EQUITABLE ACCUMULATOR EXPRESS(SM)
A combination variable and fixed deferred
annuity contract
PROSPECTUS DATED SEPTEMBER 2, 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 Morgan Stanley Emerging
o BT Small Company Index Markets Equity
o BT International Equity Index o EQ/Putnam Growth & Income Value
o Capital Guardian U.S. Equity o EQ/Putnam Investors Growth
o Capital Guardian Research o EQ/Putnam International Equity
o Capital Guardian International
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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 September 2, 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.
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2 CONTENTS OF THIS PROSPECTUS
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Contents of this prospectus
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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 THE
VARIABLE INVESTMENT OPTIONS 24
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Transferring your account value 24
Dollar cost averaging your account value 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 variable 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
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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. In September 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 Equitable Life
has been among the largest insurance companies in the United States. We are
licensed to sell life insurance and annuities in all fifty states, the District
of Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is
located at 1290 Avenue of the Americas, New York, N.Y. 10104.
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6 WHO IS EQUITABLE LIFE?
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HOW TO REACH US
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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 Bank One, N.A.
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 contract 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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PROFESSIONAL Equitable Accumulator Express' variable investment options invest in 22 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.
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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 the No tax on any dividends, interest or capital gains until you
contract make withdrawals from your contract or receive annuity
payments.
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o On transfers inside the No tax on transfers among variable investment options.
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 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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EQUITABLE ACCUMULATOR EXPRESS AT GLANCE -- KEY FEATURES 9
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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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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
Equitable associate, 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.
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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 1.95%
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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 use is year
determined by the contract year in which you make the withdrawal or surrender 1................ 7.00%
your contract. For each contribution, we consider the contract year in which we 2................ 6.00%
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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FEE TABLE 11
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THE HUDSON RIVER TRUST ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
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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
OTHER ANNUAL
INVESTMENT EXPENSES EXPENSES
MANAGEMENT & (AFTER EXPENSE (AFTER EXPENSE
ADVISORY 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%
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%
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%.
(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.
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12 FEE TABLE
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(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; 0.55% 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; 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. In September 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; 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; and 0.59% for MFS Growth
with Income. Initial seed capital was invested on December 31, 1998 for the
MFS Growth with Income Portfolio and April 30, 1999 for the EQ/Alliance
Premier Growth, Capital Guardian U.S. Equity, Capital Guardian Research, and
Capital Guardian International Portfolios.
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. For more information see the prospectus for EQ Advisors
Trust.
<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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR CONTRACT IF YOU DO NOT SURRENDER YOUR CONTRACT
AT THE END OF EACH PERIOD SHOWN, AT THE END OF EACH PERIOD SHOWN,
THE EXPENSES WOULD BE: THE EXPENSES WOULD BE:
-------------------------------------- -------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
THE HUDSON RIVER TRUST OPTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Money Market $87.08 $102.93 $121.19 $198.42 $17.08 $52.93 $ 91.19 $198.42
