traditional IRAs.
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.
However, 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
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distribution amount, you may choose to take your annual required minimum
distribution from any one or more traditional IRAs that you own.
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 required minimum distribution rules. We will
remind you when our records show that your age 70 1/2 is approaching. 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? If you die
after either (a) the start of annuity payments, or (b) your required beginning
date, your beneficiary must receive payment of the remaining values in the
contract at least as rapidly as under the distribution method before your death.
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.
If you die before your required beginning date and before annuity payments
begin, federal income tax rules require complete distribution of your entire
value in the contract within five years after your death. Payments to a
designated beneficiary over the beneficiary's life or over a period certain that
does not extend beyond the beneficiary's life expectancy are also permitted, if
these payments start within one year of your death. A surviving spouse
beneficiary can also (a) delay starting any payments until you would have
reached age 70 1/2 or (b) roll over your traditional IRA into his or her own
traditional IRA.
SUCCESSOR ANNUITANT AND OWNER. If your spouse is the sole primary beneficiary
and elects to become the successor annuitant and owner, no death benefit is
payable until your surviving spouse's death.
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% will 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. The extra
penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o used to pay certain extraordinary medical expenses (special federal income
tax definition); or
o used to pay medical insurance premiums for unemployed individuals (special
federal income tax definition); or
o used to pay certain first-time home buyer expenses (special federal income
tax definition; $10,000 lifetime total limit for these distributions from
all your traditional and Roth IRAs); or
o used to pay certain higher education expenses (special federal income tax
definition); or
o 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 expectancy) using an IRS-approved
distribution method.
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To meet this last exception, you could elect to apply your contract value to an
Income Manager (Life Annuity with a Period Certain) payout annuity contract
(level payments version). You could also elect the substantially equal
withdrawals option. We will calculate the substantially equal annual payments
under a method we select based on guidelines issued by the IRS (currently
contained in IRS Notice 89-25, Question and Answer 12). Although substantially
equal withdrawals and Income Manager payments are not subject to the 10% penalty
tax, they are taxable as discussed in "Withdrawals, payments and transfers of
funds out of traditional IRAs" above. Once substantially equal withdrawals or
Income Manager annuity payments begin, the distributions should not be stopped
or changed until the later of your reaching age 59 1/2 or five years after the
date of the first distribution, or the penalty tax, including an interest charge
for the prior penalty avoidance, may apply to all prior distributions under
either option. Also, it is possible that the IRS could view any additional
withdrawal or payment you take from your contract as changing your pattern of
substantially equal withdrawals or Income Manager payments for purposes of
determining whether the penalty applies.
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 Equitable Accumulator Express Roth IRA contract is designed to qualify as a
Roth individual retirement annuity under Sections 408A and 408(b) of the
Internal Revenue Code.
CONTRIBUTIONS TO ROTH IRAS
Individuals may make four different types of contributions to a Roth IRA:
o regular after-tax contributions out of earnings; or
o taxable rollover contributions from traditional IRAs ("conversion"
contributions); or
o tax-free rollover contributions from other Roth IRAs; or
o tax-free direct custodian-to-custodian transfers from other Roth IRAs
("direct transfers").
Regular after-tax, direct transfer, and rollover contributions may be made to a
Flexible Premium Roth IRA contract. We only permit direct transfer and rollover
contributions under the Roth Conversion IRA contract. See "Rollovers and direct
transfers" below. 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.
REGULAR CONTRIBUTIONS TO ROTH IRAS
LIMITS ON REGULAR CONTRIBUTIONS. Generally, $2,000 is the maximum amount that
you may contribute to all IRAs (including Roth IRAs) in any taxable year. This
$2,000 limit does not apply to rollover contributions or direct
custodian-to-custodian transfers into a Roth IRA. Any contributions to Roth IRAs
reduce your ability to contribute to traditional IRAs and vice versa. When your
earnings are below $2,000, 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 traditional IRAs.
With a Roth IRA, you can make regular contributions when you reach 70 1/2, as
long as you have sufficient earnings. But, you cannot make contributions for any
year that:
o your federal income tax filing status is "married filing jointly" and your
adjusted gross income is over $160,000; or
o your federal income tax filing status is "single" and your adjusted gross
income is over $110,000.
However, you can make regular Roth IRA contributions in reduced amounts when:
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o your federal income tax filing status is "married filing jointly" and your
adjusted gross income is between $150,000 and $160,000; or
o your federal income tax filing status is "single" and your adjusted gross
income is between $95,000 and $110,000.
If you are married and filing separately and your adjusted gross income is
between $0 and $10,000 the amount of regular contributions you are permitted to
make is phased out. If your adjusted gross income is more than $10,000 you
cannot make regular Roth IRA contributions.
WHEN YOU CAN MAKE CONTRIBUTIONS. Same as traditional IRAs.
DEDUCTIBILITY OF CONTRIBUTIONS. Roth IRA contributions are not tax deductible.
ROLLOVERS AND DIRECT TRANSFERS
WHAT IS THE DIFFERENCE BETWEEN ROLLOVER AND DIRECT TRANSFER TRANSACTIONS? You
may make rollover contributions to a Roth IRA from only two sources:
o another Roth IRA ("tax-free rollover contribution"); or
o another traditional IRA, including a SEP-IRA or SIMPLE-IRA, in a taxable
"conversion" rollover ("conversion contribution").
You may not make contributions to a Roth IRA from a qualified plan under Section
401(a) of the Internal Revenue Code, or a TSA under Section 403(b) of the
Internal Revenue Code. You may make direct transfer contributions to a Roth IRA
only from another Roth IRA.
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 Equitable Life, as the Roth IRA 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 use rollover transactions between different plan types
(for example, traditional IRA to 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. 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 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.
Unlike a rollover from a traditional IRA to another traditional IRA, the
conversion rollover transaction is not tax-free. Instead, the distribution from
the traditional IRA is generally fully taxable. For this reason, we are required
to withhold 10% federal income tax from the amount converted unless you elect
out of such withholding. (If 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.)
There is, however, no early distribution penalty tax on the traditional IRA
withdrawal that you are converting to a Roth IRA, even if you are under age
59 1/2.
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You cannot make conversion contributions to a Roth IRA for any taxable year in
which your adjusted gross income exceeds $100,000. (For this purpose, your
adjusted gross income is computed without the gross income stemming from the
traditional IRA conversion.) You also cannot make conversion contributions to a
Roth IRA for any taxable year in which your federal income tax filing status is
"married filing separately."
Finally, you cannot make conversion contributions to a Roth IRA to the extent
that the funds in your traditional IRA are subject to the annual required
minimum distribution rule applicable to traditional IRAs beginning at age 70
1/2.
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 of your contract
and annuity payments from your contract. Death benefits are also distributions.
The following distributions from Roth IRAs are free of income tax:
o Rollovers from a Roth IRA to another Roth IRA;
o Direct transfers from a Roth IRA to another Roth IRA;
o "Qualified Distributions" from Roth IRAs; and
o 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:
o you reach age 59 1/2; or
o you die; or
o you become disabled (special federal income tax definition); or
o 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). It is not possible to have a
tax-free qualified distribution before the year 2003 because of the five-year
aging requirement.
NONQUALIFIED DISTRIBUTIONS FROM ROTH IRAS. Non-qualified distributions from Roth
IRAs are distributions that do not meet
the qualifying event and five-year aging period tests described above. Such
distributions are potentially taxable as ordinary income. Nonqualified
distributions receive return-of-investment-first treatment. Only the difference
between the amount of the distribution and the amount of contributions to all of
your Roth IRAs is taxable. You have to reduce the amount of contributions to all
of your Roth IRAs to reflect any previous tax-free recoveries.
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 five-year averaging method (or, in certain cases,
favorable ten-year averaging and long-term capital gain treatment) available in
certain cases to distributions from qualified plans.
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REQUIRED MINIMUM DISTRIBUTIONS AT DEATH
Same as traditional IRA under "What are the required minimum distribution
payments after you die?" Lifetime required minimum distributions do not apply.
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
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 (for example, conversion contributions from a traditional IRA if
your adjusted gross income is in excess of $100,000 in the conversion year).
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.
For Roth IRAs, special penalty rules may apply to amounts withdrawn attributable
to 1998 conversion rollovers.
FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING
We must withhold federal income tax from distributions from annuity contracts.
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:
o We might have to withhold on amounts we pay under a free look or
cancellation.
o We are generally required to withhold on conversion rollovers of
traditional IRAs to Roth IRAs, as it is considered a withdrawal from the
traditional IRA and is taxable.
o We are required to withhold on the gross amount of a distribution from a
Roth IRA unless you elect out of withholding. This may result in tax being
withheld even though the Roth IRA distribution is not taxable in whole or
in part.
Special withholding rules apply to foreign recipients and United States citizens
residing outside the United States. We do not discuss these rules here. Certain
states have indicated that state income tax withholding will also apply to
payments from the contracts made to residents. In some states, you may elect out
of state withholding, even if federal withholding applies. Generally, an
election out of federal withholding will also be considered an election out of
state 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
We withhold differently on "periodic" and "non-periodic" payments. For a
periodic annuity payment, for example, unless you specify a different number of
withholding exemptions, we withhold assuming that you are married and
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claiming three withholding exemptions. If you do not give us your correct
Taxpayer Identification Number, we withhold as if you are single with no
exemptions.
Based on the assumption that you are married and claiming three withholding
exemptions, if you receive less than $14,700 in periodic annuity payments in
1999, your payments will generally be exempt from federal income tax
withholding. You could specify a different choice of withholding exemption or
request that tax be withheld. Your withholding election remains effective unless
and until you revoke it. You may revoke or change your withholding election at
any time.
FEDERAL INCOME TAX WITHHOLDING ON NON-PERIODIC ANNUITY PAYMENTS
(WITHDRAWALS)
For a non-periodic distribution (total surrender or partial withdrawal), we
generally withhold at a flat 10% rate. We apply that rate to the taxable amount
in the case of nonqualified contracts, and to the payment amount in the case of
IRAs and Roth IRAs.
You cannot elect out of withholding if the payment is an "eligible rollover
distribution" from a qualified plan or TSA. If a non-periodic distribution from
a qualified plan or TSA is not an "eligible rollover distribution" then the 10%
withholding rate applies.
IMPACT OF TAXES TO EQUITABLE LIFE
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.
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ABOUT OUR SEPARATE ACCOUNT NO. 49
Each variable investment option is a subaccount of our 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, including these 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. The results of Separate
Account No. 49's operations are accounted for without regard to Equitable Life's
other operations.
Separate Account No. 49 is registered under the Investment Company Act of 1940
and is classified by that act as a "unit investment trust." The SEC, however,
does not manage or supervise Equitable Life or Separate Account No. 49.
Each subaccount (variable investment option) within Separate Account No. 49
invests solely in class IB shares issued by the corresponding Portfolio of The
Hudson River Trust and EQ Advisors 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;
and
(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.
ABOUT THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST
The Hudson River Trust and EQ Advisors Trust are registered under the Investment
Company Act of 1940. They are classified as "open-end management investment
companies," more commonly called mutual funds. Each trust issues different
shares relating to each Portfolio.
The Hudson River Trust and EQ Advisors Trust do not impose sales charges or
"loads" for buying and selling their shares. All dividends and other
distributions on a trust's shares are reinvested in full. The Boards of Trustee
of The Hudson River Trust and EQ Advisors Trust each may establish additional
Portfolios or eliminate existing Portfolios at any time. More detailed
information about The Hudson River Trust and EQ Advisors Trust, their investment
objectives, policies, restrictions, risks, expenses, their Rule 12b-1 Plans
relating to their Class IB shares, and other aspects of their operations,
appears in their prospectuses attached at the end of this prospectus, or in
their SAIs which are available upon request.
PROPOSED SUBSTITUTION OF PORTFOLIOS. We are asking the SEC to approve the
substitution of newly created Portfolios of the EQ Advisors Trust for each of
The Hudson River Trust Portfolios currently available under the variable
investment options (the "Substitution"). The EQ Advisors Trust Portfolios will
have substantially identical investment objectives, strategies, and policies as
those of The Hudson River Trust Portfolios they would replace. The assets of any
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Portfolio of The Hudson River Trust underlying your contract would be
transferred to the substituted EQ Advisors Trust Portfolio.
We believe that this Substitution will be in your best interest because you
would have a single set of variable investment options with similar advisory
structures. You also will have a single EQ Advisors Trust prospectus for all the
Portfolios, rather than the two separate prospectuses you now receive. EQ
Financial Consultants Inc. will be the manager of the new EQ Advisors Trust
Portfolios, and Alliance Capital Management L.P. will continue to provide the
day-to-day advisory services to each of the new Portfolios.
You should note that:
o No action is required on your part. You will not need to vote a proxy, file
a new election, or take any other action if the SEC approves the
Substitution.
o The elections you have on file for allocating your account value and
contributions will remain unchanged until you direct us otherwise.
o We will bear all expenses directly relating to the Substitution
transaction.
o The management fees for the new Portfolios will be the same as those for
the corresponding Portfolios of The Hudson River Trust. Certain of the new
EQ Advisors Trust Portfolios may have slightly higher expense ratios.
o On the effective date of the Substitution transaction, your account value
(i.e., the units you own) in the variable investment options will be the
same as before the transaction.
o The Substitution will have no tax consequences for you.
Please review the EQ Advisors Trust prospectus that accompanies this prospectus.
It contains more information about EQ Advisors Trust, including its management
structure, advisory arrangements, and general fees and expenses that will be of
interest to you.
Subject to SEC approval, we expect the Substitution to be completed in the fall
of 1999. It will affect everyone who has a balance in The Hudson River Trust
Portfolios at that time. Of course, you may transfer your account value among
the investment options, as usual.
We will notify you when we receive SEC approval and the Substitution is
complete.
ABOUT OUR FIXED MATURITY OPTIONS
RATES TO MATURITY AND PRICE PER $100 OF MATURITY VALUE
We can determine the amount required to be allocated to one or more fixed
maturity options in order to produce specified maturity values. For example, we
can tell you how much you need to allocate per $100 of maturity value.
The rates to maturity for new allocations as of July 15, 1999 and the related
price per $100 of maturity value were as follows:
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FIXED MATURITY
OPTIONS WITH
FEBRUARY 15TH RATE TO MATURITY PRICE
MATURITY DATE OF AS OF PER $100 OF
MATURITY YEAR JULY 15, 1999 MATURITY VALUE
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2000 3.36% $98.07
2001 4.37% $93.42
2002 4.70% $88.78
2003 5.09% $83.67
2004 5.18% $79.30
2005 5.29% $74.95
2006 5.37% $70.83
2007 5.40% $67.07
2008 5.50% $63.12
2009 5.56% $59.49
- ----------------------------------------------------
HOW WE DETERMINE THE MARKET VALUE ADJUSTMENT
We use the following procedure to calculate the market value adjustment (up or
down) we make if you withdraw all of your value from a fixed maturity option
before its maturity date.
(1) We determine the market adjusted amount on the date of the withdrawal as
follows:
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52 MORE INFORMATION
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(a) We determine the fixed maturity amount that would be payable on the
maturity date, using the rate to maturity for the fixed maturity
option.
(b) We determine the period remaining in your fixed maturity option (based
on the withdrawal date) and convert it to fractional years based on a
365-day year. For example, three years and 12 days becomes 3.0329.
(c) We determine the current rate to maturity that applies on the
withdrawal date to new allocations to the same fixed maturity option.
(d) We determine the present value of the fixed maturity amount payable at
the maturity date, using the period determined in (b) and the rate
determined in (c).
(2) We determine the fixed maturity amount as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market value
adjustment applicable to such fixed maturity option, which may be positive
or negative.
- --------------------------------------------------------------------------------
Your market adjusted amount is the present value of the maturity value
discounted at the rate to maturity in effect for new contributions to that same
fixed maturity option on the date of the calculation.
- --------------------------------------------------------------------------------
If you withdraw only a portion of the amount in a fixed maturity option, the
market value adjustment will be a percentage of the market value adjustment that
would have applied if you had withdrawn the entire value in that fixed maturity
option. This percentage is equal to the percentage of the value in the fixed
maturity option that you are withdrawing. Any withdrawal charges that are
deducted from a fixed maturity option will result in a market value adjustment
calculated in the same way. See Appendix III for an example.
For purposes of calculating the rate to maturity for new allocations to a fixed
maturity option (see (1)(c) above), we use the rate we have in effect for new
allocations to that fixed maturity option. We use this rate even if new
allocations to that option would not be accepted at that time. This rate will
not be less than 3%. If we do not have a rate to maturity in effect for a fixed
maturity option to which the "current rate to maturity" in (1)(c) would apply,
we will use the rate at the next closest maturity date. If we are no longer
offering new fixed maturity options, the "current rate to maturity" will be
determined in accordance with our procedures then in effect. We reserve the
right to add up to 0.25% to the current rate in (1)(c) above for purposes of
calculating the market value adjustment only.
INVESTMENTS UNDER THE FIXED MATURITY OPTIONS
Amounts allocated to the fixed maturity options are held in a "nonunitized"
separate account we have established under the New York Insurance Law. This
separate account provides an additional measure of assurance that we will make
full payment of amounts due under the fixed maturity options. Under New York
Insurance Law, the portion of the separate account's assets equal to the
reserves and other contract liabilities relating to the contracts are not
chargeable with liabilities from any other business we may conduct. 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 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 fixed maturity options, regardless of
whether assets supporting fixed maturity options are held in a separate account
or our general account.
We have no specific formula for establishing the rates to maturity for the fixed
maturity options. We expect the rates to be influenced by, but not necessarily
correspond to, among other things, the yields that we can expect to realize on
the separate account's investments from time to time. Our current plans are to
invest in fixed-income obligations, including corporate bonds, mortgage-backed
and asset-backed securities, and government and agency issues having durations
in the aggregate consistent with those of the fixed maturity options.
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MORE INFORMATION 53
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Although the above generally describes our plans for investing the assets
supporting our obligations under the fixed maturity options under the contracts,
we are not obligated to invest those assets according to any particular plan
except as we may be required to by state insurance laws. We will not determine
the rates to maturity we establish by the performance of the nonunitized
separate account.
ABOUT THE GENERAL ACCOUNT
Our general account supports all of our policy and contract guarantees,
including those that apply to the fixed maturity options, as well as our general
obligations.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations of
all jurisdictions where we are authorized to do business. Because of exemptions
and exclusionary provisions that apply, interests in the general account have
not been registered under the Securities Act of 1933, nor is the general account
an investment company under the Investment Company Act of 1940. However, the
market value adjustment interests under the contracts are registered under the
Securities Act of 1933.
We have been advised that the staff of the SEC has not reviewed the portions of
this prospectus that relate to the general account (other than market value
adjustment interests). 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
We accept initial contributions sent by wire to our Processing Office by
agreement with certain broker-dealers. The 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."
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 forwarded
electronically. In these cases, you must sign our Acknowledgement of Receipt
form.
Where we require a signed application, no financial transactions will be
permitted until we receive the signed application and have issued the contract.
Where we require an Acknowledgement of Receipt form, financial transactions are
only permitted if you request them in writing, sign the request and have it
signature guaranteed, until we receive the signed Acknowledgement of Receipt
form.
After your contract has been issued, additional contributions may be transmitted
by wire.
AUTOMATIC INVESTMENT PROGRAM -- FOR NQ, FLEXIBLE PREMIUM IRA, AND FLEXIBLE
PREMIUM ROTH IRA CONTRACTS ONLY
You may use our automatic investment program, or "AIP," to have a specified
amount automatically deducted from a checking account, money market account, or
credit union checking account and contributed as an additional contribution into
an NQ, Flexible Premium IRA or Flexible Premium Roth IRA contract on a monthly
or quarterly basis. AIP is not available for Rollover IRA or Roth Conversion IRA
contracts.
AIP additional contributions may be allocated to any of the variable investment
options and available fixed maturity options. Our minimum contribution amount
requirement is $20. You choose the day of the month you wish to have your
account debited. However, you may not choose a date later than the 28th day of
the month.
You may cancel AIP at any time by notifying our Processing Office. We are not
responsible for any debits made to your account before the time written notice
of cancellation is received at our Processing Office.
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54 MORE INFORMATION
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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 any day the New York Stock Exchange is open for trading. We
calculate unit values for our variable investment options as of the end of each
business day. This usually is 4:00 p.m., Eastern time. Contributions will be
applied and any other transaction requests will be processed when they are
received along with all the required information.
o If your contribution, transfer or any other transaction request, containing
all the required information, reaches us on a non-business day or after
4:00 p.m. on a business day, we will use the next business day.
o 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.
o 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.
CONTRIBUTIONS AND TRANSFERS
o Contributions allocated to the variable investment options are invested at
the unit value next determined after the close of the business day.
o Contributions allocated to a fixed maturity option will receive the rate to
maturity in effect for that fixed maturity option on that business day.
o Transfers to or from variable investment options will be made at the unit
value next determined after the close of the business day.
o Transfers to a fixed maturity option will be based on the rate to maturity
in effect for that fixed maturity option on the business day of the
transfer.
ABOUT YOUR VOTING RIGHTS
As the owner of the shares of The Hudson River Trust and EQ Advisors Trust we
have the right to vote on certain matters involving the Portfolios, such as:
o the election of trustees;
o the formal approval of independent auditors selected for each trust; or
o any other matters described in the prospectuses for the trusts 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.
VOTING RIGHTS OF OTHERS
Currently, we control each trust. EQ Advisors Trust shares are sold only to our
separate accounts and an affiliated qualified plan trust. The Hudson River Trust
shares are held by other separate accounts of ours and by separate accounts of
insurance companies unaffiliated with us. Shares held by these separate accounts
will probably be voted according to the instructions of the owners of insurance
policies and contracts issued by those insurance companies. While this will
dilute the effect of the voting instructions of the contract owners, we
currently do not foresee any disadvantages because of this. The Hudson River
Trust Board of Trustees intends to monitor events in order to identify any
material irreconcilable conflicts that may arise and to determine what
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MORE INFORMATION 55
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action, if any, should be taken in response. If we believe that a response to
any of those events insufficiently protects our contract owners, we will see to
it that appropriate action is taken.
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.
ABOUT OUR YEAR 2000 PROGRESS
Equitable Life relies upon various computer systems in order to administer your
contract and operate the investment options. Some of these systems belong to
service providers who are not affiliated with Equitable Life.
In 1995, Equitable Life began addressing the question of whether its computer
systems would recognize the year 2000 before, on or after January 1, 2000, and
Equitable Life has identified those of its systems critical to business
operations that were not year 2000 compliant. Equitable Life has completed the
work of modifying or replacing non-compliant systems and has confirmed, through
testing, that its systems are year 2000 compliant. Equitable Life has contacted
third-party vendors and service providers to seek confirmation that they are
acting to address the year 2000 issue with the goal of avoiding any material
adverse effect on services provided to contract owners and on operations of the
investment options. All third-party vendors and service providers considered
critical to Equitable Life's business have provided us confirmation of their
year 2000 compliance or a satisfactory plan for compliance. With respect to
vendors and service providers considered non-critical, we believe we are on
schedule for substantially all such vendors and service providers to be
confirmed by September 30, 1999 as year 2000 compliant or be the subject of a
satisfactory plan for compliance. If such confirmation is not received by
September 30, 1999, the vendor or service provider will be replaced, eliminated,
or be the subject of contingency plans. Additionally, Equitable Life has
supplemented its existing business continuity and disaster recovery plans to
cover certain categories of contingencies that could arise as a result of year
2000 related failures.
There are many risks associated with year 2000 issues, including the risk that
Equitable Life's computer systems will not operate as intended. Additionally,
there can be no assurance that the systems of third parties will be year 2000
compliant. Any significant unresolved difficulty related to the year 2000
compliance initiatives could result in an interruption in, or a failure of,
normal business operations and, accordingly, could have a material adverse
effect on our ability to administer your contract and operate the investment
options.
To the fullest extent permitted by law, the foregoing year 2000 discussion is a
"Year 2000 Readiness Disclosure" within the meaning of The Year 2000 Information
and Readiness Disclosure Act, (P.L. 105-271) (1998).
ABOUT LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings is 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.
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56 MORE INFORMATION
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ABOUT OUR INDEPENDENT ACCOUNTANTS
The financial statements of Equitable Life incorporated in this prospectus by
reference to the Annual Report on Form 10-K at December 31, 1998 and 1997, and
for the three years ended December 31, 1998, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING
You can transfer ownership of an NQ contract at any time before annuity payments
begin. We will continue to treat you as the owner until we receive notification
of any change at our Processing Office. You cannot assign your NQ contract as
collateral or security for a loan. Loans are also not available under your NQ
contract. In some cases, an assignment or change of ownership may have adverse
tax consequences. See "Tax information" earlier in this prospectus.
You cannot assign or transfer ownership of an IRA contract except by surrender
to us. Loans are not available and you cannot assign IRA contracts as security
for a loan or other obligation.
For limited transfers of ownership after the owner's death see "Payment of death
benefit" and "Beneficiary continuation option for Rollover IRA and Flexible
Premium IRA contracts." You may direct the transfer of the values under your IRA
contract to another similar arrangement. Under federal income tax rules, in the
case of such a transfer, we will impose a withdrawal charge, if one applies.
DISTRIBUTION OF THE CONTRACTS
Equitable Distributors, Inc. ("EDI"), an indirect, wholly owned subsidiary of
Equitable Life, is the distributor of the contracts and has responsibility for
sales and marketing functions for Separate Account No. 49. EDI serves as the
principal underwriter of Separate Account No. 49. EDI is registered with the SEC
as a broker-dealer and is a member of the National Association of Securities
Dealers, Inc. EDI's principal business address is 1290 Avenue of the Americas,
New York, New York 10104. Under a distribution agreement between EDI, Equitable
Life, and certain of Equitable Life's separate accounts, including Separate
Account No. 49, Equitable Life paid EDI distribution fees of $35,452,793 for
1998, $9,566,343 for 1997, and $87,157 for 1996, as the distributor of certain
contracts, including these contracts, and as the principal underwriter of
several Equitable Life separate accounts, including Separate Account No. 49.
The contracts will be sold by registered representatives of EDI, as well as by
affiliated and unaffiliated broker-dealers with which EDI has entered into
selling agreements. Broker-dealer sales compensation will generally not exceed
7% of total contributions made under the contracts. EDI may also receive
compensation and reimbursement for its marketing services under the terms of its
distribution agreement with Equitable Life. Broker-dealers receiving sales
compensation will generally pay a portion of it to their registered
representatives as commissions related to sales of the contracts. The offering
of the contracts is intended to be continuous.
<PAGE>
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INVESTMENT PERFORMANCE 57
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9
Investment performance
- --------------------------------------------------------------------------------
We provide the following tables to show five different measurements of the
investment performance of the variable investment options and/or the Portfolios
in which they invest. We include these tables because they may be of general
interest to you. THE RESULTS SHOWN REFLECT PAST PERFORMANCE. THEY DO NOT
INDICATE HOW THE VARIABLE INVESTMENT OPTIONS MAY PERFORM IN THE FUTURE. THEY
ALSO DO NOT REPRESENT THE RESULTS EARNED BY ANY PARTICULAR INVESTOR. YOUR
RESULTS WILL DIFFER.
Table 1 shows the average annual total return of the variable investment
options. Average annual total return is the annual rate of growth that would be
necessary to achieve the ending value of a contribution invested in the variable
investment options for the periods shown.
Table 2 shows the growth of a hypothetical $1,000 investment in the variable
investment options over the periods shown. Both Tables 1 and 2 take into account
all fees and charges under the contract, including the withdrawal charge, the
annual administrative charge but do not reflect the charges for any applicable
taxes such as premium taxes or any applicable annuity administrative fee.
Tables 3, 4, and 5 show the rates of return of the variable investment options
on an annualized, cumulative, and year-by-year basis. These tables take into
account all fees and charges under the contract, but do not reflect the
withdrawal charge, the annual administrative charge or the charges for any
applicable taxes such as premium taxes or any applicable annuity administrative
fee. If the charges were reflected they would effectively reduce the rates of
return shown.
In all cases the results shown are based on the actual historical investment
experience of the Portfolios in which the variable investment options invest. In
some cases, the results shown relate to periods when the variable investment
options and/or the contracts were not available. In those cases, we adjusted the
results of the Portfolios to reflect the charges under the contracts that would
have applied had the investment options and/or contracts been available. The
contracts are being offered for the first time as of the date of this
prospectus.
In addition, we have adjusted the results prior to October 1996, when The Hudson
River Trust Class IB shares were not available, to reflect the 12b-1 fees
currently imposed. Finally, the results shown for the Alliance Money Market and
Alliance Common Stock options for periods before March 22, 1985 reflect the
results of the variable investment options that preceded them. The "Since
Portfolio inception" figures for these options are based on the date of
inception of the preceding variable investment options. We have adjusted these
results to reflect the maximum investment advisory fee payable for the
Portfolios, as well as an assumed charge of 0.06% for direct operating expenses.
EQ Advisors Trust commenced operations on May 1, 1997.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends.
BENCHMARKS
Tables 3 and 4 compare the performance of variable investment options to market
indices that serve as benchmarks. Market indices are not subject to any charges
for investment advisory fees, brokerage commission or other operating expenses
typically associated with a managed Portfolio. Also, they do not reflect other
contract charges such as the mortality and expense risks charge, administrative
charges, or any withdrawal or optional benefit charge. Comparisons with these
benchmarks, therefore, may be of limited use. We include them because they are
widely known and may help you to understand the universe of securities from
which each Portfolio is likely to select its holdings. Benchmark data reflect
the reinvestment of dividend income. The benchmarks include:
<PAGE>
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58 INVESTMENT PERFORMANCE
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ALLIANCE MONEY MARKET: Salomon Brothers Three-Month T-Bill Index.
ALLIANCE HIGH YIELD: Merrill Lynch High Yield Master Index.
ALLIANCE COMMON STOCK: Standard & Poor's 500 Index.
ALLIANCE AGGRESSIVE STOCK: 50% Russell 2000 Index and 50% Standard &
Poor's Mid-Cap Total Return Index.
ALLIANCE SMALL CAP GROWTH: Russell 2000 Growth Index.
EQ/ALLIANCE PREMIER GROWTH: Standard & Poor's 500 Index.
BT EQUITY 500 INDEX: Standard & Poor's 500 Index.
BT SMALL COMPANY INDEX: Russell 2000 Index.
BT INTERNATIONAL EQUITY INDEX: Morgan Stanley Capital International
Europe, Australia, Far East Index.
CAPITAL GUARDIAN U.S. EQUITY: Standard & Poor's 500 Index.
CAPITAL GUARDIAN RESEARCH: Standard & Poor's 500 Index.
CAPITAL GUARDIAN INTERNATIONAL: Morgan Stanley Capital International
Europe, Australia, Far East Index.
EQ/EVERGREEN: Russell 2000 Index.
EQ/EVERGREEN FOUNDATION: 60% Standard & Poor's 500 Index/40% Lehman
Brothers Aggregate Bond Index.
JPM CORE BOND: Salomon Brothers Broad Investment Grade Bond.
LAZARD LARGE CAP VALUE: Standard & Poor's 500 Index.
LAZARD SMALL CAP VALUE: Russell 2000 Index.
MFS GROWTH WITH INCOME: Standard & Poor's 500 Index.
MFS RESEARCH: Standard & Poor's 500 Index.
MFS EMERGING GROWTH COMPANIES: Russell 2000 Index.
MERRILL LYNCH BASIC VALUE EQUITY: Standard & Poor's 500 Index.
MERRILL LYNCH WORLD STRATEGY: 36% Standard & Poor's 500 Index/24%
Morgan Stanley Capital International Europe, Australia, Far East
Index/21% Salomon Brothers U.S. Treasury Bond 1 Year+ 14% Salomon
Brothers World Government Bond (excluding U.S.)/and 5% Three-Month
U.S. Treasury Bill.
MORGAN STANLEY EMERGING MARKETS EQUITY: Morgan Stanley Capital
International Emerging Markets Free Price Return Index.
EQ/PUTNAM GROWTH & INCOME VALUE: Standard & Poor's 500 Index.
EQ/PUTNAM INVESTORS GROWTH: Standard & Poor's 500 Index.
EQ/PUTNAM INTERNATIONAL EQUITY: Morgan Stanley Capital International
Europe, Australia, Far East Index.
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LIPPER SURVEY. The Lipper Variable Insurance Products Performance Analysis
Survey (Lipper Survey) records the performance of a large group of variable
annuity products, including managed separate accounts of insurance companies.
According to Lipper Analytical Services, Inc., the data are presented net of
investment management fees, direct operating expenses and asset-based charges
applicable under annuity contracts. Lipper data provide a more accurate picture
than market benchmarks of the Equitable Accumulator Express performance relative
to other variable annuity products.
58
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INVESTMENT PERFORMANCE 59
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TABLE 1
AVERAGE ANNUAL TOTAL RETURN UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
<TABLE>
<CAPTION>
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LENGTH OF INVESTMENT PERIOD
----------------------------------------------------------------------------
SINCE SINCE PORTFOLIO
1 3 5 10 OPTION PORTFOLIO INCEPTION
VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION* INCEPTION DATE**
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Money Market (5.00)% 0.11% 0.78% 1.77% (1.00)% 3.62% 7/13/81
- ---------------------------------------------------------------------------------------------------------------------
Alliance High Yield (15.15)% 6.24% 5.94% 7.76% 0.00% 7.03% 1/2/87
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Alliance Common Stock 18.27% 22.66% 18.00% 15.37% 16.22% 13.73% 1/13/76
- ---------------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock (9.88)% 5.61% 7.46% 16.13% (1.06)% 14.94% 1/27/86
- ---------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth (14.24)% -- -- -- 4.05% 4.05% 5/1/97
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BT Equity 500 Index 14.46% -- -- -- 14.46% 14.46% 12/31/97
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BT Small Company Index (12.18)% -- -- -- (12.18)% (12.18)% 12/31/97
- ---------------------------------------------------------------------------------------------------------------------
BT International Equity Index 9.57% -- -- -- 9.57% 9.57% 12/31/97
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JPM Core Bond (1.17)% -- -- -- (1.17)% (1.17)% 12/31/97
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Lazard Large Cap Value 9.54% -- -- -- 9.54% 9.54% 12/31/97
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Lazard Small Cap Value (16.79)% -- -- -- (16.79)% (16.79)% 12/31/97
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MFS Research 13.47% -- -- -- 14.07% 14.07% 5/1/97
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MFS Emerging Growth Companies 23.57% -- -- -- 22.41% 22.41% 5/1/97
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Merrill Lynch Basic Value Equity 1.31% -- -- -- 8.36% 8.36% 5/1/97
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Merrill Lynch World Strategy (3.31)% -- -- -- (0.14)% (0.14) 5/1/97
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Morgan Stanley Emerging Markets Equity (36.16)% -- -- -- (36.16)% (29.85)% 8/20/97
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EQ/Putnam Growth & Income Value 2.52% -- -- -- 8.59% 8.59% 5/1/97
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EQ/Putnam Investors Growth 25.29% -- -- -- 24.44% 24.44% 5/1/97
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EQ/Putnam International Equity 8.97% -- -- -- 8.51% 8.51% 5/1/97
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</TABLE>
* The since inception dates for the variable investment options are as
follows: Alliance Money Market, Alliance High Yield, Alliance Common Stock,
and Alliance Aggressive Stock (October 16, 1996); Alliance Small Cap Growth,
MFS Research, MFS Emerging Growth Companies, EQ/Putnam Growth & Income
Value, EQ/Putnam Investors Growth, and EQ/Putnam International Equity (May
1, 1997); BT Equity 500 Index, BT Small Company Index, BT International
Equity Index, JPM Core Bond, Lazard Large Cap Value, Lazard Small Cap Value,
and Morgan Stanley Emerging Markets Equity (December 31, 1997).
** The inception dates for the Portfolios that became available on or after
December 31, 1998 and are therefore not shown in the tables are:
EQ/Evergreen, EQ/Evergreen Foundation, and MFS Growth with Income (December
31, 1998); EQ/Alliance Premier Growth, Capital Guardian U.S. Equity, Capital
Guardian Research, and Capital Guardian International (May 1, 1999).
<PAGE>
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60 INVESTMENT PERFORMANCE
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TABLE 2
GROWTH OF $1,000 UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
<TABLE>
<CAPTION>
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LENGTH OF INVESTMENT PERIOD
---------------------------------------------------------------
SINCE
1 3 5 10 PORTFOLIO
VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION*
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market $ 949.98 $1,003.44 $1,039.58 $1,191.64 $ 1,896.30
- --------------------------------------------------------------------------------------------------------
Alliance High Yield $ 848.46 $1,199.02 $1,334.61 $2,112.25 $ 2,261.00
- --------------------------------------------------------------------------------------------------------
Alliance Common Stock $1,182.73 $1,845.35 $2,287.83 $4,179.19 $19,281.51
- --------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock $ 901.18 $1,177.98 $1,432.82 $4,461.09 $ 6,109.06
- --------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth $ 857.57 -- -- -- $ 1,082.73
- --------------------------------------------------------------------------------------------------------
BT Equity 500 Index $1,144.61 -- -- -- $ 1,144.61
- --------------------------------------------------------------------------------------------------------
BT Small Company Index $ 878.25 -- -- -- $ 878.25
- --------------------------------------------------------------------------------------------------------
BT International Equity Index $1,095.71 -- -- -- $ 1,095.71
- --------------------------------------------------------------------------------------------------------
JPM Core Bond $ 988.30 -- -- -- $ 988.30
- --------------------------------------------------------------------------------------------------------
Lazard Large Cap Value $1,095.42 -- -- -- $ 1,095.42
- --------------------------------------------------------------------------------------------------------
Lazard Small Cap Value $ 832.09 -- -- -- $ 832.09
- --------------------------------------------------------------------------------------------------------
MFS Research $1,134.71 -- -- -- $ 1,301.26
- --------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies $1,235.75 -- -- -- $ 1,498.31
- --------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity $1,013.10 -- -- -- $ 1,174.23
- --------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy $ 966.94 -- -- -- $ 997.25
- --------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity $ 638.44 -- -- -- $ 492.15
- --------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value $1,025.15 -- -- -- $ 1,179.17
- --------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth $1,252.90 -- -- -- $ 1,548.55
- --------------------------------------------------------------------------------------------------------
EQ/Putnam International Equity $1,089.73 -- -- -- $ 1,177.46
- --------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
* Portfolio inception dates are shown in Table 1.
