Registration No. 333-17669
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2 TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
SEPARATE ACCOUNT FP
of
THE EQUITABLE LIFE ASSURANCE Edward D. Miller, President
SOCIETY OF THE UNITED STATES The Equitable Life Assurance Society of
(Exact Name of Trust) the United States
THE EQUITABLE LIFE ASSURANCE 1290 Avenue of the Americas
SOCIETY OF THE UNITED STATES New York, New York 10104
(Exact Name of Depositor) (Name and Address of Agent for Service)
1290 Avenue of the Americas
New York, New York 10104
(Address of Depositor's Principal
Executive Offices)
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Telephone Number, Including Area Code: (212) 554-1234
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Please send copies of all communications to:
MARY P. BREEN, ESQ. with a copy to:
Vice President and Thomas C. Lauerman
Associate General Counsel Freedman, Levy, Kroll & Simonds
The Equitable Life Assurance 1050 Connecticut Avenue, N.W., Suite 825
Society of the United States Washington, D.C. 20036
1290 Avenue of the Americas
New York, New York 10104
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Securities Being Registered: Units of Interest in Separate Account FP
It is proposed that this filing will become effective (check appropriate line):
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on (May 1, 1998) pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) of Rule 485
_____ on ( ) pursuant to paragraph (a) of Rule 485
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
VARIABLE LIFE INSURANCE POLICIES
FUNDED THROUGH SEPARATE ACCOUNT FP
IL PROTECTOR(R)
IL COLI
INCENTIVE LIFE PLUS(SM)
SURVIVORSHIP 2000
SPECIAL OFFER POLICY
INCENTIVE LIFE 2000
CHAMPION 2000
INCENTIVE LIFE
PROSPECTUS SUPPLEMENT DATED MAY 1, 1998
This supplement updates certain information in the prospectus you received for
your Equitable variable life insurance policy* and any prior supplements to that
prospectus.** Capitalized terms used in this supplement have the same meanings
as in the prospectus. You should keep this supplement with your prospectus and
any previous prospectus supplement. We will send you another copy of any
prospectus or supplement, without charge, on written request. Corporations and
other trade or business entities that either own or have a beneficial interest
in any life insurance policy should refer to the tax information contained
herein concerning the potential application of new tax rules which can impact
the ability to deduct interest on borrowing unrelated to the policy.
LIMITED OPPORTUNITY FOR UNRESTRICTED TRANSFER FROM THE GUARANTEED INTEREST
ACCOUNT. Your policy permits you to transfer a limited amount of your unloaned
policy account value out of the Guaranteed Interest Account within 30 days of
your policy anniversary. See THE GUARANTEED INTEREST ACCOUNT in your prospectus.
From March 16, 1998 through JULY 10, 1998 (extended from May 15, 1998), we are
relaxing our policy rules to permit you to transfer any amount of unloaned
policy account value out of the Guaranteed Interest Account to a division of the
Separate Account whether or not you are within 30 days of your policy
anniversary. Your written transfer request must be received in our
Administrative Office by JULY 10, 1998, in order to take advantage of this
unrestricted transfer opportunity. An interfund transfer form follows this
supplement. See CHARGE FOR TRANSFERS in your prospectus. We reserve the right to
further extend this offer beyond this date without notice.
EQUITABLE. The information under the heading "Equitable" in your prospectus is
updated as follows:
EQUITABLE. The Equitable Life Assurance Society of the United States
(Equitable), a New York stock life insurance company, has been in business since
1859. We are a wholly owned subsidiary of The Equitable Companies Incorporated
(the Holding Company). The largest shareholder of the Holding Company is AXA-UAP
(AXA), a French insurance holding company. As of December 31, 1997, AXA
beneficially owned 58.7% of the outstanding shares of common stock of the
Holding Company. Under its investment arrangements with Equitable and the
Holding Company, AXA is able to exercise significant influence over the
operations and capital structure of the
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*This supplement updates certain information contained in the IL Protector(R)
Prospectuses dated July 25, 1996, January 1, 1997 and May 1, 1997; the
Incentive Life Plus Prospectuses dated December 19, 1994, May 1, 1995,
September 15, 1995, May 1, 1996, January 1, 1997 and May 1, 1997; the IL COLI
supplements thereto dated September 15, 1995, May 1, 1996, January 1, 1997 and
May 1, 1997 and the Special Offer Policy supplements thereto dated May 1,
1995, September 15, 1995 and May 1, 1996; the Survivorship 2000 Prospectuses
dated August 18, 1992, May 1, 1993, 1994 and 1995 and January 1 and May 1,
1997; the Incentive Life 2000 Prospectuses dated November 27, 1991 and May 1,
1993 and 1994, and the Special Offer Policy supplements thereto dated November
27, 1991, January 29, 1993, May 1, 1993, 1994 and 1995; the Champion 2000
Prospectuses dated November 27, 1991 and May 1, 1993 and 1994; and the
Incentive Life Prospectuses dated August 29, 1989, February 27, 1991 and May
1, 1990, 1993 and 1994.
**If the date of your prospectus is prior to May 1, 1997, you received a
prospectus supplement dated May 1, 1997. You may have also received
supplements dated May 1, 1996, January 1, 1997 and February 28, 1998. These
supplements are still relevant and should be retained with your prospectus.
Copyright 1998 The Equitable Life Assurance Society of the United States.
All rights reserved. IL Protector(R) is a registered Service Mark of
The Equitable Life Assurance Society of the United States.
EVM-127
<PAGE>
Holding Company and its subsidiaries, including Equitable. AXA is the holding
company for an international group of insurance and related financial services
companies. Equitable, the Holding Company and their subsidiaries managed
approximately $274.1 billion of assets as of December 31, 1997, including third
party assets of approximately $216.9 billion. Equitable's home office is 1290
Avenue of the Americas, New York, New York 10104. We are licensed to do business
in all 50 states, Puerto Rico, the Virgin Islands and the District of Columbia.
We maintain local offices throughout the United States. At December 31, 1997, we
had approximately $125.7 billion face amount of variable life insurance in
force, as compared to $114.6 billion at December 31, 1996. Prior to January 1,
1997, the variable life insurance policies listed above were issued by
Equitable's wholly owned subsidiary, Equitable Variable Life Insurance Company
(Equitable Variable). Equitable Variable was merged into Equitable as of January
1, 1997.
INVESTMENT PORTFOLIOS. As of May 1, 1998, your policy offers the following
twenty-four investment portfolios, along with the guaranteed interest option.