Alliance High Yield $89.80 $111.23 $135.19 $227.24 $19.80 $61.23 $105.19 $227.24
Alliance Common Stock $87.29 $103.57 $122.27 $200.66 $17.29 $53.57 $ 92.27 $200.66
Alliance Aggressive Stock $89.17 $109.32 $131.97 $220.66 $19.17 $59.32 $101.97 $220.66
Alliance Small Cap Growth $93.16 $121.37 $152.20 $261.70 $23.16 $71.37 $122.20 $261.70
- ------------------------------------------------------------------------------------------------------------------------------------
EQ ADVISORS TRUST OPTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/Alliance Premier Growth $92.64 $119.79 -- -- $22.64 $69.79 -- --
BT Equity 500 Index $86.34 $100.69 $117.40 $190.53 $16.34 $50.69 $ 87.40 $190.53
BT Small Company Index $88.44 $107.09 $128.21 $212.92 $18.44 $57.09 $ 98.21 $212.92
BT International Equity Index $91.06 $115.04 $141.59 $240.29 $21.06 $65.04 $111.59 $240.29
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 -- --
JPM Core Bond $88.97 $108.68 $130.90 $218.45 $18.97 $58.68 $100.90 $218.45
Lazard Large Cap Value $90.54 $113.45 $138.93 $234.87 $20.54 $63.45 $108.93 $234.87
Lazard Small Cap Value $93.16 $121.37 $152.20 $261.70 $23.16 $71.37 $122.20 $261.70
MFS Growth with Income $89.49 $110.27 -- -- $19.49 $60.27 -- --
MFS Research $89.49 $110.27 $133.58 $223.95 $19.49 $60.27 $103.58 $223.95
MFS Emerging Growth Companies $89.49 $110.27 $133.58 $223.95 $19.49 $60.27 $103.58 $223.95
Morgan Stanley Emerging Markets $98.93 $138.64 $180.90 $318.37 $28.93 $88.64 $150.90 $318.37
Equity
EQ/Putnam Growth & Income Value $89.49 $110.27 $133.58 $223.95 $19.49 $60.27 $103.58 $223.95
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
14 FEE TABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR CONTRACT IF YOU DO NOT SURRENDER YOUR CONTRACT
AT THE END OF EACH PERIOD SHOWN, AT THE END OF EACH PERIOD SHOWN,
THE EXPENSES WOULD BE: THE EXPENSES WOULD BE:
-------------------------------------- -------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EQ/Putnam Investors Growth $90.54 $113.45 $138.93 $234.87 $20.54 $63.45 $108.93 $234.87
EQ/Putnam International Equity $93.16 $121.37 $152.20 $261.70 $23.16 $71.37 $122.20 $261.70
</TABLE>
- ----------
(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" under "More information" 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
CONTRACT FOR ANNUITANT LIMITATIONS ON
TYPE ISSUE AGES SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NQ 0 through 83 o After-tax money. o No additional contributions after
age 84.
o Paid to us by check or transfer of
contract value in a tax-deferred
exchange under Section 1035 of the
Internal Revenue Code.
- --------------------------------------------------------------------------------------------------------------------------------
Flexible 20 through 70 o "Regular" traditional IRA contributions. o No regular IRA contributions in the
Premium IRA calendar year you turn age 70 1/2 and
o Rollovers from a qualified plan. thereafter.
o Rollovers from a TSA. o Total regular contributions may not
exceed $2,000 for a year.
o Rollovers from another traditional
individual retirement arrangement. o No additional rollover or direct 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
contributions after age 84.
o Rollovers from a TSA.
o Contributions after age 70 1/2
o Rollovers from another must be net of required
traditional individual retirement minimum distributions.
arrangement.
o Regular IRA contributions are
o Direct custodian-to-custodian not permitted.
transfers from another
traditional individual retirement
arrangement.
Only rollover and direct transfer contributions are permitted under the Rollover IRA
contract.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
16 CONTRACT FEATURES AND BENEFITS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT LIMITATIONS ON
TYPE ISSUE AGES SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Flexible 20 through 83 o Regular after-tax contributions. o No additional regular after-tax
Premium Roth contributions after age 84.
IRA o Rollovers from another Roth IRA.
o No additional rollover or direct transfer
o Conversion rollovers from a traditional contributions after age 84.
IRA.
o Contributions are subject to income
o Direct transfers from another Roth IRA. 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 20 through 83 o Rollovers from another Roth IRA. o No additional rollover or direct transfer
Conversion IRA contributions after age 84.
o Conversion rollovers from a traditional
IRA. o Conversion rollovers after age 70 1/2
must be net of required minimum
o Direct transfers from another Roth IRA. 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 Only rollover and direct transfer o Regular after-tax contributions are not
contributions are permitted under the permitted.
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 22 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 22 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 preserving Alliance Capital Management L.P.
assets and maintaining liquidity
- ----------------------------------------------------------------------------------------------------------------------
Alliance High Yield High return by maximizing current income and, Alliance Capital Management L.P.
to the extent consistent with that objective,
capital appreciation
- ----------------------------------------------------------------------------------------------------------------------
Alliance Common Stock Long-term growth of capital and increasing Alliance Capital Management L.P.