<PAGE>
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INVESTMENT PERFORMANCE 61
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- --------------------------------------------------------------------------------
TABLE 3
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
SINCE
PORTFOLIO
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION*
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 4.08% 4.10% 3.91% 4.32% 5.10% -- 5.80%
- ----------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 4.87% 4.77% 5.20% -- -- 6.77%
- ----------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 5.18% 5.11% 5.44% -- -- 6.76%
- ----------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (6.28)% 10.02% 8.67% -- -- -- 9.17%
- ----------------------------------------------------------------------------------------------------------------
Lipper High Current Yield (0.44)% 8.21% 7.37% 9.34% -- -- 8.97%
- ----------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 9.11% 9.01% 11.08% -- -- 10.72%
- ----------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 27.83% 26.07% 20.45% 17.21% 16.04% 17.18% 14.99%
- ----------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% 22.23% 18.63% 16.72% -- 16.30% 16.01%
- ----------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 28.23% 24.06% 19.21% -- 17.76% 15.98%
- ----------------------------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK (0.90)% 9.41% 10.12% 17.46% -- -- 16.35%
- ----------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth 12.16% 16.33% 14.87% 15.44% -- -- 13.69%
- ----------------------------------------------------------------------------------------------------------------
Benchmark 8.28% 17.77% 15.56% 16.49% -- -- 14.78%
- ----------------------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH (5.35)% -- -- -- -- -- 10.98%
- ----------------------------------------------------------------------------------------------------------------
Lipper Small Company Growth (0.33)% -- -- -- -- -- 16.72%
- ----------------------------------------------------------------------------------------------------------------
Benchmark 1.23% -- -- -- -- -- 16.58%
- ----------------------------------------------------------------------------------------------------------------
BT EQUITY 500 INDEX 23.94% -- -- -- -- -- 23.94%
- ----------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 26.78% -- -- -- -- -- 26.78%
- ----------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- -- 28.58%
- ----------------------------------------------------------------------------------------------------------------
BT SMALL COMPANY INDEX (3.24)% -- -- -- -- -- (3.24)%
- ----------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% -- -- -- -- -- 1.53%
- ----------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- -- (2.54)%
- ----------------------------------------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX 18.95% -- -- -- -- -- 18.95%
- ----------------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- -- 12.17%
- ----------------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- -- 20.00%
- ----------------------------------------------------------------------------------------------------------------
JPM CORE BOND 7.99% -- -- -- -- -- 7.99%
- ----------------------------------------------------------------------------------------------------------------
Lipper Intermediate Investment
Grade Debt 7.23% -- -- -- -- -- 7.23%
- ----------------------------------------------------------------------------------------------------------------
Benchmark 8.72% -- -- -- -- -- 8.72%
- ----------------------------------------------------------------------------------------------------------------
LAZARD LARGE CAP VALUE 18.92% -- -- -- -- -- 18.92%
- ----------------------------------------------------------------------------------------------------------------
Lipper Capital Appreciation 24.16% -- -- -- -- -- 24.16%
- ----------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- -- 28.58%
- ----------------------------------------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE (7.95)% -- -- -- -- -- (7.95)%
- ----------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% -- -- -- -- -- 1.53%
- ----------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- -- (2.54)%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
62 INVESTMENT PERFORMANCE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 3 (CONTINUED)
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
SINCE
PORTFOLIO
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION*
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MFS RESEARCH 22.93% -- -- -- -- -- 23.25%
- -------------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% -- -- -- -- -- 28.73%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- -- 31.63%
- -------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES 33.24% -- -- -- -- -- 33.57%
- -------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap 15.97% -- -- -- -- -- 22.72%
- -------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- -- 14.53%
- -------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY 10.52% -- -- -- -- -- 16.22%
- -------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- -- 21.32%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- -- 31.63%
- -------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY 5.81% -- -- -- -- -- 5.92%
- -------------------------------------------------------------------------------------------------------------------
Lipper Global Flexible Portfolio 9.34% -- -- -- -- -- 11.15%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 19.55% -- -- -- -- -- 20.00%
- -------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS
EQUITY (27.71)% -- -- -- -- -- (33.35)%
- -------------------------------------------------------------------------------------------------------------------
Lipper Emerging Markets (30.50)% -- -- -- -- -- (36.28)%
- -------------------------------------------------------------------------------------------------------------------
Benchmark (25.34)% -- -- -- -- -- (28.92)%
- -------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE 11.75% -- -- -- -- -- 16.50%
- -------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- -- 21.32%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- -- 31.63%
- -------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM INVESTORS GROWTH 34.99% -- -- -- -- -- 36.08%
- -------------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% -- -- -- -- -- 28.73%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- -- 31.63%
- -------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM INTERNATIONAL EQUITY 18.34% -- -- -- -- -- 16.41%
- -------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- -- 9.06%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- -- 13.43%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT PERFORMANCE 63
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 4
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
SINCE
PORTFOLIO
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION*
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 4.08% 12.81% 21.14% 52.62% 110.84% -- 167.86%
- ------------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 15.34% 26.25% 66.09% -- -- 214.68%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 16.35% 28.27% 69.88% -- -- 214.45%
- ------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (6.28)% 33.18% 51.57% -- -- -- 186.45%
- ------------------------------------------------------------------------------------------------------------------
Lipper High Current Yield (0.44)% 26.80% 43.00% 145.62% -- -- 182.21%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 29.90% 53.96% 186.01% -- -- 239.69%
- ------------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 27.83% 100.38% 153.56% 389.49% 830.91% 2,284.72% 2,373.10%
- ------------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% 84.52% 138.97% 388.00% -- 2,185.68% 3,490.04%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 110.85% 193.91% 479.62% -- 2,530.43% 2,919.92%
- ------------------------------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK (0.90)% 30.98% 61.91% 399.92% -- -- 608.45%
- ------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth 12.16% 58.64% 102.73% 334.88% -- -- 448.32%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 8.28% 63.35% 106.12% 360.30% -- -- 494.67%
- ------------------------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH (5.35)% -- -- -- -- -- 18.99%
- ------------------------------------------------------------------------------------------------------------------
Lipper Small Company Growth (0.33)% -- -- -- -- -- 28.98%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 1.23% -- -- -- -- -- 29.23%
- ------------------------------------------------------------------------------------------------------------------
BT EQUITY 500 INDEX 23.94% -- -- -- -- -- 23.94%
- ------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 26.78% -- -- -- -- -- 26.78%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- -- 28.58%
- ------------------------------------------------------------------------------------------------------------------
BT SMALL COMPANY INDEX (3.24)% -- -- -- -- -- (3.24)%
- ------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% -- -- -- -- -- 1.49%
- ------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- -- (2.54)%
- ------------------------------------------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX 18.95% -- -- -- -- -- 18.95%
- ------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- -- 12.23%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- -- 20.00%
- ------------------------------------------------------------------------------------------------------------------
JPM CORE BOND 7.99% -- -- -- -- -- 7.99%
- ------------------------------------------------------------------------------------------------------------------
Lipper Intermediate Investment
Grade Debt 7.23% -- -- -- -- -- 7.23%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 8.72% -- -- -- -- -- 8.72%
- ------------------------------------------------------------------------------------------------------------------
LAZARD LARGE CAP VALUE 18.92% -- -- -- -- -- 18.92%
- ------------------------------------------------------------------------------------------------------------------
Lipper Capital Appreciation 24.16% -- -- -- -- -- 24.09%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- -- 28.58%
- ------------------------------------------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE (7.95)% -- -- -- -- -- (7.95)%
- ------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% -- -- -- -- -- 1.53%
- ------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- -- (2.54)%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
64 INVESTMENT PERFORMANCE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 4 (CONTINUED)
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
SINCE
PORTFOLIO
1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS 20 YEARS INCEPTION*
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MFS RESEARCH 22.93% -- -- -- -- -- 41.74%
- ------------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% -- -- -- -- -- 52.86%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- -- 57.60%
- ------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES 33.24% -- -- -- -- -- 62.08%
- ------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap 15.97% -- -- -- -- -- 42.16%
- ------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- -- 25.40%
- ------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY 10.52% -- -- -- -- -- 28.51%
- ------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- -- 15.59%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- -- 57.60%
- ------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY 5.81% -- -- -- -- -- 10.08%
- ------------------------------------------------------------------------------------------------------------------
Lipper Global Flexible Portfolio 9.34% -- -- -- -- -- 19.41%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 19.55% -- -- -- -- -- 33.33%
- ------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS
EQUITY (27.71)% -- -- -- -- -- (42.51)%
- ------------------------------------------------------------------------------------------------------------------
Lipper Emerging Markets (30.50)% -- -- -- -- -- (45.67)%
- ------------------------------------------------------------------------------------------------------------------
Benchmark (25.34)% -- -- -- -- -- (36.71)%
- ------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE 11.75% -- -- -- -- -- 29.03%
- ------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- -- 38.49%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- -- 57.60%
- ------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM INVESTORS GROWTH 34.99% -- -- -- -- -- 67.21%
- ------------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% -- -- -- -- -- 52.86%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- -- 57.60%
- ------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM INTERNATIONAL EQUITY 18.34% -- -- -- -- -- 28.85%
- ------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- -- 15.88%
- ------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- -- 23.42%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT PERFORMANCE 65
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 5
YEAR-BY-YEAR RATES OF RETURN
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 7.88% 6.94% 4.92% 2.32% 1.73% 2.77% 4.48% 4.06% 4.16% 4.08%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD 3.88% (2.31)% 22.98% 10.96% 21.68% (3.95)% 18.49% 21.40% 17.05% (6.26)%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 24.10% (9.22)% 36.24% 1.98% 23.33% (3.31)% 30.87% 22.78% 27.67% 27.83%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 41.79% 6.87% 84.64% (4.32)% 15.35% (4.96)% 30.07% 20.73% 9.48% (0.90)%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH -- -- -- -- -- -- -- -- 25.71% (5.35)%
- ------------------------------------------------------------------------------------------------------------------------------------
BT EQUITY 500 INDEX -- -- -- -- -- -- -- -- -- 23.94%
- ------------------------------------------------------------------------------------------------------------------------------------
BT SMALL COMPANY INDEX -- -- -- -- -- -- -- -- -- (3.24)%
- ------------------------------------------------------------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX -- -- -- -- -- -- -- -- -- 18.95%
- ------------------------------------------------------------------------------------------------------------------------------------
JPM CORE BOND -- -- -- -- -- -- -- -- -- 7.99%
- ------------------------------------------------------------------------------------------------------------------------------------
LAZARD LARGE CAP VALUE -- -- -- -- -- -- -- -- -- 18.92%
- ------------------------------------------------------------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE -- -- -- -- -- -- -- -- -- (7.95)%
- ------------------------------------------------------------------------------------------------------------------------------------
MFS RESEARCH -- -- -- -- -- -- -- -- 15.30% 22.93%
- ------------------------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES -- -- -- -- -- -- -- -- 21.64% 33.24%
- ------------------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY -- -- -- -- -- -- -- -- 16.28% 10.52%
- ------------------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY -- -- -- -- -- -- -- -- 4.04% 5.81%
- ------------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING
MARKETS EQUITY -- -- -- -- -- -- -- -- (20.47) 27.71)%
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE -- -- -- -- -- -- -- -- 15.46% 11.75%
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM INVESTORS GROWTH -- -- -- -- -- -- -- -- 23.86% 34.99%
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM INTERNATIONAL EQUITY -- -- -- -- -- -- -- -- 8.88% 18.34%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
+ Returns for these Portfolios represent less than 12 months of performance.
The returns are as of each Portfolio inception date as shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
66 INVESTMENT PERFORMANCE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMUNICATING PERFORMANCE DATA
In reports or other communications to contract owners or in advertising
material, we may describe general economic and market conditions affecting our
variable investment options and the Portfolios and may compare the performance
or ranking of those options and the Portfolios with:
o those of other insurance company separate accounts or mutual funds included in
the rankings prepared by Lipper Analytical Services, Inc., Morningstar, Inc.,
VARDS, or similar investment services that monitor the performance of
insurance company separate accounts or mutual funds;
o other appropriate indices of investment securities and averages for peer
universes of mutual funds; or
o data developed by us derived from such indices or averages.
We also may furnish to present or prospective contract owners advertisements or
other communications that include evaluations of a variable investment option or
Portfolio by nationally recognized financial publications. Examples of such
publications are:
- --------------------------------------------------------------------------------
Barron's Money Management Letter
- --------------------------------------------------------------------------------
Morningstar's Variable Annuity Sourcebook Investment Dealers Digest
- --------------------------------------------------------------------------------
Business Week National Underwriter
- --------------------------------------------------------------------------------
Forbes Pension & Investments
- --------------------------------------------------------------------------------
Fortune USA Today
- --------------------------------------------------------------------------------
Institutional Investor Investor's Business Daily
- --------------------------------------------------------------------------------
Money The New York Times
- --------------------------------------------------------------------------------
Kiplinger's Personal Finance The Wall Street Journal
- --------------------------------------------------------------------------------
Financial Planning The Los Angeles Times
- --------------------------------------------------------------------------------
Investment Adviser The Chicago Tribune
- --------------------------------------------------------------------------------
Investment Management Weekly
- --------------------------------------------------------------------------------
Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer
universes of funds with similar investment objectives in its Lipper Survey.
Morningstar, Inc. compiles similar data in the Morningstar Variable Annuity/Life
Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 mutual
funds underlying variable annuity and life insurance products. It divides these
actively managed Portfolios into 25 categories by Portfolio objectives. The
Lipper Survey contains two different universes, which reflect different types of
fees in performance data:
o The "separate account" universe reports performance data net of investment
management fees, direct operating expenses and asset-based charges applicable
under variable life and annuity contracts, and
o The "mutual fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects only
charges that relate to the underlying mutual fund.
The Morningstar Variable Annuity/Life Report consists of nearly 700 variable
life and annuity funds, all of which report their data net of investment
management fees, direct operating expenses and separate account level charges.
VARDS is a monthly reporting service that monitors approximately 2,500 variable
life and variable annuity funds on performance and account information.
YIELD INFORMATION
Current yield for the Alliance Money Market option will be based on
net changes in a hypothetical investment over a given seven-day period,
exclusive of capital changes, and then "annualized" (assuming that the same
seven-day result would occur each week for 52 weeks). Current yield for the
Alliance High Yield option will be based on net changes in a hypothetical
investment over a given 30-day period, exclusive of capital changes, and then
"annualized" (assuming that the same 30-day result would occur each month for 12
months).
"Effective yield" is calculated in a similar manner, but when annualized, any
income earned by the investment is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield" because any earnings are
compounded weekly for the Alliance Money Market option. The yields and effective
yields assume the deduction of all contract charges and expenses other than the
withdrawal
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT PERFORMANCE 67
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
charge, the annual administrative charge, and any charge for taxes such as
premium tax. See "Yield Information for the Alliance Money Market Option and
Alliance High Yield Option" in the SAI.
<PAGE>
- --------------------------------------------------------------------------------
68 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
- --------------------------------------------------------------------------------
10
Incorporation of certain documents by reference
- --------------------------------------------------------------------------------
Equitable Life's annual report on Form 10-K for the year ended December 31,
1998, current report on Form 8-K dated April 9, 1999, and quarterly report on
Form 10-Q for the quarter ended March 31, 1999, are considered to be a part of
this prospectus because they are incorporated by reference.
After the date of this prospectus and before we terminate the offering of
the securities under this prospectus, 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 our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q, electronically according to EDGAR
under CIK No. 0000727920. The SEC maintains a Web site that contains reports,
proxy and information statements, and other information regarding registrants
that file electronically with the SEC. The address of the site is
http://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. This does not include exhibits not specifically incorporated by
reference into the text of such documents. Requests for documents should be
directed to The Equitable Life Assurance Society of the United States, 1290
Avenue of the Americas, New York, New York 10104. Attention: Corporate Secretary
(telephone: (212) 554-1234).
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX: MARKET VALUE ADJUSTMENT EXAMPLE A-1
- --------------------------------------------------------------------------------
Appendix: Market value adjustment example
- --------------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined
and how it would be applied to a withdrawal, assuming that $100,000 was
allocated on February 15, 2000 to a fixed maturity option with a maturity date
of February 15, 2009 (nine years later) at a rate to maturity of 7.00%,
resulting in a maturity value at the maturity date of $183,846. We further
assume that a withdrawal of $50,000 is made four years later on February 15,
2004.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
ASSUMED RATE TO TO MATURITY ON FEBRUARY 15, 2004
--------------------------------------------------
5.00% 9.00%
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
AS OF FEBRUARY 15, 2004 (BEFORE WITHDRAWAL)
- ---------------------------------------------------------------------------------------------------------
(1)Market adjusted amount $144,048 $119,487
- ---------------------------------------------------------------------------------------------------------
(2)Fixed maturity amount $131,080 $131,080
- ---------------------------------------------------------------------------------------------------------
(3)Market value adjustment:
(1) -(2) $ 12,968 $(11,593)
- ---------------------------------------------------------------------------------------------------------
ON FEBRUARY 15, 2004 (AFTER WITHDRAWAL)
- ---------------------------------------------------------------------------------------------------------
(4)Portion of market value adjustment associated with withdrawal:
(3) x [$50,000/(1)] $ 4,501 $ (4,851)
- ---------------------------------------------------------------------------------------------------------
(5)Reduction in fixed maturity amount:
[$50,000 -(4)] $ 45,499 $ 54,851
- ---------------------------------------------------------------------------------------------------------
(6)Fixed maturity amount: (2) -(5) $ 85,581 $ 76,229
- ---------------------------------------------------------------------------------------------------------
(7)Maturity value $120,032 $106,915
- ---------------------------------------------------------------------------------------------------------
(8)Market adjusted amount of (7) $ 94,048 $ 69,487
- ---------------------------------------------------------------------------------------------------------
</TABLE>
You should note that under this example if a withdrawal is made when rates
have increased from 7.00% to 9.00% (right column), a portion of a negative
market value adjustment is realized. On the other hand, if a withdrawal is made
when rates have decreased from 7.00% to 5.00% (left column), a portion of a
positive market value adjustment is realized.
<PAGE>
- --------------------------------------------------------------------------------
Statement of additional information
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
Unit Values 2
Annuity Unit Values 2
Custodian and Independent Accountants 3
Yield Information for the Alliance Money Market Option and Alliance
High Yield Option 3
Long-Term Market Trends 5
Key Factors in Retirement Planning 7
Financial Statements 11
HOW TO OBTAIN AN EQUITABLE ACCUMULATOR EXPRESS STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 49
Send this request form to:
Equitable Accumulator Express
P.O. Box 1547
Secaucus, NJ 07096-1547
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Please send me an Equitable Accumulator Express SAI for Separate Account
No. 49 dated , 1999.
-----------------------------------------------------------------------------
Name:
-----------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------------
City State Zip
(EDIEXPSAI 8/99)
<PAGE>
EQUITABLE ACCUMULATOR EXPRESS(SM) THE EQUITABLE LIFE ASSURANCE SOCIETY
Combination Variable and Fixed Deferred OF THE UNITED STATES
Annuity Contracts 1290 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10104
STATEMENT OF ADDITIONAL INFORMATION
DATED _________ 1999
- --------------------------------------------------------------------------------
This statement of additional information ("SAI") is not a prospectus. It should
be read in conjunction with the related Equitable Accumulator Express
prospectus, dated _______, 1999. That prospectus provides detailed information
concerning the contracts and the variable investment options, as well as the
fixed maturity options, that fund the contracts. Each variable investment option
is a subaccount of Equitable Life's Separate Account No. 49. The fixed maturity
options are part of Equitable Life's general account. 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 (Post Office Box 1547, Secaucus, NJ 07096-1547), by calling
1-800-789-7771 toll free, or by contacting your registered representative.
TABLE OF CONTENTS
Unit Values 2
Annuity Unit Values 2
Custodian and Independent Accountants 3
Yield Information for the Alliance Money Market
option and Alliance High Yield option 3
Long-term Market Trends 5
Key Factors in Retirement Planning 7
Financial Statements 11
Copyright 1999 The Equitable Life Assurance Society of the United States.
All rights reserved. Accumulator Express is a service mark of
The Equitable Life Assurance Society of the United States.
(EDIEXPSAI8/99)
<PAGE>
2
- --------------------------------------------------------------------------------
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 Equitable
Accumulator Express.
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/b) - c
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
Hudson River Trust or EQ Advisors Trust.
(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 daily mortality and expense risks charge and administrative charge
relating to the contracts, times the number of calendar days in the valuation
period. These daily charges are at an effective annual rate not to exceed a
total of 0.95%.
ANNUITY UNIT VALUES
The annuity unit value for each variable investment option will be fixed at
$1.00 as of the date of the prospectus for contracts with assumed base rates of
net investment return of both 5% and 3 1/2% a year. For each valuation period
after that date, it is the annuity unit value for the immediately preceding
valuation period multiplied by the adjusted net investment factor under the
contract. For each valuation period, the adjusted net investment factor is equal
to the net investment factor reduced for each day in the valuation period by:
o .00013366 of the net investment factor if the assumed base rate of net
investment return is 5% a year; or
o .00009425 of the net investment factor if the assumed base rate of net
investment return is 3 1/2%.
Because of this adjustment, the annuity unit value rises and falls depending on
whether the actual rate of net investment return (after deduction of charges) is
higher or lower than the assumed base rate.
All contracts have a 5% assumed base rate of net investment return, except in
states where that rate is not permitted. Annuity payments under contracts with
an assumed base rate of 3 1/2% will at first be smaller than those under
contracts with a 5% assumed base rate. Payments under the 3 1/2% contracts,
however, will rise more rapidly when unit values are rising, and payments will
fall more slowly when unit values are falling than those under 5% contracts.
The amounts of variable annuity payments are determined as follows:
Payments normally start on the business day specified on your election form, or
on such other future date you specify. The payments are made on a monthly basis.
The first three payments are of equal amounts. Each of the first three payments
will be based on the amount specified in the Tables of Guaranteed Annuity
Payments in your contract.
The first three payments depend on the assumed base rate of net investment
return and the form of annuity chosen (and any fixed period or period certain).
If the annuity involved is a life contingency, the risk class and the age of the
annuitants will affect payments.
<PAGE>
3
- --------------------------------------------------------------------------------
The amount of the fourth and each later payment will vary according to the
investment performance of the variable investment options. We calculate each
monthly payment by multiplying the number of annuity units credited by the
average annuity unit value for the second calendar month immediately preceding
the due date of the payment. We calculate the number of units by dividing the
first monthly payment by the annuity unit value for the valuation period. This
includes the due date of the first monthly payment. The average annuity unit
value is the average of the annuity unit values for the valuation periods ending
in that month. Variable income annuities may also be available by separate
prospectus through other separate accounts we offer.
ILLUSTRATION OF CHANGES IN ANNUITY UNIT VALUES
To show how we determine variable annuity payments from month to month, assume
that the account value on the date annuity payments are to begin is enough to
fund an annuity with a monthly payment of $363. Also assume that the annuity
unit value for the valuation period that includes the due date of the first
annuity payment is $1.05. The number of annuity units credited under the
contract would be 345.71 (363 divided by 1.05 = 345.71).
If the fourth monthly payment is due in March, and the average annuity unit
value for January was $1.10, the annuity payment for March would be the number
of units (345.71) times the average annuity unit value ($1.10), or $380.28. If
the average annuity unit value was $1 in February, the annuity payment for April
would be 345.71 times $1, or $345.71.
CUSTODIAN AND INDEPENDENT ACCOUNTANTS
Equitable Life is the custodian for the shares of The Hudson River Trust and EQ
Advisors Trust owned by Separate Account No. 49.
The financial statements of Separate Account No. 49 as at December 31, 1998 and
for the periods ended December 31, 1998 and 1997 and the consolidated financial
statements of Equitable Life as at December 31, 1998 and 1997 and for each of
the three years ended December 31, 1998 included in this SAI have been so
included in reliance on the reports of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
YIELD INFORMATION FOR THE ALLIANCE MONEY MARKET OPTION
AND ALLIANCE HIGH YIELD OPTION
ALLIANCE MONEY MARKET OPTION
The Alliance Money Market option calculates yield information for seven-day
periods. The seven-day current yield calculation is based on a hypothetical
contract with one unit at the beginning of the period. To determine the
seven-day rate of return, the net change in the unit value is computed by
subtracting the unit value at the beginning of the period from a unit value,
exclusive of capital changes, at the end of the period.
The net change is then reduced by the average administrative charge factor
(explained below). This reduction is made to recognize the deduction of the
annual administrative charge which is not reflected in the unit value.
semiannual
Unit values reflect all other accrued expenses of the Alliance Money Market
option but do not reflect any withdrawal charges or charges for applicable taxes
such as state or local premium taxes.
The adjusted net change is divided by the unit value at the beginning of the
period to obtain what is called the adjusted base period rate of return. This
seven-day adjusted base period return is then multiplied by 365/7 to produce an
annualized seven-day current yield figure carried to the nearest one-hundredth
of one percent.
The actual dollar amount of the annual administrative charge that is deducted
from the Alliance Money Market option will vary for each contract depending upon
the percentage of the account value allocated to the Alliance Money Market
option. To determine the effect of the annual administrative charge on the
yield, we start with the total dollar amounts of the charges deducted from the
option during the 12-month period ending on the last day of the prior year. The
amount is multiplied by 7/365 to produce an average administrative charge factor
which is used in all weekly yield computations for the ensuing year. The average
administrative charge factor is then divided by the number of Alliance Money
Market units as of the end
<PAGE>
4
- --------------------------------------------------------------------------------
of the prior calendar year, and the resulting quotient is deducted form the net
change in unit value for the seven-day period.
The effective yield is obtained by modifying the current yield to take into
account the compounding nature of the Alliance Money Market option's
investments, as follows: the unannualized adjusted base period return is
compounded by adding one to the adjusted base period return, raising the sum to
a power equal to 365 divided by 7, and subtracting one from the result, i.e.,
effective yield = (base period return + 1 )[Superscript: 365/7] - 1. The
Alliance Money Market option yields will fluctuate daily. Accordingly, yields
for any given period do not necessarily represent future results. In addition,
the value of units of the Alliance Money Market option will fluctuate and not
remain constant.
ALLIANCE HIGH YIELD OPTION
The Alliance High Yield option calculates yield information for 30-day periods.
The 30-day current yield calculation is based on a hypothetical contract with
one unit at the beginning of the period. To determine the 30-day rate of return,
the net change in the unit value is computed by subtracting the unit value at
the beginning of the period from a unit value, exclusive of capital changes, at
the end of the period.
The net change is then reduced by the average administrative charge factor
(explained below). This reduction is made to recognize the deduction of the
annual administrative charge which is not reflected in the unit value.
Unit values reflect all other accrued expenses of the Alliance High Yield option
but do not reflect any withdrawal charges or charges for applicable taxes such
as state or local premium taxes.
The adjusted net change is divided by the unit value at the beginning of the
period to obtain the adjusted base period rate of return. This 30-day adjusted
base period return is then multiplied by 365/30 to produce an annualized 30-day
current yield figure carried to the nearest one-hundredth of one percent.
The actual dollar amount of the annual administrative charge that is deducted
from the Alliance High Yield option will vary for each contract depending upon
the percentage of the account value allocated to the Alliance High Yield option.
To determine the effect of the annual administrative charge on the yield, we
start with the total dollar amounts of the charges deducted from the option
during the 12-month period ending on the last day of the prior year. The amount
is multiplied by 30/365 to produce an average administrative charge factor which
is used in all 30-day yield computations for the ensuing year. The average
administrative charge factor is then divided by the number of Alliance High
Yield units as of the end of the prior calendar year, and the resulting quotient
is deducted from the net change in unit value for the 30-day period.
The yield for the Alliance High Yield option will fluctuate daily. Accordingly,
the yield for any given period does not necessarily represent future results. In
addition, the value of units of the Alliance High Yield option will fluctuate
and not remain constant.
ALLIANCE MONEY MARKET OPTION AND ALLIANCE HIGH YIELD OPTION YIELD INFORMATION
The yields for the Alliance Money Market option and Alliance High Yield option
reflect charges that are not normally reflected in the yields of other
investments. Therefore, they may be lower when compared with yields of other
investments. The yields for the Alliance Money Market option and Alliance High
Yield option should not be compared to the return on fixed rate investments
which guarantee rates of interest for specified periods, such as the fixed
maturity options. Nor should the yields be compared to the yields of money
market options made available to the general public.
Because the Equitable Accumulator Express contracts described in the prospectus
are being offered for the first time in 1999, no yield information is presented.
LONG-TERM MARKET TRENDS
As a tool for understanding how different investment strategies may affect
long-term results, it may be useful to consider the historical returns on
different types of assets. The follow-
<PAGE>
5
- --------------------------------------------------------------------------------
ing charts present historical return trends for various types of securities. The
information presented, while not directly related to the performance of the
variable investment options, helps to provide a perspective on the potential
returns of different asset classes over different periods of time. By combining
this information with knowledge of your own financial needs (for example, the
length of time until you retire, your financial requirements at retirement), you
may be able to better determine how you wish to allocate contributions among the
variable investment options.
Historically, the long-term investment performance of common stocks has
generally been superior to that of long- or short-term debt securities. For
those investors who have many years until retirement, or whose primary focus is
on long-term growth potential and protection against inflation, there may be
advantages to allocating some or all of their account value to those variable
investment options that invest in stocks.
GROWTH OF $1 INVESTED ON JANUARY 1, 1958
(VALUES ARE AS OF LAST BUSINESS DAY)
[THE FOLLOWING DATA WAS REPRESENTED AS A
SHADED AREA GRAPH IN THE PRINTED DOCUMENT:]
Common Stock Inflation
1958 1.00 1.00
1959 1.12 1.01
1960 1.12 1.03
1961 1.43 1.04
1962 1.30 1.05
1963 1.60 1.07
1964 1.86 1.08
1965 2.10 1.10
1966 1.88 1.14
1967 2.34 1.17
1968 2.59 1.23
1969 2.37 1.30
1970 2.47 1.37
1971 2.82 1.42
1972 3.36 1.47
1973 2.87 1.60
1974 2.11 1.79
1975 2.89 1.92
1976 3.58 2.01
1977 3.32 2.15
1978 3.54 2.34
1979 4.19 2.65
1980 5.55 2.98
1981 5.28 3.25
1982 6.41 3.37
1983 7.86 3.50
1984 8.35 3.64
1985 11.03 3.78
1986 13.07 3.82
1987 13.75 3.99
1988 16.07 4.16
1989 21.13 4.36
1990 20.46 4.62
1991 26.74 4.76
1992 28.75 4.90
1993 31.63 5.04
1994 32.04 5.17
1995 44.03 5.30
1996 54.19 5.48
1997 72.27 5.57
1998 92.93 5.67
[LIGHT SHADED AREA = COMMON STOCK]
[DARK SHADED AREA = INFLATION]
[END OF GRAPHICALLY REPRESENTED DATA]
Source: Ibbotson Associates, Inc. See discussion and information preceding and
following chart on next page.
Over shorter periods of time, however, common stocks tend to be subject to more
dramatic changes in value than fixed-income (debt) securities. Investors who are
nearing retirement age, or who have a need to limit short-term risk, may find it
preferable to allocate a smaller percentage of their account value to those
variable investment options that invest in common stocks. The following graph
illustrates the monthly fluctuations in value of $1 based on monthly returns of
the Standard & Poor's 500 during 1990, a year that represents more typical
volatility than 1998.
GROWTH OF $1 INVESTED ON JANUARY 1, 1990
(VALUES ARE AS OF LAST BUSINESS DAY)
[THE FOLLOWING DATA WAS REPRESENTED AS A BLACK AND WHITE LINE GRAPH
IN THE PRINTED DOCUMENT:]
Intermediate-Term
Govt. Bonds Common Stocks
1/1/90 1.00 1.00
Jan. 0.99 0.93
Feb. 0.99 0.94
Mar. 0.99 0.97
Apr. 0.98 0.95
May 1.01 1.04
June 1.02 1.03
July 1.04 1.03
Aug. 1.03 0.93
Sep. 1.04 0.89
Oct. 1.06 0.89
Nov. 1.08 0.94
Dec. 1.10 0.97
[END OF GRAPHICALLY REPRESENTED DATA]
Source: Ibbotson Associates, Inc. See discussion and information preceding and
following chart on next page.
The following chart illustrates average annual rates of return over selected
time periods between December 31, 1926 and December 31, 1998 for different types
of securities: common stocks, long-term government bonds, long-term corporate
bonds, intermediate-term government bonds and U.S. Treasury Bills. For
comparison purposes, the Consumer Price Index is shown as a measure of
inflation. The average annual returns shown in the chart reflect capital
appreciation and assume the reinvestment of dividends and interest. Investment
management fees or expenses and charges typically associated with deferred
annuity products are not reflected.
The information presented is merely a summary of past experience for unmanaged
groups of securities and is neither an estimate nor guarantee of future
performance. Any investment in securities, whether equity or debt, involves
<PAGE>
6
- --------------------------------------------------------------------------------
varying degrees of potential risk, in addition to offering varying degrees of
potential reward.
The rates of return illustrated do not represent returns of the variable
investment options. In addition, there is no assurance that the performance of
the variable investment options will correspond to rates of return such as those
illustrated in the chart.
- --------------------------------------------------------------------------------
For a comparative illustration of performance results of the variable investment
options (which reflect the trusts and variable investment options charges), see
"Investment performance" in the prospectus.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
MARKET TRENDS:
ILLUSTRATIVE ANNUAL RATES OF RETURN
- -----------------------------------------------------------------------------------------------------------------------
LONG-TERM LONG-TERM INTERMEDIATE- U.S.
FOR THE FOLLOWING PERIODS COMMON GOVERNMENT CORPORATE TERM GOV'T. TREASURY CONSUMER
ENDING DECEMBER 31, 1998 STOCKS BONDS BONDS BONDS BILLS PRICE INDEX
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Year 28.58% 13.06% 10.76% 10.21% 4.86% 1.80%
- -----------------------------------------------------------------------------------------------------------------------
3 Years 28.27 9.07 8.25 6.84 5.11 2.27
- -----------------------------------------------------------------------------------------------------------------------
5 Years 24.06 9.52 8.74 6.20 4.96 2.41
- -----------------------------------------------------------------------------------------------------------------------
10 Years 19.19 11.66 10.85 8.74 5.29 3.14
- -----------------------------------------------------------------------------------------------------------------------
20 Years 17.75 11.14 10.86 9.85 7.17 4.53
- -----------------------------------------------------------------------------------------------------------------------
30 Years 12.67 9.09 9.14 8.71 6.76 5.24
- -----------------------------------------------------------------------------------------------------------------------
40 Years 12.00 7.20 7.43 7.39 5.94 4.44
- -----------------------------------------------------------------------------------------------------------------------
50 Years 13.56 5.89 6.20 6.21 5.07 3.92
- -----------------------------------------------------------------------------------------------------------------------
60 Years 12.49 5.43 5.62 5.50 4.26 4.19
- -----------------------------------------------------------------------------------------------------------------------
Since 12/31/26 11.21 5.29 5.78 5.32 3.78 3.15
- -----------------------------------------------------------------------------------------------------------------------
Inflation Adjusted Since 1926 7.82 2.08 2.55 2.11 0.62 --
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
SOURCE: Ibbotson, Roger G., and Rex A. Sinquefield, Stocks, Bonds, Bills, and
Inflation (SBBI), 1982, updated in Stocks, Bonds, Bills and Inflation 1998
Yearbook(TM), Ibbotson Associates, Inc., Chicago. All rights reserved.
COMMON STOCKS (S&P 500) --Standard and Poor's Composite Index, an unmanaged
weighted index of the stock performance of 500 industrial, transportation,
utility and financial companies.
LONG-TERM GOVERNMENT BONDS--Measured using a one-bond portfolio constructed each
year containing a bond with approximately a twenty-year maturity and a
reasonably current coupon.
LONG-TERM CORPORATE BONDS--For the period 1969-1998, represented by the Salomon
Brothers Long-Term, High-Grade Corporate Bond Index; for the period 1946-1968,
the Salomon Brothers Index was backdated using Salomon Brothers monthly yield
data and a methodology similar to that used by Salomon Brothers for 1969-1998;
for the period 1927-1945, the Standard and Poor's monthly High-Grade Corporate
Composite yield data were used, assuming a 4 percent coupon and a twenty-year
maturity.
INTERMEDIATE-TERM GOVERNMENT BONDS--Measured by a one-bond portfolio constructed
each year containing a bond with approximately a five-year maturity.
U.S. TREASURY BILLS--Measured by rolling over each month a one-bill portfolio
containing, at the beginning of each month, the bill having the shortest
maturity not less than one month.
INFLATION--Measured by the Consumer Price Index for all Urban Consumers (CPI-U),
not seasonally adjusted.
<PAGE>
7
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- --------------------------------------------------------------------------------
KEY FACTORS IN RETIREMENT PLANNING
INTRODUCTION
The Equitable Accumulator Express is available to help meet the retirement
income and investment needs of individuals. In assessing these retirement needs,
some key factors need to be addressed: (1) the impact of inflation on fixed
retirement incomes; (2) the importance of planning early for retirement; (3) the
benefits of tax deferral; (4) the selection of an appropriate investment
strategy; and (5) the benefit of receiving annuity payments. Each of these
factors is addressed below.
- --------------------------------------------------------------------------------
Unless otherwise noted, all of the following presentations use an assumed annual
rate of return of 7.5% compounded annually. This rate of return is for
illustrative purposes only and is not intended to represent an expected or
guaranteed rate of return for any investment vehicle.
In addition, unless otherwise noted, none of the illustrations reflect any
charges that may be applied under a particular investment vehicle. Such charges
would effectively reduce the actual return under any type of investment.
- --------------------------------------------------------------------------------
All earnings in these presentations are assumed to accumulate tax deferred
unless otherwise noted. Most programs designed for retirement savings offer tax
deferral. Monies are taxed upon withdrawal and a 10% penalty tax may apply to
premature withdrawals. Certain retirement programs prohibit early withdrawals.
See "Tax information" in the prospectus. Where taxes are taken into
consideration in these presentations, a 28% tax rate is assumed.
The source of the data used by us to compile the charts which appear in this
section (other than charts 1, 2, 3, 4 and 7) is Ibbotson Associates, Inc.,
Chicago, Stocks, Bonds, Bills and Inflation [1998] Yearbook(TM). All rights
reserved.
In reports or other communications, or in advertising material, we may make use
of these or other graphic or numerical illustrations that we prepare showing the
impact of inflation, planning early for retirement, tax deferral,
diversification and other concepts important to retirement planning.
INFLATION
Inflation erodes purchasing power. This means that, in an inflationary period,
the dollar is worth less as time passes. Because many people live on a fixed
income during retirement, inflation is of particular concern to them. The charts
that follow illustrate the harmful impact of inflation over an extended period
of time. Between 1968 and 1998, the average annual inflation rate was 5.24%. As
demonstrated in Chart 1, this 5.24% annual rate of inflation would cause the
purchasing power of $35,000 to decrease to only $7,562 after 30 years.
CHART 1
[THE FOLLOWING DATA WAS REPRESENTED AS A
SHADED VERTICAL BAR GRAPH IN THE PRINTED DOCUMENT:]
(Income)
Today 35,000
10 Years 21,002
20 Years 12,602
30 Years 7,562
[END OF GRAPHICALLY REPRESENTED DATA]
In Chart 2, the impact of inflation is examined from another perspective.