The twenty-four investment portfolios are as follows:
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIOS
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FIXED INCOME SERIES: EQUITY SERIES: ASSET ALLOCATION SERIES:
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<S> <C> <C> <C>
Domestic Fixed Income Domestic Equity International Equity o Alliance Conservative
- --------------------- --------------- -------------------- Investors
o Alliance Money Market o T. Rowe Price Equity o Alliance Global o EQ/Putnam Balanced
o Alliance Intermediate Income o Alliance International o Alliance Balanced
Government Securities o EQ/Putnam Growth & o T. Rowe Price o Alliance Growth
o Alliance Quality Bond Income Value International Stock Investors
Aggressive Fixed Income o Alliance Growth & o Morgan Stanley o Merrill Lynch World
- ----------------------- Income Emerging Markets Strategy
o Alliance High Yield o Alliance Equity Index Equity
o Merrill Lynch Basic Aggressive Equity
Value Equity -----------------
o Alliance Common Stock o Alliance Aggressive
o MFS Research Stock
o Warburg Pincus Small
Company Value
o Alliance Small Cap
Growth
o MFS Emerging Growth
Companies
</TABLE>
PERFORMANCE INFORMATION. If your prospectus sets forth performance information
under the heading "HUDSON RIVER TRUST RATES OF RETURN," that information and any
illustrations of policy values based on such information are deleted.
THE SEPARATE ACCOUNT AND THE TRUSTS. The information relating to the Morgan
Stanley Emerging Markets Equity Portfolio under the heading "INVESTMENT
POLICIES AND OBJECTIVES OF THE TRUSTS' PORTFOLIOS" in your supplement or
prospectus dated May 1, 1997 is replaced with the following:
<TABLE>
<CAPTION>
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PORTFOLIO INVESTMENT POLICY OBJECTIVE
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<S> <C> <C>
Morgan Stanley Emerging Markets Primarily equity securities of emerging market Long-term capital appreciation.
Equity country issuers with a focus on those in which
the portfolio adviser believes the
economies are developing strongly and in
which the markets are becoming more
sophisticated.
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</TABLE>
DEDUCTIONS AND CHARGES
FROM THE TRUSTS. The information under the section "From the Trust" in your
prospectus is revised as follows:
o The Separate Account Funds purchase Class IA shares of corresponding
portfolios of the HRT or Class IB shares of corresponding portfolios of the
EQAT at net asset value. That price reflects investment management fees, any
Rule 12b-1 distribution fees, indirect expenses, such as brokerage
commissions, and certain other operating expenses.
The Hudson River Trust. Effective May 1, 1997, a new investment advisory
agreement relating to each of the HRT portfolios was entered into between HRT
and Alliance, HRT's Investment Adviser. The table below, reflecting the HRT's
estimated expenses, is based on information for the year ended December 31,
1997 and has been restated to reflect (i) the fees that would have been paid
to Alliance if the present advisory agreement had been in effect as of January
1, 1997 and (ii) estimated accounting expenses for the year ended December 31,
1997. Investment management fees may increase or decrease based on the level
of portfolio net assets. These fees are subject to maximum rates, as described
in the attached HRT prospectus. Other expenses are also likely to fluctuate
from year to year. Both investment management fees and other expenses are
expressed in the table on the next page as an annual percentage of each
portfolio's daily average net assets:
2
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<TABLE>
<CAPTION>
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1997 RESTATED FEES AND EXPENSES
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HRT PORTFOLIO MANAGEMENT FEE OTHER EXPENSES TOTAL ANNUAL EXPENSES
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<S> <C> <C> <C>
Alliance Money Market..................................... 0.35% 0.04% 0.39%
Alliance Intermediate Government Securities............... 0.50% 0.06% 0.56%
Alliance Quality Bond..................................... 0.53% 0.05% 0.58%
Alliance High Yield....................................... 0.60% 0.04% 0.64%
Alliance Growth & Income.................................. 0.55% 0.04% 0.59%
Alliance Equity Index..................................... 0.32% 0.04% 0.36%
Alliance Common Stock..................................... 0.37% 0.03% 0.40%
Alliance Global........................................... 0.65% 0.08% 0.73%
Alliance International.................................... 0.90% 0.18% 1.08%
Alliance Aggressive Stock................................. 0.54% 0.03% 0.57%
Alliance Small Cap Growth*................................ 0.90% 0.05% 0.95%
Alliance Conservative Investors........................... 0.48% 0.07% 0.55%
Alliance Balanced......................................... 0.42% 0.05% 0.47%
Alliance Growth Investors................................. 0.52% 0.05% 0.57%
</TABLE>
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* Estimated expenses. The portfolio commenced operations on May 1, 1997.
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EQ Advisors Trust. The EQ Advisors Trust commenced operations on May 1, 1997.
The table below shows the annual rates payable for management fees, Rule 12b-1
distribution fees, and other estimated expenses to be deducted from EQAT assets
in 1998. Other expenses are likely to fluctuate from year to year. The
management fees are not subject to any reduction based on the level of portfolio
net assets. The management fees, Rule 12b-1 distribution fees and other expenses
are expressed in the table below as an annual percentage of each portfolio's
daily average net assets:
<TABLE>
<CAPTION>
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1998 ESTIMATED FEES AND EXPENSES
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EQAT PORTFOLIO MANAGEMENT 12B-1 OTHER TOTAL ANNUAL
FEE FEES EXPENSES* EXPENSES
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<S> <C> <C> <C> <C>
T. Rowe Price Equity Income............................... 0.55% 0.25% 0.05% 0.85%
EQ/Putnam Growth & Income Value........................... 0.55% 0.25% 0.05% 0.85%
Merrill Lynch Basic Value Equity.......................... 0.55% 0.25% 0.05% 0.85%
MFS Research.............................................. 0.55% 0.25% 0.05% 0.85%
T. Rowe Price International Stock......................... 0.75% 0.25% 0.20% 1.20%
Morgan Stanley Emerging Markets Equity**.................. 1.15% 0.25% 0.35% 1.75%
Warburg Pincus Small Company Value........................ 0.65% 0.25% 0.10% 1.00%
MFS Emerging Growth Companies............................. 0.55% 0.25% 0.05% 0.85%
EQ/Putnam Balanced........................................ 0.55% 0.25% 0.10% 0.90%
Merrill Lynch World Strategy.............................. 0.70% 0.25% 0.25% 1.20%
</TABLE>
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*After fee waivers or assumptions by EQAT's Manager pursuant to an expense
limitation agreement. See the attached EQAT prospectus.
**Commenced operations on August 20, 1997.
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INVESTMENT PERFORMANCE. Footnote 6 to the Separate Account FP financial
statements included herein contains information about the net return for each
Fund which commenced operations prior to December 31, 1997. The attached
prospectuses for The Hudson River Trust and the EQ Advisors Trust contain rates
of return and other portfolio performance information of the Trusts various
periods ended December 31, 1997. Remember, the changes in the Policy Account
value of your policy depend not only on the performance of the portfolios, but
also on the deductions and charges under your policy. To obtain the current unit
values of the Separate Account Funds, call (888) 855-5100.