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.
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
PORTFOLIOS OF EQ ADVISORS TRUST
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- ----------------------------------------------------------------------------------------------------------------------
EQ/Alliance Premier Growth Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index Replicate as closely as possible (before Bankers Trust Company
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 (before Bankers Trust Company
deduction of Portfolio expenses) the total return
of the Russell 2000 Index
- ----------------------------------------------------------------------------------------------------------------------
BT International Equity Replicate as closely as possible (before Bankers Trust Company
Index 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 Long-term growth of capital by investing Capital Guardian Trust Company
International 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>
JPM Core Bond High total return consistent with moderate risk J.P. Morgan Investment Management Inc.
of capital and 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 long-term Massachusetts Financial Services Company
growth of capital and income
- ----------------------------------------------------------------------------------------------------------------------------
MFS Research Long-term growth of capital and future income Massachusetts Financial Services Company
- ----------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Long-term capital growth Massachusetts Financial Services Company
Companies
- ----------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Long-term capital appreciation Morgan Stanley Asset Management
Markets Equity
- ----------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Capital growth, current income is a secondary Putnam Investment Management, Inc.
Value objective
- ----------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth Long-term growth of capital and any increased Putnam Investment Management, Inc.
income that results from this growth
- ----------------------------------------------------------------------------------------------------------------------------
EQ/Putnam International Capital appreciation Putnam Investment Management, Inc.
Equity
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 that option, adjusted for any
units deducted from your contract under that option, multiplied by that day's
value for one unit. The number of your contract units in any variable investment
option does not change unless 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>
- --------------------------------------------------------------------------------
24 TRANSFERRING YOUR MONEY AMONG INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
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
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(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.
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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.
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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.
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26 ACCESSING YOUR MONEY
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4
Accessing your money
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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."
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METHOD OF WITHDRAWAL
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SUBSTANTIALLY MINIMUM
CONTRACT LUMP SUM SYSTEMATIC EQUAL DISTRIBUTION
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NQ Yes Yes No No
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Rollover IRA Yes Yes Yes Yes
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Flexible
Premium IRA Yes Yes Yes Yes
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Roth Conversion
IRA Yes Yes Yes No
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Flexible
Premium
Roth IRA Yes Yes Yes No
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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.
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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.
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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).
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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
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28 ACCESSING YOUR MONEY
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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 choose whether these
payments will be either fixed or variable.
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:
(1) the amount applied to purchase the annuity;
(2) the type of annuity chosen, and whether it is fixed or variable. If you
choose a variable annuity, we will use an assumed base rate of either 5% or
3 1/2% to calculate the level of payments. We provide information about the
assumed base rate in the SAI;
(3) in the case of a life annuity, the annuitant's age (or the annuitant's and
joint annuitant's ages); and
(4) in certain instances, the sex of the annuitant(s).
In no event will you ever receive payments under a fixed option or an initial
payment under a variable option of less than the minimum amounts guaranteed by
the contract.
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
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30 ACCESSING YOUR MONEY
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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 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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Charges and expenses
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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.
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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:
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CONTRACT YEAR
- --------------------------------------------------------------------------------
1 2 3 4 5 6 7 8+
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Percentage of
contribution 7% 6% 5% 4% 3% 2% 1% 0%
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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.
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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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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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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:
($10,000-excess AGI) times $2,000 (or earned Equals the adjusted
- -------------------- x income, if less) = deductible
divided by $10,000 contribution
limit
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 income 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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(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
Amounts that have been contributed as traditional IRA funds may subsequently be
treated as Roth IRA funds. Special federal income tax rules allow you to change
your mind again and have amounts that are subsequently treated as Roth IRA
funds, once again treated as traditional IRA funds. You do this by using the
forms we prescribe. This is referred to as having "recharacterized" your
contribution.
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,
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traditional IRAs can be transferred on a tax-free basis between spouses or
former spouses as a result of a court-ordered divorce or separation decree.