Specifically, the chart illustrates the additional income needed to maintain the
purchasing power of $35,000 over a thirty-year period. Again, the 1968-1998
historical inflation rate of 5.24% is used. In this case, an additional $126,992
would be required to maintain the purchasing power of $35,000 after 30 years.
<PAGE>
8
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CHART 2
[THE FOLLOWING DATA WAS REPRESENTED AS A SHADED
VERTICAL BAR GRAPH IN THE PRINTED DOCUMENT:]
Annual
Income Increase
Needed Needed
Today 35,000 -
10 Years 58,328 23,325
20 Years 97,204 62,204
30 Years 161,992 126,992
[END OF GRAPHICALLY REPRESENTED DATA]
STARTING EARLY
The impact of inflation highlights the need to begin a retirement program early.
The value of starting early is illustrated in the following charts.
As shown in Chart 3, if an individual makes annual contributions of $2,500 to
his or her retirement program beginning at age 30, he or she would accumulate
$414,551 by age 65 under the assumptions described earlier. If that individual
waited until age 50, he or she would only accumulate $70,193 by age 65 under the
same assumptions.
CHART 3
[THE FOLLOWING DATA WAS REPRESENTED AS A SHADED
AREA GRAPH IN THE PRINTED DOCUMENT:]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[BLACK:] Age 50 $0 $0 $0 $0 $0 $15,610 $38,020 $70,193
[WHITE:] Age 40 $0 $0 $0 $15,610 $38,020 $70,193 $116,381 $182,691
[GRAY:] Age 30 $0 $15,610 $38,020 $70,193 $116,381 $182,691 $277,886 $414,551
</TABLE>
In Table 1, the impact of starting early is demonstrated in another format. For
example, if an individual invests $300 monthly, he or she would accumulate
$387,193 in thirty years under our assumptions. In contrast, if that individual
invested the same $300 per month for 15 years, he or she would accumulate only
$97,804 under our assumptions.
TABLE 1
- -----------------------------------------------------------
MONTHLY
CONTRI- YEAR YEAR YEAR YEAR YEAR
BUTION 10 15 20 25 30
- -----------------------------------------------------------
$ 20 $ 3,532 $ 6,520 $ 10,811 $16,970 $ 25,813
- -----------------------------------------------------------
50 8,829 16,301 27,027 42,425 64,532
- -----------------------------------------------------------
100 17,659 32,601 54,053 84,851 129,064
- -----------------------------------------------------------
200 35,317 65,202 108,107 169,701 258,129
- -----------------------------------------------------------
300 52,976 97,804 162,160 254,552 387,193
- -----------------------------------------------------------
Chart 4 presents an additional way to demonstrate the significant impact of
starting to make contributions to a retirement program earlier rather than
later. It assumes that an individual had a goal to accumulate $250,000 (pre-tax)
by age 65. If he or she starts at age 30, under our assumptions he or
<PAGE>
9
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she could reach the goal by making a monthly pre-tax contribution of $129
(equivalent to $93 after taxes). The total net cost for the 30-year-old in this
hypothetical example would be $39,265. If the individual in this hypothetical
example waited until age 50, he or she would have to make a monthly pre-tax
contribution of $767 (equivalent to $552 after taxes) to attain the goal,
illustrating the importance of starting early.
CHART 4
[THE FOLLOWING DATA WAS REPRESENTED AS A BLACK AND WHITE
VERTICAL BAR GRAPH IN THE PRINTED DOCUMENT:]
GOAL: $250,000 BY AGE 65
Tax Savings
and Tax-deferred
Net Cost Earnings at 7.5%
$93 per month Age 30 $ 39,265 $ 210,735
$212 per month Age 40 63,641 186,359
$552 per month Age 50 99,383 150,617
[END OF GRAPHICALLY REPRESENTED DATA]
TAX DEFERRAL
Contributing to a retirement plan early is part of an effective strategy for
addressing the impact of inflation. Another part of such a strategy is to
carefully select the types of retirement programs in which to invest. In
deciding where to invest retirement contributions, there are three basic types
of programs.
The first type offers the most tax benefits, and therefore is potentially the
most beneficial for accumulating funds for retirement. Contributions are made
with pre-tax dollars or are tax deductible and earnings grow income tax
deferred. An example of this type of program is the deductible traditional IRA.
The second type of program also provides for tax-deferred earnings growth;
however, contributions are made with after-tax dollars. Examples of this type of
program are nondeductible traditional IRAs and non-qualified annuities.
The third approach to retirement savings is fully taxable. Contributions are
made with after-tax dollars and earnings are taxed each year. Examples of this
type of program include certificates of deposit, savings accounts, and taxable
stock, bond or mutual fund investments.
Consider an example. For the type of retirement program that offers both pre-tax
contributions and tax deferral, assume that a $2,000 annual pre-tax contribution
is made for thirty years. In this example, the retirement funds would be
$185,711 after thirty years (assuming a 7.5% rate of return, no withdrawals, and
assuming the deduction of the 0.95% Separate Account daily asset charge -- but
no withdrawal charge or other charges under the contract, or trust charges to
Portfolios), and such funds would be $222,309 without the effect of any charges.
Assuming a lump sum withdrawal was made in year thirty and a 28% tax bracket,
these amounts would be $133,712 and $160,062, respectively.
For the type of program that offers only tax deferral, assume an after-tax
annual contribution of $1,440 for thirty years and the same rate of return. The
after-tax contribution is derived by taxing the $2,000 pre-tax contribution,
again assuming a 28% tax bracket. In this example, the retirement funds would be
$133,712 after thirty years assuming the deduction of charges and no
withdrawals, and $160,062 without the effect of charges. Assuming a lump sum
withdrawal in year thirty, the total after-tax amount would be $108,369 with
charges deducted and $127,341 without charges as described above.
For the fully taxable investment, assume an after-tax contribution of $1,440 for
thirty years. Earnings are taxed annually. After thirty years, the amount of
this fully taxable investment is $108,046.
Keep in mind that taxable investments have fees and charges, too (investment
advisory fees, administrative charges, 12b-1 fees, sales loads, brokerage
commissions, etc.). We have not attempted to apply these fees and charges to the
fully taxable
<PAGE>
10
- --------------------------------------------------------------------------------
amounts since this is intended merely as an example of tax deferral.
Again, it must be emphasized that the assumed rate of return of 7.5% compounded
annually used in these examples is for illustrative purposes only. It is not
intended to represent a guaranteed or expected rate of return on any type of
investment. Moreover, early withdrawals of tax-deferred invest-ments are
generally subject to a 10% penalty tax.
INVESTMENT FOR RETIREMENT
Selecting an appropriate retirement program is clearly an important part of an
effective retirement planning strategy. Carefully choosing among available
investment is another essential component.
During the 1968-1998 period, common stock average annual returns outperformed
the average annual returns of fixed investments such as long-term government
bonds and Treasury Bills ("T-Bills"). See "Notes" below. Common stocks earned an
average annual return of 12.67% over this period, in contrast to 9.09% and 6.76%
for the other two investment categories. Significantly, common stock returns
also outpaced inflation, which grew at 5.24% over this period.
The Equitable Accumulator Express can be an effective program for diversifying
ongoing investments between various asset categories. In addition, the Equitable
Accumulator Express offers special features which help address the risk
associated with timing the equity markets, such as dollar cost averaging. By
transferring the same dollar amount each month from the Alliance Money Market
option to other variable investment options, dollar cost averaging attempts to
shield your investment from short-term price fluctuations. This, however, does
not assure a profit or protect against a loss in declining markets.
THE BENEFIT OF ANNUITIZATION
An individual may shift the risk of outliving his or her principal by electing a
lifetime income annuity. See "Choosing your annuity payout options" under
"Accessing your money" in the prospectus. Chart 5 below shows the monthly income
that can be generated under various forms of life annuities, as compared to
receiving level payments of interest only or principal and interest from the
investment. Calculations in the Chart are based on the following assumption: a
$100,000 contribution was made at one of the ages shown, annuity payments begin
immediately, and a 5% annuitization interest rate is used. For purposes of this
example, principal and interest are paid out on a level basis over 15 years. In
the case of the interest-only scenario, the principal is always available and
may be left to other individuals at death. Under the principal and interest
scenario, a portion of the principal will be left at death, assuming the
individual dies within the 15-year period. In contrast, under the life annuity
scenarios, there is no residual amount left.
CHART 5
MONTHLY INCOME
($100,000 CONTRIBUTION)
--------------------------------------------------------
PRINCI- JOINT AND SURVIVOR*
PAL AND ------------------------
INTEREST INTEREST 50% 66.67% 100%
ANNUI- ONLY FOR 15 SINGLE TO SUR- TO SUR- TO SUR-
TANT FOR LIFE YEARS LIFE VIVOR VIVOR VIVOR
--------------------------------------------------------
Male 65 $401 $785 $617 $560 $544 $513
Male 70 401 785 685 609 588 549
Male 75 401 785 771 674 646 598
Male 80 401 785 888 760 726 665
Male 85 401 785 1,045 878 834 757
- -------------------
The numbers are based on 5% interest compounded annually and the 1983 Individual
Annuity Mortality Table "a" projected with modified Scale G. Annuity purchase
rates available at annuitization may vary, depending primarily on the
annuitization interest rate, which may not be less than an annual rate of 2.5%.
* The joint and survivor annuity forms are based on male and female annuitants
of the same age.
<PAGE>
11
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FINANCIAL STATEMENTS
The consolidated financial statements of Equitable Life included herein should
be considered only as bearing upon the ability of Equitable Life to meet its
obligations under the contracts.
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants ...................................... FS-2
Financial Statements:
Statements of Assets and Liabilities, December 31, 1998 .............. FS-3
Statements of Operations for the Year Ended December 31, 1998 ........ FS-7
Statements of Changes in Net Assets for the Years Ended December 31,
1998 and 1997 ...................................................... FS-10
Notes to Financial Statements ........................................ FS-15
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants ...................................... F-1
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 1998 and 1997 .............. F-2
Consolidated Statements of Earnings, Years Ended December 31, 1998,
1997 and 1996 ..................................................... F-3
Consolidated Statements of Shareholder's Equity, Years Ended December
31, 1998, 1997 and 1996 ........................................... F-4
Consolidated Statements of Cash Flows, Years Ended December 31, 1998,
1997 and 1996 ..................................................... F-5
Notes to Consolidated Financial Statements ........................... F-6
FS-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and Contractowners of Separate Account No. 49
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of the Alliance Money Market Fund,
Alliance High Yield Fund, Alliance Common Stock Fund, Alliance Aggressive Stock
Fund, Alliance Small Cap Growth Fund, Alliance Global Fund, Alliance Growth
Investors Fund, Alliance Equity Index Fund ("Hudson River Trust funds") and the
BT Equity 500 Index Fund, BT Small Company Index Fund, BT International Equity
Index Fund, EQ/Evergreen Fund, EQ/Evergreen Foundation Fund, JPM Core Bond Fund,
Lazard Large Cap Value Fund, Lazard Small Cap Value Fund, Merrill Lynch Basic
Value Equity Fund, Merrill Lynch World Strategy Fund, MFS Research Fund, MFS
Emerging Growth Companies Fund, MFS Growth With Income Fund, Morgan Stanley
Emerging Markets Equity Fund, EQ/Putnam Growth & Income Value Fund, EQ/Putnam
Investors Growth Fund and EQ/Putnam International Equity Fund ("EQ Advisors
Trust funds"), separate investment funds of The Equitable Life Assurance Society
of the United States ("Equitable Life") Separate Account No. 49 at December 31,
1998 and the results of each of their operations and changes in each of their
net assets for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
Equitable Life's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of shares owned in The Hudson River Trust and in The EQ Advisors
Trust at December 31, 1998 with the transfer agent, provide a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 8, 1999
FS-2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
MONEY ALLIANCE COMMON AGGRESSIVE SMALL CAP ALLIANCE
MARKET HIGH STOCK STOCK GROWTH GLOBAL
FUND YIELD FUND FUND FUND FUND FUND
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of the Trusts --
at market value (Note 1)
Cost: $225,580,555 ...................... $224,505,500
168,101,566 ...................... $143,068,233
406,761,148 ...................... $430,175,252
91,972,683 ...................... $ 85,021,814
78,319,196 ...................... $ 75,812,281
12,469,240 ...................... $ 14,015,688
Receivable for Trust shares sold ........... -- -- -- -- -- --
Receivable for policy-related transactions . 4,332,935 383,395 2,667,305 424,488 367,423 --
------------ ------------ ------------ ------------ ------------ ------------
Total Assets ............................... 228,838,435 143,451,628 432,842,557 85,446,302 76,179,704 14,015,688
------------ ------------ ------------ ------------ ------------ ------------
LIABILITIES
Payable for policy-related transactions .... -- -- -- -- -- 2,491
Payable for Trust shares purchased ......... 4,330,788 398,221 2,690,644 431,647 377,229 225
Amount retained by Equitable Life in
Separate Account No. 49 (Note 5) ........ 56,711 12,131 29,663 19,328 14,543 13,884
------------ ------------ ------------ ------------ ------------ ------------
Total Liabilities .......................... 4,387,499 410,352 2,720,307 450,975 391,772 16,600
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS .. $224,450,936 $143,041,276 $430,122,250 $ 84,995,327 $ 75,787,932 $ 13,999,088
============ ============ ============ ============ ============ ============
</TABLE>
- ----------
See Notes to Financial Statements.
FS-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE BT
GROWTH EQUITY BT SMALL INTERNATIONAL EQ/
INVESTORS INDEX BT EQUITY 500 COMPANY EQUITY INDEX EVERGREEN
FUND FUND INDEX FUND INDEX FUND FUND FUND(a)
----------- ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of the Trusts --
at market value (Note 1)
Cost: $ 17,737,959 ...................... $19,586,712
5,140 ...................... $7,810
148,924,562 ...................... $164,809,643
28,054,963 ...................... $27,509,854
38,187,791 ...................... $ 42,725,945
1,000 ...................... $ 1,000
Receivable for Trust shares sold ........... -- -- -- -- -- --
Receivable for policy-related transactions . -- -- 1,922,002 140,715 204,947 --
----------- ------ ------------ ----------- ------------ ------------
Total Assets ............................... 19,586,712 7,810 166,731,645 27,650,569 42,930,892 1,000
----------- ------ ------------ ----------- ------------ ------------
LIABILITIES
Payable for policy-related transactions .... 3,786 -- -- -- -- --
Payable for Trust shares purchased ......... 225 -- 1,922,001 140,715 204,947 --
Amount retained by Equitable Life in
Separate Account No. 49 (Note 5) ........ 21,482 7,810 451,887 9,795,374 18,049,105 1,000
----------- ------ ------------ ----------- ------------ ------------
Total Liabilities .......................... 25,493 7,810 2,373,888 9,936,089 18,254,052 1,000
----------- ------ ------------ ----------- ------------ ------------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS .. $19,561,219 -- $164,357,757 $17,714,480 $ 24,676,840 --
=========== ====== ============ =========== ============ ============
</TABLE>
- ----------
See Notes to Financial Statements.
(a) December 31, 1998 initial capital was received.
FS-4
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MERRILL
EQ/ MERRILL LYNCH
EVERGREEN LAZARD LAZARD LYNCH BASIC WORLD MFS
FOUNDATION JPM CORE LARGE CAP SMALL CAP VALUE EQUITY STRATEGY RESEARCH
FUND(a) BOND FUND VALUE FUND VALUE FUND FUND FUND FUND
------ ------------ ----------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of the Trusts --
at market value (Note 1)
Cost: $ 1,000 ..................... $1,000
103,171,703 ..................... $103,323,470
68,051,738 ..................... $74,639,434
52,206,882 ..................... $50,968,336
56,285,600 ..................... $56,061,240
7,720,878 ..................... $7,859,687
192,883,837 ..................... $220,852,728
Receivable for Trust shares sold .......... -- -- -- -- -- 79,629 --
Receivable for policy-related transactions. -- 1,017,157 571,212 229,801 255,851 -- 1,280,613
------ ------------ ----------- ----------- ----------- ---------- ------------
Total Assets .............................. 1,000 104,340,627 75,210,646 51,198,137 56,317,091 7,939,316 222,133,341
------ ------------ ----------- ----------- ----------- ---------- ------------
LIABILITIES
Payable for policy-related transactions ... -- -- -- -- -- 79,629 --
Payable for Trust shares purchased ........ -- 1,007,157 571,212 229,801 259,993 -- 1,284,748
Amount retained by Equitable Life in
Separate Account No. 49 (Note 5) ....... 1,000 5,064,229 3,198,959 4,194,228 37,340 17,784 84,931
------ ------------ ----------- ----------- ----------- ---------- ------------
Total Liabilities ......................... 1,000 6,071,386 3,770,171 4,424,029 297,333 97,413 1,369,679
------ ------------ ----------- ----------- ----------- ---------- ------------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS.. -- $ 98,269,241 $71,440,475 $46,774,108 $56,019,758 $7,841,903 $220,763,662
====== ============ =========== =========== =========== ========== ============
</TABLE>
- ----------
See Notes to Financial Statements.
(a) December 31, 1998 initial capital was received.
FS-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
STATEMENTS OF ASSETS AND LIABILITIES (CONCLUDED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MFS MORGAN
EMERGING MFS STANLEY EQ/PUTNAM
GROWTH GROWTH EMERGING GROWTH & EQ/PUTNAM EQ/PUTNAM
COMPANIES WITH INCOME MARKETS INCOME VALUE INVESTORS INTERNATIONAL
FUND FUND(a) EQUITY FUND FUND GROWTH FUND EQUITY FUND
------------ ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of the Trusts --
at market value (Note 1)
Cost: $125,337,823 .................... $152,938,200
1,000 .................... $1,000
11,094,471 .................... $ 11,598,378
306,939,965 .................... $327,783,967
144,081,047 .................... $174,979,286
130,785,497 .................... $143,712,431
Receivable for Trust shares sold ......... -- -- -- -- -- --
Receivable for policy-related
transactions .......................... 462,302 -- 93,637 1,246,390 1,644,116 419,401
------------ ------ ------------ ------------ ------------ ------------
Total Assets ............................. 153,400,502 1,000 11,692,015 329,030,357 176,623,402 144,131,832
------------ ------ ------------ ------------ ------------ ------------
LIABILITIES
Payable for policy-related transactions .. -- -- -- -- -- --
Payable for Trust shares purchased ....... 466,138 -- 92,621 1,250,224 1,648,214 453,401
Amount retained by Equitable Life in
Separate Account No. 49 (Note 5) ...... 99,138 1,000 26,825 145,459 335,744 108,935
------------ ------ ------------ ------------ ------------ ------------
Total Liabilities ........................ 565,276 1,000 119,446 1,395,683 1,983,958 562,336
------------ ------ ------------ ------------ ------------ ------------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS. $152,835,226 -- $ 11,572,569 $327,634,674 $174,639,444 $143,569,496
============ ====== ============ ============ ============ ============
</TABLE>
- ----------
See Notes to Financial Statements.
(a) December 31, 1998 initial capital was received.
FS-6
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE
MONEY ALLIANCE COMMON AGGRESSIVE
MARKET HIGH STOCK STOCK
FUND YIELD FUND FUND FUND
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trusts ..................................... $ 6,709,792 $ 11,775,522 $ 952,116 $ 275,359
Expenses (Note 3):
Asset-based charges ........................................... 1,118,065 1,381,303 3,268,314 855,772
----------- ------------ ----------- -----------
NET INVESTMENT INCOME (LOSS) ........................................ 5,591,727 10,394,219 (2,316,198) (580,413)
----------- ------------ ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2):
Realized gain (loss) on investments .............................. 303,090 (258,448) 277,445 (105,214)
Realized gain distribution from the Trusts ....................... 5,637 2,718,464 49,605,206 3,824,065
----------- ------------ ----------- -----------
NET REALIZED GAIN (LOSS) ............................................ 308,727 2,460,016 49,882,651 3,718,851
----------- ------------ ----------- -----------
Unrealized appreciation (depreciation) on investments:
Beginning of period ........................................... (404,121) (1,398,277) 4,116,666 (2,440,983)
End of period ................................................. (1,075,056) (25,033,332) 23,414,104 (6,950,869)
----------- ------------ ----------- -----------
Change in unrealized appreciation (depreciation) during
the period .................................................... (670,935) (23,635,055) 19,297,438 (4,509,886)
----------- ------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............. (362,208) (21,175,039) 69,180,089 (791,035)
----------- ------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..... $ 5,229,519 $(10,780,820) $66,863,891 $(1,371,448)
=========== ============ =========== ===========
<CAPTION>
ALLIANCE ALLIANCE
SMALL ALLIANCE GROWTH
CAP GLOBAL INVESTORS
GROWTH FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trusts ..................................... $ -- $ 136,475 $ 338,347
Expenses (Note 3):
Asset-based charges ........................................... 717,685 160,655 224,047
----------- ---------- ----------
NET INVESTMENT INCOME (LOSS) ........................................ (717,685) (24,180) 114,300
----------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2):
Realized gain (loss) on investments .............................. 9,425 224,358 342,546
Realized gain distribution from the Trusts ....................... -- 892,450 1,579,446
----------- ---------- ----------
NET REALIZED GAIN (LOSS) ............................................ 9,425 1,116,808 1,921,992
----------- ---------- ----------
Unrealized appreciation (depreciation) on investments:
Beginning of period ........................................... (532,878) 221,064 906,877
End of period ................................................. (2,506,915) 1,546,448 1,848,754
----------- ---------- ----------
Change in unrealized appreciation (depreciation) during
the period .................................................... (1,974,037) 1,325,384 941,877
----------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............. (1,964,612) 2,442,192 2,863,869
----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..... $(2,682,297) $2,418,012 $2,978,169
=========== ========== ==========
</TABLE>
- ----------
See Notes to Financial Statements.
FS-7
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BT SMALL BT INTER-
ALLIANCE COMPANY NATIONAL
EQUITY INDEX BT EQUITY 500 INDEX EQUITY INDEX
FUND INDEX FUND FUND FUND
------------ ----------- --------- ----------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trusts ..................................... $ 63 $ 768,510 $ 188,913 $ 536,259
Expenses (Note 3):
Asset-based charges ........................................... -- 738,411 86,164 122,054
------ ----------- --------- ----------
NET INVESTMENT INCOME (LOSS) ........................................ 63 30,099 102,749 414,205
------ ----------- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2):
Realized gain (loss) on investments .............................. -- 579,907 (196,585) (487,255)
Realized gain distribution from the Trusts ....................... 2 -- 359,171 --
------ ----------- --------- ----------
NET REALIZED GAIN (LOSS) ............................................ 2 579,907 162,586 (487,255)
------ ----------- --------- ----------
Unrealized appreciation (depreciation) on investments:
Beginning of period ........................................... 1,039 -- -- --
End of period ................................................. 2,670 15,885,081 (545,108) 4,538,154
------ ----------- --------- ----------
Change in unrealized appreciation (depreciation) during
the period .................................................... 1,631 15,885,081 (545,108) 4,538,154
------ ----------- --------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............. 1,633 16,464,988 (382,522) 4,050,899
------ ----------- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..... $1,696 $16,495,087 $(279,773) $4,465,104
====== =========== ========= ==========
<CAPTION>
LAZARD LAZARD
JPM CORE LARGE CAP SMALL CAP
BOND VALUE VALUE
FUND FUND FUND
----------- ----------- -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trusts ..................................... $ 1,942,258 $ 355,224 $ 135,255
Expenses (Note 3):
Asset-based charges ........................................... 428,389 332,634 248,380
----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) ........................................ 1,513,869 22,590 (113,125)
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2):
Realized gain (loss) on investments .............................. (6,592) (156,900) (707,142)
Realized gain distribution from the Trusts ....................... 1,048,914 -- --
----------- ----------- -----------
NET REALIZED GAIN (LOSS) ............................................ 1,042,322 (156,900) (707,142)
----------- ----------- -----------
Unrealized appreciation (depreciation) on investments:
Beginning of period ........................................... -- -- --
End of period ................................................. 151,767 6,587,696 (1,238,546)
----------- ----------- -----------
Change in unrealized appreciation (depreciation) during
the period .................................................... 151,767 6,587,696 (1,238,546)
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............. 1,194,089 6,430,796 (1,945,688)
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..... $ 2,707,958 $ 6,453,386 $(2,058,813)
=========== =========== ===========
</TABLE>
- ----------
See Notes to Financial Statements.
FS-8
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
STATEMENTS OF OPERATIONS (CONCLUDED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MERRILL MERRILL MFS
LYNCH LYNCH EMERGING
BASIC WORLD MFS GROWTH
VALUE EQUITY STRATEGY RESEARCH COMPANIES
FUND FUND FUND FUND
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trusts ..................................... $ 523,399 $ 56,946 $ 553,891 $ 2,768
Expenses (Note 3):
Asset-based charges ........................................... 433,649 73,191 1,646,014 1,102,263
---------- --------- ----------- -----------
NET INVESTMENT INCOME (LOSS) ........................................ 89,750 (16,245) (1,092,123) (1,099,495)
---------- --------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2):
Realized gain (loss) on investments .............................. (125,370) (47,109) 28,858 305,790
Realized gain distribution from the Trusts ....................... 1,814,918 -- -- --
---------- --------- ----------- -----------
NET REALIZED GAIN (LOSS) ............................................ 1,689,548 (47,109) 28,858 305,790
---------- --------- ----------- -----------
Unrealized appreciation (depreciation) on investments:
Beginning of period ........................................... (304,932) (116,763) 6,734 (858,314)
End of period ................................................. (224,361) 138,809 27,968,891 27,600,377
---------- --------- ----------- -----------
Change in unrealized appreciation (depreciation) during
the period .................................................... 80,571 255,572 27,962,157 28,458,691
---------- --------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............. 1,770,119 208,463 27,991,015 28,764,481
---------- --------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..... $1,859,869 $ 192,218 $26,898,892 $27,664,986
========== ========= =========== ===========
<CAPTION>
MORGAN
STANLEY EQ/PUTNAM EQ/
EMERGING GROWTH & EQ/PUTNAM PUTNAM
MARKETS INCOME INVESTORS INTERNATIONAL
EQUITY VALUE GROWTH EQUITY
FUND FUND FUND FUND
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trusts ..................................... $ 38,906 $ 2,771,619 $ 111,391 $ 42,947
Expenses (Note 3):
Asset-based charges ........................................... 74,659 2,560,202 1,074,066 1,173,602
----------- ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) ........................................ (35,753) 211,417 (962,675) (1,130,655)
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2):
Realized gain (loss) on investments .............................. (2,128,521) 303,706 2,190,787 1,085,258
Realized gain distribution from the Trusts ....................... -- 2,503,287 2 --
----------- ----------- ----------- -----------
NET REALIZED GAIN (LOSS) ............................................ (2,128,521) 2,806,993 2,190,789 1,085,258
----------- ----------- ----------- -----------
Unrealized appreciation (depreciation) on investments:
Beginning of period ........................................... -- 1,251,440 2,286,852 (355,156)
End of period ................................................. 503,907 20,844,002 30,898,239 12,926,933
----------- ----------- ----------- -----------
Change in unrealized appreciation (depreciation) during
the period .................................................... 503,907 19,592,562 28,611,387 13,282,089
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .............. (1,624,614) 22,399,555 30,802,176 14,367,347
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..... $(1,660,367) $22,610,972 $29,839,501 $13,236,692
=========== =========== =========== ===========
</TABLE>
- ----------
See Notes to Financial Statements.
FS-9
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ALLIANCE MONEY ALLIANCE HIGH
MARKET FUND YIELD FUND
---------------------------- ---------------------------
1998 1997 1998 1997
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) .............................. $ 5,591,727 $ 1,422,874 $ 10,394,219 $ 1,935,418
Net realized gain (loss) .................................. 308,727 30,245 2,460,016 1,930,121
Change in unrealized appreciation (depreciation) of
investments ............................................ (670,935) (374,038) (23,635,055) (1,368,712)
------------ ------------ ------------ -----------
Net increase (decrease) in net assets from
operations ............................................. 5,229,519 1,079,081 (10,780,820) 2,496,827
------------ ------------ ------------ -----------
FROM CONTRACTOWNERS TRANSACTIONS:
Contributions and Transfers:
Contributions .......................................... 308,003,451 104,148,675 101,309,392 42,971,395
Transfers from other Funds and Guaranteed Interest
Rate Account (Note 1) ............................... 117,047,248 11,039,704 28,971,750 6,495,053
------------ ------------ ------------ -----------
Total ............................................... 425,050,699 115,188,379 130,281,142 49,466,448
------------ ------------ ------------ -----------
WITHDRAWAL AND TRANSFERS:
Benefits and other policy transactions .................... 7,436,997 670,360 3,457,632 327,004
Withdrawal and administrative charges ..................... 104,554 93,894 173,986 117,245
Transfers to other Funds and Guaranteed Interest
Rate Account (Note 1) .................................. 265,941,784 50,981,067 23,920,120 1,028,028
------------ ------------ ------------ -----------
Total .................................................. 273,483,335 51,745,321 27,551,738 1,472,277
------------ ------------ ------------ -----------
Net increase in net assets from Contractowners
transactions ........................................... 151,567,364 63,443,058 102,729,404 47,994,171
------------ ------------ ------------ -----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY
EQUITABLE LIFE IN SEPARATE ACCOUNT NO. 49 (NOTE 5) ........ 3,172 (2,952) (2,579) (28,875)
------------ ------------ ------------ -----------
INCREASE IN NET ASSETS ATTRIBUTABLE TO
CONTRACTOWNERS ............................................ 156,800,055 64,519,187 91,946,005 50,462,123
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, BEGINNING
OF PERIOD ................................................. 67,650,881 3,131,694 51,095,271 633,148
------------ ------------ ------------ -----------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, END OF
PERIOD .................................................... $224,450,936 $ 67,650,881 $143,041,276 $51,095,271
============ ============ ============ ===========
<CAPTION>
ALLIANCE COMMON ALLIANCE AGGRESSIVE
STOCK FUND STOCK FUND
---------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) .............................. $ (2,316,198) $ (480,576) $ (580,413) $ (277,123)
Net realized gain (loss) .................................. 49,882,651 9,497,894 3,718,851 3,898,956
Change in unrealized appreciation (depreciation) of
investments ............................................ 19,297,438 4,187,658 (4,509,886) (2,412,173)
------------ ------------ ----------- -----------
Net increase (decrease) in net assets from
operations ............................................. 66,863,891 13,204,976 (1,371,448) 1,209,660
------------ ------------ ----------- -----------
FROM CONTRACTOWNERS TRANSACTIONS:
Contributions and Transfers:
Contributions .......................................... 225,245,017 107,212,947 41,444,328 42,250,282
Transfers from other Funds and Guaranteed Interest
Rate Account (Note 1) ............................... 43,818,466 11,247,312 9,547,092 6,703,750
------------ ------------ ----------- -----------
Total ............................................... 269,063,483 118,460,259 50,991,420 48,954,032
------------ ------------ ----------- -----------
WITHDRAWAL AND TRANSFERS:
Benefits and other policy transactions .................... 9,862,986 744,150 1,928,655 534,703
Withdrawal and administrative charges ..................... 438,917 428,790 148,718 190,057
Transfers to other Funds and Guaranteed Interest
Rate Account (Note 1) .................................. 22,819,554 4,156,366 9,292,218 3,266,536
------------ ------------ ----------- -----------
Total .................................................. 33,121,457 5,329,306 11,369,591 3,991,296
------------ ------------ ----------- -----------
Net increase in net assets from Contractowners
transactions ........................................... 235,942,026 113,130,953 39,621,829 44,962,736
------------ ------------ ----------- -----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY
EQUITABLE LIFE IN SEPARATE ACCOUNT NO. 49 (NOTE 5) ........ (207,816) (431) 3,308 8,081
------------ ------------ ----------- -----------
INCREASE IN NET ASSETS ATTRIBUTABLE TO
CONTRACTOWNERS ............................................ 302,598,101 126,335,498 38,253,689 46,180,477
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, BEGINNING
OF PERIOD ................................................. 127,524,149 1,188,651 46,741,638 561,161
------------ ------------ ----------- -----------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, END OF
PERIOD .................................................... $430,122,250 $127,524,149 $84,995,327 $46,741,638
============ ============ =========== ===========
</TABLE>
- ----------
See Notes to Financial Statements.
FS-10
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ALLIANCE SMALL CAP
GROWTH FUND(a) ALLIANCE GLOBAL FUND
----------------------------- ----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) .............................. $ (717,685) $ (103,753) $ (24,180) $ 94,464
Net realized gain (loss) .................................. 9,425 761,781 1,116,808 986,714
Change in unrealized appreciation (depreciation)
of investments ......................................... (1,974,037) (532,878) 1,325,384 224,896
----------- ----------- ----------- -----------
Net increase (decrease) in net assets from operations ..... (2,682,297) 125,150 2,418,012 1,306,074
----------- ----------- ----------- -----------
FROM CONTRACTOWNERS TRANSACTIONS:
Contributions and Transfers:
Contributions .......................................... 43,397,274 30,538,328 416,404 11,035,782
Transfers from other Funds and Guaranteed
Interest Rate Account (Note 1) ...................... 12,800,367 2,845,702 712,308 2,538,990
----------- ----------- ----------- -----------
Total ............................................... 56,197,641 33,384,030 1,128,712 13,574,772
----------- ----------- ----------- -----------
WITHDRAWAL AND TRANSFERS:
Benefits and other policy transactions .................... 1,391,608 77,516 507,389 303,394
Withdrawal and administrative charges ..................... 86,076 30,958 47,663 121,147
Transfers to other Funds and Guaranteed Interest Rate
Account (Note 1) ....................................... 8,974,764 672,314 1,808,151 1,825,805
----------- ----------- ----------- -----------
Total .................................................. 10,452,448 780,788 2,363,203 2,250,346
----------- ----------- ----------- -----------
Net increase in net assets from Contractowners
transactions ........................................... 45,745,193 32,603,242 (1,234,491) 11,324,426
----------- ----------- ----------- -----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT NO.49
(NOTE 5) .................................................. 2,485 (5,841) (24,608) (27,562)
----------- ----------- ----------- -----------
INCREASE IN NET ASSETS ATTRIBUTABLE TO
CONTRACTOWNERS ............................................ 43,065,381 32,722,551 1,158,913 12,602,938
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, BEGINNING
OF PERIOD ................................................. 32,722,551 -- 12,840,175 237,237
----------- ----------- ----------- -----------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS,
END OF PERIOD ............................................. $75,787,932 $32,722,551 $13,999,088 $12,840,175
=========== =========== =========== ===========
<CAPTION>
ALLIANCE GROWTH ALLIANCE EQUITY
INVESTORS FUND INDEX FUND(a)
----------------------------- ---------------------
1998 1997 1998 1997
----------- ----------- ------- -------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) .............................. $ 114,300 $ 192,366 $ 63 $ 52
Net realized gain (loss) .................................. 1,921,992 1,119,576 2 23
Change in unrealized appreciation (depreciation)
of investments ......................................... 941,877 912,616 1,631 1,039
----------- ----------- ------- -------
Net increase (decrease) in net assets from operations ..... 2,978,169 2,224,558 1,696 1,114
----------- ----------- ------- -------
FROM CONTRACTOWNERS TRANSACTIONS:
Contributions and Transfers:
Contributions .......................................... 979,342 14,900,369 -- --
Transfers from other Funds and Guaranteed
Interest Rate Account (Note 1) ...................... 861,920 2,566,982 -- --
----------- ----------- ------- -------
Total ............................................... 1,841,262 17,467,351 -- --
----------- ----------- ------- -------
WITHDRAWAL AND TRANSFERS:
Benefits and other policy transactions .................... 692,359 160,368 -- --
Withdrawal and administrative charges ..................... 62,534 87,200 -- --
Transfers to other Funds and Guaranteed Interest Rate
Account (Note 1) ....................................... 2,475,681 1,833,943 -- --
----------- ----------- ------- -------
Total .................................................. 3,230,574 2,081,511 -- --
----------- ----------- ------- -------
Net increase in net assets from Contractowners
transactions ........................................... (1,389,312) 15,385,840 -- --
----------- ----------- ------- -------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT NO.49
(NOTE 5) .................................................. (27,724) (29,804) (1,696) (1,114)
----------- ----------- ------- -------
INCREASE IN NET ASSETS ATTRIBUTABLE TO
CONTRACTOWNERS ............................................ 1,561,133 17,500,594 -- --
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, BEGINNING
OF PERIOD ................................................. 18,000,086 419,492 -- --
----------- ----------- ------- -------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS,
END OF PERIOD ............................................. $19,561,219 $18,000,086 -- --
=========== =========== ======= =======
</TABLE>
- ----------
(a) Commenced operations on May 1, 1997.
See Notes to Financial Statements.
FS-11
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
BT SMALL BT
COMPANY INTERNATIONAL
BT EQUITY 500 INDEX EQUITY INDEX
INDEX FUND(a) FUND(a) FUND(a)
------------- ------------ -------------
1998 1998 1998
------------- ------------ -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) .................................. $ 30,099 $ 102,749 $ 414,205
Net realized gain (loss) ...................................... 579,907 162,586 (487,255)
Change in unrealized appreciation (depreciation) of
investments ................................................ 15,885,081 (545,108) 4,538,154
------------ ----------- -----------
Net increase (decrease) in net assets from operations ......... 16,495,087 (279,773) 4,465,104
------------ ----------- -----------
FROM CONTRACTOWNERS TRANSACTIONS:
Contributions and Transfers:
Contributions .............................................. 137,742,388 15,585,722 20,850,190
Transfers from other Funds and Guaranteed Interest Rate
Account (Note 1) ........................................ 28,395,723 4,179,014 16,741,163
------------ ----------- -----------
Total ................................................... 166,138,111 19,764,736 37,591,353
------------ ----------- -----------
WITHDRAWAL AND TRANSFERS:
Benefits and other policy transactions ........................ 1,738,442 120,912 219,542
Withdrawal and administrative charges ......................... 14,899 1,784 2,627
Transfers to other Funds and Guaranteed Interest Rate
Account (Note 1) ........................................... 15,478,264 1,873,434 14,133,716
------------ ----------- -----------
Total ...................................................... 17,231,605 1,996,130 14,355,885
------------ ----------- -----------
Net increase in net assets from Contractowners transactions ... 148,906,506 17,768,606 23,235,468
------------ ----------- -----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT NO. 49 (NOTE 5) ........................... (1,043,836) 225,647 (3,023,732)
------------ ----------- -----------
INCREASE IN NET ASSETS ATTRIBUTABLE TO
CONTRACTOWNERS ................................................ 164,357,757 17,714,480 24,676,840
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, BEGINNING OF
PERIOD ....................................................... -- -- --
------------ ----------- -----------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, END OF PERIOD ......... $164,357,757 $17,714,480 $24,676,840
============ =========== ===========
<CAPTION>
LAZARD LAZARD
JPM CORE LARGE CAP SMALL CAP
BOND VALUE VALUE
FUND(a) FUND(a) FUND(a)
------------ ----------- -----------
1998 1998 1998
------------ ----------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) .................................. $ 1,513,869 $ 22,590 $ (113,125)
Net realized gain (loss) ...................................... 1,042,322 (156,900) (707,142)
Change in unrealized appreciation (depreciation) of
investments ................................................ 151,767 6,587,696 (1,238,546)
------------ ----------- -----------
Net increase (decrease) in net assets from operations ......... 2,707,958 6,453,386 (2,058,813)
------------ ----------- -----------
FROM CONTRACTOWNERS TRANSACTIONS:
Contributions and Transfers:
Contributions .............................................. 73,102,741 60,150,648 44,673,767
Transfers from other Funds and Guaranteed Interest Rate
Account (Note 1) ........................................ 37,948,208 9,859,740 8,257,562
------------ ----------- -----------
Total ................................................... 111,050,949 70,010,388 52,931,329
------------ ----------- -----------
WITHDRAWAL AND TRANSFERS:
Benefits and other policy transactions ........................ 1,038,633 586,925 436,736
Withdrawal and administrative charges ......................... 18,447 5,537 5,989
Transfers to other Funds and Guaranteed Interest Rate
Account (Note 1) ........................................... 13,947,945 3,799,798 4,021,584
------------ ----------- -----------
Total ...................................................... 15,005,025 4,392,260 4,464,309
------------ ----------- -----------
Net increase in net assets from Contractowners transactions ... 96,045,924 65,618,128 48,467,020
------------ ----------- -----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT NO. 49 (NOTE 5) ........................... (484,641) (631,039) 365,901
------------ ----------- -----------
INCREASE IN NET ASSETS ATTRIBUTABLE TO
CONTRACTOWNERS ................................................ 98,269,241 71,440,475 46,774,108
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, BEGINNING OF
PERIOD ....................................................... -- -- --
------------ ----------- -----------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, END OF PERIOD ......... $ 98,269,241 $71,440,475 $46,774,108
============ =========== ===========
</TABLE>
- ----------
(a) Commenced operations on January 1, 1998.