The values reported in footnote 6 for all Policies are computed using net rates
of return for the corresponding portfolios of the HRT and EQAT. The returns
reported in footnote 6 for each of the policy forms are reduced only by any
mortality and expense risk charge deducted from Separate Account assets.
FLEXIBLE PREMIUMS. Certain of the information under this caption in your
prospectus is amended as follows:
Premiums must be by check or money order drawn on a U.S. bank in U.S. dollars
and made payable to Equitable. The preferred form of payment is a single check
on your business or personal account. Payment may also be in the form of a
single money order, bank draft or
3
<PAGE>
cashier's check payable directly to Equitable; however, please be aware that
Equitable is required to report the receipt of these "cash equivalents" to the
Internal Revenue Service under certain circumstances. These checks, money orders
and drafts are accepted subject to collection. Cash and traveler's checks are
not acceptable. Third party checks payable to someone other than Equitable and
endorsed over to Equitable are not acceptable unless the check is money directly
from a qualified retirement plan or pursuant to a 1035 exchange (a tax-deferred
exchange pursuant to Section 1035 of the Internal Revenue Code), or it is a
trustee check that involves no refund. Equitable's policy is to return any
unacceptable forms of payment, and the policyowner bears the risk of lapse or
other consequences which may result from the effective non-payment.
YOUR POLICY ACCOUNT VALUE
HOW WE DETERMINE THE UNIT VALUE. The description of "business day" and the unit
values applicable to different types of transactions is revised as follows:
We determine unit values for the Funds at the end of each business day. A
business day is any day the New York Stock Exchange is open for trading.
A transaction date is the day we perform automatic transactions, such as policy
anniversary reports and monthly charge deductions, or process requested
transactions, such as remittances, disbursements and transfers. If your request
for a policy transaction is not accompanied by complete information or is
directed to the wrong address, the transaction date will be the date we receive
such complete information at our administrative office. If your request for a
policy transaction reaches our administrative office when we are closed, or
after 4:00 p.m. Eastern Time, the transaction date will be the next day we are
open. The transaction date for automatic transactions is the date they are
scheduled to be performed.
The unit value that applies to a transaction will be the unit value calculated
at the close of business on the transaction date. When a transaction is
scheduled on a non-business day, the unit value applied will be the unit value
calculated for the next business day. The unit value for any business day is
equal to the unit value for the preceding business day multiplied by the net
investment factor for that Fund on that business day.
PURPOSE OF POLICY CHARGES. The charges under the policies are designed to cover,
in the aggregate, our direct and indirect costs of selling, administering and
providing benefits under the policies. They are also designed, in the aggregate,
to compensate us for the risks of loss we assume pursuant to the policies.
If, as expected, the charges that we collect from the policies exceed our total
costs in connection with the policies, we will earn a profit. Otherwise, we will
incur a loss. The current and maximum rates of certain of our charges have been
set with reference to estimates of the amount of specific types of expenses or
risks that we will incur. In most cases, this prospectus identifies such
expenses or risks in the name of the charge; e.g., the monthly administrative
charge, cost of insurance charge, and mortality and expense risk charge.
However, the fact that any charge bears the name of a particular expense or risk
does not mean that the amount we collect from that charge will never be more
than the amount of such expense or risk, or that we may not also be compensated
for such expense or risk out of any other charges we are permitted to deduct by
the terms of the policies.
TAX EFFECTS. Certain of the information under the heading "Tax Effects" has been
revised as follows:
ESTATE AND GENERATION SKIPPING TAXES. If the insured person is the policyowner,
the death benefit under the policy will generally be includable in the
policyowner's estate for purposes of Federal estate tax. If the policyowner is
not the insured person, under certain conditions only the Cash Surrender Value
of the policy would be so includable upon the death of the policyowner. If the
policyowner is not the insured and the insured dies with someone other than the
owner as beneficiary, the policyowner will be considered to have made a gift
transfer to the beneficiary of such proceeds. Federal estate tax is integrated
with Federal gift tax under a unified rate schedule. In general, estates less
than $625,000 for decedents dying during 1998 (scheduled to increase in
subsequent years to $1 million by the year 2005) will not incur a Federal estate
tax liability. In addition, an unlimited marital deduction may be available for
Federal estate tax purposes.
The information below generally applies to policies issued after June 8, 1997.
However, certain material changes to existing policies could cause your policy
to be considered a new policy for purposes of this effective date.
TRADE OR BUSINESS ENTITY OWNS OR IS DIRECTLY OR INDIRECTLY A BENEFICIARY OF THE
POLICY. Where a policy is owned by other than a natural person, the owner's
ability to deduct interest on business borrowing unrelated to the policy can be
impacted as a result of its ownership of cash value life insurance. No deduction
will be allowed for a portion of a taxpayer's otherwise deductible interest
expense unless the policy covers only one individual (two, in the case of
Survivorship 2000 policies), and such individual(s) is (are), at the time first
covered by the policy, a 20 percent owner of the trade or business entity that
owns the policy, or an officer, director, or employee of such trade or business
(or, for Survivorship 2000, a 20 percent owner of such entity and his/her
spouse). Although this limitation generally does not apply to policies held by
natural persons, if a trade or business (other than one carried on as a sole
proprietorship) is directly or indirectly the beneficiary under a policy, (e.g.,
pursuant to a split-dollar agreement) the policy shall be treated as held by
such trade or business. The effect will be that a portion of the trade or
business entity's deduction for its interest expenses will be disallowed unless
the above exception applies.
4
<PAGE>
The portion of the entity's interest deduction that is disallowed will generally
be a pro rata amount which bears the same ratio to such interest expense as the
taxpayer's average unborrowed cash value bears to the sum of the taxpayer's
average unborrowed cash value and average adjusted bases of all other assets.
These rules disallowing interest expenses for trade or business entities
generally apply to contracts issued after June 8, 1997 in taxable years ending
after such date. However, for purposes of the preceding sentence, any material
increase in the death benefit or other material change in a contract shall be
treated as a new contract. Any corporate or business use of life insurance
should be carefully reviewed by your tax adviser with attention to these rules
as well as any other rules and possible tax law changes that could occur with
respect to business-owned life insurance.
DISTRIBUTION. Certain of the information presented under the caption
"Distribution" in your prospectus is revised as follows:
EQ Financial Consultants, Inc. (EQF) is the principal underwriter of the HRT and
one of the principal underwriters of the EQAT, and is also a distributor of our
variable life insurance policies and variable annuity contracts. EQF is
registered with the SEC as an investment adviser under the Investment Advisers
Act of 1940 and also is the Manager of the EQAT. EQF's principal business
address is 1290 Avenue of the Americas, New York, NY 10104. EQF is registered
with the SEC as a broker-dealer under the Securities Exchange Act of 1934 (1934
Act) and is a member of the National Association of Securities Dealers, Inc. In
1996 and 1997, EQF was paid a fee of $325,380 annually for its services as
distributor of its policies.