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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46 TAX INFORMATION
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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 Trustees
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
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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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(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.
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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.
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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.
<PAGE>
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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.
<PAGE>
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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
<PAGE>
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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.
<PAGE>
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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 PERFORAMANCE 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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------
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.
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.
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.
<PAGE>
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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>
- -----------------------------------------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
-------------------------------------------------------------------------------------------
SINCE SINCE
1 3 5 10 OPTION PORTFOLIO
VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION* INCEPTION**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alliance Money Market (5.00)% 0.11% 0.78% 1.77% (1.00)% 3.62%
- -----------------------------------------------------------------------------------------------------------------------------------
Alliance High Yield (15.15)% 6.24 5.94% 7.76% 0.00% 7.03%
- -----------------------------------------------------------------------------------------------------------------------------------
Alliance Common Stock 18.27% 22.66% 18.00% 15.37% 16.22% 13.73%
- -----------------------------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock (9.88)% 5.61% 7.46% 16.13% (1.06%) 14.94%
- -----------------------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth (14.24)% - - - 4.05% 4.05%
- -----------------------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index 14.46% - - - 14.46% 14.46%
- -----------------------------------------------------------------------------------------------------------------------------------
BT Small Company Index (12.18)% - - - (12.18)% (12.18)%
- -----------------------------------------------------------------------------------------------------------------------------------
BT International Equity Index 9.57% - - - 9.57% 9.57%
- -----------------------------------------------------------------------------------------------------------------------------------
JPM Core Bond (1.17)% - - - (1.17)% (1.17)%
- -----------------------------------------------------------------------------------------------------------------------------------
Lazard Large Cap Value 9.54% - - - 9.54% 9.54%
- -----------------------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Value (16.79)% - - - (16.79)% (16.79)%
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Research 13.47% - - - 14.07% 14.07%
- -----------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies 23.57% - - - 22.41% 22.41%
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity (36.16)% - - - (36.16)% (29.85)%
- -----------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value 2.52% - - - 8.59% 8.59%
- -----------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth 25.29% - - - 24.44% 24.44%
- -----------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam International Equity 8.97% - - - 8.51% 8.51%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The variable investment option inception dates are: 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 variable
investment options that became available on or after December 31, 1998, and
are therefore not shown in this table are: MFS Growth with Income (December
31, 1998); EQ/Alliance Premier Growth, Capital Guardian U.S. Equity, Capital
Guardian Research, and Capital Guardian International (April 30, 1999).
** The Portfolio inception dates are: Alliance Money Market (July 13, 1981);
Alliance High Yield (January 2, 1987); Alliance Common Stock (January 13,
1976); Alliance Aggressive Stock (January 27, 1986); 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, and Lazard Small Cap
Value (December 31, 1997); and Morgan Stanley Emerging Markets Equity
(August 20, 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: MFS Growth with Income (December 31, 1998); EQ/Alliance Premier
Growth, Capital Guardian U.S. Equity, Capital Guardian Research, and Capital
Guardian International (April 30, 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>
- --------------------------------------------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------------------------------------------
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 20 YEARS INCEPTION*
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 4.08% 4.10% 3.91% 4.32% - 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% 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 20 YEARS INCEPTION*
- -------------------------------------------------------------------------------------------------------------------
<S> <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%
- -------------------------------------------------------------------------------------------------------------------
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 20 YEARS INCEPTION*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 4.08% 12.81% 21.14% 52.62% - 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% 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 20 YEARS INCEPTION*
- -----------------------------------------------------------------------------------------------------------------
<S> <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%
- -----------------------------------------------------------------------------------------------------------------
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%
- ---------------------------------------------------------------------------------------------------------------------------------
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, and a current report on Form 8-K dated September 1, 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 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
<TABLE>
<CAPTION>
PAGE
<S> <C>
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
</TABLE>
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 September 2, 1999.
- ------------------------------------------------------------------------------
Name:
- ------------------------------------------------------------------------------
Address:
- ------------------------------------------------------------------------------
City State Zip
(SAI 9A(9/99)