See Notes to Financial Statements.
FS-12
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MERRILL LYNCH
BASIC VALUE MERRILL LYNCH
EQUITY WORLD STRATEGY
FUND(a) FUND(a)
-------------------------- ------------------------
1998 1997 1998 1997
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ........................ $ 89,750 $ 41,169 $ (16,245) $ 7,480
Net realized gain (loss) ............................ 1,689,548 62,644 (47,109) 31,803
Change in unrealized appreciation (depreciation)
of investments ................................... 80,571 (304,932) 255,572 (116,763)
----------- ----------- ---------- ----------
Net increase (decrease) in net assets from
operations ....................................... 1,859,869 (201,119) 192,218 (77,480)
----------- ----------- ---------- ----------
FROM CONTRACTOWNERS TRANSACTIONS:
Contributions and Transfers:
Contributions .................................... 38,734,895 13,505,624 4,563,199 3,230,838
Transfers from other Funds and Guaranteed Interest
Rate Account (Note 1) ......................... 4,663,103 416,478 710,326 74,498
----------- ----------- ---------- ----------
Total ......................................... 43,397,998 13,922,102 5,273,525 3,305,336
----------- ----------- ---------- ----------
WITHDRAWAL AND TRANSFERS:
Benefits and other policy transactions .............. 524,761 1,398 157,552 583
Withdrawal and administrative charges ............... 54,926 11,188 10,898 3,955
Transfers to other Funds and Guaranteed Interest
Rate Account (Note 1) ............................ 2,334,323 7,058 627,786 44,263
----------- ----------- ---------- ----------
Total ............................................ 2,914,010 19,644 796,236 48,801
----------- ----------- ---------- ----------
Net increase in net assets from Contractowners
transactions ..................................... 40,483,988 13,902,458 4,477,289 3,256,535
----------- ----------- ---------- ----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY
EQUITABLE LIFE IN SEPARATE ACCOUNT NO. 49 (NOTE 5) .. (25,519) 81 (6,676) 17
----------- ----------- ---------- ----------
INCREASE IN NET ASSETS ATTRIBUTABLE TO
CONTRACTOWNERS ...................................... 42,318,338 13,701,420 4,662,831 3,179,072
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS,
BEGINNING OF PERIOD ................................. 13,701,420 -- 3,179,072 --
----------- ----------- ---------- ----------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS,
END OF PERIOD ...................................... $56,019,758 $13,701,420 $7,841,903 $3,179,072
=========== =========== ========== ==========
<CAPTION>
MORGAN
STANLEY
MFS EMERGING EMERGING
MFS GROWTH MARKETS
RESEARCH COMPANIES EQUITY
FUND(a) FUND(a) FUND(b)
-------------------------- --------------------------- -----------
1998 1997 1998 1997 1998
------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ........................ $ (1,092,123) $ (81,799) $ (1,099,495) $ (69,045) $ (35,753)
Net realized gain (loss) ............................ 28,858 545,158 305,790 1,070,973 (2,128,521)
Change in unrealized appreciation (depreciation)
of investments ................................... 27,962,157 6,734 28,458,691 (858,314) 503,907
------------ ----------- ------------ ----------- -----------
Net increase (decrease) in net assets from
operations ....................................... 26,898,892 470,093 27,664,986 143,614 (1,660,367)
------------ ----------- ------------ ----------- -----------
FROM CONTRACTOWNERS TRANSACTIONS:
Contributions and Transfers:
Contributions .................................... 121,807,223 59,357,999 76,639,008 40,227,730 11,589,726
Transfers from other Funds and Guaranteed Interest
Rate Account (Note 1) ......................... 23,365,292 5,000,723 25,862,262 4,340,105 12,891,618
------------ ----------- ------------ ----------- -----------
Total ......................................... 145,172,515 64,358,722 102,501,270 44,567,835 24,481,344
------------ ----------- ------------ ----------- -----------
WITHDRAWAL AND TRANSFERS:
Benefits and other policy transactions .............. 3,681,079 183,523 2,376,229 341,045 83,958
Withdrawal and administrative charges ............... 208,060 85,087 133,480 44,128 1,595
Transfers to other Funds and Guaranteed Interest
Rate Account (Note 1) ............................ 10,792,798 1,051,389 16,923,642 2,114,159 11,162,025
------------ ----------- ------------ ----------- -----------
Total ............................................ 14,681,937 1,319,999 19,433,351 2,499,332 11,247,578
------------ ----------- ------------ ----------- -----------
Net increase in net assets from Contractowners
transactions ..................................... 130,490,578 63,038,723 83,067,919 42,068,503 13,233,766
------------ ----------- ------------ ----------- -----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY
EQUITABLE LIFE IN SEPARATE ACCOUNT NO. 49 (NOTE 5) .. (131,281) (3,343) (106,304) (3,492) (830)
------------ ----------- ------------ ----------- -----------
INCREASE IN NET ASSETS ATTRIBUTABLE TO
CONTRACTOWNERS ...................................... 157,258,189 63,505,473 110,626,601 42,208,625 11,572,569
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS,
BEGINNING OF PERIOD ................................. 63,505,473 -- 42,208,625 -- --
------------ ----------- ------------ ----------- -----------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS,
END OF PERIOD ...................................... $220,763,662 $63,505,473 $152,835,226 $42,208,625 $11,572,569
============ =========== ============ =========== ===========
</TABLE>
- ----------
(a) Commenced operations on May 1, 1997.
(b) Commenced operations on December 31, 1997.
See Notes to Financial Statements.
FS-13
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQ/PUTNAM
GROWTH & INCOME EQ/PUTNAM
VALUE INVESTORS GROWTH
FUND(a) FUND(a)
---------------------------- -----------------------------
1998 1997 1998 1997
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ........................ $ 211,417 $ 119,673 $ (962,675) $ (36,575)
Net realized gain (loss) ............................ 2,806,993 391,558 2,190,789 364,091
Change in unrealized appreciation (depreciation)
of investments ................................... 19,592,562 1,251,440 28,611,387 2,286,852
------------ ----------- ------------ -----------
Net increase (decrease) in net assets from
operations ....................................... 22,610,972 1,762,671 29,839,501 2,614,368
------------ ----------- ------------ -----------
FROM CONTRACTOWNERS TRANSACTIONS:
Contributions and Transfers:
Contributions .................................... 192,282,349 89,354,305 102,305,888 29,499,045
Transfers from other Funds and Guaranteed Interest
Rate Account (Note 1) ......................... 38,949,363 8,714,901 22,084,671 3,342,187
------------ ----------- ------------ -----------
Total ......................................... 231,231,712 98,069,206 124,390,559 32,841,232
------------ ----------- ------------ -----------
WITHDRAWAL AND TRANSFERS:
Benefits and other policy transactions .............. 6,393,934 -- 2,648,953 151,674
Withdrawal and administrative charges ............... 306,018 684,612 116,410 70,276
Transfers to other Funds and Guaranteed Interest
Rate Account (Note 1) ............................ 17,366,879 1,112,466 9,084,232 573,939
------------ ----------- ------------ -----------
Total ............................................ 24,066,831 1,797,078 11,849,595 795,889
------------ ----------- ------------ -----------
Net increase in net assets from Contractowners
transactions ..................................... 207,164,881 96,272,128 112,540,964 32,045,343
------------ ----------- ------------ -----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY
EQUITABLE LIFE IN SEPARATE ACCOUNT NO. 49 (NOTE 5) .. (181,146) 5,168 (1,164,027) (1,236,705)
------------ ----------- ------------ -----------
INCREASE IN NET ASSETS ATTRIBUTABLE TO
CONTRACTOWNERS ...................................... 229,594,707 98,039,967 141,216,438 33,423,006
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, BEGINNING
OF PERIOD ........................................... 98,039,967 -- 33,423,006 --
------------ ----------- ------------ -----------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, END OF
PERIOD .............................................. $327,634,674 $98,039,967 $174,639,444 $33,423,006
============ =========== ============ ===========
<CAPTION>
EQ/PUTNAM
INTERNATIONAL EQUITY
FUND(a)
-------------------------------
1998 1997
------------ -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ........................ $ (1,130,655) $ (102,449)
Net realized gain (loss) ............................ 1,085,258 259,624
Change in unrealized appreciation (depreciation)
of investments ................................... 13,282,089 (355,156)
------------ -----------
Net increase (decrease) in net assets from
operations ....................................... 13,236,692 (197,981)
------------ -----------
FROM CONTRACTOWNERS TRANSACTIONS:
Contributions and Transfers:
Contributions .................................... 72,938,890 49,901,207
Transfers from other Funds and Guaranteed Interest
Rate Account (Note 1) ......................... 29,843,626 4,211,149
------------ -----------
Total ......................................... 102,782,516 54,112,356
------------ -----------
WITHDRAWAL AND TRANSFERS:
Benefits and other policy transactions .............. 2,642,413 155,422
Withdrawal and administrative charges ............... 169,696 69,966
Transfers to other Funds and Guaranteed Interest
Rate Account (Note 1) ............................ 21,216,559 1,074,411
------------ -----------
Total ............................................ 24,028,668 1,299,799
------------ -----------
Net increase in net assets from Contractowners
transactions ..................................... 78,753,848 52,812,557
------------ -----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY
EQUITABLE LIFE IN SEPARATE ACCOUNT NO. 49 (NOTE 5) .. (560,408) (475,212)
------------ -----------
INCREASE IN NET ASSETS ATTRIBUTABLE TO
CONTRACTOWNERS ...................................... 91,430,132 52,139,364
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, BEGINNING
OF PERIOD ........................................... 52,139,364 --
------------ -----------
NET ASSETS ATTRIBUTABLE TO CONTRACTOWNERS, END OF
PERIOD .............................................. $143,569,496 $52,139,364
============ ===========
</TABLE>
- ----------
(a) Commenced operations on May 1, 1997.
See Notes to Financial Statements.
FS-14
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. General
The Equitable Life Assurance Society of the United States (Equitable Life)
Separate Account No. 49 (the Account) is organized as a unit investment
trust, a type of investment company, and is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940 (the 1940
Act). Alliance Capital Management L.P., an indirect majority-owned
subsidiary of Equitable Life, manages The Hudson River Trust (HRT) and is
the investment adviser for all of the investment funds of HRT. EQ Financial
Consultants, Inc., ("EQFC") and Equitable Distributors Inc. ("EDI") are
indirect, wholly owned subsidiaries of Equitable Life. EQFC manages the EQ
Advisors Trust (EQAT) and has overall responsibility for general management
and administration of EQAT. The Account consists of 25 investment funds
(Funds): the Alliance Money Market Fund, Alliance High Yield Fund, Alliance
Common Stock Fund, Alliance Aggressive Stock Fund, Alliance Small Cap
Growth Fund, Alliance Global Fund, Alliance Growth Investors Fund, Alliance
Equity Index Fund, BT Equity 500 Index Fund, BT Small Company Index Fund,
BT International Equity Index Fund, EQ/Evergreen Fund, EQ/Evergreen
Foundation Fund, JPM Core Bond Fund, Lazard Large Cap Value Fund, Lazard
Small Cap Value Fund, Merrill Lynch Basic Value Equity Fund, Merrill Lynch
World Strategy Fund, MFS Research, MFS Emerging Growth Companies, MFS
Growth with Income Fund, Morgan Stanley Emerging Markets Equity Fund, EQ
Putnam Growth & Income Value Fund, EQ/Putnam Investors Growth Fund and
EQ/Putnam International Equity Fund. As of December 31, 1998, the following
funds have not yet sold units to the public and accordingly there is no
activity in the Statements of Operations and the Statement of Changes in
Net Assets: EQ/Evergreen Fund, EQ/Evergreen Foundation Fund, MFS Growth
with Income Fund. The assets in each fund are invested in Class 1B shares
of a corresponding portfolio (Portfolio) of a mutual fund of HRT or of EQAT
(collectively, the "Trusts"). Class 1A and 1B shares are offered by the
Trust at net asset value. Both classes of shares are subject to fees for
investment management and advisory services and other Trust expenses. Class
1B shares are subject to distribution fees imposed under a distribution
plan (herein, the "Rule 12b-1 Plans") adopted pursuant to Rule 12b-1 under
the 1940 Act, as amended. The Rule 12b-1 Plans provide that the Trusts, on
behalf of each Fund, may charge annually up to 0.25% of the average daily
net assets of a Fund attributable to its Class 1B Shares in respect of
activities primarily intended to result in the sale of Class 1B Shares.
These fees are reflected in the net asset value of the shares. The Trusts
are open-ended, diversified management investment companies that sell their
shares to separate accounts of insurance companies. Each Portfolio has
separate investment objectives. The Account commenced operations on October
1, 1996.
EQFC and EDI earns fees from both Trusts under distribution agreements held
with the Trusts. EQFC also earns fees under an investment management
agreement with EQAT. Alliance earns fees under an investment advisory
agreement with the HRT.
The Account is used to fund benefits for the Rollover IRA, Equitable
Accumulator IRA, Equitable Accumulator TSA, Equitable Accumulator Select
IRA and Equitable Accumulator Select TSA, qualified deferred variable
annuities, which combined the Portfolios in the Account with guaranteed
fixed rate options, and the Accumulator, Equitable Accumulator NQ and
Equitable Accumulator Select NQ, which offer the same investment options as
the Equitable Accumulator IRA and Equitable Accumulator Select IRA for the
non-qualified market. The non-qualified variable annuities are also
available for purchase by certain types of qualified plans (referred to as
Equitable Accumulator QP and Equitable Accumulator Select QP). The
Equitable Accumulator IRA, NQ, QP and TSA (including Equitable Accumulator
Select IRA, NQ, QP and TSA), collectively referred to as the Contracts, are
offered under group and individual variable annuity forms.
All Contracts are issued by Equitable Life. The assets of the Account are
the property of Equitable Life. However, the portion of the Account's
assets attributable to the Contracts will not be chargeable with
liabilities arising out of any other business Equitable Life may conduct.
Receivable/payable for policy-related transactions represent amounts due
to/from General Account predominately related to premiums, surrenders and
death benefits.
Included in the Withdrawals and Administrative Charges line of the
Statements of Changes in Net Assets are certain administrative charges
which are deducted from the Contractowners account value.
Contractowners may allocate amounts in their individual accounts to the
Funds of the Account, and/or to the guaranteed interest account of
Equitable Life's General Account, and/or to other Separate Accounts. The
net assets of any Fund of the Account may not be less than the aggregate of
the contractowners' accounts allocated to that Fund. Additional assets are
set aside in Equitable Life's General Account to provide for other policy
benefits, as required under the state insurance law. Equitable Life's
General Account is subject to creditor rights.
FS-15
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
2. Significant Accounting Policies
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Investments are made in shares of the Trust and are valued at the net asset
values per share of the respective Portfolios. The net asset value is
determined by the Trust using the market or fair value of the underlying
assets of the Portfolio less liabilities.
Investment transactions in the Trusts are recorded on the trade date.
Realized gains and losses include gains and losses on redemptions of the
Trust's shares (determined on the identified cost basis) and Trust
distributions representing the net realized gains on Trust investment
transactions which are distributed by the Trusts at the end of each year
and automatically reinvested in additional shares.
Dividends are recorded by HRT at the end of each quarter and by EQAT in the
fourth quarter on the ex-dividend date. Capital gains are distributed by
the Trust at the end of each year.
No Federal income tax based on net income or realized and unrealized
capital gains is currently applicable to Contracts participating in the
Account by reason of applicable provisions of the Internal Revenue Code and
no Federal income tax payable by Equitable Life is expected to affect the
unit value of Contracts participating in the Account. Accordingly, no
provision for income taxes is required. However, Equitable Life retains the
right to charge for any Federal income tax which is attributable to the
Account if the law is changed.
3. Asset Charges
Charges are made directly against the net assets of the Account and are
reflected daily in the computation of the unit values of the Contracts.
Under the Contracts, Equitable Life charges the account for the following
charges:
<TABLE>
<CAPTION>
Asset-based
Mortality and Administration Distribution Aggregate
Expense Risks Charge Charge Charges
------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Accumulator and Rollover IRA issued before 0.90% 0.30% -- 1.20%
May 1, 1997
Equitable Accumulator issued after May 1, 1997 1.10% 0.25% -- 1.35%
Equitable Accumulator Select 1.10% 0.25% 0.25% 1.60%
</TABLE>
These charges may be retained in the Account by Equitable Life and to the
extent retained, participate in the net results of the Trust ratably with
assets attributable to the Contracts.
Trust shares are valued at their net asset value with investment advisory
or management fees, the 12b-1 fee, and direct operating expenses of the
Trust, in effect, passed on to the Account and reflected in the
accumulation unit values of the Contracts.
4. Contributions, Transfers and Charges:
Net accumulation units issued during the periods indicated were:
DECEMBER 31, DECEMBER 31,
1998 1997
----------- ----------
ALLIANCE MONEY MARKET FUND (IN THOUSANDS)
-------------------------
Net Issued (Redeemed) 120 b.p............ (30) 172
Net Issued (Redeemed) 135 b.p............ 4,005 1,153
Net Issued (Redeemed) 160 b.p............ 349 --
Net Issued (Redeemed) 0 b.p.............. 1,286 947
ALLIANCE HIGH YIELD FUND
-------------------------
Net Issued (Redeemed) 120 b.p............ (17) 402
Net Issued (Redeemed) 135 b.p............ 3,265 1,256
Net Issued (Redeemed) 160 b.p............ 168 2
FS-16
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
4. Contributions, Transfers and Charges (Continued):
Net accumulation units issued during the periods indicated were:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
ALLIANCE COMMON STOCK FUND ----------- -----------
-------------------------- (IN THOUSANDS)
<S> <C> <C> <C>
Net Issued (Redeemed) 120 b.p................................. (10) 229
Net Issued (Redeemed) 135 b.p................................. 1,108 434
Net Issued (Redeemed) 160 b.p................................. 34 1
ALLIANCE AGGRESSIVE STOCK FUND
------------------------------
Net Issued (Redeemed) 120 b.p................................. (13) 269
Net Issued (Redeemed) 135 b.p................................. 559 380
Net Issued (Redeemed) 160 b.p................................. 16 --
ALLIANCE SMALL CAP GROWTH FUND (a)
----------------------------------
Net Issued (Redeemed) 120 b.p................................. 13 89
Net Issued (Redeemed) 135 b.p................................. 3,580 2,521
Net Issued (Redeemed) 160 b.p................................. 211 --
ALLIANCE GLOBAL FUND
--------------------
Net Issued (Redeemed) 120 b.p................................. (42) 455
ALLIANCE GROWTH INVESTORS FUND
------------------------------
Net Issued (Redeemed) 120 b.p................................. (44) 582
BT EQUITY 500 INDEX FUND (b)
---------------------------
Net Issued (Redeemed) 120 b.p................................. 87 --
Net Issued (Redeemed) 135 b.p................................. 12,279 --
Net Issued (Redeemed) 160 b.p................................. 951 --
BT SMALL COMPANY INDEX FUND (b)
------------------------------
Net Issued (Redeemed) 120 b.p................................. 18 --
Net Issued (Redeemed) 135 b.p................................. 1,610 --
Net Issued (Redeemed) 160 b.p................................. 211 --
BT INTERNATIONAL EQUITY INDEX FUND (b)
--------------------------------------
Net Issued (Redeemed) 120 b.p................................. 9 --
Net Issued (Redeemed) 135 b.p................................. 1,827 --
Net Issued (Redeemed) 160 b.p................................. 248 --
JPM CORE BOND FUND (b)
----------------------
Net Issued (Redeemed) 120 b.p................................. 98 --
Net Issued (Redeemed) 135 b.p................................. 8,661 --
Net Issued (Redeemed) 160 b.p................................. 379 --
</TABLE>
- ----------
(a) Commenced operations on May 1, 1997.
(b) Commenced operations on January 1, 1998.
FS-17
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
4. Contributions, Transfers and Charges (Continued):
Net accumulation units issued during the periods indicated were:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
LAZARD LARGE CAP VALUE FUND (b) ----------- -----------
------------------------------- (IN THOUSANDS)
<S> <C> <C>
Net Issued (Redeemed) 120 b.p................................. 22 --
Net Issued (Redeemed) 135 b.p................................. 5,696 --
Net Issued (Redeemed) 160 b.p................................. 315 --
LAZARD SMALL CAP VALUE FUND (b)
-------------------------------
Net Issued (Redeemed) 120 b.p................................. 26 --
Net Issued (Redeemed) 135 b.p................................. 4,733 --
Net Issued (Redeemed) 160 b.p................................. 344 --
MERRILL LYNCH BASIC VALUE EQUITY FUND (a)
-----------------------------------------
Net Issued (Redeemed) 135 b.p................................. 3,207 1,182
MERRILL LYNCH WORLD STRATEGY FUND (a)
-------------------------------------
Net Issued (Redeemed) 135 b.p................................. 411 306
MFS RESEARCH FUND (a)
--------------------
Net Issued (Redeemed) 120 b.p................................. 93 263
Net Issued (Redeemed) 135 b.p................................. 9,656 5,257
Net Issued (Redeemed) 160 b.p................................. 409 2
MFS EMERGING GROWTH COMPANIES FUND (a)
--------------------------------------
Net Issued (Redeemed) 120 b.p................................. 27 149
Net Issued (Redeemed) 135 b.p................................. 5,790 3,327
Net Issued (Redeemed) 160 b.p................................. 198 3
MORGAN STANLEY EMERGING MARKETS EQUITY FUND (c)
-----------------------------------------------
Net Issued (Redeemed) 120 b.p................................. 16 --
Net Issued (Redeemed) 135 b.p................................. 1,805 --
Net Issued (Redeemed) 160 b.p................................. 203 --
EQ/PUTNAM GROWTH & INCOME VALUE FUND (a)
----------------------------------------
Net Issued (Redeemed) 120 b.p................................. 123 383
Net Issued (Redeemed) 135 b.p................................. 16,230 8,113
Net Issued (Redeemed) 160 b.p................................. 697 17
EQ/PUTNAM INVESTORS GROWTH FUND (a)
-----------------------------------
Net Issued (Redeemed) 120 b.p................................. 36 124
Net Issued (Redeemed) 135 b.p................................. 7,491 2,581
Net Issued (Redeemed) 160 b.p................................. 282 --
</TABLE>
- ----------
(a) Commenced operations on May 1, 1997.
(b) Commenced operations on January 1, 1998.
(c) Commenced operations on December 31, 1997.
FS-18
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
4. Contributions, Transfers and Charges (Concluded):
Net accumulation units issued during the periods indicated were:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
EQ/PUTNAM INTERNATIONAL EQUITY FUND (a) ---------- ----------
--------------------------------------- (IN THOUSANDS)
<S> <C> <C>
Net Issued (Redeemed) 120 b.p................................. 3 187
Net Issued (Redeemed) 135 b.p................................. 5,998 4,609
Net Issued (Redeemed) 160 b.p................................. 418 5
</TABLE>
- ----------
(a) Commenced operations on May 1, 1997.
5. Amounts retained by Equitable Life in Separate Account No. 49
The amount retained by Equitable Life in the Account arises principally
from (1) contributions from Equitable Life, (2) mortality and expense
charges and Asset-based administrative charges accumulated in the account,
and (3) that portion, determined ratably, of the Account's investment
results applicable to those assets in the Account in excess of the net
assets for the Contracts. Amounts retained by Equitable Life are not
subject to charges for mortality and expense risks and Asset-based
administrative expenses.
Amounts retained by Equitable Life in the Account may be transferred at any
time by Equitable Life to its General Account.
The following table shows the contributions (withdrawals) in net amounts
retained by Equitable Life by investment fund:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
INVESTMENT FUND 1998 1997
--------------- --------------------- --------------------
<S> <C> <C>
Alliance Money Market Fund................................ $ (1,183,691) $ (105,000)
Alliance High Yield Fund.................................. (1,528,340) (85,000)
Alliance Common Stock Fund................................ (3,823,234) (180,000)
Alliance Aggressive Stock Fund............................ (983,127) (110,000)
Alliance Small Cap Growth Fund............................ (792,824) 5,000
Alliance Global Fund...................................... (225,129) (90,000)
Alliance Growth Investors Fund............................ (336,002) (97,000)
Alliance Equity Index Fund................................ -- 5,000
BT Equity 500 Index Fund(2)............................... (1,331,361) 1,000
BT Small Company Index Fund(2)............................ 9,933,857 1,000
BT International Equity Index Fund(2)..................... 14,902,319 1,000
EQ/Evergreen Fund(3) ..................................... 1,000 --
EQ/Evergreen Foundation Fund(3)........................... 1,000 --
JPM Core Bond Fund(2)..................................... 4,150,198 1,000
Lazard Large Cap Value Fund(2)............................ 2,234,287 1,000
Lazard Small Cap Value Fund(2)............................ 4,310,749 1,000
Merrill Lynch Basic Value Equity Fund(1).................. (433,013) --
Merrill Lynch World Strategy Fund(1)...................... (64,920) --
MFS Research Fund(1)...................................... (1,751,938) --
MFS Emerging Growth Companies Fund(1)..................... (1,150,981) --
MFS Growth with Income Fund(3) ........................... -- --
Morgan Stanley Emerging Markets Equity Fund(4)............ (48,664) --
EQ/Putnam Growth & Income Value Fund(1)................... (2,678,339) --
EQ/Putnam Investors Growth Fund(1)........................ (8,168,474) 5,000,000
EQ/Putnam International Equity Fund(1).................... (7,148,298) 5,000,000
</TABLE>
- ----------
(1) Commenced operations on May 1, 1997.
(2) Initial capital received on December 31, 1997.
(3) Initial capital received on December 31, 1998.
(4) Commenced operations on December 31, 1997.
FS-19
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
6. Accumulation Unit Values
Shown below is accumulation unit value information for a unit outstanding
throughout the period shown.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996
--------------- -------------- -----------------
ALLIANCE MONEY MARKET FUND
- --------------------------
<S> <C> <C> <C>
1.20% Unit value, beginning of period...................... $25.64 $24.68 $24.43
1.20% Unit value, end of period............................ $26.62 $25.64 $24.68
1.35% Unit value, beginning of period (a).................. $25.00 $24.38 --
1.35% Unit value, end of period (a)........................ $25.92 $25.00 --
1.60% Unit value, beginning of period (b).................. $23.98 $23.78 --
1.60% Unit value, end of period (b)........................ $24.80 $23.98 --
0% Unit value, beginning of period (a)..................... $31.27 $30.21 --
0% Unit value, end of period (a)........................... $32.86 $31.27 --
Number of units outstanding, end of period (000's)
1.20%................................................... 329 359 127
1.35%................................................... 5,158 1,153 --
1.60%................................................... 349 -- --
0%...................................................... 2,233 947 --
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996
--------------- -------------- -----------------
ALLIANCE HIGH YIELD FUND
- ------------------------
<S> <C> <C> <C>
1.20% Unit value, beginning of period...................... $30.46 $26.09 $25.33
1.20% Unit value, end of period............................ $28.48 $30.46 $26.09
1.35% Unit value, beginning of period (a).................. $29.96 $26.35 --
1.35% Unit value, end of period (a)........................ $27.96 $29.96 --
1.60% Unit value, beginning of period (b).................. $29.13 $28.79 --
1.60% Unit value, end of period (b)........................ $27.12 $29.13 --
Number of units outstanding, end of period (000's)
1.20%................................................... 422 439 24
1.35%................................................... 4,521 1,256 --
1.60%................................................... 170 2 --
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996
--------------- -------------- -----------------
ALLIANCE COMMON STOCK FUND
- --------------------------
<S> <C> <C> <C>
1.20% Unit value, beginning of period..................... $192.60 $151.23 $139.82
1.20% Unit value, end of period........................... $245.58 $192.60 $151.23
1.35% Unit value, beginning of period (a)................. $186.29 $146.89 --
1.35% Unit value, end of period (a)....................... $237.18 $186.29 --
1.60% Unit value, beginning of period (b)................. $176.22 $172.77 --
1.60% Unit value, end of period (b)....................... $223.79 $176.22 --
Number of units outstanding, end of period (000's)
1.20%.................................................. 230 240 8
1.35%.................................................. 1,542 434 --
1.60%.................................................. 35 1 --
</TABLE>
- ----------
(a) Units were made available for sale on May 1, 1997.
(b) Units were made available for sale on October 1, 1997.
FS-20
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
6. Accumulation Unit Values (Continued):
Shown below is accumulation unit value information for a unit outstanding
throughout the period shown.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------
1998 1997 1996
--------------- -------------- ----------
ALLIANCE AGGRESSIVE STOCK FUND
- ------------------------------
<S> <C> <C> <C>
1.20% Unit value, beginning of period....................... $71.57 $65.53 $64.24
1.20% Unit value, end of period............................. $70.74 $71.57 $65.53
1.35% Unit value, beginning of period (a)................... $70.28 $61.42 --
1.35% Unit value, end of period (a)......................... $69.37 $70.28 --
1.60% Unit value, beginning of period (b)................... $68.19 $75.44 --
1.60% Unit value, end of period (b)......................... $67.13 $68.19 --
Number of units outstanding, end of period (000's)
1.20%.................................................... 266 279 9
1.35%.................................................... 939 380 --
1.60%.................................................... 16 -- --
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------
1998 1997
------------------------- --------------------
ALLIANCE SMALL CAP GROWTH FUND
- ------------------------------
<S> <C> <C>
1.20% Unit value, beginning of period (a)..................... $12.55 $10.00
1.20% Unit value, end of period (a)...................... $11.85 $12.55
1.35% Unit value, beginning of period (a)................ $12.54 $10.00
1.35% Unit value, end of period (a)...................... $11.82 $12.54
1.60% Unit value, beginning of period (b)................ $12.52 $13.22
1.60% Unit value, end of period (b)...................... $11.77 $12.52
Number of units outstanding, end of period (000's)
1.20%...................................................... 102 89
1.35%...................................................... 6,101 2,521
1.60%...................................................... 211 --
</TABLE>
- ----------
(a) Units were made available for sale on May 1, 1997.
(b) Units were made available for sale on October 1, 1997.
FS-21
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
6. Accumulation Unit Values (Continued):
Shown below is accumulation unit value information for a unit outstanding
throughout the period shown.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1998 1997 1996
--------------------- ------------------- -----------------
ALLIANCE GLOBAL FUND
- --------------------
<S> <C> <C> <C>
1.20% Unit value, beginning of period....................... $27.61 $25.12 $26.00
1.20% Unit value, end of period............................. $33.15 $27.61 $25.12
Number of units outstanding, end of period (000's)
1.20%.................................................... 422 464 9
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1998 1997 1996
--------------------- ------------------- ------------------
ALLIANCE GROWTH INVESTORS FUND
- ------------------------------
<S> <C> <C> <C>
1.20% Unit value, beginning of period....................... $30.09 $26.15 $25.06
1.20% Unit value, end of period............................. $35.33 $30.09 $26.15
Number of units outstanding, end of period (000's) 544
1.20%.................................................... 598 16
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1998 1997
------------------------------- ------------------------------
ALLIANCE EQUITY INDEX FUND
- -----------------------------
<S> <C> <C>
1.35% Unit value, beginning of period (a)................... $21.21 $17.51
1.35% Unit value, end of period (a)......................... $26.73 $21.21
Number of units outstanding, end of period (000's)
1.35%.................................................... -- --
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1998 1997 (b)
------------------------------- ------------------------------
BT EQUITY 500 INDEX FUND
- -----------------------------
<S> <C> <C>
1.20% Unit value, beginning of period....................... $10.00 $10.00
1.20% Unit value, end of period............................. $12.36 $10.00
1.35% Unit value, beginning of period....................... $10.00 $10.00
1.35% Unit value, end of period............................. $12.34 $10.00
1.60% Unit value, beginning of period....................... $10.00 $10.00
1.60% Unit value, end of period............................. $12.31 $10.00
Number of units outstanding, end of period (000's)
1.20%.................................................... 87 --
1.35%.................................................... 12,279 --
1.60%.................................................... 951 --
</TABLE>
- ----------
(a) Units were made available for sale on May 1, 1997.
(b) Initial capital was received on December 31, 1997.
FS-22
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
6. Accumulation Unit Values (Continued):
Shown below is accumulation unit value information for a unit outstanding
throughout the period shown.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1998 1997 (a)
-------------------------- --------------------------
BT SMALL COMPANY INDEX FUND
- ---------------------------
<S> <C> <C>
1.20% Unit value, beginning of period..................... $10.00 $10.00
1.20% Unit value, end of period........................... $9.65 $10.00
1.35% Unit value, beginning of period..................... $10.00 $10.00
1.35% Unit value, end of period........................... $9.64 $10.00
1.60% Unit value, beginning of period..................... $10.00 $10.00
1.60% Unit value, end of period........................... $9.61 $10.00
Number of units outstanding, end of period (000's)
1.20%.................................................. 18 --
1.35%.................................................. 1,610 --
1.60%.................................................. 211 --
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1998 1997 (a)
-------------------------- --------------------------
BT INTERNATIONAL EQUITY INDEX FUND
- ----------------------------------
<S> <C> <C>
1.20% Unit value, beginning of period..................... $10.00 $10.00
1.20% Unit value, end of period........................... $11.87 $10.00
1.35% Unit value, beginning of period..................... $10.00 $10.00
1.35% Unit value, end of period........................... $11.85 $10.00
1.60% Unit value, beginning of period..................... $10.00 $10.00
1.60% Unit value, end of period........................... $11.82 $10.00
Number of units outstanding, end of period (000's)
1.20%.................................................. 9 --
1.35%.................................................. 1,827 --
1.60%.................................................. 248 --
<CAPTION>
DECEMBER 31, 1998 (b)
---------------------------
EQ/EVERGREEN FUND
- -----------------
<S> <C>
1.35% Unit value, beginning of period..................... $10.00
1.35% Unit value, end of period........................... $10.00
1.60% Unit value, beginning of period..................... $10.00
1.60% Unit value, end of period........................... $10.00
</TABLE>
- ----------
(a) Initial capital was received on December 31, 1997.
(b) Initial capital was received on December 31, 1998.
FS-23
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
6. Accumulation Unit Values (Continued):
Shown below is accumulation unit value information for a unit outstanding
throughout the period shown.
<TABLE>
<CAPTION>
DECEMBER 31, 1998 (b)
------------------------------
EQ/EVERGREEN FOUNDATION FUND
- ----------------------------------
<S> <C>
1.35% Unit value, beginning of period......................... $10.00
1.35% Unit value, end of period............................... $10.00
1.60% Unit value, beginning of period......................... $10.00
1.60% Unit value, end of period............................... $10.00
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1998 1997 (a)
----------------------- ----------------------
JPM CORE BOND FUND
- ------------------
<S> <C> <C>
1.20% Unit value, beginning of period......................... $10.00 $10.00
1.20% Unit value, end of period............................... $10.77 $10.00
1.35% Unit value, beginning of period......................... $10.00 $10.00
1.35% Unit value, end of period............................... $10.76 $10.00
1.60% Unit value, beginning of period......................... $10.00 $10.00
1.60% Unit value, end of period............................... $10.73 $10.00
Number of units outstanding, end of period (000's)
1.20%...................................................... 98 --
1.35%...................................................... 8,661 --
1.60%...................................................... 379 --
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1998 1997 (a)
----------------------- ----------------------
LAZARD LARGE CAP VALUE FUND
- ---------------------------
<S> <C> <C>
1.20% Unit value, beginning of period......................... $10.00 $10.00
1.20% Unit value, end of period............................... $11.86 $10.00
1.35% Unit value, beginning of period......................... $10.00 $10.00
1.35% Unit value, end of period............................... $11.84 $10.00
1.60% Unit value, beginning of period......................... $10.00 $10.00
1.60% Unit value, end of period............................... $11.81 $10.00
Number of units outstanding, end of period (000's)
1.20%...................................................... 22 --
1.35%...................................................... 5,696 --
1.60%...................................................... 315 --
</TABLE>
- ----------
(a) Initial capital was received on December 31, 1997.
(b) Initial capital was received on December 31, 1998.