YEAR 2000 PROGRESS
Equitable relies upon various computer systems in order to administer your
policy and operate the investment portfolios. Some of these systems belong to
service providers who are not affiliated with Equitable.
In 1995, Equitable began addressing the question of whether its computer systems
would recognize the year 2000 before, on or after January 1, 2000, and Equitable
believes it has identified those of its systems critical to business operations
that are not Year 2000 compliant. By year end 1998, Equitable expects that the
work of modifying or replacing non-compliant systems will substantially be
completed and expects a comprehensive test of its Year 2000 compliance will be
performed in the first half of 1999. Equitable is in the process of seeking
assurances from third party service providers that they are acting to address
the Year 2000 issue with the goal of avoiding any material adverse effect on
services provided to policy holders and on operations of the investment
portfolios. Any significant unresolved difficulty related to the Year 2000
compliance initiatives could have a material adverse effect on the ability to
administer your policy and operate the investment portfolios. Assuming the
timely completion of computer modifications by Equitable and third party service
providers, there should be no material adverse effect on our ability to perform
these functions.
ILLUSTRATIONS OF POLICY BENEFITS. Certain of the information under this caption
in your prospectus is revised as follows: The new aggregate expense assumption
for the portfolios is 0.63% per annum (0.59% per annum for investment management
fees and 0.04% per annum for other expenses). The investment management fee
assumption is the average of the advisory fees payable for each HRT and EQAT
Portfolio based on average net assets for 1997. The other expense assumption is
the weighted average of the other expenses (including any applicable 12b-1
distribution fees) of the HRT and EQAT Portfolios based on average net assets
for 1997. The tables under this caption in your prospectus have not been
restated to reflect this new portfolio expense assumption. For a personalized
illustration reflecting the fees and expenses under your policy, contact your
Equitable agent.
MANAGEMENT. A list of our directors and, to the extent they are responsible for
variable life insurance operations, our principal officers and a brief statement
of their business experience for the past five years is contained in Appendix A
to this supplement.
LONG-TERM MARKET TRENDS. Appendix B to this supplement presents historical
return trends for various types of securities which may be useful for
understanding how different investment strategies may affect long-term results.
FINANCIAL STATEMENTS. The financial statements of Separate Account FP and
Equitable included in this prospectus supplement have been audited for the years
ended December 31, 1997, 1996 and 1995 by the accounting firm of Price
Waterhouse LLP, independent accountants, as stated in their reports. The
financial statements of Separate Account FP and Equitable for the years ended
December 31, 1997, 1996 and 1995 included in this prospectus supplement have
been so included in reliance on the reports of Price Waterhouse LLP, given on
the authority of such firm as experts in accounting and auditing.
The financial statements of Equitable contained in this prospectus supplement
should be considered only as bearing upon the ability of Equitable to meet its
obligations under the policies. They should not be considered as bearing upon
the investment experience of the funds in the Separate Account. The financial
statements of Separate Account FP include periods prior to the merger when
Separate Account FP was part of Equitable Variable Life Insurance Company
("Equitable Variable"). As mentioned in a previously distributed supplement,
Equitable Variable was merged with and into Equitable on January 1, 1997.
5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants................................... FSA-2
Financial Statements:
Statements of Assets and Liabilities, December 31, 1997....... FSA-3
Statements of Operations for the Years Ended
December 31, 1997, 1996 and 1995............................ FSA-5
Statements of Changes in Net Assets for the Years Ended
December 31, 1997, 1996 and 1995............................ FSA-11
Notes to Financial Statements................................. FSA-17
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants.................................................................................. F-1
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 1997 and 1996......................................................... F-2
Consolidated Statements of Earnings, Years Ended December 31, 1997, 1996 and 1995............................... F-3
Consolidated Statements of Shareholder's Equity, Years Ended December 31, 1997,
1996 and 1995................................................................................................. F-4
Consolidated Statements of Cash Flows, Years Ended December 31, 1997, 1996 and 1995............................. F-5
Notes to Consolidated Financial Statements...................................................................... F-6
</TABLE>
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and Policyowners of Separate Account FP
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of the Alliance Money Market Fund,
Alliance Intermediate Government Securities Fund, Alliance Quality Bond Fund,
Alliance High Yield Fund, T. Rowe Price Equity Income Fund, EQ/Putnam Growth and
Income Value Fund, Alliance Growth & Income Fund, Alliance Equity Index Fund,
Merrill Lynch Basic Value Equity Fund, Alliance Common Stock Fund, MFS Research
Fund, Alliance Global Fund, Alliance International Fund, T. Rowe Price
International Stock Fund, Morgan Stanley Emerging Markets Equity Fund, Alliance
Aggressive Stock Fund, Warburg Pincus (SM)all Company Value Fund, Alliance Small
Cap Growth Fund, MFS Emerging Growth Companies Fund, Alliance Conservative
Investors Fund, EQ/Putnam Balanced Fund, Alliance Growth Investors Fund,
Alliance Balanced Fund, and Merrill Lynch World Strategy Fund, separate
investment funds of The Equitable Life Assurance Society of the United States
("Equitable Life") Separate Account FP (formerly Equitable Variable Life
Insurance Company Separate Account FP) at December 31, 1997 and the results of
each of their operations and changes in each of their net assets for the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of Equitable Life's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of shares owned in The
Hudson River Trust and in The EQ Advisors Trust at December 31, 1997 with the
transfer agent, provide a reasonable basis for the opinion expressed above. The
rates of return information presented in Note 6 for the year ended December 31,
1992, and for each of the periods indicated prior thereto, were audited by other
independent accountants whose report dated February 16, 1993 expressed an
unqualified opinion on the financial statements containing such information.
/s/ Price Waterhouse LLP
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Price Waterhouse LLP
New York, New York
February 10, 1998
FSA-2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FIXED INCOME SERIES: EQUITY SERIES
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ALLIANCE T. ROWE
ALLIANCE INTERMEDIATE ALLIANCE ALLIANCE Price EQ/Putnam
MONEY GOVERNMENT QUALITY HIGH Equity Growth &
MARKET SECURITIES BOND YIELD Income Income
FUND FUND FUND FUND Fund Value Fund
--------------- ------------- ---------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trusts -- at market
value (Notes 2 and 6)
Cost: $ 184,556,028....... $185,360,377
58,134,976....... $59,003,029
153,361,136....... $155,756,854
154,768,802....... $163,391,638
17,983,654....... $19,057,202
6,789,522....... $7,059,083
75,515,846.......
177,456,804.......
6,893,358.......
1,636,078,781.......
9,515,046.......
385,210,185.......
Receivable for Trust shares
sold........................ -- -- -- -- -- --
Receivable for policy-
related transactions........ 5,055,238 -- 8,175 434,562 75,365 21,535
Total Assets................... 190,415,615 59,003,029 155,765,029 163,826,200 19,132,567 7,080,618
LIABILITIES
Payable for Trust shares
purchased................... 4,662,684 42,271 2,592 485,203 75,639 21,550
Payable for policy-
related transactions........ -- 252,530 -- -- -- --
Amount retained by
Equitable Life
in Separate Account
FP (Note 4)................. 673,129 590,435 621,951 962,628 1,593,864 1,394,706
Total Liabilities.............. 5,335,813 885,236 624,543 1,447,831 1,669,503 1,416,256
NET ASSETS ATTRIBUTABLE
TO POLICYOWNERS............. $185,079,802 $58,117,793 $155,140,486 $162,378,369 $17,463,064 $5,664,362
============ =========== ============ ============ =========== ==========
EQUITY SERIES (CONTINUED):
----------------------------------------------------------------------------------------------
MERRILL
ALLIANCE ALLIANCE LYNCH BASIC ALLIANCE
GROWTH & EQUITY VALUE COMMON MFS ALLIANCE
INCOME INDEX EQUITY STOCK RESEARCH GLOBAL
FUND FUND FUND FUND FUND FUND
------------- --------------- -------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trusts -- at market
value (Notes 2 and 6)
Cost: $ 184,556,028.......
58,134,976.......
153,361,136.......
154,768,802.......
17,983,654.......
6,789,522.......
75,515,846....... $88,537,449
177,456,804....... $240,512,230
6,893,358....... $7,028,361
1,636,078,781....... $2,203,309,790
9,515,046....... $9,764,428
385,210,185....... $431,323,374
Receivable for Trust shares
sold........................ -- -- -- -- -- --
Receivable for policy-
related transactions........ 298,194 507,189 6,797 13,645,121 5,623 317,454
Total Assets................... 88,835,643 241,019,419 7,035,158 2,216,954,911 9,770,051 431,640,828
LIABILITIES
Payable for Trust shares
purchased................... 302,975 559,374 6,704 14,239,272 17,192 39,330
Payable for policy-
related transactions........ -- -- -- -- -- --
Amount retained by
Equitable Life
in Separate Account
FP (Note 4)................. 685,873 527,959 1,407,017 1,870,999 2,324,830 851,192
Total Liabilities.............. 988,848 1,087,333 1,413,721 16,110,271 2,342,022 890,522
NET ASSETS ATTRIBUTABLE
TO POLICYOWNERS............. $87,846,795 $239,932,086 $5,621,437 $2,200,844,640 $7,428,029 $430,750,306
=========== ============ ========== ============== ========== ============
</TABLE>
See Notes to Financial Statements...
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF ASSETS AND LIABILITIES (CONCLUDED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
-------------------------------------------------------------------------------------------------
MORGAN
STANLEY WARBURG
T. ROWE EMERGING ALLIANCE PINCUS ALLIANCE
ALLIANCE PRICE MARKETS AGGRESSIVE SMALL SMALL CAP
INTERNATIONAL INTERNATIONAL EQUITY STOCK COMPANY GROWTH
FUND STOCK FUND FUND FUND VALUE FUND FUND
--------------- -------------- ------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trusts -- at market
value (Notes 2 and 6)
Cost: $ 48,890,465............ $46,096,631
18,857,986............ $18,037,268
6,828,909............ $5,749,521
925,922,491............ $958,618,111
25,268,810............ $25,040,101
23,177,804............ $23,949,616
12,690,330............
166,060,131............
3,688,652............
708,290,860............
371,159,172............
3,717,560............
Receivable for Trust shares
sold............................. -- 178,837 5,207 10,800,745 -- 4,071,394
Receivable for policy-
related transactions............. 50,805 -- -- -- 119,558 --
Total Assets........................ 46,147,436 18,216,105 5,754,728 969,418,856 25,159,659 28,021,010
LIABILITIES
Payable for Trust shares
purchased........................ 15,821 -- -- -- 133,511 --
Payable for policy-
related transactions............. -- 177,631 33,971 11,111,927 -- 4,123,081
Amount retained by
Equitable Life
in Separate Account
FP (Note 4)...................... 281,133 3,946,795 3,193,381 1,266,499 725,974 1,532,066
Total Liabilities................... 296,954 4,124,426 3,227,352 12,378,426 859,485 5,655,147
NET ASSETS ATTRIBUTABLE
TO POLICYOWNERS.................. $45,850,482 $14,091,679 $2,527,376 $957,040,430 $24,300,174 $22,365,863
=========== =========== ========== ============ =========== ===========
<CAPTION>
EQUITY
SERIES
(CONTINUED): ASSET ALLOCATION SERIES:
-------------- ----------------------------------------------------------------------------------
MERRILL
MFS EMERGING ALLIANCE EQ/ ALLIANCE LYNCH
GROWTH CONSERVATIVE PUTNAM GROWTH ALLIANCE WORLD
COMPANIES INVESTORS BALANCED INVESTORS BALANCED STRATEGY
FUND FUND FUND FUND FUND FUND
-------------- ---------------- ------------- ---------------- --------------- --------------
ASSETS
Investments in shares of
the Trusts -- at market
value (Notes 2 and 6)
<S> <C> <C> <C> <C> <C> <C>
Cost: $ 48,890,465.......
18,857,986.......
6,828,909.......
925,922,491.......
25,268,810.......
23,177,804.......
12,690,330....... $12,861,650
166,060,131....... $182,288,276
3,688,652....... $3,958,884
708,290,860....... $823,347,501
371,159,172....... $432,037,458
3,717,560....... $3,679,634
Receivable for Trust shares
sold........................ -- -- -- -- -- 55,547
Receivable for policy-
related transactions........ 27,498 73,209 11,388 110,150 -- --
Total Assets................... 12,889,148 182,361,485 3,970,272 823,457,651 432,037,458 3,735,181
LIABILITIES
Payable for Trust shares
purchased................... 59,447 17,478 11,906 157,733 23,444 --
Payable for policy-
related transactions........ -- -- -- -- 112,068 55,536
Amount retained by
Equitable Life
in Separate Account
FP (Note 4)................. 2,454,147 684,710 2,290,579 636,188 742,210 2,094,918
Total Liabilities.............. 2,513,594 702,188 2,302,485 793,921 877,722 2,150,454
NET ASSETS ATTRIBUTABLE
TO POLICYOWNERS............. $10,375,554 $181,659,297 $1,667,787 $822,663,730 $431,159,736 $1,584,727
=========== ============ ========== ============ ============ ==========
</TABLE>
See Notes to Financial Statements...