FS-24
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
6. Accumulation Unit Values (Continued):
Shown below is accumulation unit value information for a unit outstanding
throughout the period shown.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1998 1997 (b)
----------------------- ----------------------
LAZARD SMALL CAP VALUE FUND
- ---------------------------
<S> <C> <C>
1.20% Unit value, beginning of period......................... $10.00 $10.00
1.20% Unit value, end of period............................... $9.18 $10.00
1.35% Unit value, beginning of period......................... $10.00 $10.00
1.35% Unit value, end of period............................... $9.17 $10.00
1.60% Unit value, beginning of period......................... $10.00 $10.00
1.60% Unit value, end of period............................... $9.14 $10.00
Number of units outstanding, end of period (000's)
1.20%...................................................... 26 --
1.35%...................................................... 4,733 --
1.60%...................................................... 344 --
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1998 1997
----------------------- ----------------------
MERRILL LYNCH BASIC VALUE EQUITY FUND (a)
- -----------------------------------------
<S> <C> <C>
1.35% Unit value, beginning of period......................... $11.60 $9.99
1.35% Unit value, end of period............................... $12.76 $11.60
1.60% Unit value, beginning of period (c)..................... $11.58 $12.15
1.60% Unit value, end of period (c) .......................... $12.71 $11.58
Number of units outstanding, end of period (000's)
1.35%...................................................... 4,389 1,182
1.60%...................................................... -- --
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1998 1997
----------------------- ----------------------
MERRILL LYNCH WORLD STRATEGY FUND (a)
- -------------------------------------
<S> <C> <C>
1.35% Unit value, beginning of period......................... $10.38 $10.00
1.35% Unit value, end of period............................... $10.94 $10.38
1.60% Unit value, beginning of period (c)..................... $10.36 $11.13
1.60% Unit value, end of period (c)........................... $10.89 $10.36
Number of units outstanding, end of period (000's)
1.35%...................................................... 717 306
1.60%...................................................... -- --
</TABLE>
- ----------
(a) Units were made available for sale on May 1, 1997.
(b) Initial capital was received on December 31, 1997.
(c) Units were made available for sale on October 1, 1997.
FS-25
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
6. Accumulation Unit Values (Continued):
Shown below is accumulation unit value information for a unit outstanding
throughout the period shown.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1998 1997 (a)
----------------------- ----------------------
MFS RESEARCH FUND
- -----------------
<S> <C> <C>
1.20% Unit value, beginning of period......................... $11.51 $10.00
1.20% Unit value, end of period............................... $14.12 $11.51
1.35% Unit value, beginning of period......................... $11.50 $10.00
1.35% Unit value, end of period............................... $14.08 $11.50
1.60% Unit value, beginning of period (c).................... $11.48 $11.77
1.60% Unit value, end of period (c)........................... $14.02 $11.48
Number of units outstanding, end of period (000's)
1.20%...................................................... 356 263
1.35%...................................................... 14,913 5,257
1.60%...................................................... 410 1
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1998 1997 (a)
----------------------- ----------------------
MFS EMERGING GROWTH COMPANIES FUND
- ----------------------------------
<S> <C> <C>
1.20% Unit value, beginning of period......................... $12.14 $10.00
1.20% Unit value, end of period............................... $16.14 $12.14
1.35% Unit value, beginning of period......................... $12.13 $10.00
1.35% Unit value, end of period............................... $16.10 $12.13
1.60% Unit value, beginning of period (c)..................... $12.11 $12.60
1.60% Unit value, end of period (c)........................... $16.03 $12.11
Number of units outstanding, end of period (000's)
1.20%...................................................... 176 149
1.35%...................................................... 9,117 3,327
1.60%...................................................... 200 2
<CAPTION>
DECEMBER 31, 1998 (b)
-------------------------
MFS EMERGING GROWTH WITH INCOME FUND
- ------------------------------------
<C> <C>
1.20% Unit value, beginning of period......................... $10.00
1.20% Unit value, end of period............................... $10.00
1.35% Unit value, beginning of period......................... $10.00
1.35% Unit value, end of period............................... $10.00
1.60% Unit value, beginning of period......................... $10.00
1.60% Unit value, end of period............................... $10.00
</TABLE>
(a) Units were made available for sale on May 1, 1997.
(b) Initial capital was received on December 31, 1998.
(c) Units were made available for sale on October 1, 1997.
FS-26
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
6. Accumulation Unit Values (Continued):
Shown below is accumulation unit value information for a unit outstanding
throughout the period shown.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997
--------------------------- ---------------------------
MORGAN STANLEY EMERGING MARKETS EQUITY FUND
- -------------------------------------------
<S> <C> <C>
1.20% Unit value, beginning of period (c) .................... $7.95 $7.95
1.20% Unit value, end of period (c)........................... $5.73 $7.95
1.35% Unit value, beginning of period (c)..................... $7.94 $7.94
1.35% Unit value, end of period (c)........................... $5.72 $7.94
1.60% Unit value, beginning of period (c)..................... $7.93 $7.93
1.60% Unit value, end of period (c)........................... $5.70 $7.93
Number of units outstanding, end of period (000's)
1.20%...................................................... 16 --
1.35%...................................................... 1,805 --
1.60%...................................................... 203 --
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997(a)
--------------------------- ---------------------------
EQ/PUTNAM GROWTH & INCOME VALUE FUND
- ------------------------------------
<S> <C> <C>
1.20% Unit value, beginning of period......................... $11.53 $10.00
1.20% Unit value, end of period............................... $12.85 $11.53
1.35% Unit value, beginning of period......................... $11.52 $10.00
1.35% Unit value, end of period............................... $12.82 $11.52
1.60% Unit value, beginning of period (c)..................... $11.50 $11.63
1.60% Unit value, end of period (c)........................... $12.76 $11.50
Number of units outstanding, end of period (000's)
1.20%...................................................... 506 383
1.35%...................................................... 24,343 8,113
1.60%...................................................... 714 17
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997(a)
--------------------------- ---------------------------
EQ/PUTNAM INVESTORS GROWTH FUND
- -------------------------------
<S> <C> <C>
1.20% Unit value, beginning of period......................... $12.37 $10.00
1.20% Unit value, end of period............................... $16.65 $12.37
1.35% Unit value, beginning of period......................... $12.35 $10.00
1.35% Unit value, end of period............................... $16.61 $12.35
1.60% Unit value, beginning of period (c) .................... $12.33 $12.12
1.60% Unit value, end of period (c) .......................... $16.54 $12.33
Number of units outstanding, end of period (000's)
1.20%...................................................... 160 124
1.35%...................................................... 10,072 2,581
1.60%...................................................... 282 --
</TABLE>
- ----------
(a) Units were made available for sale on May 1, 1997.
(b) Units were made available for sale on May 1, 1998.
(c) Units were made available for sale on December 31, 1997.
FS-27
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 49
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
DECEMBER 31, 1998
6. Accumulation Unit Values (Concluded):
Shown below is accumulation unit value information for a unit outstanding
throughout the period shown.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------
1998 1997(a)
--------------------------- -----------------------
EQ/PUTNAM INTERNATIONAL EQUITY FUND
- -----------------------------------
<S> <C> <C>
1.20% Unit value, beginning of period......................... $10.87 $10.00
1.20% Unit value, end of period............................... $12.83 $10.87
1.35% Unit value, beginning of period......................... $10.86 $10.00
1.35% Unit value, end of period............................... $12.80 $10.86
1.60% Unit value, beginning of period (c)..................... $10.84 $11.52
1.60% Unit value, end of period (c)........................... $12.75 $10.84
Number of units outstanding, end of period (000's)
1.20%...................................................... 190 187
1.35%...................................................... 10,607 4,609
1.60%...................................................... 422 4
</TABLE>
- ----------
(a) Units were made available for sale on May 1, 1997.
(c) Units were made available for sale on October 1, 1997.
FS-28
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholder of
The Equitable Life Assurance Society of the United States
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, of shareholder's equity and comprehensive
income and of cash flows present fairly, in all material respects, the financial
position of The Equitable Life Assurance Society of the United States and its
subsidiaries ("Equitable Life") at December 31, 1998 and 1997, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of Equitable
Life's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Note 2 to the consolidated financial statements, Equitable Life
changed its method of accounting for long-lived assets in 1996.
/s/PricewaterhouseCoopers LLP
- -----------------------------
PricewaterhouseCoopers LLP
New York, New York
February 8, 1999
F-1
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------------- -----------------
(In Millions)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value............................. $ 18,993.7 $ 19,630.9
Held to maturity, at amortized cost..................................... 125.0 -
Mortgage loans on real estate............................................. 2,809.9 2,611.4
Equity real estate........................................................ 1,676.9 2,495.1
Policy loans.............................................................. 2,086.7 2,422.9
Other equity investments.................................................. 713.3 951.5
Investment in and loans to affiliates..................................... 928.5 731.1
Other invested assets..................................................... 808.2 612.2
----------------- -----------------
Total investments..................................................... 28,142.2 29,455.1
Cash and cash equivalents................................................... 1,245.5 300.5
Deferred policy acquisition costs........................................... 3,563.8 3,236.6
Amounts due from discontinued operations.................................... 2.7 572.8
Other assets................................................................ 3,051.9 2,687.4
Closed Block assets......................................................... 8,632.4 8,566.6
Separate Accounts assets.................................................... 43,302.3 36,538.7
----------------- -----------------
Total Assets................................................................ $ 87,940.8 $ 81,357.7
================= =================
LIABILITIES
Policyholders' account balances............................................. $ 20,889.7 $ 21,579.5
Future policy benefits and other policyholders' liabilities................. 4,694.2 4,553.8
Short-term and long-term debt............................................... 1,181.7 1,716.7
Other liabilities........................................................... 3,474.3 3,267.2
Closed Block liabilities.................................................... 9,077.0 9,073.7
Separate Accounts liabilities............................................... 43,211.3 36,306.3
----------------- -----------------
Total liabilities..................................................... 82,528.2 76,497.2
----------------- -----------------
Commitments and contingencies (Notes 11, 13, 14, 15 and 16)
SHAREHOLDER'S EQUITY
Common stock, $1.25 par value 2.0 million shares authorized, issued
and outstanding........................................................... 2.5 2.5
Capital in excess of par value.............................................. 3,110.2 3,105.8
Retained earnings........................................................... 1,944.1 1,235.9
Accumulated other comprehensive income...................................... 355.8 516.3
----------------- -----------------
Total shareholder's equity............................................ 5,412.6 4,860.5
----------------- -----------------
Total Liabilities and Shareholder's Equity.................................. $ 87,940.8 $ 81,357.7
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee
income...................................................... $ 1,056.2 $ 950.6 $ 874.0
Premiums...................................................... 588.1 601.5 597.6
Net investment income......................................... 2,228.1 2,282.8 2,203.6
Investment gains (losses), net................................ 100.2 (45.2) (9.8)
Commissions, fees and other income............................ 1,503.0 1,227.2 1,081.8
Contribution from the Closed Block............................ 87.1 102.5 125.0
----------------- ----------------- -----------------
Total revenues.......................................... 5,562.7 5,119.4 4,872.2
----------------- ----------------- -----------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances.......... 1,153.0 1,266.2 1,270.2
Policyholders' benefits....................................... 1,024.7 978.6 1,317.7
Other operating costs and expenses............................ 2,201.2 2,203.9 2,075.7
----------------- ----------------- -----------------
Total benefits and other deductions..................... 4,378.9 4,448.7 4,663.6
----------------- ----------------- -----------------
Earnings from continuing operations before Federal
income taxes, minority interest and cumulative
effect of accounting change................................. 1,183.8 670.7 208.6
Federal income taxes.......................................... 353.1 91.5 9.7
Minority interest in net income of consolidated subsidiaries.. 125.2 54.8 81.7
----------------- ----------------- -----------------
Earnings from continuing operations before cumulative
effect of accounting change................................. 705.5 524.4 117.2
Discontinued operations, net of Federal income taxes.......... 2.7 (87.2) (83.8)
Cumulative effect of accounting change, net of Federal
income taxes................................................ - - (23.1)
----------------- ----------------- -----------------
Net Earnings.................................................. $ 708.2 $ 437.2 $ 10.3
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
Common stock, at par value, beginning and end of year......... $ 2.5 $ 2.5 $ 2.5
----------------- ----------------- -----------------
Capital in excess of par value, beginning of year............. 3,105.8 3,105.8 3,105.8
Additional capital in excess of par value..................... 4.4 - -
----------------- ----------------- -----------------
Capital in excess of par value, end of year................... 3,110.2 3,105.8 3,105.8
Retained earnings, beginning of year.......................... 1,235.9 798.7 788.4
Net earnings.................................................. 708.2 437.2 10.3
----------------- ----------------- -----------------
Retained earnings, end of year................................ 1,944.1 1,235.9 798.7
----------------- ----------------- -----------------
Accumulated other comprehensive income,
beginning of year........................................... 516.3 177.0 361.4
Other comprehensive income.................................... (160.5) 339.3 (184.4)
----------------- ----------------- -----------------
Accumulated other comprehensive income, end of year........... 355.8 516.3 177.0
----------------- ----------------- -----------------
Total Shareholder's Equity, End of Year....................... $ 5,412.6 $ 4,860.5 $ 4,084.0
================= ================= =================
COMPREHENSIVE INCOME
Net earnings.................................................. $ 708.2 $ 437.2 $ 10.3
----------------- ----------------- -----------------
Change in unrealized gains (losses), net of reclassification
adjustment.................................................. (149.5) 343.7 (206.6)
Minimum pension liability adjustment.......................... (11.0) (4.4) 22.2
----------------- ----------------- -----------------
Other comprehensive income.................................... (160.5) 339.3 (184.4)
----------------- ----------------- -----------------
Comprehensive Income.......................................... $ 547.7 $ 776.5 $ (174.1)
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
Net earnings.................................................. $ 708.2 $ 437.2 $ 10.3
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Interest credited to policyholders' account balances........ 1,153.0 1,266.2 1,270.2
Universal life and investment-type product
policy fee income......................................... (1,056.2) (950.6) (874.0)
Investment (gains) losses................................... (100.2) 45.2 9.8
Change in Federal income tax payable........................ 123.1 (74.4) (197.1)
Other, net.................................................. (324.9) 169.4 330.2
----------------- ----------------- -----------------
Net cash provided by operating activities..................... 503.0 893.0 549.4
----------------- ----------------- -----------------
Cash flows from investing activities:
Maturities and repayments................................... 2,289.0 2,702.9 2,275.1
Sales....................................................... 16,972.1 10,385.9 8,964.3
Purchases................................................... (18,578.5) (13,205.4) (12,559.6)
Decrease (increase) in short-term investments............... 102.4 (555.0) 450.3
Decrease in loans to discontinued operations................ 660.0 420.1 1,017.0
Sale of subsidiaries........................................ - 261.0 -
Other, net.................................................. (341.8) (612.6) (281.0)
----------------- ----------------- -----------------
Net cash provided (used) by investing activities.............. 1,103.2 (603.1) (133.9)
----------------- ----------------- -----------------
Cash flows from financing activities:
Policyholders' account balances:
Deposits.................................................. 1,508.1 1,281.7 1,925.4
Withdrawals............................................... (1,724.6) (1,886.8) (2,385.2)
Net (decrease) increase in short-term financings............ (243.5) 419.9 (.3)
Repayments of long-term debt................................ (24.5) (196.4) (124.8)
Payment of obligation to fund accumulated deficit of
discontinued operations................................... (87.2) (83.9) -
Other, net.................................................. (89.5) (62.7) (66.5)
----------------- ----------------- -----------------
Net cash used by financing activities......................... (661.2) (528.2) (651.4)
----------------- ----------------- -----------------
Change in cash and cash equivalents........................... 945.0 (238.3) (235.9)
Cash and cash equivalents, beginning of year.................. 300.5 538.8 774.7
----------------- ----------------- -----------------
Cash and Cash Equivalents, End of Year........................ $ 1,245.5 $ 300.5 $ 538.8
================= ================= =================
Supplemental cash flow information
Interest Paid............................................... $ 130.7 $ 217.1 $ 109.9
================= ================= =================
Income Taxes Paid (Refunded)................................ $ 254.3 $ 170.0 $ (10.0)
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) ORGANIZATION
The Equitable Life Assurance Society of the United States ("Equitable
Life") is a wholly owned subsidiary of The Equitable Companies
Incorporated (the "Holding Company"). Equitable Life's insurance
business is conducted principally by Equitable Life and its wholly owned
life insurance subsidiaries, Equitable of Colorado ("EOC"), and, prior
to December 31, 1996, Equitable Variable Life Insurance Company
("EVLICO"). Effective January 1, 1997, EVLICO was merged into Equitable
Life, which continues to conduct the Company's insurance business.
Equitable Life's investment management business, which comprises the
Investment Services segment, is conducted principally by Alliance
Capital Management L.P. ("Alliance"), in which Equitable Life has a
57.7% ownership interest, and Donaldson, Lufkin & Jenrette, Inc.
("DLJ"), an investment banking and brokerage affiliate in which
Equitable Life has a 32.5% ownership interest. AXA ("AXA"), a French
holding company for an international group of insurance and related
financial services companies, is the Holding Company's largest
shareholder, owning approximately 58.5% at December 31, 1998 (53.4% if
all securities convertible into, and options on, common stock were to be
converted or exercised).
The Insurance segment offers a variety of traditional, variable and
interest-sensitive life insurance products, disability income, annuity
products, mutual fund and other investment products to individuals and
small groups. It also administers traditional participating group
annuity contracts with conversion features, generally for corporate
qualified pension plans, and association plans which provide full
service retirement programs for individuals affiliated with professional
and trade associations. This segment includes Separate Accounts for
individual insurance and annuity products.
The Investment Services segment includes Alliance, the results of DLJ
which are accounted for on an equity basis, and, through June 10, 1997,
Equitable Real Estate Investment Management, Inc. ("EREIM"), a real
estate investment management subsidiary which was sold. Alliance
provides diversified investment fund management services to a variety of
institutional clients, including pension funds, endowments, and foreign
financial institutions, as well as to individual investors, principally
through a broad line of mutual funds. This segment includes
institutional Separate Accounts which provide various investment options
for large group pension clients, primarily deferred benefit contribution
plans, through pooled or single group accounts. DLJ's businesses include
securities underwriting, sales and trading, merchant banking, financial
advisory services, investment research, venture capital, correspondent
brokerage services, online interactive brokerage services and asset
management. DLJ serves institutional, corporate, governmental and
individual clients both domestically and internationally. EREIM provided
real estate investment management services, property management
services, mortgage servicing and loan asset management, and agricultural
investment management.
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements are prepared in
conformity with generally accepted accounting principles ("GAAP") which
require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The accompanying consolidated financial statements include the accounts
of Equitable Life and its wholly owned life insurance subsidiary
(collectively, the "Insurance Group"); non-insurance subsidiaries,
principally Alliance and EREIM (see Note 5); and those partnerships and
joint ventures in which Equitable Life or its subsidiaries has control
F-6
<PAGE>
and a majority economic interest (collectively, including its
consolidated subsidiaries, the "Company"). The Company's investment in
DLJ is reported on the equity basis of accounting. Closed Block assets,
liabilities and results of operations are presented in the consolidated
financial statements as single line items (see Note 7). Unless
specifically stated, all other footnote disclosures contained herein
exclude the Closed Block related amounts.
All significant intercompany transactions and balances except those with
the Closed Block and discontinued operations (see Note 8) have been
eliminated in consolidation. The years "1998," "1997" and "1996" refer
to the years ended December 31, 1998, 1997 and 1996, respectively.
Certain reclassifications have been made in the amounts presented for
prior periods to conform these periods with the 1998 presentation.
Closed Block
On July 22, 1992, Equitable Life established the Closed Block for the
benefit of certain individual participating policies which were in force
on that date. The assets allocated to the Closed Block, together with
anticipated revenues from policies included in the Closed Block, were
reasonably expected to be sufficient to support such business, including
provision for payment of claims, certain expenses and taxes, and for
continuation of dividend scales payable in 1991, assuming the experience
underlying such scales continues.
Assets allocated to the Closed Block inure solely to the benefit of the
Closed Block policyholders and will not revert to the benefit of the
Holding Company. No reallocation, transfer, borrowing or lending of
assets can be made between the Closed Block and other portions of
Equitable Life's General Account, any of its Separate Accounts or any
affiliate of Equitable Life without the approval of the New York
Superintendent of Insurance (the "Superintendent"). Closed Block assets
and liabilities are carried on the same basis as similar assets and
liabilities held in the General Account. The excess of Closed Block
liabilities over Closed Block assets represents the expected future
post-tax contribution from the Closed Block which would be recognized in
income over the period the policies and contracts in the Closed Block
remain in force.
Discontinued Operations
Discontinued operations include the Group Non-Participating Wind-Up
Annuities ("Wind-Up Annuities") and the Guaranteed Interest Contract
("GIC") lines of business. An allowance was established for the premium
deficiency reserve for Wind-Up Annuities and estimated future losses of
the GIC line of business. Management reviews the adequacy of the
allowance each quarter and believes the allowance for future losses at
December 31, 1998 is adequate to provide for all future losses; however,
the quarterly allowance review continues to involve numerous estimates
and subjective judgments regarding the expected performance of
Discontinued Operations Investment Assets. There can be no assurance the
losses provided for will not differ from the losses ultimately realized.
To the extent actual results or future projections of the discontinued
operations differ from management's current best estimates and
assumptions underlying the allowance for future losses, the difference
would be reflected in the consolidated statements of earnings in
discontinued operations. In particular, to the extent income, sales
proceeds and holding periods for equity real estate differ from
management's previous assumptions, periodic adjustments to the allowance
are likely to result (see Note 8).
Accounting Changes
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 131,
"Disclosures about Segments of an Enterprise and Related Information".
SFAS No. 131 establishes standards for public companies to report
information about operating segments in annual and interim financial
statements issued to shareholders. It also specifies related disclosure
requirements for products and services, geographic areas and major
customers. Generally, financial information must be reported using the
basis management uses to make operating decisions and to evaluate
business performance. The Company implemented SFAS No. 131 effective
December 31, 1998 and continues to identify two operating segments to
reflect its major businesses: Insurance and Investment Services. While
the segment descriptions are the same as those previously reported,
certain amounts have been reattributed between the two reportable
segments. Prior period comparative segment information has been
restated.
F-7
<PAGE>
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use,"
which requires capitalization of external and certain internal costs
incurred to obtain or develop internal-use computer software during the
application development stage. The Company applied the provisions of SOP
98-1 prospectively effective January 1, 1998. The adoption of SOP 98-1
did not have a material impact on the Company's consolidated financial
statements. Capitalized internal-use software is amortized on a
straight-line basis over the estimated useful life of the software.
The Company implemented SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," as of
January 1, 1996. SFAS No. 121 requires long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate the carrying value of such assets may
not be recoverable. Effective with SFAS No. 121's adoption, impaired
real estate is written down to fair value with the impairment loss being
included in investment gains (losses), net. Before implementing SFAS No.
121, valuation allowances on real estate held for the production of
income were computed using the forecasted cash flows of the respective
properties discounted at a rate equal to the Company's cost of funds.
Adoption of the statement resulted in the release of valuation
allowances of $152.4 million and recognition of impairment losses of
$144.0 million on real estate held for production of income. Real estate
which management intends to sell or abandon is classified as real estate
held for sale. Valuation allowances on real estate held for sale
continue to be computed using the lower of depreciated cost or estimated
fair value, net of disposition costs. Initial adoption of the impairment
requirements of SFAS No. 121 to other assets to be disposed of resulted
in a charge for the cumulative effect of an accounting change of $23.1
million, net of a Federal income tax benefit of $12.4 million, due to
the writedown to fair value of building improvements relating to
facilities vacated in 1996.
New Accounting Pronouncements
In October 1998, the FASB issued SFAS No. 134, "Accounting for
Mortgage-Backed Securities Retained after the Securitization of Mortgage
Loans Held for Sale by a Mortgage Banking Enterprise," which amends
existing accounting and reporting standards for certain activities of
mortgage banking enterprises and other enterprises that conduct
operations that are substantially similar to the primary operations of a
mortgage banking enterprise. This statement is effective for the first
fiscal quarter beginning after December 15, 1998. This statement is not
expected to have a material impact on the Company's consolidated
financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and
reporting standards for derivative instruments, including certain
derivatives embedded in other contracts, and for hedging activities. It
requires all derivatives to be recognized on the balance sheet at fair
value. The accounting for changes in the fair value of a derivative
depends on its intended use. Derivatives not used in hedging activities
must be adjusted to fair value through earnings. Changes in the fair
value of derivatives used in hedging activities will, depending on the
nature of the hedge, either be offset in earnings against the change in
fair value of the hedged item attributable to the risk being hedged or
recognized in other comprehensive income until the hedged item affects
earnings. For all hedging activities, the ineffective portion of a
derivative's change in fair value will be immediately recognized in
earnings.
SFAS No. 133 requires adoption in fiscal years beginning after June 15,
1999 and permits early adoption as of the beginning of any fiscal
quarter following issuance of the statement. Retroactive application to
financial statements of prior periods is prohibited. The Company expects
to adopt SFAS No. 133 effective January 1, 2000. Adjustments resulting
from initial adoption of the new requirements will be reported in a
manner similar to the cumulative effect of a change in accounting
principle and will be reflected in net income or accumulated other
comprehensive income based upon existing hedging relationships, if any.
Management currently is assessing the impact of adoption. However,
Alliance's adoption is not expected to have a significant impact on the
Company's consolidated balance sheet or statement of earnings. Also,
since most of DLJ's derivatives are carried at fair values, the
Company's consolidated earnings and financial position are not expected
to be significantly affected by DLJ's adoption of the new requirements.
F-8
<PAGE>
In late 1998, the AICPA issued SOP 98-7, "Deposit Accounting: Accounting
for Insurance and Reinsurance Contracts that Do Not Transfer Insurance
Risk". This SOP, effective for fiscal years beginning after June 15,
1999, provides guidance to both the insured and insurer on how to apply
the deposit method of accounting when it is required for insurance and
reinsurance contracts that do not transfer insurance risk. The SOP does
not address or change the requirements as to when deposit accounting
should be applied. SOP 98-7 applies to all entities and all insurance
and reinsurance contracts that do not transfer insurance risk except for
long-duration life and health insurance contracts. This SOP is not
expected to have a material impact on the Company's consolidated
financial statements.
In December 1997, the AICPA issued SOP 97-3, "Accounting by Insurance
and Other Enterprises for Insurance-Related Assessments". SOP 97-3
provides guidance for assessments related to insurance activities and
requirements for disclosure of certain information. SOP 97-3 is
effective for financial statements issued for periods beginning after
December 31, 1998. Restatement of previously issued financial statements
is not required. SOP 97-3 is not expected to have a material impact on
the Company's consolidated financial statements.
Valuation of Investments
Fixed maturities identified as available for sale are reported at
estimated fair value. Fixed maturities, which the Company has both the
ability and the intent to hold to maturity, are stated principally at
amortized cost. The amortized cost of fixed maturities is adjusted for
impairments in value deemed to be other than temporary.
Valuation allowances are netted against the asset categories to which
they apply.
Mortgage loans on real estate are stated at unpaid principal balances,
net of unamortized discounts and valuation allowances. Valuation
allowances are based on the present value of expected future cash flows
discounted at the loan's original effective interest rate or the
collateral value if the loan is collateral dependent. However, if
foreclosure is or becomes probable, the measurement method used is
collateral value.
Real estate, including real estate acquired in satisfaction of debt, is
stated at depreciated cost less valuation allowances. At the date of
foreclosure (including in-substance foreclosure), real estate acquired
in satisfaction of debt is valued at estimated fair value. Impaired real
estate is written down to fair value with the impairment loss being
included in investment gains (losses), net. Valuation allowances on real
estate held for sale are computed using the lower of depreciated cost or
current estimated fair value, net of disposition costs. Depreciation is
discontinued on real estate held for sale. Prior to the adoption of SFAS
No. 121, valuation allowances on real estate held for production of
income were computed using the forecasted cash flows of the respective
properties discounted at a rate equal to the Company's cost of funds.
Policy loans are stated at unpaid principal balances.
Partnerships and joint venture interests in which the Company does not
have control or a majority economic interest are reported on the equity
basis of accounting and are included either with equity real estate or
other equity investments, as appropriate.
Common stocks are carried at estimated fair value and are included in
other equity investments.
Short-term investments are stated at amortized cost which approximates
fair value and are included with other invested assets.
F-9
<PAGE>
Cash and cash equivalents includes cash on hand, amounts due from banks
and highly liquid debt instruments purchased with an original maturity
of three months or less.
All securities are recorded in the consolidated financial statements on
a trade date basis.
Net Investment Income, Investment Gains, Net and Unrealized Investment
Gains (Losses)
Net investment income and realized investment gains (losses)
(collectively, "investment results") related to certain participating
group annuity contracts which are passed through to the contractholders
are reflected as interest credited to policyholders' account balances.
Realized investment gains (losses) are determined by specific
identification and are presented as a component of revenue. Changes in
valuation allowances are included in investment gains (losses).
Unrealized investment gains and losses on equity securities and fixed
maturities available for sale held by the Company are accounted for as a
separate component of accumulated comprehensive income, net of related
deferred Federal income taxes, amounts attributable to discontinued
operations, participating group annuity contracts and deferred policy
acquisition costs ("DAC") related to universal life and investment-type
products and participating traditional life contracts.
Recognition of Insurance Income and Related Expenses
Premiums from universal life and investment-type contracts are reported
as deposits to policyholders' account balances. Revenues from these
contracts consist of amounts assessed during the period against
policyholders' account balances for mortality charges, policy
administration charges and surrender charges. Policy benefits and claims
that are charged to expense include benefit claims incurred in the
period in excess of related policyholders' account balances.
Premiums from participating and non-participating traditional life and
annuity policies with life contingencies generally are recognized as
income when due. Benefits and expenses are matched with such income so
as to result in the recognition of profits over the life of the
contracts. This match is accomplished by means of the provision for
liabilities for future policy benefits and the deferral and subsequent
amortization of policy acquisition costs.
For contracts with a single premium or a limited number of premium
payments due over a significantly shorter period than the total period
over which benefits are provided, premiums are recorded as income when
due with any excess profit deferred and recognized in income in a
constant relationship to insurance in force or, for annuities, the
amount of expected future benefit payments.
Premiums from individual health contracts are recognized as income over
the period to which the premiums relate in proportion to the amount of
insurance protection provided.
Deferred Policy Acquisition Costs
The costs of acquiring new business, principally commissions,
underwriting, agency and policy issue expenses, all of which vary with
and are primarily related to the production of new business, are
deferred. DAC is subject to recoverability testing at the time of policy
issue and loss recognition testing at the end of each accounting period.
For universal life products and investment-type products, DAC is
amortized over the expected total life of the contract group (periods
ranging from 25 to 35 years and 5 to 17 years, respectively) as a
constant percentage of estimated gross profits arising principally from
investment results, mortality and expense margins and surrender charges
based on historical and anticipated future experience, updated at the
end of each accounting period. The effect on the amortization of DAC of
revisions to estimated gross profits is reflected in earnings in the
period such estimated gross profits are revised. The effect on the DAC
asset that would result from realization of unrealized gains (losses) is
recognized with an offset to accumulated other comprehensive income in
consolidated shareholder's equity as of the balance sheet date.
F-10
<PAGE>
For participating traditional life policies (substantially all of which
are in the Closed Block), DAC is amortized over the expected total life
of the contract group (40 years) as a constant percentage based on the
present value of the estimated gross margin amounts expected to be
realized over the life of the contracts using the expected investment
yield. At December 31, 1998, the expected investment yield, excluding
policy loans, generally ranged from 7.29% grading to 6.5% over a 20 year
period. Estimated gross margin includes anticipated premiums and
investment results less claims and administrative expenses, changes in
the net level premium reserve and expected annual policyholder
dividends. The effect on the amortization of DAC of revisions to
estimated gross margins is reflected in earnings in the period such
estimated gross margins are revised. The effect on the DAC asset that
would result from realization of unrealized gains (losses) is recognized
with an offset to accumulated comprehensive income in consolidated
shareholder's equity as of the balance sheet date.
For non-participating traditional life and annuity policies with life
contingencies, DAC is amortized in proportion to anticipated premiums.
Assumptions as to anticipated premiums are estimated at the date of
policy issue and are consistently applied during the life of the
contracts. Deviations from estimated experience are reflected in
earnings in the period such deviations occur. For these contracts, the
amortization periods generally are for the total life of the policy.
For individual health benefit insurance, DAC is amortized over the
expected average life of the contracts (10 years for major medical
policies and 20 years for disability income ("DI") products) in
proportion to anticipated premium revenue at time of issue.
Policyholders' Account Balances and Future Policy Benefits
Policyholders' account balances for universal life and investment-type
contracts are equal to the policy account values. The policy account
values represents an accumulation of gross premium payments plus
credited interest less expense and mortality charges and withdrawals.
For participating traditional life policies, future policy benefit
liabilities are calculated using a net level premium method on the basis
of actuarial assumptions equal to guaranteed mortality and dividend fund
interest rates. The liability for annual dividends represents the
accrual of annual dividends earned. Terminal dividends are accrued in
proportion to gross margins over the life of the contract.
For non-participating traditional life insurance policies, future policy
benefit liabilities are estimated using a net level premium method on
the basis of actuarial assumptions as to mortality, persistency and
interest established at policy issue. Assumptions established at policy
issue as to mortality and persistency are based on the Insurance Group's
experience which, together with interest and expense assumptions,
includes a margin for adverse deviation. When the liabilities for future
policy benefits plus the present value of expected future gross premiums
for a product are insufficient to provide for expected future policy
benefits and expenses for that product, DAC is written off and
thereafter, if required, a premium deficiency reserve is established by
a charge to earnings. Benefit liabilities for traditional annuities
during the accumulation period are equal to accumulated contractholders'
fund balances and after annuitization are equal to the present value of
expected future payments. Interest rates used in establishing such
liabilities range from 2.25% to 11.5% for life insurance liabilities and
from 2.25% to 13.5% for annuity liabilities.
During the fourth quarter of 1996 a loss recognition study of
participating group annuity contracts and conversion annuities ("Pension
Par") was completed which included management's revised estimate of
assumptions, such as expected mortality and future investment returns.
The study's results prompted management to establish a premium
deficiency reserve which decreased earnings from continuing operations
and net earnings by $47.5 million ($73.0 million pre-tax).
Individual health benefit liabilities for active lives are estimated
using the net level premium method and assumptions as to future
morbidity, withdrawals and interest. Benefit liabilities for disabled
lives are estimated using the present value of benefits method and
experience assumptions as to claim terminations, expenses and interest.
F-11
<PAGE>
During the fourth quarter of 1996, the Company completed a loss
recognition study of the DI business which incorporated management's
revised estimates of future experience with regard to morbidity,
investment returns, claims and administration expenses and other
factors. The study indicated DAC was not recoverable and the reserves
were not sufficient. Earnings from continuing operations and net
earnings decreased by $208.0 million ($320.0 million pre-tax) as a
result of strengthening DI reserves by $175.0 million and writing off
unamortized DAC of $145.0 million related to DI products issued prior to
July 1993. The determination of DI reserves requires making assumptions
and estimates relating to a variety of factors, including morbidity and
interest rates, claims experience and lapse rates based on then known
facts and circumstances. Such factors as claim incidence and termination
rates can be affected by changes in the economic, legal and regulatory
environments and work ethic. While management believes its Pension Par
and DI reserves have been calculated on a reasonable basis and are
adequate, there can be no assurance reserves will be sufficient to
provide for future liabilities.
Claim reserves and associated liabilities for individual DI and major
medical policies were $938.6 million and $886.7 million at December 31,
1998 and 1997, respectively. Incurred benefits (benefits paid plus
changes in claim reserves) and benefits paid for individual DI and major
medical policies (excluding reserve strengthening in 1996) are
summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Incurred benefits related to current year.......... $ 202.1 $ 190.2 $ 189.0
Incurred benefits related to prior years........... 22.2 2.1 69.1
----------------- ---------------- -----------------
Total Incurred Benefits............................ $ 224.3 $ 192.3 $ 258.1
================= ================ =================
Benefits paid related to current year.............. $ 17.0 $ 28.8 $ 32.6
Benefits paid related to prior years............... 155.4 146.2 153.3
----------------- ---------------- -----------------
Total Benefits Paid................................ $ 172.4 $ 175.0 $ 185.9
================= ================ =================
</TABLE>
Policyholders' Dividends
The amount of policyholders' dividends to be paid (including those on
policies included in the Closed Block) is determined annually by
Equitable Life's board of directors. The aggregate amount of
policyholders' dividends is related to actual interest, mortality,
morbidity and expense experience for the year and judgment as to the
appropriate level of statutory surplus to be retained by Equitable Life.
At December 31, 1998, participating policies, including those in the
Closed Block, represent approximately 19.9% ($49.3 billion) of directly
written life insurance in force, net of amounts ceded.
Federal Income Taxes
The Company files a consolidated Federal income tax return with the
Holding Company and its consolidated subsidiaries. Current Federal
income taxes are charged or credited to operations based upon amounts
estimated to be payable or recoverable as a result of taxable operations
for the current year. Deferred income tax assets and liabilities are
recognized based on the difference between financial statement carrying
amounts and income tax bases of assets and liabilities using enacted
income tax rates and laws.
Separate Accounts
Separate Accounts are established in conformity with the New York State
Insurance Law and generally are not chargeable with liabilities that
arise from any other business of the Insurance Group. Separate Accounts
assets are subject to General Account claims only to the extent the
value of such assets exceeds Separate Accounts liabilities.
F-12
<PAGE>
Assets and liabilities of the Separate Accounts, representing net
deposits and accumulated net investment earnings less fees, held
primarily for the benefit of contractholders, and for which the
Insurance Group does not bear the investment risk, are shown as separate
captions in the consolidated balance sheets. The Insurance Group bears
the investment risk on assets held in one Separate Account; therefore,
such assets are carried on the same basis as similar assets held in the
General Account portfolio. Assets held in the other Separate Accounts
are carried at quoted market values or, where quoted values are not
available, at estimated fair values as determined by the Insurance
Group.
The investment results of Separate Accounts on which the Insurance Group
does not bear the investment risk are reflected directly in Separate
Accounts liabilities. For 1998, 1997 and 1996, investment results of
such Separate Accounts were $4,591.0 million, $3,411.1 million and
$2,970.6 million, respectively.
Deposits to Separate Accounts are reported as increases in Separate
Accounts liabilities and are not reported in revenues. Mortality, policy
administration and surrender charges on all Separate Accounts are
included in revenues.
Employee Stock Option Plan
The Company accounts for stock option plans sponsored by the Holding
Company, DLJ and Alliance in accordance with the provisions of
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for
Stock Issued to Employees," and related interpretations. In accordance
with the Statement, compensation expense is recorded on the date of
grant only if the current market price of the underlying stock exceeds
the option price. See Note 22 for the pro forma disclosures for the
Holding Company, DLJ and Alliance required by SFAS No. 123, "Accounting
for Stock-Based Compensation".