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-4
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FIXED INCOME SERIES:
---------------------------------------------------------------------------
ALLIANCE MONEY ALLIANCE INTERMEDIATE GOVERNMENT
MARKET FUND SECURITIES FUND
------------------------------------ ------------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
INCOME AND EXPENSES:
<S> <C> <C> <C> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trusts........................... $9,754,675 $9,126,793 $9,225,401 $2,914,613 $2,367,498 $2,010,283
Expenses (Note 3):
Mortality and expense risk charges.................. 1,101,168 1,025,149 954,556 282,422 245,038 197,721
---------- ---------- ---------- ---------- ---------- ----------
NET INVESTMENT INCOME................................. 8,653,507 8,101,644 8,270,845 2,632,191 2,122,460 1,812,562
---------- ---------- ---------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments................. (513,800) (110,954) (432,347) (95,509) (490,315) (810,768)
Realized gain distribution from
the Trusts........................................ 13,435 -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
NET REALIZED GAIN (LOSS).............................. (500,365) (110,954) (432,347) (95,509) (490,315) (810,768)
Unrealized appreciation /(depreciation) on investments:
Beginning of period................................. 24,023 89,976 32,760 (141,479) 145,522 (2,736,863)
End of period....................................... 804,349 24,023 89,976 868,053 (141,479) 145,522
---------- ---------- ---------- ---------- ---------- ----------
Change in unrealized appreciation / (depreciation)
during the period................................... 780,326 (65,953) 57,216 1,009,532 (287,001) 2,882,385
---------- ---------- ---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.......................................
279,961 (176,907) (375,131) 914,023 (777,316) 2,071,617
========== ========== ========== ========== ========== ==========
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................... $8,933,468 $7,924,737 $7,895,714 $3,546,214 $1,345,144 $3,884,179
========== ========== ========== ========== ========== ==========
<CAPTION>
FIXED INCOME SERIES (CONTINUED):
---------------------------------------
ALLIANCE QUALITY
BOND FUND
-------------------------------------
1997 1996 1995
---------- ---------- -----------
INCOME AND EXPENSES:
<S> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trusts............................. $ 8,869,740 $8,972,983 $ 7,958,285
Expenses (Note 3):
Mortality and expense risk charges.................... 845,069 869,312 767,627
----------- ---------- -----------
NET INVESTMENT INCOME.................................... 8,024,671 8,103,671 7,190,658
----------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments.................... (504,580) (1,130,915) (632,666)
Realized gain distribution from
the Trusts........................................... -- -- --
----------- ---------- -----------
NET REALIZED GAIN (LOSS)................................. (504,580) (1,130,915) (632,666)
Unrealized appreciation / (depreciation) on investments:
Beginning of period.................................... (1,961,822) (2,105,676) (15,521,200)
End of period.......................................... 2,395,718 (1,961,822) (2,105,676)
----------- ---------- -----------
Change in unrealized appreciation / (depreciation)
during the period...................................... 4,357,540 143,854 13,415,524
----------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.......................................... 3,852,960 (987,061) 12,782,858
=========== ========== ===========
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS...................................... $11,877,631 $7,116,610 $19,973,516
=========== ========== ===========
</TABLE>
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FIXED INCOME SERIES (CONTINUED):
-------------------------------------
ALLIANCE
HIGH YIELD
FUND
--------------------------------------
1997 1996 1995
----------- ----------- -----------
INCOME AND EXPENSES:
<S> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trusts................................. $12,918,934 $ 8,696,039 $ 6,518,568
Expenses (Note 3):
Mortality and expense risk charges........................ 789,982 518,429 371,369
----------- ----------- -----------
NET INVESTMENT INCOME........................................... 12,128,952 8,177,610 6,147,199
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments....................... 936,554 939,559 (179,454)
Realized gain distribution from
the Trusts............................................. 6,365,633 6,119,053 --
----------- ----------- -----------
NET REALIZED GAIN (LOSS)........................................ 7,302,187 7,058,612 (179,454)
Unrealized appreciation / (depreciation) on investments:
Beginning of period....................................... 5,664,824 3,823,981 (873,103)
End of period............................................. 8,622,836 5,664,824 3,823,981
----------- ----------- -----------
Change in unrealized appreciation / (depreciation)
during the period......................................... 2,958,012 1,840,843 4,697,084
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS............................................... 10,260,199 8,899,455 4,517,630
=========== =========== ===========
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................................. $22,389,151 $17,077,065 $10,664,829
=========== =========== ===========
<CAPTION>
EQUITY SERIES:
----------------------------------------------------------------
T. ROWE EQ/PUTNAM
PRICE EQUITY GROWTH & ALLIANCE
INCOME INCOME VALUE GROWTH & INCOME
FUND FUND FUND
----------- ---------- --------------------------------------
1997* 1997* 1997 1996 1995
--------- -------- ----------- ----------- -----------
INCOME AND EXPENSES:
<S> <C> <C> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trusts............................ $ 145,613 $ 33,273 $ 636,335 $ 525,200 $ 380,677
Expenses (Note 3):
Mortality and expense risk charges................... 29,706 9,655 358,997 155,175 69,716
---------- -------- ----------- ---------- ----------
NET INVESTMENT INCOME...................................... 115,907 23,618 277,338 370,025 310,961
---------- -------- ----------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments.................. 56,634 1,078 530,421 5,198 2,791
Realized gain distribution from
the Trusts........................................ 53,840 27,226 5,006,247 1,943,415 --
---------- -------- ----------- ---------- ----------
NET REALIZED GAIN (LOSS)................................... 110,474 28,304 5,536,668 1,948,613 2,791
Unrealized appreciation / (depreciation) on investments:
Beginning of period.................................. -- -- 5,074,338 2,123,346 (141,585)
End of period........................................ 1,073,548 269,561 13,021,603 5,074,338 2,123,346
---------- -------- ----------- ---------- ----------
Change in unrealized appreciation / (depreciation)
during the period.................................... 1,073,548 269,561 7,947,265 2,950,992 2,264,931
---------- -------- ----------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.......................................... 1,184,022 297,865 13,483,933 4,899,605 2,267,722
========== ======== =========== ========== ==========
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS......................................... $1,299,929 $321,483 $13,761,271 $5,269,630 $2,578,683
========== ======== =========== ========== ==========
</TABLE>
See Notes to Financial Statements.
* Commencement of Operations on May 1, 1997.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-6
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
----------------------------------------------------
ALLIANCE MERRILL LYNCH
EQUITY INDEX BASIC VALUE
FUND EQUITY FUND
-------------------------------------- ------------
1997 1996 1995 1997*
----------- ------------ ----------- --------
INCOME AND EXPENSES:
<S> <C> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trusts.................................... $ 2,610,223 $ 1,751,848 $ 964,775 $ 35,810
Expenses (Note 3):
Mortality and expense risk charges........................... 977,620 605,961 289,199 9,349
----------- ----------- ----------- --------
NET INVESTMENT INCOME (LOSS)....................................... 1,632,603 1,145,887 675,576 26,461
----------- ----------- ----------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments.......................... (414,497) 8,013,073 3,060 6,656
Realized gain distribution from
the Trusts................................................ 850,437 3,889,944 536,890 33,738
----------- ----------- ----------- --------
NET REALIZED GAIN (LOSS)........................................... 435,940 11,903,017 539,950 40,394
Unrealized appreciation / (depreciation) on investments:
Beginning of period.......................................... 21,448,224 12,451,765 (399,286) --
End of period................................................ 63,055,426 21,448,224 12,451,765 135,003
----------- ----------- ----------- --------
Change in unrealized appreciation / (depreciation)
during the period............................................ 41,607,202 8,996,459 12,851,051 135,003
----------- ----------- ----------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................................. 42,043,142 20,899,476 13,391,001 175,397
=========== =========== =========== ========
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................................. $43,675,745 $22,045,363 $14,066,577 $201,858
=========== =========== =========== ========
<CAPTION>
EQUITY SERIES (CONTINUED):
----------------------------------------------------
ALLIANCE MFS
COMMON STOCK RESEARCH
FUND FUND
---------------------------------------- --------
1997 1996 1995 1997*
------------ ------------ ------------ --------
INCOME AND EXPENSES:
<S> <C> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trusts.................................... $ 10,668,337 $ 11,773,551 $ 14,259,262 $ 20,442
Expenses (Note 3):
Mortality and expense risk charges........................... 11,435,936 8,267,795 6,050,368 13,127
------------ ------------ ------------ --------
NET INVESTMENT INCOME (LOSS)....................................... (767,599) 3,505,756 8,208,894 7,315
------------ ------------ ------------ --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments.......................... 53,841,049 30,128,838 16,793,683 6,989
Realized gain distribution from
the Trusts................................................ 164,814,473 157,423,606 63,838,178 81,156
------------ ------------ ------------ --------
NET REALIZED GAIN (LOSS)........................................... 218,655,522 187,552,444 80,631,861 88,145
Unrealized appreciation / (depreciation) on investments:
Beginning of period.......................................... 294,432,897 181,824,279 (2,048,649 --
End of period................................................ 567,231,009 294,432,897 181,824,279 249,382
------------ ------------ ------------ --------
Change in unrealized appreciation / (depreciation)
during the period............................................ 272,798,112 112,608,618 183,872,928 249,382
------------ ------------ ------------ --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................................. 491,453,634 300,161,062 264,504,789 337,527
============ ============ ============ ========
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................................. $490,686,035 $303,666,818 $272,713,683 $344,842
============ ============ ============ ========
</TABLE>
See Notes to Financial Statements.
* Commencement of Operations on May 1, 1997.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-7
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
----------------------------------------
ALLIANCE
GLOBAL
FUND
---------------------------------------
1997 1996 1995
----------- ----------- -----------
INCOME AND EXPENSES:
<S> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trusts.................................... $ 8,803,070 $ 7,019,392 $ 5,152,442
Expenses (Note 3):
Mortality and expense risk charges........................... 2,805,310 2,314,066 1,743,898
----------- ----------- -----------
NET INVESTMENT INCOME (LOSS)....................................... 5,997,760 4,705,326 3,408,544
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments.......................... 30,411,238 4,971,547 3,049,444
Realized gain distribution from
the Trusts................................................ 26,426,403 18,802,992 9,214,950
----------- ----------- -----------
NET REALIZED GAIN (LOSS)........................................... 56,837,641 23,774,539 12,264,394
Unrealized appreciation / (depreciation) on investments:
Beginning of period.......................................... 58,618,054 36,525,596 3,130,280
End of period................................................ 46,113,189 58,618,054 36,525,596
----------- ----------- -----------
Change in unrealized appreciation / (depreciation)
during the period............................................ (12,504,865) 22,092,458 33,395,316
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................................. 44,332,776 45,866,997 45,659,710
=========== =========== ===========
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................................. $50,330,536 $50,572,323 $49,068,254
=========== =========== ===========
<CAPTION>
EQUITY SERIES (CONTINUED):
-----------------------------------------------------------------
ALLIANCE T. ROWE PRICE EMERGING
INTERNATIONAL INTERNATIONAL MARKETS
FUND STOCK FUND EQUITY FUND
----------------------------------- ----------- --------------
1997 1996 1995** 1997* 1997***
----------- --------- --------- ----------- --------------
INCOME AND EXPENSES:
<S> <C> <C> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trusts................................ $ 1,386,732 $ 575,524 $195,500 $ 2,393 $ 16,623
Expenses (Note 3):
Mortality and expense risk charges....................... 297,278 164,149 36,471 26,332 2,862
----------- ---------- -------- --------- -----------
NET INVESTMENT INCOME (LOSS)................................... 1,089,454 411,375 159,029 (23,939) 13,761
----------- ---------- -------- --------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments...................... (57,635) (28,490) (790) (50,331) (14,566)
Realized gain distribution from
the Trusts............................................ 2,325,403 737,771 51,741 -- --
----------- --------- -------- ---------- ----------
NET REALIZED GAIN (LOSS)....................................... 2,267,768 709,281 50,951 (50,331) (14,566)
Unrealized appreciation / (depreciation) on investments:
Beginning of period...................................... 1,857,793 667,906 -- -- --
End of period............................................ (2,793,834) 1,857,793 667,906 (820,718) (1,079,388)
----------- ---------- -------- --------- -----------
Change in unrealized appreciation / (depreciation)
during the period........................................ (4,651,627) 1,189,887 667,906 (820,718) (1,079,388)
----------- ---------- -------- --------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.............................................. (2,383,859) 1,899,168 718,857 (871,049) (1,093,954)
=========== ========== ======== ========= ===========
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS............................................. $(1,294,405) $2,310,543 $877,886 $(894,988) $(1,080,193)
=========== ========== ======== ========= ===========
</TABLE>
See Notes to Financial Statements.
* Commencement of Operations on May 1, 1997.