F-13
<PAGE>
3) INVESTMENTS
The following tables provide additional information relating to fixed
maturities and equity securities:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
----------------- ----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C> <C>
December 31, 1998
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 14,520.8 $ 793.6 $ 379.6 $ 14,934.8
Mortgage-backed.................... 1,807.9 23.3 .9 1,830.3
U.S. Treasury securities and
U.S. government and
agency securities................ 1,464.1 107.6 .7 1,571.0
States and political subdivisions.. 55.0 9.9 - 64.9
Foreign governments................ 363.3 20.9 30.0 354.2
Redeemable preferred stock......... 242.7 7.0 11.2 238.5
----------------- ----------------- ---------------- -----------------
Total Available for Sale............... $ 18,453.8 $ 962.3 $ 422.4 $ 18,993.7
================= ================= ================ =================
Held to Maturity: Corporate......... $ 125.0 $ - $ - $ 125.0
================= ================= ================ =================
Equity Securities:
Common stock......................... $ 58.3 $ 114.9 $ 22.5 $ 150.7
================= ================= ================ =================
December 31, 1997
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 14,850.5 $ 785.0 $ 74.5 $ 15,561.0
Mortgage-backed.................... 1,702.8 23.5 1.3 1,725.0
U.S. Treasury securities and
U.S. government and
agency securities................ 1,583.2 83.9 .6 1,666.5
States and political subdivisions.. 52.8 6.8 .1 59.5
Foreign governments................ 442.4 44.8 2.0 485.2
Redeemable preferred stock......... 128.0 6.7 1.0 133.7
----------------- ----------------- ---------------- -----------------
Total Available for Sale............... $ 18,759.7 $ 950.7 $ 79.5 $ 19,630.9
================= ================= ================ =================
Equity Securities:
Common stock......................... $ 408.4 $ 48.7 $ 15.0 $ 442.1
================= ================= ================ =================
</TABLE>
For publicly traded fixed maturities and equity securities, estimated
fair value is determined using quoted market prices. For fixed
maturities without a readily ascertainable market value, the Company
determines an estimated fair value using a discounted cash flow
approach, including provisions for credit risk, generally based on the
assumption such securities will be held to maturity. Estimated fair
values for equity securities, substantially all of which do not have a
readily ascertainable market value, have been determined by the Company.
Such estimated fair values do not necessarily represent the values for
which these securities could have been sold at the dates of the
consolidated balance sheets. At December 31, 1998 and 1997, securities
without a readily ascertainable market value having an amortized cost of
$3,539.9 million and $3,759.2 million, respectively, had estimated fair
values of $3,748.5 million and $3,903.9 million, respectively.
F-14
<PAGE>
The contractual maturity of bonds at December 31, 1998 is shown below:
<TABLE>
<CAPTION>
Available for Sale
------------------------------------
Amortized Estimated
Cost Fair Value
---------------- -----------------
(In Millions)
<S> <C> <C>
Due in one year or less................................................ $ 324.8 $ 323.4
Due in years two through five.......................................... 3,778.2 3,787.9
Due in years six through ten........................................... 6,543.4 6,594.1
Due after ten years.................................................... 5,756.8 6,219.5
Mortgage-backed securities............................................. 1,807.9 1,830.3
---------------- -----------------
Total.................................................................. $ 18,211.1 $ 18,755.2
================ =================
</TABLE>
Corporate bonds held to maturity with an amortized cost and estimated
fair value of $125.0 million are due in one year or less.
Bonds not due at a single maturity date have been included in the above
table in the year of final maturity. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
The Insurance Group's fixed maturity investment portfolio includes
corporate high yield securities consisting of public high yield bonds,
redeemable preferred stocks and directly negotiated debt in leveraged
buyout transactions. The Insurance Group seeks to minimize the higher
than normal credit risks associated with such securities by monitoring
concentrations in any single issuer or a particular industry group.
Certain of these corporate high yield securities are classified as other
than investment grade by the various rating agencies, i.e., a rating
below Baa or National Association of Insurance Commissioners ("NAIC")
designation of 3 (medium grade), 4 or 5 (below investment grade) or 6
(in or near default). At December 31, 1998, approximately 15.1% of the
$18,336.1 million aggregate amortized cost of bonds held by the Company
was considered to be other than investment grade.
In addition, the Insurance Group is an equity investor in limited
partnership interests which primarily invest in securities considered to
be other than investment grade.
Fixed maturity investments with restructured or modified terms are not
material.
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Balances, beginning of year........................ $ 384.5 $ 137.1 $ 325.3
SFAS No. 121 release............................... - - (152.4)
Additions charged to income........................ 86.2 334.6 125.0
Deductions for writedowns and
asset dispositions............................... (240.1) (87.2) (160.8)
----------------- ---------------- -----------------
Balances, End of Year.............................. $ 230.6 $ 384.5 $ 137.1
================= ================ =================
Balances, end of year comprise:
Mortgage loans on real estate.................... $ 34.3 $ 55.8 $ 50.4
Equity real estate............................... 196.3 328.7 86.7
----------------- ---------------- -----------------
Total.............................................. $ 230.6 $ 384.5 $ 137.1
================= ================ =================
</TABLE>
F-15
<PAGE>
At December 31, 1998, the carrying value of fixed maturities which are
non-income producing for the twelve months preceding the consolidated
balance sheet date was $60.8 million.
At December 31, 1998 and 1997, mortgage loans on real estate with
scheduled payments 60 days (90 days for agricultural mortgages) or more
past due or in foreclosure (collectively, "problem mortgage loans on
real estate") had an amortized cost of $7.0 million (0.2% of total
mortgage loans on real estate) and $23.4 million (0.9% of total mortgage
loans on real estate), respectively.
The payment terms of mortgage loans on real estate may from time to time
be restructured or modified. The investment in restructured mortgage
loans on real estate, based on amortized cost, amounted to $115.1
million and $183.4 million at December 31, 1998 and 1997, respectively.
Gross interest income on restructured mortgage loans on real estate that
would have been recorded in accordance with the original terms of such
loans amounted to $10.3 million, $17.2 million and $35.5 million in
1998, 1997 and 1996, respectively. Gross interest income on these loans
included in net investment income aggregated $8.3 million, $12.7 million
and $28.2 million in 1998, 1997 and 1996, respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1998 1997
------------------- -------------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses.................. $ 125.4 $ 196.7
Impaired mortgage loans without provision for losses............... 8.6 3.6
------------------- -------------------
Recorded investment in impaired mortgage loans..................... 134.0 200.3
Provision for losses............................................... (29.0) (51.8)
------------------- -------------------
Net Impaired Mortgage Loans........................................ $ 105.0 $ 148.5
=================== ===================
</TABLE>
Impaired mortgage loans without provision for losses are loans where the
fair value of the collateral or the net present value of the expected
future cash flows related to the loan equals or exceeds the recorded
investment. Interest income earned on loans where the collateral value
is used to measure impairment is recorded on a cash basis. Interest
income on loans where the present value method is used to measure
impairment is accrued on the net carrying value amount of the loan at
the interest rate used to discount the cash flows. Changes in the
present value attributable to changes in the amount or timing of
expected cash flows are reported as investment gains or losses.
During 1998, 1997 and 1996, respectively, the Company's average recorded
investment in impaired mortgage loans was $161.3 million, $246.9 million
and $552.1 million. Interest income recognized on these impaired
mortgage loans totaled $12.3 million, $15.2 million and $38.8 million
($.9 million, $2.3 million and $17.9 million recognized on a cash basis)
for 1998, 1997 and 1996, respectively.
The Insurance Group's investment in equity real estate is through direct
ownership and through investments in real estate joint ventures. At
December 31, 1998 and 1997, the carrying value of equity real estate
held for sale amounted to $836.2 million and $1,023.5 million,
respectively. For 1998, 1997 and 1996, respectively, real estate of $7.1
million, $152.0 million and $58.7 million was acquired in satisfaction
of debt. At December 31, 1998 and 1997, the Company owned $552.3 million
and $693.3 million, respectively, of real estate acquired in
satisfaction of debt.
Depreciation of real estate held for production of income is computed
using the straight-line method over the estimated useful lives of the
properties, which generally range from 40 to 50 years. Accumulated
depreciation on real estate was $374.8 million and $541.1 million at
December 31, 1998 and 1997, respectively. Depreciation expense on real
estate totaled $30.5 million, $74.9 million and $91.8 million for 1998,
1997 and 1996, respectively.
F-16
<PAGE>
4) JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information for real estate joint ventures
(25 and 29 individual ventures as of December 31, 1998 and 1997,
respectively) and for limited partnership interests accounted for under
the equity method, in which the Company has an investment of $10.0
million or greater and an equity interest of 10% or greater, is as
follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
BALANCE SHEETS
Investments in real estate, at depreciated cost........................ $ 913.7 $ 1,700.9
Investments in securities, generally at estimated fair value........... 636.9 1,374.8
Cash and cash equivalents.............................................. 85.9 105.4
Other assets........................................................... 279.8 584.9
---------------- -----------------
Total Assets........................................................... $ 1,916.3 $ 3,766.0
================ =================
Borrowed funds - third party........................................... $ 367.1 $ 493.4
Borrowed funds - the Company........................................... 30.1 31.2
Other liabilities...................................................... 197.2 284.0
---------------- -----------------
Total liabilities...................................................... 594.4 808.6
---------------- -----------------
Partners' capital...................................................... 1,321.9 2,957.4
---------------- -----------------
Total Liabilities and Partners' Capital................................ $ 1,916.3 $ 3,766.0
================ =================
Equity in partners' capital included above............................. $ 312.9 $ 568.5
Equity in limited partnership interests not included above............. 442.1 331.8
Other.................................................................. .7 4.3
---------------- -----------------
Carrying Value......................................................... $ 755.7 $ 904.6
================ =================
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures............. $ 246.1 $ 310.5 $ 348.9
Revenues of other limited partnership interests.... 128.9 506.3 386.1
Interest expense - third party..................... (33.3) (91.8) (111.0)
Interest expense - the Company..................... (2.6) (7.2) (30.0)
Other expenses..................................... (197.0) (263.6) (282.5)
----------------- ---------------- -----------------
Net Earnings....................................... $ 142.1 $ 454.2 $ 311.5
================= ================ =================
Equity in net earnings included above.............. $ 59.6 $ 76.7 $ 73.9
Equity in net earnings of limited partnership
interests not included above..................... 22.7 69.5 35.8
Other.............................................. - (.9) .9
----------------- ---------------- -----------------
Total Equity in Net Earnings....................... $ 82.3 $ 145.3 $ 110.6
================= ================ =================
</TABLE>
F-17
<PAGE>
5) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Fixed maturities................................... $ 1,489.0 $ 1,459.4 $ 1,307.4
Mortgage loans on real estate...................... 235.4 260.8 303.0
Equity real estate................................. 356.1 390.4 442.4
Other equity investments........................... 83.8 156.9 122.0
Policy loans....................................... 144.9 177.0 160.3
Other investment income............................ 185.7 181.7 217.4
----------------- ---------------- -----------------
Gross investment income.......................... 2,494.9 2,626.2 2,552.5
Investment expenses.............................. (266.8) (343.4) (348.9)
----------------- ---------------- -----------------
Net Investment Income.............................. $ 2,228.1 $ 2,282.8 $ 2,203.6
================= ================ =================
</TABLE>
Investment gains (losses), net, including changes in the valuation
allowances, are summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Fixed maturities................................... $ (24.3) $ 88.1 $ 60.5
Mortgage loans on real estate...................... (10.9) (11.2) (27.3)
Equity real estate................................. 74.5 (391.3) (79.7)
Other equity investments........................... 29.9 14.1 18.9
Sale of subsidiaries............................... (2.6) 252.1 -
Issuance and sales of Alliance Units............... 19.8 - 20.6
Issuance and sale of DLJ common stock.............. 18.2 3.0 -
Other.............................................. (4.4) - (2.8)
----------------- ---------------- -----------------
Investment Gains (Losses), Net..................... $ 100.2 $ (45.2) $ (9.8)
================= ================ =================
</TABLE>
Writedowns of fixed maturities amounted to $101.6 million, $11.7 million
and $29.9 million for 1998, 1997 and 1996, respectively, and writedowns
of equity real estate subsequent to the adoption of SFAS No. 121
amounted to $136.4 million for 1997. In the fourth quarter of 1997, the
Company reclassified $1,095.4 million depreciated cost of equity real
estate from real estate held for the production of income to real estate
held for sale. Additions to valuation allowances of $227.6 million were
recorded upon these transfers. Additionally, in fourth quarter 1997,
$132.3 million of writedowns on real estate held for production of
income were recorded.
For 1998, 1997 and 1996, respectively, proceeds received on sales of
fixed maturities classified as available for sale amounted to $15,961.0
million, $9,789.7 million and $8,353.5 million. Gross gains of $149.3
million, $166.0 million and $154.2 million and gross losses of $95.1
million, $108.8 million and $92.7 million, respectively, were realized
on these sales. The change in unrealized investment gains (losses)
related to fixed maturities classified as available for sale for 1998,
1997 and 1996 amounted to $(331.7) million, $513.4 million and $(258.0)
million, respectively.
For 1998, 1997 and 1996, investment results passed through to certain
participating group annuity contracts as interest credited to
policyholders' account balances amounted to $136.9 million, $137.5
million and $136.7 million, respectively.
F-18
<PAGE>
On June 10, 1997, Equitable Life sold EREIM (other than its interest in
Column Financial, Inc.) ("ERE") to Lend Lease Corporation Limited ("Lend
Lease"), a publicly traded, international property and financial
services company based in Sydney, Australia. The total purchase price
was $400.0 million and consisted of $300.0 million in cash and a $100.0
million note which was paid in 1998. The Company recognized an
investment gain of $162.4 million, net of Federal income tax of $87.4
million as a result of this transaction. Equitable Life entered into
long-term advisory agreements whereby ERE continues to provide
substantially the same services to Equitable Life's General Account and
Separate Accounts, for substantially the same fees, as provided prior to
the sale.
Through June 10, 1997 and for the year ended December 31, 1996,
respectively, the businesses sold reported combined revenues of $91.6
million and $226.1 million and combined net earnings of $10.7 million
and $30.7 million.
In 1996, Alliance acquired the business of Cursitor Holdings L.P. and
Cursitor Holdings Limited (collectively, "Cursitor") for approximately
$159.0 million. The purchase price consisted of $94.3 million in cash,
1.8 million of Alliance's publicly traded units ("Alliance Units"), 6%
notes aggregating $21.5 million payable ratably over four years, and
additional consideration to be determined at a later date but currently
estimated to not exceed $10.0 million. The excess of the purchase price,
including acquisition costs and minority interest, over the fair value
of Cursitor's net assets acquired resulted in the recognition of
intangible assets consisting of costs assigned to contracts acquired and
goodwill of approximately $122.8 million and $38.3 million,
respectively. The Company recognized an investment gain of $20.6 million
as a result of the issuance of Alliance Units in this transaction. On
June 30, 1997, Alliance reduced the recorded value of goodwill and
contracts associated with Alliance's acquisition of Cursitor by $120.9
million. This charge reflected Alliance's view that Cursitor's
continuing decline in assets under management and its reduced
profitability, resulting from relative investment underperformance, no
longer supported the carrying value of its investment. As a result, the
Company's earnings from continuing operations before cumulative effect
of accounting change for 1997 included a charge of $59.5 million, net of
a Federal income tax benefit of $10.0 million and minority interest of
$51.4 million. The remaining balance of intangible assets is being
amortized over its estimated useful life of 20 years. At December 31,
1998, the Company's ownership of Alliance Units was approximately 56.7%.
F-19
<PAGE>
Net unrealized investment gains (losses), included in the consolidated
balance sheets as a component of accumulated comprehensive income and
the changes for the corresponding years, are summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Balance, beginning of year......................... $ 533.6 $ 189.9 $ 396.5
Changes in unrealized investment gains (losses).... (242.4) 543.3 (297.6)
Changes in unrealized investment losses
(gains) attributable to:
Participating group annuity contracts.......... (5.7) 53.2 -
DAC............................................ 13.2 (89.0) 42.3
Deferred Federal income taxes.................. 85.4 (163.8) 48.7
----------------- ---------------- -----------------
Balance, End of Year............................... $ 384.1 $ 533.6 $ 189.9
================= ================ =================
Balance, end of year comprises:
Unrealized investment gains on:
Fixed maturities............................... $ 539.9 $ 871.2 $ 357.8
Other equity investments....................... 92.4 33.7 31.6
Other, principally Closed Block................ 111.1 80.9 53.1
----------------- ---------------- -----------------
Total........................................ 743.4 985.8 442.5
Amounts of unrealized investment gains
attributable to:
Participating group annuity contracts........ (24.7) (19.0) (72.2)
DAC.......................................... (127.8) (141.0) (52.0)
Deferred Federal income taxes................ (206.8) (292.2) (128.4)
----------------- ---------------- -----------------
Total.............................................. $ 384.1 $ 533.6 $ 189.9
================= ================ =================
</TABLE>
6) ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income represents cumulative gains and
losses on items that are not reflected in earnings. The balances for the
years 1998, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Unrealized gains on investments.................... $ 384.1 $ 533.6 $ 189.9
Minimum pension liability.......................... (28.3) (17.3) (12.9)
----------------- ---------------- -----------------
Total Accumulated Other
Comprehensive Income............................. $ 355.8 $ 516.3 $ 177.0
================= ================ =================
</TABLE>
F-20
<PAGE>
The components of other comprehensive income for the years 1998, 1997
and 1996 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Net unrealized gains (losses) on investment
securities:
Net unrealized gains (losses) arising during
the period..................................... $ (186.1) $ 564.0 $ (249.8)
Reclassification adjustment for (gains) losses
included in net earnings....................... (56.3) (20.7) (47.8)
----------------- ---------------- -----------------
Net unrealized gains (losses) on investment
securities....................................... (242.4) 543.3 (297.6)
Adjustments for policyholder liabilities,
DAC and deferred
Federal income taxes............................. 92.9 (199.6) 91.0
----------------- ---------------- -----------------
Change in unrealized gains (losses), net of
reclassification and adjustments................. (149.5) 343.7 (206.6)
Change in minimum pension liability................ (11.0) (4.4) 22.2
----------------- ---------------- -----------------
Total Other Comprehensive Income................... $ (160.5) $ 339.3 $ (184.4)
================= ================ =================
</TABLE>
7) CLOSED BLOCK
Summarized financial information for the Closed Block follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1998 1997
----------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost,
$4,149.0 and $4,059.4)........................................... $ 4,373.2 $ 4,231.0
Mortgage loans on real estate........................................ 1,633.4 1,341.6
Policy loans......................................................... 1,641.2 1,700.2
Cash and other invested assets....................................... 86.5 282.0
DAC.................................................................. 676.5 775.2
Other assets......................................................... 221.6 236.6
----------------- -----------------
Total Assets......................................................... $ 8,632.4 $ 8,566.6
================= =================
Liabilities
Future policy benefits and policyholders' account balances........... $ 9,013.1 $ 8,993.2
Other liabilities.................................................... 63.9 80.5
----------------- -----------------
Total Liabilities.................................................... $ 9,077.0 $ 9,073.7
================= =================
</TABLE>
F-21
<PAGE>
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Premiums and other revenue......................... $ 661.7 $ 687.1 $ 724.8
Investment income (net of investment
expenses of $15.5, $27.0 and $27.3).............. 569.7 574.9 546.6
Investment losses, net............................. .5 (42.4) (5.5)
----------------- ---------------- -----------------
Total revenues............................... 1,231.9 1,219.6 1,265.9
----------------- ---------------- -----------------
Benefits and Other Deductions
Policyholders' benefits and dividends.............. 1,082.0 1,066.7 1,106.3
Other operating costs and expenses................. 62.8 50.4 34.6
----------------- ---------------- -----------------
Total benefits and other deductions.......... 1,144.8 1,117.1 1,140.9
----------------- ---------------- -----------------
Contribution from the Closed Block................. $ 87.1 $ 102.5 $ 125.0
================= ================ =================
</TABLE>
At December 31, 1998 and 1997, problem mortgage loans on real estate had
an amortized cost of $5.1 million and $8.1 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had an amortized cost of $26.0 million and $70.5 million,
respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 55.5 $ 109.1
Impaired mortgage loans without provision for losses................... 7.6 .6
---------------- -----------------
Recorded investment in impaired mortgages.............................. 63.1 109.7
Provision for losses................................................... (10.1) (17.4)
---------------- -----------------
Net Impaired Mortgage Loans............................................ $ 53.0 $ 92.3
================ =================
</TABLE>
During 1998, 1997 and 1996, the Closed Block's average recorded
investment in impaired mortgage loans was $85.5 million, $110.2 million
and $153.8 million, respectively. Interest income recognized on these
impaired mortgage loans totaled $4.7 million, $9.4 million and $10.9
million ($1.5 million, $4.1 million and $4.7 million recognized on a
cash basis) for 1998, 1997 and 1996, respectively.
Valuation allowances amounted to $11.1 million and $18.5 million on
mortgage loans on real estate and $15.4 million and $16.8 million on
equity real estate at December 31, 1998 and 1997, respectively. As of
January 1, 1996, the adoption of SFAS No. 121 resulted in the
recognition of impairment losses of $5.6 million on real estate held for
production of income. Writedowns of fixed maturities amounted to $3.5
million and $12.8 million for 1997 and 1996, respectively. Writedowns of
equity real estate subsequent to the adoption of SFAS No. 121 amounted
to $28.8 million for 1997.
In the fourth quarter of 1997, $72.9 million depreciated cost of equity
real estate held for production of income was reclassified to equity
real estate held for sale. Additions to valuation allowances of $15.4
million were recorded upon these transfers. Additionally, in fourth
quarter 1997, $28.8 million of writedowns on real estate held for
production of income were recorded.
Many expenses related to Closed Block operations are charged to
operations outside of the Closed Block; accordingly, the contribution
from the Closed Block does not represent the actual profitability of the
Closed Block operations. Operating costs and expenses outside of the
Closed Block are, therefore, disproportionate to the business outside of
the Closed Block.
F-22
<PAGE>
8) DISCONTINUED OPERATIONS
Summarized financial information for discontinued operations follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1998 1997
----------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Mortgage loans on real estate........................................ $ 553.9 $ 635.2
Equity real estate................................................... 611.0 874.5
Other equity investments............................................. 115.1 209.3
Other invested assets................................................ 24.9 152.4
----------------- -----------------
Total investments.................................................. 1,304.9 1,871.4
Cash and cash equivalents............................................ 34.7 106.8
Other assets......................................................... 219.0 243.8
----------------- -----------------
Total Assets......................................................... $ 1,558.6 $ 2,222.0
================= =================
Liabilities
Policyholders' liabilities........................................... $ 1,021.7 $ 1,048.3
Allowance for future losses.......................................... 305.1 259.2
Amounts due to continuing operations................................. 2.7 572.8
Other liabilities.................................................... 229.1 341.7
----------------- -----------------
Total Liabilities.................................................... $ 1,558.6 $ 2,222.0
================= =================
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Investment income (net of investment
expenses of $63.3, $97.3 and $127.5)............. $ 160.4 $ 188.6 $ 245.4
Investment gains (losses), net..................... 35.7 (173.7) (18.9)
Policy fees, premiums and other income............. (4.3) .2 .2
----------------- ---------------- -----------------
Total revenues..................................... 191.8 15.1 226.7
Benefits and other deductions...................... 141.5 169.5 250.4
Earnings added (losses charged) to allowance
for future losses................................ 50.3 (154.4) (23.7)
----------------- ---------------- -----------------
Pre-tax loss from operations....................... - - -
Pre-tax earnings from releasing (loss from
strengthening) of the allowance for future
losses........................................... 4.2 (134.1) (129.0)
Federal income tax (expense) benefit............... (1.5) 46.9 45.2
----------------- ---------------- -----------------
Earnings (Loss) from Discontinued Operations....... $ 2.7 $ (87.2) $ (83.8)
================= ================ =================
</TABLE>
The Company's quarterly process for evaluating the allowance for future
losses applies the current period's results of the discontinued
operations against the allowance, re-estimates future losses and adjusts
the allowance, if appropriate. Additionally, as part of the Company's
annual planning process which takes place in the fourth quarter of each
year, investment and benefit cash flow projections are prepared. These
updated assumptions and estimates resulted in a release of allowance in
1998 and strengthening of allowance in 1997 and 1996.
F-23
<PAGE>
In the fourth quarter of 1997, $329.9 million depreciated cost of equity
real estate was reclassified from equity real estate held for production
of income to real estate held for sale. Additions to valuation
allowances of $79.8 million were recognized upon these transfers.
Additionally, in fourth quarter 1997, $92.5 million of writedowns on
real estate held for production of income were recognized.
Benefits and other deductions includes $26.6 million, $53.3 million and
$114.3 million of interest expense related to amounts borrowed from
continuing operations in 1998, 1997 and 1996, respectively.
Valuation allowances amounted to $3.0 million and $28.4 million on
mortgage loans on real estate and $34.8 million and $88.4 million on
equity real estate at December 31, 1998 and 1997, respectively. As of
January 1, 1996, the adoption of SFAS No. 121 resulted in a release of
existing valuation allowances of $71.9 million on equity real estate and
recognition of impairment losses of $69.8 million on real estate held
for production of income. Writedowns of equity real estate subsequent to
the adoption of SFAS No. 121 amounted to $95.7 million and $12.3 million
for 1997 and 1996, respectively.
At December 31, 1998 and 1997, problem mortgage loans on real estate had
amortized costs of $1.1 million and $11.0 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had amortized costs of $3.5 million and $109.4 million,
respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 6.7 $ 101.8
Impaired mortgage loans without provision for losses................... 8.5 .2
---------------- -----------------
Recorded investment in impaired mortgages.............................. 15.2 102.0
Provision for losses................................................... (2.1) (27.3)
---------------- -----------------
Net Impaired Mortgage Loans............................................ $ 13.1 $ 74.7
================ =================
</TABLE>
During 1998, 1997 and 1996, the discontinued operations' average
recorded investment in impaired mortgage loans was $73.3 million, $89.2
million and $134.8 million, respectively. Interest income recognized on
these impaired mortgage loans totaled $4.7 million, $6.6 million and
$10.1 million ($3.4 million, $5.3 million and $7.5 million recognized on
a cash basis) for 1998, 1997 and 1996, respectively.
At December 31, 1998 and 1997, discontinued operations had carrying
values of $50.0 million and $156.2 million, respectively, of real estate
acquired in satisfaction of debt.
F-24
<PAGE>
9) SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1998 1997
----------------- -----------------
(In Millions)
<S> <C> <C>
Short-term debt...................................................... $ 179.3 $ 422.2
----------------- -----------------
Long-term debt:
Equitable Life:
6.95% surplus notes scheduled to mature 2005....................... 399.4 399.4
7.70% surplus notes scheduled to mature 2015....................... 199.7 199.7
Other.............................................................. .3 .3
----------------- -----------------
Total Equitable Life........................................... 599.4 599.4
----------------- -----------------
Wholly Owned and Joint Venture Real Estate:
Mortgage notes, 5.91% - 12.00%, due through 2017................... 392.2 676.6
----------------- -----------------
Alliance:
Other.............................................................. 10.8 18.5
----------------- -----------------
Total long-term debt................................................. 1,002.4 1,294.5
----------------- -----------------
Total Short-term and Long-term Debt.................................. $ 1,181.7 $ 1,716.7
================= =================
</TABLE>
Short-term Debt
Equitable Life has a $350.0 million bank credit facility available to
fund short-term working capital needs and to facilitate the securities
settlement process. The credit facility consists of two types of
borrowing options with varying interest rates and expires in September
2000. The interest rates are based on external indices dependent on the
type of borrowing and at December 31, 1998 range from 5.23% to 7.75%.
There were no borrowings outstanding under this bank credit facility at
December 31, 1998.
Equitable Life has a commercial paper program with an issue limit of
$500.0 million. This program is available for general corporate purposes
used to support Equitable Life's liquidity needs and is supported by
Equitable Life's existing $350.0 million bank credit facility. At
December 31, 1998, there were no borrowings outstanding under this
program.
During July 1998, Alliance entered into a $425.0 million five-year
revolving credit facility with a group of commercial banks which
replaced a $250.0 million revolving credit facility. Under the facility,
the interest rate, at the option of Alliance, is a floating rate
generally based upon a defined prime rate, a rate related to the London
Interbank Offered Rate ("LIBOR") or the Federal Funds Rate. A facility
fee is payable on the total facility. During September 1998, Alliance
increased the size of its commercial paper program from $250.0 million
to $425.0 million. Borrowings from these two sources may not exceed
$425.0 million in the aggregate. The revolving credit facility provides
backup liquidity for commercial paper issued under Alliance's commercial
paper program and can be used as a direct source of borrowing. The
revolving credit facility contains covenants which require Alliance to,
among other things, meet certain financial ratios. As of December 31,
1998, Alliance had commercial paper outstanding totaling $179.5 million
at an effective interest rate of 5.5% and there were no borrowings
outstanding under Alliance's revolving credit facility.
Long-term Debt
Several of the long-term debt agreements have restrictive covenants
related to the total amount of debt, net tangible assets and other
matters. The Company is in compliance with all debt covenants.
F-25
<PAGE>
The Company has pledged real estate, mortgage loans, cash and securities
amounting to $640.2 million and $1,164.0 million at December 31, 1998
and 1997, respectively, as collateral for certain short-term and
long-term debt.
At December 31, 1998, aggregate maturities of the long-term debt based
on required principal payments at maturity for 1999 and the succeeding
four years are $322.8 million, $6.9 million, $1.7 million, $1.8 million
and $2.0 million, respectively, and $668.0 million thereafter.
10) FEDERAL INCOME TAXES
A summary of the Federal income tax expense in the consolidated
statements of earnings is shown below:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current.......................................... $ 283.3 $ 186.5 $ 97.9
Deferred......................................... 69.8 (95.0) (88.2)
----------------- ---------------- -----------------
Total.............................................. $ 353.1 $ 91.5 $ 9.7
================= ================ =================
</TABLE>
The Federal income taxes attributable to consolidated operations are
different from the amounts determined by multiplying the earnings before
Federal income taxes and minority interest by the expected Federal
income tax rate of 35%. The sources of the difference and the tax
effects of each are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Expected Federal income tax expense................ $ 414.3 $ 234.7 $ 73.0
Non-taxable minority interest...................... (33.2) (38.0) (28.6)
Adjustment of tax audit reserves................... 16.0 (81.7) 6.9
Equity in unconsolidated subsidiaries.............. (39.3) (45.1) (32.3)
Other.............................................. (4.7) 21.6 (9.3)
----------------- ---------------- -----------------
Federal Income Tax Expense......................... $ 353.1 $ 91.5 $ 9.7
================= ================ =================
</TABLE>
The components of the net deferred Federal income taxes are as follows:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
--------------------------------- ---------------------------------
Assets Liabilities Assets Liabilities
--------------- ---------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C> <C>
Compensation and related benefits...... $ 235.3 $ - $ 257.9 $ -
Other.................................. 27.8 - 30.7 -
DAC, reserves and reinsurance.......... - 231.4 - 222.8
Investments............................ - 364.4 - 405.7
--------------- ---------------- --------------- ---------------
Total.................................. $ 263.1 $ 595.8 $ 288.6 $ 628.5
=============== ================ =============== ===============
</TABLE>
F-26
<PAGE>
The deferred Federal income taxes impacting operations reflect the net
tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes. The sources of these temporary differences
and the tax effects of each are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
DAC, reserves and reinsurance...................... $ (7.7) $ 46.2 $ (156.2)
Investments........................................ 46.8 (113.8) 78.6
Compensation and related benefits.................. 28.6 3.7 22.3
Other.............................................. 2.1 (31.1) (32.9)
----------------- ---------------- -----------------
Deferred Federal Income Tax
Expense (Benefit)................................ $ 69.8 $ (95.0) $ (88.2)
================= ================ =================
</TABLE>
The Internal Revenue Service (the "IRS") is in the process of examining
the Holding Company's consolidated Federal income tax returns for the
years 1992 through 1996. Management believes these audits will have no
material adverse effect on the Company's results of operations.
11) REINSURANCE AGREEMENTS
The Insurance Group assumes and cedes reinsurance with other insurance
companies. The Insurance Group evaluates the financial condition of its
reinsurers to minimize its exposure to significant losses from reinsurer
insolvencies. Ceded reinsurance does not relieve the originating insurer
of liability. The effect of reinsurance (excluding group life and
health) is summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Direct premiums.................................... $ 438.8 $ 448.6 $ 461.4
Reinsurance assumed................................ 203.6 198.3 177.5
Reinsurance ceded.................................. (54.3) (45.4) (41.3)
----------------- ---------------- -----------------
Premiums........................................... $ 588.1 $ 601.5 $ 597.6
================= ================ =================
Universal Life and Investment-type Product
Policy Fee Income Ceded.......................... $ 75.7 $ 61.0 $ 48.2
================= ================ =================
Policyholders' Benefits Ceded...................... $ 85.9 $ 70.6 $ 54.1
================= ================ =================
Interest Credited to Policyholders' Account
Balances Ceded................................... $ 39.5 $ 36.4 $ 32.3
================= ================ =================
</TABLE>
Beginning in May 1997, the Company began reinsuring on a yearly renewal
term basis 90% of the mortality risk on new issues of certain term,
universal and variable life products. During 1996, the Company's
retention limit on joint survivorship policies was increased to $15.0
million. Effective January 1, 1994, all in force business above $5.0
million was reinsured. The Insurance Group also reinsures the entire
risk on certain substandard underwriting risks as well as in certain
other cases.
The Insurance Group cedes 100% of its group life and health business to
a third party insurance company. Premiums ceded totaled $1.3 million,
$1.6 million and $2.4 million for 1998, 1997 and 1996, respectively.
Ceded death and disability benefits totaled $15.6 million, $4.3 million
and $21.2 million for 1998, 1997 and 1996, respectively. Insurance
liabilities ceded totaled $560.3 million and $593.8 million at December
31, 1998 and 1997, respectively.
F-27
<PAGE>
12) EMPLOYEE BENEFIT PLANS
The Company sponsors qualified and non-qualified defined benefit plans
covering substantially all employees (including certain qualified
part-time employees), managers and certain agents. The pension plans are
non-contributory. Equitable Life's benefits are based on a cash balance
formula or years of service and final average earnings, if greater,
under certain grandfathering rules in the plans. Alliance's benefits are
based on years of credited service, average final base salary and
primary social security benefits. The Company's funding policy is to
make the minimum contribution required by the Employee Retirement Income
Security Act of 1974 ("ERISA").
Components of net periodic pension cost (credit) for the qualified and
non-qualified plans are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Service cost....................................... $ 33.2 $ 32.5 $ 33.8
Interest cost on projected benefit obligations..... 129.2 128.2 120.8
Actual return on assets............................ (175.6) (307.6) (181.4)
Net amortization and deferrals..................... 6.1 166.6 43.4
----------------- ---------------- -----------------
Net Periodic Pension Cost (Credit)................. $ (7.1) $ 19.7 $ 16.6
================= ================ =================
</TABLE>
The plan's projected benefit obligation under the qualified and
non-qualified plans was comprised of:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Benefit obligation, beginning of year.................................. $ 1,801.3 $ 1,765.5
Service cost........................................................... 33.2 32.5
Interest cost.......................................................... 129.2 128.2
Actuarial (gains) losses............................................... 108.4 (15.5)
Benefits paid.......................................................... (138.7) (109.4)
---------------- -----------------
Benefit Obligation, End of Year........................................ $ 1,933.4 $ 1,801.3
================ =================
</TABLE>
The funded status of the qualified and non-qualified pension plans is as
follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Plan assets at fair value, beginning of year........................... $ 1,867.4 $ 1,626.0
Actual return on plan assets........................................... 338.9 307.5
Contributions.......................................................... - 30.0
Benefits paid and fees................................................. (123.2) (96.1)
---------------- -----------------
Plan assets at fair value, end of year................................. 2,083.1 1,867.4
Projected benefit obligations.......................................... 1,933.4 1,801.3
---------------- -----------------
Projected benefit obligations less than plan assets.................... 149.7 66.1
Unrecognized prior service cost........................................ (7.5) (9.9)
Unrecognized net loss from past experience different
from that assumed.................................................... 38.7 95.0
Unrecognized net asset at transition................................... 1.5 3.1
---------------- -----------------
Prepaid Pension Cost.................................................. $ 182.4 $ 154.3
================ =================
</TABLE>
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of projected benefit
obligations were 7.0% and 3.83%, respectively, at December 31, 1998 and
7.25% and 4.07%, respectively, at December 31, 1997. As of January 1,
1998 and 1997, the expected long-term rate of return on assets for the
retirement plan was 10.25%.
F-28
<PAGE>
The Company recorded, as a reduction of shareholders' equity an
additional minimum pension liability of $28.3 million and $17.3 million,
net of Federal income taxes, at December 31, 1998 and 1997,
respectively, primarily representing the excess of the accumulated
benefit obligation of the qualified pension plan over the accrued
liability.
The pension plan's assets include corporate and government debt
securities, equity securities, equity real estate and shares of group
trusts managed by Alliance.
Prior to 1987, the qualified plan funded participants' benefits through
the purchase of non-participating annuity contracts from Equitable Life.
Benefit payments under these contracts were approximately $31.8 million,
$33.2 million and $34.7 million for 1998, 1997 and 1996, respectively.
The Company provides certain medical and life insurance benefits
(collectively, "postretirement benefits") for qualifying employees,
managers and agents retiring from the Company (i) on or after attaining
age 55 who have at least 10 years of service or (ii) on or after
attaining age 65 or (iii) whose jobs have been abolished and who have
attained age 50 with 20 years of service. The life insurance benefits
are related to age and salary at retirement. The costs of postretirement
benefits are recognized in accordance with the provisions of SFAS No.
106. The Company continues to fund postretirement benefits costs on a
pay-as-you-go basis and, for 1998, 1997 and 1996, the Company made
estimated postretirement benefits payments of $28.4 million, $18.7
million and $18.9 million, respectively.
The following table sets forth the postretirement benefits plan's
status, reconciled to amounts recognized in the Company's consolidated
financial statements:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Service cost....................................... $ 4.6 $ 4.5 $ 5.3
Interest cost on accumulated postretirement
benefits obligation.............................. 33.6 34.7 34.6
Net amortization and deferrals..................... .5 1.9 2.4
----------------- ---------------- -----------------
Net Periodic Postretirement Benefits Costs......... $ 38.7 $ 41.1 $ 42.3
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Accumulated postretirement benefits obligation, beginning
of year.............................................................. $ 490.8 $ 388.5
Service cost........................................................... 4.6 4.5
Interest cost.......................................................... 33.6 34.7
Contributions and benefits paid........................................ (28.4) 72.1
Actuarial (gains) losses............................................... (10.2) (9.0)
---------------- -----------------
Accumulated postretirement benefits obligation, end of year............ 490.4 490.8
Unrecognized prior service cost........................................ 31.8 40.3
Unrecognized net loss from past experience different
from that assumed and from changes in assumptions.................... (121.2) (140.6)
---------------- -----------------
Accrued Postretirement Benefits Cost................................... $ 401.0 $ 390.5
================ =================
</TABLE>
Since January 1, 1994, costs to the Company for providing these medical
benefits available to retirees under age 65 are the same as those
offered to active employees and medical benefits will be limited to 200%
of 1993 costs for all participants.
F-29
<PAGE>
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefits obligation was 8.0% in 1998,
gradually declining to 2.5% in the year 2009, and in 1997 was 8.75%,
gradually declining to 2.75% in the year 2009. The discount rate used in
determining the accumulated postretirement benefits obligation was 7.0%
and 7.25% at December 31, 1998 and 1997, respectively.
If the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefits obligation as of December 31, 1998
would be increased 4.83%. The effect of this change on the sum of the
service cost and interest cost would be an increase of 4.57%. If the
health care cost trend rate assumptions were decreased by 1% the
accumulated postretirement benefits obligation as of December 31, 1998
would be decreased by 5.6%. The effect of this change on the sum of the
service cost and interest cost would be a decrease of 5.4%.
13) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivatives
The Insurance Group primarily uses derivatives for asset/liability risk
management and for hedging individual securities. Derivatives mainly are
utilized to reduce the Insurance Group's exposure to interest rate
fluctuations. Accounting for interest rate swap transactions is on an
accrual basis. Gains and losses related to interest rate swap
transactions are amortized as yield adjustments over the remaining life
of the underlying hedged security. Income and expense resulting from
interest rate swap activities are reflected in net investment income.
The notional amount of matched interest rate swaps outstanding at
December 31, 1998 and 1997, respectively, was $880.9 million and
$1,353.4 million. The average unexpired terms at December 31, 1998
ranged from 1 month to 4.3 years. At December 31, 1998, the cost of
terminating swaps in a loss position was $8.0 million. Equitable Life
has implemented an interest rate cap program designed to hedge crediting
rates on interest-sensitive individual annuities contracts. The
outstanding notional amounts at December 31, 1998 of contracts purchased
and sold were $8,450.0 million and $875.0 million, respectively. The net
premium paid by Equitable Life on these contracts was $54.8 million and
is being amortized ratably over the contract periods ranging from 1 to 5
years. Income and expense resulting from this program are reflected as
an adjustment to interest credited to policyholders' account balances.
Substantially all of DLJ's activities related to derivatives are, by
their nature trading activities which are primarily for the purpose of
customer accommodations. DLJ enters into certain contractual agreements
referred to as derivatives or off-balance-sheet financial instruments
involving futures, forwards and options. DLJ's derivative activities
consist of writing over-the-counter ("OTC") options to accommodate its
customer needs, trading in forward contracts in U.S. government and
agency issued or guaranteed securities and in futures contracts on
equity-based indices, interest rate instruments and currencies and
issuing structured products based on emerging market financial
instruments and indices. DLJ's involvement in swap contracts and
commodity derivative instruments is not significant.
Fair Value of Financial Instruments
The Company defines fair value as the quoted market prices for those
instruments that are actively traded in financial markets. In cases
where quoted market prices are not available, fair values are estimated
using present value or other valuation techniques. The fair value
estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument,
including estimates of the timing and amount of expected future cash
flows and the credit standing of counterparties. Such estimates do not
reflect any premium or discount that could result from offering for sale
at one time the Company's entire holdings of a particular financial
instrument, nor do they consider the tax impact of the realization of
unrealized gains or losses. In many cases, the fair value estimates
cannot be substantiated by comparison to independent markets, nor can
the disclosed value be realized in immediate settlement of the
instrument.
Certain financial instruments are excluded, particularly insurance
liabilities other than financial guarantees and investment contracts.
Fair market value of off-balance-sheet financial instruments of the
Insurance Group was not material at December 31, 1998 and 1997.
F-30
<PAGE>
Fair values for mortgage loans on real estate are estimated by
discounting future contractual cash flows using interest rates at which
loans with similar characteristics and credit quality would be made.
Fair values for foreclosed mortgage loans and problem mortgage loans are
limited to the estimated fair value of the underlying collateral if
lower.
Fair values of policy loans are estimated by discounting the face value
of the loans from the time of the next interest rate review to the
present, at a rate equal to the excess of the current estimated market
rates over the current interest rate charged on the loan.
The estimated fair values for the Company's association plan contracts,
supplementary contracts not involving life contingencies ("SCNILC") and
annuities certain, which are included in policyholders' account
balances, and guaranteed interest contracts are estimated using
projected cash flows discounted at rates reflecting expected current
offering rates.
The estimated fair values for variable deferred annuities and single
premium deferred annuities ("SPDA"), which are included in
policyholders' account balances, are estimated by discounting the
account value back from the time of the next crediting rate review to
the present, at a rate equal to the excess of current estimated market
rates offered on new policies over the current crediting rates.
Fair values for long-term debt are determined using published market
values, where available, or contractual cash flows discounted at market
interest rates. The estimated fair values for non-recourse mortgage debt
are determined by discounting contractual cash flows at a rate which
takes into account the level of current market interest rates and
collateral risk. The estimated fair values for recourse mortgage debt
are determined by discounting contractual cash flows at a rate based
upon current interest rates of other companies with credit ratings
similar to the Company. The Company's carrying value of short-term
borrowings approximates their estimated fair value.
The following table discloses carrying value and estimated fair value
for financial instruments not otherwise disclosed in Notes 3, 7 and 8:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------------
1998 1997
--------------------------------- ---------------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
--------------- ---------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C> <C>
Consolidated Financial Instruments:
Mortgage loans on real estate.......... $ 2,809.9 $ 2,961.8 $ 2,611.4 $ 2,822.8
Other limited partnership interests.... 562.6 562.6 509.4 509.4
Policy loans........................... 2,086.7 2,370.7 2,422.9 2,493.9
Policyholders' account balances -
investment contracts................. 12,892.0 13,396.0 12,611.0 12,714.0
Long-term debt......................... 1,002.4 1,025.2 1,294.5 1,257.0
Closed Block Financial Instruments:
Mortgage loans on real estate.......... 1,633.4 1,703.5 1,341.6 1,420.7
Other equity investments............... 56.4 56.4 86.3 86.3
Policy loans........................... 1,641.2 1,929.7 1,700.2 1,784.2
SCNILC liability....................... 25.0 25.0 27.6 30.3
Discontinued Operations Financial
Instruments:
Mortgage loans on real estate.......... 553.9 599.9 655.5 779.9
Fixed maturities....................... 24.9 24.9 38.7 38.7
Other equity investments............... 115.1 115.1 209.3 209.3
Guaranteed interest contracts.......... 37.0 34.0 37.0 34.0
Long-term debt......................... 147.1 139.8 296.4 297.6
</TABLE>
F-31
<PAGE>
14) COMMITMENTS AND CONTINGENT LIABILITIES
The Company has provided, from time to time, certain guarantees or
commitments to affiliates, investors and others. These arrangements
include commitments by the Company, under certain conditions: to make
capital contributions of up to $142.9 million to affiliated real estate
joint ventures; and to provide equity financing to certain limited
partnerships of $287.3 million at December 31, 1998, under existing loan
or loan commitment agreements.
Equitable Life is the obligor under certain structured settlement
agreements which it had entered into with unaffiliated insurance
companies and beneficiaries. To satisfy its obligations under these
agreements, Equitable Life owns single premium annuities issued by
previously wholly owned life insurance subsidiaries. Equitable Life has
directed payment under these annuities to be made directly to the
beneficiaries under the structured settlement agreements. A contingent
liability exists with respect to these agreements should the previously
wholly owned subsidiaries be unable to meet their obligations.
Management believes the satisfaction of those obligations by Equitable
Life is remote.
The Insurance Group had $24.7 million of letters of credit outstanding
at December 31, 1998.
15) LITIGATION
Major Medical Insurance Cases
Equitable Life agreed to settle, subject to court approval, previously
disclosed cases involving lifetime guaranteed renewable major medical
insurance policies issued by Equitable Life in five states. Plaintiffs
in these cases claimed that Equitable Life's method for determining
premium increases breached the terms of certain forms of the policies
and was misrepresented. In certain cases plaintiffs also claimed that
Equitable Life misrepresented to policyholders that premium increases
had been approved by insurance departments, and that it determined
annual rate increases in a manner that discriminated against the
policyholders.
In December 1997, Equitable Life entered into a settlement agreement,
subject to court approval, which would result in creation of a
nationwide class consisting of all persons holding, and paying premiums
on, the policies at any time since January 1, 1988 and the dismissal
with prejudice of the pending actions and the resolution of all similar
claims on a nationwide basis. Under the terms of the settlement, which
involves approximately 127,000 former and current policyholders,
Equitable Life would pay $14.2 million in exchange for release of all
claims and will provide future relief to certain current policyholders
by restricting future premium increases, estimated to have a present
value of $23.3 million. This estimate is based upon assumptions about
future events that cannot be predicted with certainty and accordingly
the actual value of the future relief may vary. In October 1998, the
court entered a judgment approving the settlement agreement and, in
November, a member of the national class filed a notice of appeal of the
judgment. In January 1999, the Court of Appeals granted Equitable Life's
motion to dismiss the appeal.
Life Insurance and Annuity Sales Cases
A number of lawsuits are pending as individual claims and purported
class actions against Equitable Life and its subsidiary insurance
companies Equitable Variable Life Insurance Company ("EVLICO," which was
merged into Equitable Life effective January 1, 1997) and The Equitable
of Colorado, Inc. ("EOC"). These actions involve, among other things,
sales of life and annuity products for varying periods from 1980 to the
present, and allege, among other things, sales practice
misrepresentation primarily involving: the number of premium payments
required; the propriety of a product as an investment vehicle; the
propriety of a product as a replacement of an existing policy; and
failure to disclose a product as life insurance. Some actions are in
state courts and others are in U.S. District Courts in varying
jurisdictions, and are in varying stages of discovery and motions for
class certification.
F-32
<PAGE>
In general, the plaintiffs request an unspecified amount of damages,
punitive damages, enjoinment from the described practices, prohibition
against cancellation of policies for non-payment of premium or other
remedies, as well as attorneys' fees and expenses. Similar actions have
been filed against other life and health insurers and have resulted in
the award of substantial judgments, including material amounts of
punitive damages, or in substantial settlements. Although the outcome of
litigation cannot be predicted with certainty, particularly in the early
stages of an action, The Equitable's management believes that the
ultimate resolution of these cases should not have a material adverse
effect on the financial position of The Equitable. The Equitable's
management cannot make an estimate of loss, if any, or predict whether
or not any such litigation will have a material adverse effect on The
Equitable's results of operations in any particular period.
Discrimination Case
Equitable Life is a defendant in an action, certified as a class action
in September 1997, in the United States District Court for the Northern
District of Alabama, Southern Division, involving alleged discrimination
on the basis of race against African-American applicants and potential
applicants in hiring individuals as sales agents. Plaintiffs seek a
declaratory judgment and affirmative and negative injunctive relief,
including the payment of back-pay, pension and other compensation.
Although the outcome of litigation cannot be predicted with certainty,
The Equitable's management believes that the ultimate resolution of this
matter should not have a material adverse effect on the financial
position of The Equitable. The Equitable's management cannot make an
estimate of loss, if any, or predict whether or not such matter will
have a material adverse effect on The Equitable's results of operations
in any particular period.
Alliance Capital
In July 1995, a class action complaint was filed against Alliance North
American Government Income Trust, Inc. (the "Fund"), Alliance and
certain other defendants affiliated with Alliance, including the Holding
Company, alleging violations of Federal securities laws, fraud and
breach of fiduciary duty in connection with the Fund's investments in
Mexican and Argentine securities. The original complaint was dismissed
in 1996; on appeal, the dismissal was affirmed. In October 1996,
plaintiffs filed a motion for leave to file an amended complaint,
alleging the Fund failed to hedge against currency risk despite
representations that it would do so, the Fund did not properly disclose
that it planned to invest in mortgage-backed derivative securities and
two Fund advertisements misrepresented the risks of investing in the
Fund. In October 1998, the U.S. Court of Appeals for the Second Circuit
issued an order granting plaintiffs' motion to file an amended complaint
alleging that the Fund misrepresented its ability to hedge against
currency risk and denying plaintiffs' motion to file an amended
complaint containing the other allegations. Alliance believes that the
allegations in the amended complaint, which was filed in February 1999,
are without merit and intends to defend itself vigorously against these
claims. While the ultimate outcome of this matter cannot be determined
at this time, Alliance's management does not expect that it will have a
material adverse effect on Alliance's results of operations or financial
condition.
DLJSC
DLJSC is a defendant along with certain other parties in a class action
complaint involving the underwriting of units, consisting of notes and
warrants to purchase common shares, of Rickel Home Centers, Inc.
("Rickel"), which filed a voluntary petition for reorganization pursuant
to Chapter 11 of the Bankruptcy Code. The complaint seeks unspecified
compensatory and punitive damages from DLJSC, as an underwriter and as
an owner of 7.3% of the common stock, for alleged violation of Federal
securities laws and common law fraud for alleged misstatements and
omissions contained in the prospectus and registration statement used in
the offering of the units. DLJSC is defending itself vigorously against
all the allegations contained in the complaint. Although there can be no
assurance, DLJ's management does not believe that the ultimate outcome
of this litigation will have a material adverse effect on DLJ's
consolidated financial condition. Due to the early stage of this
litigation, based on the information currently available to it, DLJ's
management cannot predict whether or not such litigation will have a
material adverse effect on DLJ's results of operations in any particular
period.
F-33
<PAGE>
DLJSC is a defendant in a purported class action filed in a Texas State
Court on behalf of the holders of $550 million principal amount of
subordinated redeemable discount debentures of National Gypsum
Corporation ("NGC"). The debentures were canceled in connection with a
Chapter 11 plan of reorganization for NGC consummated in July 1993. The
litigation seeks compensatory and punitive damages for DLJSC's
activities as financial advisor to NGC in the course of NGC's Chapter 11
proceedings. Trial is expected in early May 1999. DLJSC intends to
defend itself vigorously against all the allegations contained in the
complaint. Although there can be no assurance, DLJ's management does not
believe that the ultimate outcome of this litigation will have a
material adverse effect on DLJ's consolidated financial condition. Based
upon the information currently available to it, DLJ's management cannot
predict whether or not such litigation will have a material adverse
effect on DLJ's results of operations in any particular period.
DLJSC is a defendant in a complaint which alleges that DLJSC and a
number of other financial institutions and several individual defendants
violated civil provisions of RICO by inducing plaintiffs to invest over
$40 million in The Securities Groups, a number of tax shelter limited
partnerships, during the years 1978 through 1982. The plaintiffs seek
recovery of the loss of their entire investment and an approximately
equivalent amount of tax-related damages. Judgment for damages under
RICO are subject to trebling. Discovery is complete. Trial has been
scheduled for May 17, 1999. DLJSC believes that it has meritorious
defenses to the complaints and will continue to contest the suits
vigorously. Although there can be no assurance, DLJ's management does
not believe that the ultimate outcome of this litigation will have a
material adverse effect on DLJ's consolidated financial condition. Based
upon the information currently available to it, DLJ's management cannot
predict whether or not such litigation will have a material adverse
effect on DLJ's results of operations in any particular period.
DLJSC is a defendant along with certain other parties in four actions
involving Mid-American Waste Systems, Inc. ("Mid-American"), which filed
a voluntary petition for reorganization pursuant to Chapter 11 of the
Bankruptcy Code in January 1997. Three actions seek rescission,
compensatory and punitive damages for DLJSC's role in underwriting notes
of Mid-American. The other action, filed by the Plan Administrator for
the bankruptcy estate of Mid-American, alleges that DLJSC is liable as
an underwriter for alleged misrepresentations and omissions in the
prospectus for the notes, and liable as financial advisor to
Mid-American for allegedly failing to advise Mid-American about its
financial condition. DLJSC believes that it has meritorious defenses to
the complaints and will continue to contest the suits vigorously.
Although there can be no assurance, DLJ's management does not believe
that the ultimate outcome of this litigation will have a material
adverse effect on DLJ's consolidated financial condition. Based upon
information currently available to it, DLJ's management cannot predict
whether or not such litigation will have a material adverse effect on
DLJ's results of operations in any particular period.
Other Matters
In addition to the matters described above, the Holding Company and its
subsidiaries are involved in various legal actions and proceedings in
connection with their businesses. Some of the actions and proceedings
have been brought on behalf of various alleged classes of claimants and
certain of these claimants seek damages of unspecified amounts. While
the ultimate outcome of such matters cannot be predicted with certainty,
in the opinion of management no such matter is likely to have a material
adverse effect on the Company's consolidated financial position or
results of operations.
16) LEASES
The Company has entered into operating leases for office space and
certain other assets, principally data processing equipment and office
furniture and equipment. Future minimum payments under noncancelable
leases for 1999 and the succeeding four years are $98.7 million, $92.7
million, $73.4 million, $59.9 million, $55.8 million and $550.1 million
thereafter. Minimum future sublease rental income on these noncancelable
leases for 1999 and the succeeding four years is $7.6 million, $5.6
million, $4.6 million, $2.3 million, $2.3 million and $25.4 million
thereafter.
F-34
<PAGE>
At December 31, 1998, the minimum future rental income on noncancelable
operating leases for wholly owned investments in real estate for 1999
and the succeeding four years is $189.2 million, $177.0 million, $165.5
million, $145.4 million, $122.8 million and $644.7 million thereafter.
17) OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Compensation costs................................. $ 772.0 $ 721.5 $ 704.8
Commissions........................................ 478.1 409.6 329.5
Short-term debt interest expense................... 26.1 31.7 8.0
Long-term debt interest expense.................... 84.6 121.2 137.3
Amortization of policy acquisition costs........... 292.7 287.3 405.2
Capitalization of policy acquisition costs......... (609.1) (508.0) (391.9)
Rent expense, net of sublease income............... 100.0 101.8 113.7
Cursitor intangible assets writedown............... - 120.9 -
Other.............................................. 1,056.8 917.9 769.1
----------------- ---------------- -----------------
Total.............................................. $ 2,201.2 $ 2,203.9 $ 2,075.7
================= ================ =================
</TABLE>
During 1997 and 1996, the Company restructured certain operations in
connection with cost reduction programs and recorded pre-tax provisions
of $42.4 million and $24.4 million, respectively. The amounts paid
during 1998, associated with cost reduction programs, totaled $22.6
million. At December 31, 1998, the liabilities associated with cost
reduction programs amounted to $39.4 million. The 1997 cost reduction
program included costs related to employee termination and exit costs.
The 1996 cost reduction program included restructuring costs related to
the consolidation of insurance operations' service centers. Amortization
of DAC in 1996 included a $145.0 million writeoff of DAC related to DI
contracts.
18) INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
Equitable Life is restricted as to the amounts it may pay as dividends
to the Holding Company. Under the New York Insurance Law, the
Superintendent has broad discretion to determine whether the financial
condition of a stock life insurance company would support the payment of
dividends to its shareholders. For 1998, 1997 and 1996, statutory net
income (loss) totaled $384.4 million, $(351.7) million and $(351.1)
million, respectively. Statutory surplus, capital stock and Asset
Valuation Reserve ("AVR") totaled $4,728.0 million and $3,907.1 million
at December 31, 1998 and 1997, respectively. No dividends have been paid
by Equitable Life to the Holding Company to date.
At December 31, 1998, the Insurance Group, in accordance with various
government and state regulations, had $25.6 million of securities
deposited with such government or state agencies.
The differences between statutory surplus and capital stock determined
in accordance with Statutory Accounting Principles ("SAP") and total
shareholders' equity on a GAAP basis are primarily attributable to: (a)
inclusion in SAP of an AVR intended to stabilize surplus from
fluctuations in the value of the investment portfolio; (b) future policy
benefits and policyholders' account balances under SAP differ from GAAP
due to differences between actuarial assumptions and reserving
methodologies; (c) certain policy acquisition costs are expensed under
SAP but deferred under GAAP and amortized over future periods to achieve
a matching of revenues and expenses; (d) Federal income taxes are
generally accrued under SAP based upon revenues and expenses in the
Federal income tax return while under GAAP deferred taxes are provided
for timing differences between recognition of revenues and expenses for
financial reporting and income tax purposes; (e) valuation of assets
under SAP and GAAP differ due to different investment valuation and
depreciation methodologies, as well as the deferral of interest-related
realized capital gains and losses on fixed income investments; and (f)
differences in the accrual methodologies for post-employment and
retirement benefit plans.
F-35
<PAGE>
19) BUSINESS SEGMENT INFORMATION
The Company's operations consist of Insurance and Investment Services.
The Company's management evaluates the performance of each of these
segments independently and allocates resources based on current and
future requirements of each segment. Management evaluates the
performance of each segment based upon operating results adjusted to
exclude the effect of unusual or non-recurring events and transactions
and certain revenue and expense categories not related to the base
operations of the particular business net of minority interest.
Information for all periods is presented on a comparable basis.
Intersegment investment advisory and other fees of approximately $61.8
million, $84.1 million and $129.2 million for 1998, 1997 and 1996,
respectively, are included in total revenues of the Investment Services
segment. These fees, excluding amounts related to discontinued
operations of $.5 million, $4.2 million and $13.3 million for 1998, 1997
and 1996, respectively, are eliminated in consolidation.
The following tables reconcile each segment's revenues and operating
earnings to total revenues and earnings from continuing operations
before Federal income taxes and cumulative effect of accounting change
as reported on the consolidated statements of earnings and the segments'
assets to total assets on the consolidated balance sheets, respectively.
<TABLE>
<CAPTION>
Investment
Insurance Services Elimination Total
--------------- ----------------- --------------- ----------------
(In Millions)
<S> <C> <C> <C> <C>
1998
Segment revenues..................... $ 4,029.8 $ 1,438.4 $ (5.7) $ 5,462.5
Investment gains..................... 64.8 35.4 - 100.2
--------------- ----------------- --------------- ----------------
Total Revenues....................... $ 4,094.6 $ 1,473.8 $ (5.7) $ 5,562.7
=============== ================= =============== ================
Pre-tax operating earnings........... $ 688.6 $ 284.3 $ - $ 972.9
Investment gains , net of
DAC and other charges.............. 41.7 27.7 - 69.4
Pre-tax minority interest............ - 141.5 - 141.5
--------------- ----------------- --------------- ----------------
Earnings from Continuing
Operations......................... $ 730.3 $ 453.5 $ - $ 1,183.8
=============== ================= =============== ================
Total Assets......................... $ 75,626.0 $ 12,379.2 $ (64.4) $ 87,940.8
=============== ================= =============== ================
1997
Segment revenues..................... $ 3,990.8 $ 1,200.0 $ (7.7) $ 5,183.1
Investment gains (losses)............ (318.8) 255.1 - (63.7)
--------------- ----------------- --------------- ----------------
Total Revenues....................... $ 3,672.0 $ 1,455.1 $ (7.7) $ 5,119.4
=============== ================= =============== ================
Pre-tax operating earnings........... $ 507.0 $ 258.3 $ - $ 765.3
Investment gains (losses), net of
DAC and other charges.............. (292.5) 252.7 - (39.8)
Non-recurring costs and expenses..... (41.7) (121.6) - (163.3)
Pre-tax minority interest............ - 108.5 - 108.5
--------------- ----------------- --------------- ----------------
Earnings from Continuing
Operations......................... $ 172.8 $ 497.9 $ - $ 670.7
=============== ================= =============== ================
Total Assets......................... $ 67,762.4 $ 13,691.4 $ (96.1) $ 81,357.7
=============== ================= =============== ================
</TABLE>
F-36
<PAGE>
<TABLE>
<CAPTION>
Investment
Insurance Services Elimination Total
--------------- ----------------- --------------- ----------------
(In Millions)
<S> <C> <C> <C> <C>
1996
Segment revenues..................... $ 3,789.1 $ 1,105.5 $ (12.6) $ 4,882.0
Investment gains (losses)............ (30.3) 20.5 - (9.8)
--------------- ----------------- --------------- ----------------
Total Revenues....................... $ 3,758.8 $ 1,126.0 $ (12.6) $ 4,872.2
=============== ================= =============== ================
Pre-tax operating earnings........... $ 337.1 $ 224.6 $ - $ 561.7
Investment gains (losses), net of
DAC and other charges.............. (37.2) 16.9 - (20.3)
Reserve strengthening and DAC
writeoff........................... (393.0) - - (393.0)
Non-recurring costs and
expenses........................... (22.3) (1.1) - (23.4)
Pre-tax minority interest............ - 83.6 - 83.6
--------------- ----------------- --------------- ----------------
Earnings (Loss) from
Continuing Operations.............. $ (115.4) $ 324.0 $ - $ 208.6
=============== ================= =============== ================
</TABLE>
20) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations for 1998 and 1997 are summarized
below:
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------------------------
March 31 June 30 September 30 December 31
----------------- ----------------- ------------------ ------------------
(In Millions)
<S> <C> <C> <C> <C>
1998
Total Revenues................ $ 1,470.2 $ 1,422.9 $ 1,297.6 $ 1,372.0
================= ================= ================== ==================
Earnings from Continuing
Operations before
Cumulative Effect
of Accounting Change........ $ 212.8 $ 197.0 $ 136.8 $ 158.9
================= ================= ================== ==================
Net Earnings.................. $ 213.3 $ 198.3 $ 137.5 $ 159.1
================= ================= ================== ==================
1997
Total Revenues................ $ 1,266.0 $ 1,552.8 $ 1,279.0 $ 1,021.6
================= ================= ================== ==================
Earnings from Continuing
Operations before
Cumulative Effect
of Accounting Change........ $ 117.4 $ 222.5 $ 145.1 $ 39.4
================= ================= ================== ==================
Net Earnings (Loss)........... $ 114.1 $ 223.1 $ 144.9 $ (44.9)
================= ================= ================== ==================
</TABLE>
Net earnings for the three months ended December 31, 1997 includes a
charge of $212.0 million related to additions to valuation allowances on
and writeoffs of real estate of $225.2 million, and reserve
strengthening on discontinued operations of $84.3 million offset by a
reversal of prior years tax reserves of $97.5 million.
F-37
<PAGE>
21) INVESTMENT IN DLJ
At December 31, 1998, the Company's ownership of DLJ interest was
approximately 32.5%. The Company's ownership interest will be further
reduced upon the issuance of common stock after the vesting of
forfeitable restricted stock units acquired by and/or the exercise of
options granted to certain DLJ employees. DLJ restricted stock units
represents forfeitable rights to receive approximately 5.2 million
shares of DLJ common stock through February 2000.
The results of operations of DLJ are accounted for on the equity basis
and are included in commissions, fees and other income in the
consolidated statements of earnings. The Company's carrying value of DLJ
is included in investment in and loans to affiliates in the consolidated
balance sheets.
Summarized balance sheets information for DLJ, reconciled to the
Company's carrying value of DLJ, are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Assets:
Trading account securities, at market value............................ $ 13,195.1 $ 16,535.7
Securities purchased under resale agreements........................... 20,063.3 22,628.8
Broker-dealer related receivables...................................... 34,264.5 28,159.3
Other assets........................................................... 4,759.3 3,182.0
---------------- -----------------
Total Assets........................................................... $ 72,282.2 $ 70,505.8
================ =================
Liabilities:
Securities sold under repurchase agreements............................ $ 35,775.6 $ 36,006.7
Broker-dealer related payables......................................... 26,161.5 26,127.2
Short-term and long-term debt.......................................... 3,997.6 3,249.5
Other liabilities...................................................... 3,219.8 2,860.9
---------------- -----------------
Total liabilities...................................................... 69,154.5 68,244.3
DLJ's company-obligated mandatorily redeemed preferred
securities of subsidiary trust holding solely debentures of DLJ...... 200.0 200.0
Total shareholders' equity............................................. 2,927.7 2,061.5
---------------- -----------------
Total Liabilities, Cumulative Exchangeable Preferred Stock and
Shareholders' Equity................................................. $ 72,282.2 $ 70,505.8
================ =================
DLJ's equity as reported............................................... $ 2,927.7 $ 2,061.5
Unamortized cost in excess of net assets acquired in 1985
and other adjustments................................................ 23.7 23.5
The Holding Company's equity ownership in DLJ.......................... (1,002.4) (740.2)
Minority interest in DLJ............................................... (1,118.2) (729.3)
---------------- -----------------
The Company's Carrying Value of DLJ.................................... $ 830.8 $ 615.5
================ =================
</TABLE>
F-38
<PAGE>
Summarized statements of earnings information for DLJ reconciled to the
Company's equity in earnings of DLJ is as follows:
<TABLE>
<CAPTION>
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Commission, fees and other income...................................... $ 3,184.7 $ 2,430.7
Net investment income.................................................. 2,189.1 1,652.1
Dealer, trading and investment gains, net.............................. 33.2 557.7
---------------- -----------------
Total revenues......................................................... 5,407.0 4,640.5
Total expenses including income taxes.................................. 5,036.2 4,232.2
---------------- -----------------
Net earnings........................................................... 370.8 408.3
Dividends on preferred stock........................................... 21.3 12.2
---------------- -----------------
Earnings Applicable to Common Shares................................... $ 349.5 $ 396.1
================ =================
DLJ's earnings applicable to common shares as reported................. $ 349.5 $ 396.1
Amortization of cost in excess of net assets acquired in 1985.......... (.8) (1.3)
The Holding Company's equity in DLJ's earnings......................... (136.8) (156.8)
Minority interest in DLJ............................................... (99.5) (109.1)
---------------- -----------------
The Company's Equity in DLJ's Earnings................................. $ 112.4 $ 128.9
================ =================
</TABLE>
22) ACCOUNTING FOR STOCK-BASED COMPENSATION
The Holding Company sponsors a stock option plan for employees of
Equitable Life. DLJ and Alliance each sponsor their own stock option
plans for certain employees. The Company has elected to continue to
account for stock-based compensation using the intrinsic value method
prescribed in APB No. 25. Had compensation expense for the Holding
Company, DLJ and Alliance Stock Option Incentive Plan options been
determined based on SFAS No. 123's fair value based method, the
Company's pro forma net earnings for 1998, 1997 and 1996 would have
been:
<TABLE>
<CAPTION>
1998 1997 1996
--------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C>
Net Earnings:
As reported............................................. $ 708.2 $ 437.2 $ 10.3
Pro forma............................................... 678.4 426.3 3.3
</TABLE>
The fair values of options granted after December 31, 1994, used as a
basis for the above pro forma disclosures, were estimated as of the
dates of grant using the Black-Scholes option pricing model. The option
pricing assumptions for 1998, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
Holding Company DLJ Alliance
------------------------------ ------------------------------- ----------------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
--------- ---------- --------- ---------- -------------------- ---------------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividend yield...... 0.32% 0.48% 0.80% 0.69% 0.86% 1.54% 6.50% 8.00% 8.00%
Expected volatility. 28% 20% 20% 40% 33% 25% 29% 26% 23%
Risk-free interest
rate.............. 5.48% 5.99% 5.92% 5.53% 5.96% 6.07% 4.40% 5.70% 5.80%
Expected life
in years.......... 5 5 5 5 5 5 7.2 7.2 7.4
Weighted average
fair value per
option at
grant-date........ $22.64 $12.25 $6.94 $16.27 $10.81 $4.03 $3.86 $2.18 $1.35
</TABLE>
F-39
<PAGE>
A summary of the Holding Company, DLJ and Alliance's option plans is as
follows:
<TABLE>
<CAPTION>
Holding Company DLJ Alliance
----------------------------- ----------------------------- -----------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Price of Price of Price of
Shares Options Shares Options Units Options
(In Millions) Outstanding (In Millions) Outstanding (In Millions) Outstanding
--------------- ------------- --------------- ------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of
January 1, 1996........ 6.7 $20.27 18.4 $13.50 9.6 $ 8.86
Granted................ .7 $24.94 4.2 $16.27 1.4 $12.56
Exercised.............. (.1) $19.91 - (.8) $ 6.82
Expired................ - - -
Forfeited.............. (.6) $20.21 (.4) $13.50 (.2) $ 9.66
--------------- ------------- ---------------
Balance as of
December 31, 1996...... 6.7 $20.79 22.2 $14.03 10.0 $ 9.54
Granted................ 3.2 $41.85 6.4 $30.54 2.2 $18.28
Exercised.............. (1.6) $20.26 (.2) $16.01 (1.2) $ 8.06
Forfeited.............. (.4) $23.43 (.2) $13.79 (.4) $10.64
--------------- ------------- ---------------
Balance as of
December 31, 1997...... 7.9 $29.05 28.2 $17.78 10.6 $11.41
Granted................ 4.3 $66.26 1.5 $38.59 2.8 $26.28
Exercised.............. (1.1) $21.18 (1.4) $14.91 (.9) $ 8.91
Forfeited.............. (.4) $47.01 (.1) $17.31 (.2) $13.14
--------------- ------------- ---------------
Balance as of
December 31, 1998...... 10.7 $44.00 28.2 $19.04 12.3 $14.94
=============== ============= ===============
</TABLE>
F-40
<PAGE>
Information about options outstanding and exercisable at December 31,
1998 is as follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------------- -----------------------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices (In Millions) Life (Years) Price (In Millions) Price
--------------------------------------- ----------------- ---------------- ------------------- ---------------
Holding
Company
----------------------
<S> <C> <C> <C> <C> <C>
$18.125 -$27.75 3.7 5.19 $20.97 3.0 $20.33
$28.50 -$45.25 3.0 8.68 $41.79 -
$50.63 -$66.75 2.1 9.21 $52.73 -
$81.94 -$82.56 1.9 9.62 $82.56 -
----------------- -------------------
$18.125 -$82.56 10.7 7.75 $44.00 3.0 $20.33
================= ================= ================ ==================== ==============
DLJ
----------------------
$13.50 -$25.99 22.3 7.1 $14.59 21.4 $15.05
$26.00 -$38.99 5.0 8.8 $33.94 -
$39.00 -$52.875 .9 9.4 $44.65 -
----------------- -------------------
$13.50 -$52.875 28.2 7.5 $19.04 21.4 $15.05
================= ================== ============== ===================== =============
Alliance
----------------------
$ 3.03 -$ 9.69 3.1 4.5 $ 8.03 2.4 $ 7.57
$ 9.81 -$10.69 2.0 5.3 $10.05 1.6 $10.07
$11.13 -$13.75 2.4 7.5 $11.92 1.0 $11.77
$18.47 -$18.78 2.0 9.0 $18.48 .4 $18.48
$22.50 -$26.31 2.8 9.9 $26.28 - -
----------------- -------------------
$ 3.03 -$26.31 12.3 7.2 $14.94 5.4 $ 9.88
================= =================== ============= ===================== =============
</TABLE>
F-41
<PAGE>
PART C
OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits.
(a) Financial Statements
1. Separate Account No. 49:
- Report of Independent Accountants - PricewaterhouseCoopers
LLP;
- Statements of Assets and Liabilities for the Year Ended
December 31, 1998;
- Statements of Operations for the Year Ended December 31,
1998;
- Statements of Changes in Net Assets for the Years Ended
December 31, 1998 and 1997; and
- Notes to Financial Statements.
2. The Equitable Life Assurance Society of the United States:
- Report of Independent Accountants - PricewaterhouseCoopers
LLP;
- Consolidated Balance Sheets as of December 31, 1998 and
1997;
- Consolidated Statements of Earnings for Years Ended
December 31, 1998, 1997 and 1996;
- Consolidated Statements of Equity for Years Ended December
31, 1998, 1997 and 1996;
- Consolidated Statements of Cash Flows for Years Ended
December 31, 1998, 1997 and 1996; and
- Notes to Consolidated Financial Statements.
(b) Exhibits.
The following exhibits are filed herewith:
1. Resolutions of the Board of Directors of The Equitable Life
Assurance Society of the United States ("Equitable") authorizing
the establishment of the Registrant, incorporated herein by
reference to exhibit(1) to Registration Statement No. 333-05593 on
June 10, 1996.
2. Not applicable.
3. (a) Form of Distribution Agreement dated as of January 1, 1998
among The Equitable Life Assurance Society of the United
States for itself and as depositor on behalf of certain
separate accounts and Equitable Distributors, Inc.,
incorporated herein by reference to Exhibit 3(b) to
Registration Statement no. 333-05593, filed May 1, 1998.
(b) Form of Sales Agreement among Equitable Distributors, Inc.,
as Distributor, a Broker-Dealer (to be named) and a General
Agent (to be named), incorporated herein by reference to
Exhibit 3(b) to Registration Statement No. 333-05593 filed
June 7, 1996.
(c) Form of The Hudson River Trust Sales Agreement by and among,
The Equitable Life Assurance Society of the United States,
Equitable Distributors, Inc. and Separate Account No. 49 of
The Equitable Life
C-1
<PAGE>
Assurance Society of the United States, incorporated herein
by reference to Exhibit 3(c) to Registration Statement
No. 333-05593 filed June 7, 1996.
4. (a) Form of group annuity contract no. 1050-94IC, incorporated
herein by reference to Exhibit 4(a) to the Registration
Statement on Form N-4 (File No. 33-83750), filed February 27,
1998.
(b) Forms of group annuity certificate nos. 94ICA and 94ICB,
incorporated herein by reference to Exhibit 4(b) to the
Registration Statement on Form N-4 (File No. 33-83750), filed
February 27, 1998.
C-2
<PAGE>
(c) Forms of endorsement nos. 94ENIRAI, 94ENNQI and 94ENMVAI to
contract no. 1050-94IC and data pages nos. 94ICA/BIM and
94ICA/BMVA, incorporated herein by reference to Exhibit 4(c)
to the Registration Statement on Form N-4 (File No.
33-83750), filed February 27, 1998.
(d) Form of Guaranteed Minimum Income Benefit Endorsement to
Contract Form No. 10-50-94IC and the Certificates under the
Contract, incorporated herein by reference to Exhibit 4(h)
to the Registration Statement on Form N-4 (File No.
33-83750), filed April 23, 1996.
(e) Form of endorsement No. 98ENJONQI to Contract Form No.
1050-94IC and the Certificates under the Contract,
incorporated herein by reference to Exhibit 4(n) to
Registration Statement No. 333-05593 filed December 31, 1997.
(f) Form of endorsement No. 98Roth to Contract Form No. 1050-94IC
and the Certificates under the Contract, incorporated herein
by reference to Exhibit 4(o) to Registration Statement No.
333-05593 filed December 31, 1997.
(g) Form of Custodial Owned Roth IRA endorsement no. 98COROTH to
Contract No. 1050-94IC, incorporated herein by reference to
Exhibit 4(p) to Registration Statement No. 333-05593, filed
May 1, 1998.
(h) Form of data pages for Equitable Accumulator Express,
previously filed with this Registration Statement, File No.
333-79379, on May 26, 1999.
5. Form of Enrollment Form/Application for Equitable Accumulator
Express, previously filed with this Registration Statement, File
No. 333-79379, on May 26, 1999.
6. (a) Restated Charter of Equitable, as amended January 1, 1997,
incorporated herein by reference to Exhibit 6(a) to
Registration Statement No. 333-05593 filed March 6, 1997.
(b) By-Laws of Equitable, as amended November 21, 1996,
incorporated herein by reference to Exhibit 6(b) to
Registration Statement No. 333-05593 filed March 6, 1997.
7. Not applicable.
8. Form of Participation Agreement among EQ Advisors Trust,
Equitable, Equitable Distributors, Inc. and EQ Financial
Consultants, Inc., incorporated by reference to the Registration
Statement of EQ Advisors Trust on Form N-1A. (File Nos. 333-17217
and 811-07953).
9. Opinion and Consent of Mary Joan Hoene, Vice President and
Counsel of Equitable Life, as to the legality of the securities
being offered, dated July 29, 1999.
10. (a) Consent of PricewaterhouseCoopers LLP.
(b) Powers of Attorney, previously filed with this Registration
Statement, File No. 333-79379, on May 26, 1999.
11. Not applicable.
12. Not applicable.
13. (a) Formulae for Determining Money Market Fund Yield for a
Seven-Day Period, incorporated herein by reference to Exhibit
13(a) to Registration Statement No. 333-05593 filed
June 7, 1996.
C-3
<PAGE>
(b) Formulae for Determining Cumulative and Annualized Rates of
Return, incorporated herein by reference to Exhibit 13(b) to
Registration Statement No. 333-05593 filed June 7, 1996.
(c) Formulae for Determining Standardized Performance Value and
Annualized Average Performance Ratio incorporated herein by
reference to Exhibit 13(c) to Registration Statement No.
333-05593 filed June 7, 1996.
C-4
<PAGE>
Item 25: Directors and Officers of Equitable.
Set forth below is information regarding the directors and principal
officers of Equitable. Equitable's address is 1290 Avenue of Americas,
New York, New York 10104. The business address of the persons whose
names are preceded by an asterisk is that of Equitable.
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS EQUITABLE
- ---------------- ---------
DIRECTORS
Francoise Colloc'h Director
AXA
23, Avenue Matignon
75008 Paris, France
Henri de Castries Director
AXA
23, Avenue Matignon
75008 Paris, France
Joseph L. Dionne Director
The McGraw-Hill Companies
1221 Avenue of the Americas
New York, NY 10020
Denis Duverne Director
AXA
23, Avenue Matignon
75008 Paris, France
Jean-Rene Fourtou Director
Rhone-Poulenc S.A.
25 Quai Paul Doumer
92408 Courbevoie Cedex,
France
Norman C. Francis Director
Xavier University of Louisiana
7325 Palmetto Street
New Orleans, LA 70125
C-5
<PAGE>
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS EQUITABLE
- ---------------- ---------
Donald J. Greene Director
LeBouef, Lamb, Greene & MacRae
125 West 55th Street
New York, NY 10019-4513
John T. Hartley Director
Harris Corporation
1025 NASA Boulevard
Melbourne, FL 32919
John H.F. Haskell, Jr. Director
SBC Warburg Dillon Read LLC
535 Madison Avenue
New York, NY 10028
Mary R. (Nina) Henderson Director
CPC Specialty Markets Group
CPC International Plaza
P.O. Box 8000
Englewood Cliffs, NJ 07632-9976
W. Edwin Jarmain Director
Jarmain Group Inc.
121 King Street West
Suite 2525
Toronto, Ontario M5H 3T9,
Canada
George T. Lowy Director
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
C-6
<PAGE>
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS EQUITABLE
- ---------------- ---------
Didier Pineau-Valencienne Director
Schneider S.A.
64-70 Avenue Jean-Baptiste Clement
92646 Boulogne-Billancourt Cedex
France
George J. Sella, Jr. Director
P.O. Box 397
Newton, NJ 07860
Peter J. Tobin Director
St. John's University
8000 Utopia Parkway
Jamaica, NY 11439
Dave H. Williams Director
Alliance Capital Management Corporation
1345 Avenue of the Americas
New York, NY 10105
OFFICER-DIRECTORS
- -----------------
*Michael Hegarty President, Chief Operating
Officer and Director
*Edward D. Miller Chairman of the Board,
Chief Executive Officer
and Director
*Stanley B. Tulin Vice Chairman of the Board,
Chief Financial Officer and Director
OTHER OFFICERS
- --------------
*Leon Billis Executive Vice President
*Derry Bishop Executive Vice President and
Chief Agency Officer
*Harvey Blitz Senior Vice President
*Kevin R. Byrne Senior Vice President and Treasurer
*John A. Caroselli Executive Vice President
*Alvin H. Fenichel Senior Vice President and
Controller
C-7
<PAGE>
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS EQUITABLE
- ---------------- ---------
*Paul J. Flora Senior Vice President and Auditor
*Robert E. Garber Executive Vice President and
General Counsel
*James D. Goodwin Vice President
*Edward J. Hayes Senior Vice President
*Mark A. Hug Senior Vice President
*Donald R. Kaplan Vice President and Chief Compliance
Officer and Associate General
Counsel
*Michael S. Martin Executive Vice President and Chief
Marketing Officer
*Richard J. Matteis Executive Vice President
*Peter D. Noris Executive Vice President and Chief
Investment Officer
*Brian S. O'Neil Executive Vice President
*Anthony C. Pasquale Senior Vice President
*Pauline Sherman Senior Vice President, Secretary
and Associate General Counsel
*Samuel B. Shlesinger Senior Vice President
*Richard V. Silver Senior Vice President and Deputy
General Counsel
*Jose Suquet Senior Executive Vice President and
Chief Distribution Officer
*Gregory Wilcox Executive Vice President
*R. Lee Wilson Executive Vice President
*Naomi J. Weinstein Vice President
*Maureen K. Wolfson Vice President
C-8
<PAGE>
Item 26. Persons Controlled by or Under Common Control with the Insurance
Company or Registrant.
Separate Account No. 49 of The Equitable Life Assurance Society of the
United States (the "Separate Account") is a separate account of Equitable.
Equitable, a New York stock life insurance company, is a wholly owned
subsidiary of The Equitable Companies Incorporated (the "Holding Company"), a
publicly traded company.
The largest stockholder of the Holding Company is AXA which as of
July 31, 1999 beneficially owned 58.3% of the Holding Company's outstanding
common stock. AXA is able to exercise significant influence over the
operations and capital structure of the Holding Company and its subsidiaries,
including Equitable. AXA, a French company, is the holding company for an
international group of insurance and related financial services companies.
C-9
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
The Equitable Companies Incorporated (l991) (Delaware)
Donaldson, Lufkin & Jenrette, Inc. (1993) (Delaware) (41.8%) (See
Addendum B(1) for subsidiaries)
The Equitable Life Assurance Society of the United States (1859)
(New York) (a)(b)
The Equitable of Colorado, Inc. (l983) (Colorado)
EVLICO, INC. (1995) (Delaware)
EVLICO East Ridge, Inc. (1995) (California)
GP/EQ Southwest, Inc. (1995) (Texas)
Franconom, Inc. (1985) (Pennsylvania)
Frontier Trust Company (1987) (North Dakota)
Gateway Center Buildings, Garage, and Apartment Hotel, Inc.
(inactive) (pre-l970) (Pennsylvania)
Equitable Deal Flow Fund, L.P.
Equitable Managed Assets (Delaware)
EREIM LP Associates (99%)
EML Associates, L.P. (19.8%)
Alliance Capital Management L.P. (2.7% limited partnership
interest)
ACMC, Inc. (1991) (Delaware)(s)
Alliance Capital Management L.P. (1988) (Delaware)
(39.3% limited partnership interest)
EVCO, Inc. (1991) (New Jersey)
EVSA, Inc. (1992) (Pennsylvania)
Prime Property Funding, Inc. (1993) (Delaware)
Wil Gro, Inc. (1992) (Pennsylvania)
Equitable Underwriting and Sales Agency (Bahamas) Limited (1993)
(Bahamas)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-10
<PAGE>
The Equitable Companies Incorporated (cont.)
Donaldson Lufkin & Jenrette, Inc.
The Equitable Life Assurance Society of the United States (cont.)
Fox Run, Inc. (1994) (Massachusetts)
STCS, Inc. (1992) (Delaware)
CCMI Corporation (1994) (Maryland)
FTM Corporation (1994) (Maryland)
Equitable BJVS, Inc. (1992) (California)
Equitable Rowes Wharf, Inc. (1995) (Massachusetts)
Camelback JVS, Inc. (1995) (Arizona)
ELAS Realty, Inc. (1996) (Delaware)
100 Federal Street Realty Corporation (Massachusetts)
Equitable Structured Settlement Corporation (1996) (Delaware)
Prime Property Funding II, Inc. (1997) (Delaware)
Sarasota Prime Hotels, Inc. (1997) (Florida)
ECLL, Inc. (1997) (Michigan)
Equitable Holdings LLC (1997) (New York) (into which Equitable Holding
Corporation was merged in 1997)
EQ Financial Consultants, Inc. (l97l) (Delaware) (a) (b)
ELAS Securities Acquisition Corp. (l980) (Delaware)
100 Federal Street Funding Corporation (Massachusetts)
EquiSource of New York, Inc. (1986) (New York) (See
Addendum A for subsidiaries)
Equitable Casualty Insurance Company (l986) (Vermont)
EREIM LP Corp. (1986) (Delaware)
EREIM LP Associates (1%)
EML Associates (.02%)
Equitable Distributors, Inc. (1988) (Delaware) (a)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-11
<PAGE>
The Equitable Companies Incorporated (cont.)
Donaldson Lufkin & Jenrette, Inc.
The Equitable Life Assurance Society of the United States (cont.)
Equitable Holdings, LLC (cont.)
Equitable JVS, Inc. (1988) (Delaware)
Astor/Broadway Acquisition Corp. (1990) (New York)
Astor Times Square Corp. (1990) (New York)
PC Landmark, Inc. (1990) (Texas)
Equitable JVS II, Inc. (1994) (Maryland)
EJSVS, Inc. (1995) (New Jersey)
Donaldson, Lufkin & Jenrette, Inc. (1985 by EIC; 1993 by EQ and
EHC) (Delaware) (34.4%) (See Addendum B(1) for
subsidiaries)
JMR Realty Services, Inc. (1994) (Delaware)
Equitable Investment Corporation (l97l) (New York)
Stelas North Carolina Limited Partnership (50% limited
partnership interest) (l984)
Equitable JV Holding Corporation (1989) (Delaware)
Alliance Capital Management Corporation (l991) (Delaware) (b)
(See Addendum B(2) for subsidiaries)
Equitable Capital Management Corporation (l985)
(Delaware) (b)
Alliance Capital Management L.P. (1988)
(Delaware) (14.8% limited partnership interest)
EQ Services, Inc. (1992) (Delaware)
EREIM Managers Corp. (1986) (Delaware)
ML/EQ Real Estate Portfolio, L.P.
EML Associates, L.P.
(a) Registered Broker/Dealer (b) Registered Investment
Advisor
C-12
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
ADDENDUM A - SUBSIDIARY
OF EQUITABLE HOLDINGS, LLC
HAVING MORE THAN FIVE SUBSIDIARIES
-------------------------------------------------------
EquiSource of New York, Inc. (formerly Traditional Equinet Business Corporation
of New York) has the following subsidiaries that are brokerage companies to
make available to Equitable Agents within each state traditional (non-equity)
products and services not manufactured by Equitable:
EquiSource of Alabama, Inc. (1986) (Alabama)
EquiSource of Arizona, Inc. (1986) (Arizona)
EquiSource of Arkansas, Inc. (1987) (Arkansas)
EquiSource Insurance Agency of California, Inc. (1987) (California)
EquiSource of Colorado, Inc. (1986) (Colorado)
EquiSource of Delaware, Inc. (1986) (Delaware)
EquiSource of Hawaii, Inc. (1987) (Hawaii)
EquiSource of Maine, Inc. (1987) (Maine)
EquiSource Insurance Agency of Massachusetts, Inc. (1988)
(Massachusetts)
EquiSource of Montana, Inc. (1986) (Montana)
EquiSource of Nevada, Inc. (1986) (Nevada)
EquiSource of New Mexico, Inc. (1987) (New Mexico)
EquiSource of Pennsylvania, Inc. (1986) (Pennsylvania)
EquiSource of Puerto Rico, Inc. (1997) (Puerto Rico)
EquiSource Insurance Agency of Utah, Inc. (1986) (Utah)
EquiSource of Washington, Inc. (1987) (Washington)
EquiSource of Wyoming, Inc. (1986) (Wyoming)
C-13
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
ADDENDUM B - INVESTMENT SUBSIDIARIES
HAVING MORE THAN FIVE SUBSIDIARIES
------------------------------------
Donaldson, Lufkin & Jenrette, Inc. has the following subsidiaries, and
approximately 150 other subsidiaries, most of which are special purpose
subsidiaries (the number fluctuates according to business needs):
Donaldson, Lufkin & Jenrette, Securities Corporation (1985)
(Delaware) (a) (b)
Wood, Struthers & Winthrop Management Corp. (1985)
(Delaware) (b)
Autranet, Inc. (1985) (Delaware) (a)
DLJ Real Estate, Inc.
DLJ Capital Corporation (b)
DLJ Mortgage Capital, Inc. (1988) (Delaware)
Alliance Capital Management Corporation (as general partner) (b) has the
following subsidiaries:
Alliance Capital Management L.P. (1988) (Delaware) (b)
Alliance Capital Management Corporation of Delaware, Inc.
(Delaware)
Alliance Fund Services, Inc. (Delaware) (a)
Alliance Fund Distributors, Inc. (Delaware) (a)
Alliance Capital Oceanic Corp. (Delaware)
Alliance Capital Management Australia Pty. Ltd.
(Australia)
Meiji - Alliance Capital Corp. (Delaware) (50%)
Alliance Capital (Luxembourg) S.A. (99.98%)
Alliance Eastern Europe Inc. (Delaware)
Alliance Barra Research Institute, Inc. (Delaware)
(50%)
Alliance Capital Management Canada, Inc. (Canada)
(99.99%)
Alliance Capital Management (Brazil) Llda
Alliance Capital Global Derivatives Corp. (Delaware)
Alliance International Fund Services S.A.
(Luxembourg)
Alliance Capital Management (India) Ltd. (Delaware)
Alliance Capital Mauritius Ltd.
Alliance Corporate Finance Group, Incorporated
(Delaware)
Equitable Capital Diversified Holdings, L.P. I
Equitable Capital Diversified Holdings, L.P. II
Curisitor Alliance L.L.C. (Delaware)
Curisitor Holdings Limited (UK)
Alliance Capital Management (Japan), Inc.
Alliance Capital Management (Asia) Ltd.
Alliance Capital Management (Turkey), Ltd.
Cursitor Alliance Management Limited (UK)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-14
<PAGE>
AXA GROUP CHART
The information listed below is dated as of January 1, 1999; percentages
shown represent voting power. The name of the owner is noted when AXA
indirectly controls the company.
AXA INSURANCE AND REINSURANCE BUSINESS HOLDING
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA Assurances IARD France 100% by AXA France Assurance
AXA Assurances Vie France 88.1% by AXA France Assurance
and 11.9% by AXA Collectives
AXA Courtage IARD France 100% by AXA France Assurance
and AXA Global Risks
AXA Conseil Vie France 100% by AXA France Assurance
AXA Conseil IARD France 100% by AXA France Assurance
AXA Direct France 100% by AXA
Direct Assurances IARD France 100% by AXA Direct
Direct Assurances Vie France 100% by AXA Direct
Tellit Vie Germany 100% by AKA-CKAG
Axiva France 100% by AXA France Assurance
and AXA Conseil Vie
Juridica France 100% by AXA France Assurance
AXA Assistance France France 100% by AXA Assistance SA
AXA Collectives France AXA France Assurance, AXA
Assurances IARD and AXA
Courtage IARD Mutuelle
Societe Beaujon France 100% by AXA
Lor Finance France 99.3% by AXA
Jour Finance France 100% by AXA Conseil and
by AXA Assurances IARD
Financiere 45 France 99.8% by AXA
Mofipar France 99.9% by AXA
NSM Vie France 40.1% by AXA France Assurance
Saint Georges Re France 100% by France Assurance
AXA Global Risks France 100% owned by AXA France
Assurance, AXA Courtage
Assurance Mutuelle, and AXA
Assurances IARD Mutuelle
Argovie France 94% by Axiva
AXA Assistance SA France 76.8% by AXA and 23.2% by AXA
France Assurance
S.P.S. Reassurance France 69.9% by AXA Reassurance
AXA Participations France 50% by AXA, 25% by AXA Global
Risks and 25% by AXA Courtage
IARD
Colisee Excellence France 100% by Financiere Mermoz
Financiere Mermoz France 100% by AXA
C-15
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA Assistance SA France 76.8% by AXA and 23.2% by AXA
France Assurance
S.P.S. Reassurance France 69.9% by AXA Reassurance
AXA Participations France 50% by AXA, 25% by AXA Global
Risks and 25% by AXA Courtage
IARD
Colisee Excellence France 100% by Financiere Mermoz
Financiere Mermoz France 100% by AXA
AXA France Assurance France 100% by AXA
Thema Vie France 99.6% by Axiva
AXA-Colonia Konzern AG (AXA-
CKAG) Germany 39.7% by Vinci BV, 25.6% by
Kolnische Verwaltungs and
9.4% by AXA
Finaxa Belgium Belgium 100% by AXA
AXA Belgium Belgium 86.1% by Royale Belge and 13.9%
by Parcolvi
De Kortrijske Verzekering Belgium 99.8% by AXA Belgium
Juris Belgium 100% owned by AXA Belgium
Royale Belge Belgium 51.2% by AXA Holdings Belgium,
44.5% by AXA and 3.2% by AKA
Global Risks
Royale Belge 1994 Belgium 97.8% by Royale Belge and 2%
by UAB
UAB Belgium 100% by Royale Belge
Ardenne Prevoyante Belgium 99.4% by Royale Belge
GB Lex Belgium 55% by Royale Belge, 25% by
Royale Belge 1994, 10% by
Juridica and 10% by AXA
Conseil IARD
Royale Belge Re Belgium 100% by Royale Belge
Parcolvi Belgium 100% by Vinci Belgium Holding
BV
Vinci Belgium Belgium 99.5% by Vinci BV
Finaxa Luxembourg Luxembourg 100%
AXA Assurance IARD Luxembourg Luxembourg 100% by AXA Holding Luxembourg
AXA Assurance Vie Luxembourg Luxembourg 100% by AXA Holding Luxembourg
Royale UAP Luxembourg 100% by AXA Holding Luxembourg
Paneurolife Luxembourg 90% by different companies of
the AXA Group
Paneurore Luxembourg 100% by different companies of
the AXA Group
Crealux Luxembourg 100% by Royale Belge
Futur Re Luxembourg 100% by AXA Global Risks
AXA Holding Luxembourg Luxembourg 100% by Royale Belge
AXA Aurora Spain 30% owned by AXA and 40%
by AXA Participations
Reaseguros Aurora Vida SA de Spain 97% owned by Aurora Iberica SA
Seguros y Reaseguros de Seguros y Reaseguros and
1.5% by AXA
Hilo Direct Seguros y Reaseguros Spain 71.4% by AXA Aurora
Ayuda Legal Spain 88% by AXA Aurora Iberica SA de
Seguros y Reaseguros and 12% by
Aurora Vida
AXA Aurora Iberica SA de Spain 99.8% by AXA Aurora
Seguros y Reaseguros
AXA Assicurazioni Italy 83.7% owned by AXA, 12% by
Grupo UAP Italiana, 2.2% by
AXA Conseil Vie and 2.1%
by AXA Collectives
Eurovita Italy 30% owned by AXA Assicurazioni,
19% by AXA Conseil Vie and 19%
by AXA Collectives
Gruppo UAP Italia (GUI) Italy 97% by AXA Participations and
3% by AXA Collectives
UAP Vita Italy 62% by AXA
Allsecures Vita Italy 100% by AXA
AXA Equity & Law Plc U.K. 99.9% by AXA
AXA Equity & Law Life U.K. 100% by Sun Life Holdings Plc
Assurance Society
Sun Life lle de Man U.K. 100% owned by Sun Life
Assurance
AXA Global Risks U.K. 51% owned by AXA Global
Risks (France) and 49% by
AXA Courtage IARD
Sun Life and Provincial U.K. 71.6% by AXA and AXA
Holdings (SLPH) Equity & Law Plc
Sun Life Corporation Plc U.K. 100% by AXA Sun Life Holdings
Plc
Sun Life Assurance Society Plc U.K. 100% by AXA Sun Life Holdings
Plc
AXA Provincial Insurance U.K. 100% by SLPH
English & Scottish U.K. 100% by AXA UK
AXA UK U.K. 100% by AXA
Servco U.K. 100% by AXA Sun Life Holdings
Plc
AXA Sun Life Plc U.K. 100% by AXA Sun Life Holdings
Plc
AXA Leven The Nether- 100% by Nieuw Rotterdam
lands Verzekeringen
AXA Nederland BV The Nether- 55.4% by Royale Belge and 38.9%
lands by Gelderland BV
UNIROBE Groep BV The Nether- 100% by UAP Nieuw Rotterdam
lands Holding
AXA Levensverzekeringen The Nether- 100% by UAP Nieuw Rotterdam
lands Verzekeringen
AXA Schade The Nether- 100% by UAP Nieuw Rotterdam
lands Verzekeringen
Societe Generale d'Assistance The Nether- 100% by AXA Assistance Holding
lands
Gelderland BV The Nether- 100% by Royale Belge
lands
AXA Zorg The Nether- 100% by UAP Nieuw Rotterdam
lands Verzekeringen
Vinci BV The Nether- 100% by AXA
lands
AXA Portugal Companhia de Portugal 96.2% by different companies
Serguros SA of the AXA Group
AXA Portugal Companhia de Portugal 87.6% by AXA Conseil Vie and
Serguros de Vida SA 7.5% by AXA Participations
AXA Compagnie d' Assurances Switzerland 100% by AXA Participations
AXA Compagnie d' Assurances Switzerland 95% by AXA Participations
sur la Vie
AXA Al Amane Assurances Morocco 52% by AXA Participations and
15% by Empargne Croissance
AXA Canada Inc. Canada 100% by AXA
Empargne Croissance Morocco 99.3% by AXA Al Amane
Assurances
Colonia Nordstern Leben Germany 50% by AXA-CKAG and 50% by
Colonia Nordstern Versicherungs
Kolnische Verwaltungs Germany 67.7% by Vinci BV, 23% by AXA
Colonia Konzern AG and 8.8% by
AXA
Sicher Direkt Versicherung Germany 50% by AXA Direct and 50% by
AXA-CKAG
AXA Colonia Krankenversicherung Germany 51% by AXA-CKAG, 39.6% by AXA
Colonia Lebenversicherung and
12% by Deutsche
Arzleversicherung
Colonia Nordstern Versicherungs Germany 100% by AXA-CKAG
C-16
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA non life Insurance Cy. Ltd. Japan 100% by AXA Direct
AXA Life Insurance Japan 100% by AXA
Dongbu AXA Life Korea 50% by AXA
Insurance Co. Ltd.
Sime AXA Berhad Malaysia 30% owned by AXA and
AXA Reassurance
AXA Insurance Investment Singapore 88.7% by AXA and 11.41% by AXA
Holdings Pte Ltd Courtage IARD
AXA Life Insurance Singapore 100% owned by AXA
AXA Insurance Hong Kong 82.5% owned by AXA Investment
Holdings Pte Ltd and 17.5%
by AXA
National Mutual Asia Ltd Hong Kong 53.8% by National Mutual
Holdings, Ltd and 20% by Detura
The Equitable Companies U.S.A. 43% by AXA, Financiere 45
Incorporated 3.2%, Lorfinance 6.4%, AXA
Equity & Law Life Association
Society 4.1% and AXA
Reassurance 2.9% and 0.4% by
Societe Beaujon
The Equitable Life Assurance U.S.A. 100% owned by The Equitable
Society of the United States Companies Incorporated
(ELAS)
National Mutual Holdings Ltd Australia 42.1% by AXA and 8.9% by
AXA Equity & Law Life
Assurance Society
The National Mutual Life Australia 100% owned by National Mutual
Association of Australasia Holdings Ltd
National Mutual International Australia 100% owned by National Mutual
Holdings Ltd
Australian Casualty & Life Ltd Australia 100% owned by National Mutual
Holdings Ltd
National Mutual Health Australia 100% owned by National Mutual
Insurance Pty Ltd Holdings Ltd
Detura Hong Kong 75% by National Mutual Holdings
AXA Insurance Pte Ltd Singapore 100% by AXA Insurance
Investment Holdings Pte Ltd
AXA Reinsurance Asia Pte Ltd Singapore 100% by AXA Reassurance
C-17
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA Reassurance France 100% owned by AXA, AXA
Assurances IARD and AXA Global
Risks
AXA Re Finance France 79% owned by AXA Reassurance
AXA Cessions France 100% by AXA
AXA Reinsurance U.K. Plc U.K. 100% owned by AXA Re U.K.
Holding
AXA Re U.K. Company Limited U.K. 100% owned by AXA Reassurance
AXA Reinsurance Company U.S.A. 100% owned by AXA America
AXA America U.S.A. 100% owned by AXA Reassurance
AXA Gobal Risks US U.S.A. 96.4% by AXA Global Risks and
3.6% by Colonia Nordstern
Versicherungs AG
AXA Re Life Insurance Company U.S.A. 100% owned by AXA America
C.G.R.M. Monaco 100% owned by AXA Reassurance
Nordstern Colonia Osterreich Austria 88.5% by Colonia Nordstern
Versicherungs and 11.5% by
Colonia Nordstern Leben
Royale Belge International Belgium 100% by Royale Belge
Investissement
AXA Holding Belgium Belgium 75% by AXA, 17.7% by AXA Global
Risks and 7.4% by Various
Companies of the Group
Assurances de la Poste Belgium 50% by Royale Belge
Assurances de la Poste Vie Belgium 50% by Royale Belge
AXA Asset Management LTD U.K. 91% by AXA Investment Managers
and 9% by National Mutual
Funds Management
AXA Sun Life Holdings Plc U.K. 100% by SLPH
C-18
<PAGE>
AXA FINANCIAL BUSINESS
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Compagnie Financiere de Paris France 100% AXA and the Mutuelles
(C.F.P.)
AXA Banque France 98.7% owned by Compagnie
Financiere de Paris
AXA Credit France 65% owned by Compagnie
Financiere de Paris
AXA Gestion FCP France 100% owned by AXA Investment
Managers Paris
Sofapi France 100% owned by Compagnie
Financiere de Paris
Soffim Holding France 100% owned by Compagnie
Financiere de Paris
Sofinad France 100% by Compagnie
Financiere de Paris
Banque des Tuileries France 100% by Compagnie
Financiere de Paris
Banque de marches et d'arbitrage France 18.5% by AXA and 8.2% by AXA
Courtage IARD
AXA Investment Managers France 100% by various companies
AXA Investment Managers Paris France 100% owned by AXA Investment
Managers
Colonia Bausbykasse Germany 66.7% by AXA-CKAG and 31.1% by
Colonia Nordstern Leben
Banque IPPA Belgium 99.9% by Royale Belge
Royal Belge Investissement Belgium 100% by Royale Belge
ANHYP Belgium 98.8% by Royale Belge
AXA Sun Life Asset Management U.K. 66.7% owned by SLPH and 33.3%
by AXA Asset Management Ltd.
C-19
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Alliance Capital Management U.S.A. 57.7% held by ELAS
Donaldson Lufkin & Jenrette U.S.A. 70.9% owned by Equitable
Holdings Corp. and ELAS
National Mutual Funds Australia 100% owned by National
Management (Global) Ltd Mutual Holdings Ltd
C-20
<PAGE>
AXA REAL ESTATE BUSINESS
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
S.G.C.I. France 100% by AXA
Transaxim France 100% owned by Compagnie
Parisienne de Participations
Compagnie Parisienne de France 100% owned by Sofinad
Participations (C.P.P.)
Monte Scopeto France 100% owned by Compagnie
Parisienne de Participations
Colisee Jeuneurs France 99.9% by Colisee Suresnes
Colisee Delcasse France 100% by Colisee Suresnes
Colisee Victoire France 99.7% by S.G.C.I.
Colisee Suresnes France 100% by Various Companies and
the Mutuelles
Colisee 21 Matignon France 99.4% by S.G.C.I. and 0.6% by
AXA
C-21
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Colisee Saint Georges France 100% by SGCI
AXA Millesimes France 92.9% owned by AXA and the
Mutuelles
AXA Immobiller France 100% by AXA
C-22
<PAGE>
OTHER AXA BUSINESS
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
C-23
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
NOTES
-----
1. The year of formation or acquisition and state or country of incorporation
of each affiliate is shown.
2. The chart omits certain relatively inactive special purpose real estate
subsidiaries, partnerships, and joint ventures formed to operate or
develop a single real estate property or a group of related properties,
and certain inactive name-holding corporations.
3. All ownership interests on the chart are 100% common stock ownership
except: (a) The Equitable Companies Incorporated's 41.8% interest in
Donaldson, Lufkin & Jenrette, Inc. and Equitable Holdings, LLC's
34.4% interest in same; (b) as noted for certain partnership interests; (c)
Equitable Life's ACMC, Inc.'s and Equitable Capital Management
Corporation's limited partnership interests in Alliance Capital Management
L.P.; and (d) as noted for certain subsidiaries of Alliance Capital
Management Corp. of Delaware, Inc.
4. The following entities are not included in this chart because, while they
have an affiliation with The Equitable, their relationship is not the
ongoing equity-based form of control and ownership that is characteristic
of the affiliations on the chart, and, in the case of the first two
entities, they are under the direction of at least a majority of "outside"
trustees:
The Hudson River Trust
EQ Advisors Trust
Separate Accounts
5. This chart was last revised on July 30, 1999.
C-24
<PAGE>
Item 27. Number of Contractowners
Currently, there are no holders of the contracts to be offered.
Item 28. Indemnification
Indemnification of Principal Underwriter
To the extent permitted by law of the State of New York and subject to
all applicable requirements thereof, Equitable Distributors, Inc. has
undertaken to indemnify each of its directors and officers who is made or
threatened to be made a party to any action or proceeding, whether civil or
criminal, by reason of the fact the director or officer, or his or her testator
or intestate, is or was a director or officer of Equitable Distributors, Inc.
Undertaking
Insofar as indemnification for liability arising under the Securities
Act of 1933 ("Act") 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.
Item 29. Principal Underwriters
(a) Equitable Distributors, Inc., an indirect wholly owned subsidiary
of Equitable, is the principal underwriter for Separate Account No. 49. The
principal business address of Equitable Distributors, Inc. is 1290 Avenue of
the Americas, New York, NY 10104.
(b) Set forth below is certain information regarding the directors and
principal officers of Equitable Distributors, Inc. The business address of the
persons whose names are preceded by an asterisk is that of Equitable
Distributors, Inc.
C-25
<PAGE>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER (EQUITABLE DISTRIBUTORS, INC.)
- ---------------- -----------------------------------------------
*Jose S. Suquet Chairman of the Board and Director
James A. Shepherdson, III Co-Chief Executive Officer, Co-President,
660 Newport Center Drive Managing Director, and Director
Suite 1200
Newport Beach, CA 92660
Greg Brakovich Co-Chief Executive Officer, Co-President,
660 Newport Center Drive Managing Director, and Director
Suite 1200
Newport Beach, CA 92660
Edward J. Hayes Director
200 Plaza Drive
Secaucus, NJ 07096-1583
*Charles Wilder Director
Hunter Allen Senior Vice President
660 Newport Center Drive
Suite 1200
Newport Beach, CA 92660
Elizabeth Forget Senior Vice President
660 Newport Center Drive
Suite 1200
Newport Beach, CA 92660
Jennifer Hall Senior Vice President
660 Newport Center Drive
Suite 1200
Newport Beach, CA 92660
Al Haworth Senior Vice President
660 Newport Center Drive
Suite 1200
Newport Beach, CA 92660
Stuart Hutchins Senior Vice President
660 Newport Center Drive
Suite 1200
Newport Beach, CA 92660
Ken Jaffe Senior Vice President
660 Newport Center Drive
Suite 1200
Newport Beach, CA 92660
Michael McDaniel Senior Vice President
660 Newport Center Drive
Suite 1200
Newport Beach, CA 92660
*Patrick O'Shea Vice President and Chief
Financial Officer
*Norman J. Abrams Vice President and Counsel
Debora Buffington Vice President and Chief Compliance
660 Newport Center Drive Officer
Newport Beach, CA 92660
*Ronald R. Quist Treasurer
*Linda Galasso Secretary
*Francesca Divone Assistant Secretary
(c) The information under "Distribution of the Certificates" in the
Prospectus forming a part of this Registration Statement is incorporated herein
by reference.
Item 30. Location of Accounts and Records
C-26
<PAGE>
The records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 to 31a-3 thereunder are
maintained by Equitable at 1290 Avenue of the Americas, New York, New York
10104, 135 West 50th Street, New York, NY 10020, and 200 Plaza Drive, Secaucus,
NJ 07096. The contract files will be kept at Vantage Computer System, Inc., 301
W. 11th Street, Kansas City, Mo. 64105.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement
as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more
than 16 months old for so long as payments under the variable
annuity contracts may be accepted;
(b) to include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included
in the prospectus that the applicant can remove to send for a
Statement of Additional Information;
(c) to deliver any Statement of Additional Information and any
financial statements required to be made available under this
Form promptly upon written or oral request.
Equitable represents that the fees and charges deducted under the Certificates
described in this Registration Statement, in the aggregate, in each case, are
reasonable in relation to the services rendered, the expenses to be incurred,
and the risks assumed by Equitable under the respective Certificates. Equitable
bases its representation on its assessment of all of the facts and
circumstances, including such relevant factors as: the nature and extent of such
services, expenses and risks, the need for Equitable to earn a profit, the
degree to which the Certificates include innovative features, and regulatory
standards for the grant of exemptive relief under the Investment Company Act of
1940 used prior to October 1996, including the range of industry practice. This
representation applies to all certificates sold pursuant to this Registration
Statement, including those sold on the terms specifically described in the
prospectuses contained herein, or any variations therein, based on supplements,
endorsements, data pages, or riders to any Certificate or prospectus, or
otherwise.
C-27
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant has caused this amendment to the Registration
Statement to be signed on its behalf, in the City and State of New York, on this
13th day of August, 1999.
SEPARATE ACCOUNT No. 49 OF
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
(Registrant)
By: The Equitable Life Assurance
Society of the United States
(Depositor)
By: /s/ Naomi J. Weinstein
---------------------------------
Naomi J. Weinstein
Vice President,
The Equitable Life Assurance
Society of the United States
C-28
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Depositor, has caused this amendment to the Registration
Statement to be signed on its behalf, in the City and State of New York, on this
13th day of August, 1999.
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
(Depositor)
By: /s/ Naomi J. Weinstein
---------------------------------
Naomi J. Weinstein
Vice President,
The Equitable Life Assurance
Society of the United States
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the date
indicated:
PRINCIPAL EXECUTIVE OFFICERS:
*Michael Hegarty President, Chief Operating Officer
and Director
*Edward D. Miller Chairman of the Board, Chief
Executive Officer and Director
PRINCIPAL FINANCIAL OFFICER:
*Stanley B. Tulin Vice Chairman of the Board
Chief Financial Officer and Director
PRINCIPAL ACCOUNTING OFFICER:
/s/ Alvin H. Fenichel Senior Vice President and Controller
- ------------------------
Alvin H. Fenichel
August 13, 1999
DIRECTORS:
Francoise Colloc'h Donald J. Greene George T. Lowy
Henri de Castries John T. Hartley Edward D. Miller
Joseph L. Dionne John H.F. Haskell, Jr. Didier Pineau-Valencienne
Denis Duverne Michael Hegarty George J. Sella, Jr.
Jean-Rene Fourtou Mary R. (Nina) Henderson Peter J. Tobin
Norman C. Francis W. Edwin Jarmain Stanley B. Tulin
Dave H. Williams
*By: /s/Naomi J. Weinstein
------------------------
Naomi J. Weinstein
Attorney-in-Fact
August 13, 1999
C-29
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. TAG VALUE
- ----------- ---------
9. Opinion and consent of Mary Joan Hoene, Esq. EX-99.9
10.(a) Consent of Independent Accountants EX-10a
C-30
The Equitable Life Assurance Society August 11, 1999
of the United States
1290 Avenue of the Americas
New York, NY 10104
Dear Sirs:
This opinion is furnished in connection with the filing by The
Equitable Life Assurance Society of the United States ("Equitable Life") and
Separate Account No. 49 of Equitable Life ("Separate Account No. 49") of the
Form N-4 Registration Statement of Equitable Life and Separate Account No. 49
under the Securities Act of 1933 (File No. 333-79379) and of the Registration
Statement of Separate Account No. 49 under the Investment Company Act of 1940
("1940 Act") included in the same Form N-4. The Registration Statement covers an
indefinite number of units of interest ("Units") in Separate Account No. 49.
The Units are purchased with contributions received under individual
annuity contracts and certificates Equitable Life offers under a group annuity
contract (collectively, the "Certificates"). As described in the prospectus
included in the Form N-4 Registration Statement, the Certificates are designed
to provide for retirement income benefits.
I have examined such corporate records of Equitable Life and provisions
of the New York Insurance Law as are relevant to authorization and issuance of
the Certificates and such other documents and laws as I consider appropriate. On
the basis of such examination, it is my opinion that:
1. Equitable Life is a corporation duly organized and validly existing
under the laws of the State of New York.
2. Separate Account No. 49 was duly established pursuant to the provisions
of New York Insurance Law.
3. The assets of Separate Account No. 49 are owned by Equitable Life;
Equitable Life is not a trustee with respect thereto. Under New York
law, the income, gains and losses, whether or not realized, from assets
allocated to Separate Account No. 49 must be credited to or charged
against such account, without regard to the other income, gains or
losses of Equitable Life.
4. The Certificates provide that the portion of the assets of Separate
Account No. 49 equal to the reserves and other contract liabilities with
respect to Separate Account No. 49 shall not be chargeable with
liabilities arising out of any other business Equitable Life may conduct
and that Equitable Life reserves the right to transfer assets of
Separate Account No. 49 in excess of such reserves and contract
liabilities to the general account of Equitable Life.
5. The Certificates (including any Units credited thereunder) have been
duly authorized and when issued in accordance with applicable regulatory
approvals will represent validly issued and binding obligations of
Equitable Life.
I hereby consent of the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/Mary Joan Hoene
------------------
Mary Joan Hoene
We hereby consent to the use in the Statement of Additional Information
constituting part of this Pre-Effective Amendment No. 1 to the Registration
Statement No. 333-79379 on Form N-4 (the "Registration Statement") of (1) our
report dated February 8, 1999 relating to the financial statements of Separate
Account No. 49 of The Equitable Life Assurance Society of the United States for
the year ended December 31, 1998, and (2) our report dated February 8, 1999
relating to the consolidated financial statements of The Equitable Life
Assurance Society of the United States for the year ended December 31, 1998,
which reports appear in such Statement of Additional Information. We also
consent to the incorporation by reference in the Prospectus of our reports dated
February 8, 1999 appearing on page F-1 and page F-53 of The Equitable Life
Assurance Society of the United States' Annual Report on Form 10-K for the year
ended December 31, 1998. We also consent to the references to us under the
headings "Custodian and Independent Accountants" in the Statement of Additional
Information and "About our independent accounts" in the Prospectus.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
New York, New York
August 13, 1999