** Commencement of Operations on April 3, 1995.
*** Commencement of Operations on August 20, 1997.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-8
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
-------------------------------------------------------
WARBURG
PINCUS
ALLIANCE SMALL
AGGRESSIVE STOCK COMPANY
FUND VALUE FUND
---------------------------------------- ------------
1997 1996 1995 1997*
----------- ------------ ------------ ------------
INCOME AND EXPENSES:
<S> <C> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trusts...................................... $ 1,311,613 $ 1,661,263 $ 1,268,689 $ 21,651
Expenses (Note 3):
Mortality and expense risk charges............................. 5,299,127 4,086,388 2,702,978 44,889
------------ ------------ ------------ ---------
NET INVESTMENT INCOME (LOSS)......................................... (3,987,514) (2,425,125) (1,434,289) (23,238)
------------ ------------ ------------ ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments............................ 28,217,939 30,549,608 11,560,966 29,803
Realized gain distribution from
the Trusts.................................................. 79,729,154 133,080,595 61,903,470 110,391
------------ ------------ ------------ ---------
NET REALIZED GAIN (LOSS)............................................. 107,947,093 163,630,203 73,464,436 140,194
Unrealized appreciation / (depreciation) on investments:
Beginning of period............................................ 46,617,235 80,271,118 30,761,318 --
End of period.................................................. 32,695,620 46,617,235 80,271,118 (228,709)
------------ ------------ ------------ ---------
Change in unrealized appreciation / (depreciation)
during the period.............................................. (13,921,615) (33,653,883) 49,509,800 (228,709)
------------ ------------ ------------ ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................................... 94,025,478 129,976,320 122,974,236 (88,515)
============ ============ ============ =========
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................................... $ 90,037,964 $127,551,195 $121,539,947 $(111,753)
============ ============ ============ =========
<CAPTION>
EQUITY SERIES (CONTINUED): ASSET ALLOCATION SERIES:
------------------------- -------------------------------------
ALLIANCE MFS
SMALL EMERGING
CAP GROWTH ALLIANCE
GROWTH COMPANIES CONSERVATIVE INVESTORS
FUND FUND FUND
-------- -------- -------------------------------------
1997* 1997* 1997 1996 1995
-------- -------- ----------- ----------- -----------
INCOME AND EXPENSES:
<S> <C> <C> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trusts................................. $ 4,189 $ 24,358 $ 7,217,860 $ 7,737,745 $ 8,169,109
Expenses (Note 3):
Mortality and expense risk charges........................ 41,540 18,835 1,066,078 1,046,858 921,294
-------- -------- ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS).................................... (37,351) 5,523 6,151,782 6,690,887 7,247,815
-------- -------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments....................... (609,208) 161,034 818,458 (752,434) (378,551)
Realized gain distribution from
the Trusts............................................. 545,833 296,998 5,486,742 4,429,977 1,068,272
-------- -------- ----------- ----------- -----------
NET REALIZED GAIN (LOSS)........................................ (63,375) 458,032 6,305,200 3,677,543 689,721
Unrealized appreciation / (depreciation) on investments:
Beginning of period....................................... -- -- 7,700,135 10,362,120 (8,767,697)
End of period............................................. 771,812 171,320 16,228,145 7,700,135 10,362,120
-------- -------- ----------- ----------- -----------
Change in unrealized appreciation / (depreciation)
during the period......................................... 771,812 171,320 8,528,010 (2,661,985) 19,129,817
-------- -------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS............................................... 708,437 629,352 14,833,210 1,015,558 19,819,538
======== ======== =========== =========== ===========
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................................. $671,086 $634,875 $20,984,992 $ 7,706,445 $27,067,353
======== ======== =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
* Commencement of Operations on May 1, 1997.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-9
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES (CONTINUED):
------------------------------------------------------
EQ/
PUTNAM ALLIANCE
BALANCED GROWTH INVESTORS
FUND FUND
--------- ------------------------------------------
1997* 1997 1996 1995
--------- ------------ ------------ ------------
INCOME AND EXPENSES:
<S> <C> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trusts.............................. $ 46,468 $ 19,280,574 $ 15,504,412 $ 15,855,901
Expenses (Note 3):
Mortality and expense risk charges..................... 2,741 4,570,289 3,746,683 2,796,354
-------- ------------ ------------ ------------
NET INVESTMENT INCOME........................................ 43,727 14,710,285 11,757,729 13,059,547
-------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments.................... 561 10,531,767 1,799,247 1,752,185
Realized gain distribution from
the Trusts.......................................... 31,119 42,780,443 73,474,967 7,421,853
-------- ------------ ------------ ------------
NET REALIZED GAIN (LOSS)..................................... 31,680 53,312,210 75,274,214 9,174,038
Unrealized appreciation / (depreciation) on investments:
Beginning of period.................................... -- 67,150,693 81,785,873 (770,693)
End of period.......................................... 270,232 115,056,641 67,150,693 81,785,873
-------- ------------ ------------ ------------
Change in unrealized appreciation / (depreciation)
during the period...................................... 270,232 47,905,948 (14,635,180) 82,556,566
-------- ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS............................................ 301,912 101,218,158 60,639,034 91,730,604
======== ============ ============ ============
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS........................................... $345,639 $115,928,443 $ 72,396,763 $104,790,151
======== ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES (CONTINUED):
-----------------------------------------------------
MERRILL
LYNCH
ALLIANCE WORLD
BALANCED STRATEGY
FUND FUND
--------------------------------------- --------
1997 1996 1995 1997*
----------- ----------- ----------- --------
INCOME AND EXPENSES:
<S> <C> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trusts...................................... $13,756,520 $13,094,730 $12,276,328 $ 17,124
Expenses (Note 3):
Mortality and expense risk charges............................. 2,544,300 2,490,188 2,237,982 2,678
----------- ----------- ----------- --------
NET INVESTMENT INCOME................................................ 11,212,220 10,604,542 10,038,346 14,446
----------- ----------- ----------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments............................ 5,910,524 (873,535) (2,466,524) (3,626)
Realized gain distribution from
the Trusts.................................................. 21,117,088 34,113,772 10,894,130 38,995
----------- ----------- ----------- --------
NET REALIZED GAIN (LOSS)............................................. 27,027,612 33,240,237 8,427,606 35,369
Unrealized appreciation / (depreciation) on investments:
Beginning of period............................................ 42,382,824 43,097,187 (2,878,875) --
End of period.................................................. 60,878,286 42,382,824 43,097,187 (37,926)
----------- ----------- ----------- --------
Change in unrealized appreciation / (depreciation)
during the period.............................................. 18,495,462 (714,36) 45,976,062 (37,926)
----------- ----------- ----------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................................... 45,523,074 32,525,874 54,403,668 (2,557)
=========== =========== =========== ========
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................................... $56,735,294 $43,130,416 $64,442,014 $ 11,889
=========== =========== =========== ========
</TABLE>
See Notes to Financial Statements.
* Commencement of Operations on May 1, 1997.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-10
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FIXED INCOME SERIES:
------------------------------------------------------------------------------------
ALLIANCE MONEY ALLIANCE INTERMEDIATE GOVERNMENT
MARKET FUND SECURITIES FUND
----------------------------------------- -------------------------------------
1997 1996 1995 1997 1996 1995
------------ ------------ ------------ ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income..................... $ 8,653,507 $ 8,101,644 $ 8,270,845 $ 2,632,191 $ 2,122,460 $ 1,812,562
Net realized gain (loss).................. (500,365) (110,954) (432,347) (95,509) (490,315) (810,768)
Change in unrealized appreciation /
(depreciation) on investments.......... 780,326 (65,953) 57,216 1,009,532 (287,001) 2,882,385
------------ ------------ ------------ ------------ ----------- -----------
Net increase (decrease) in net assets
from operations........................ 8,933,468 7,924,737 7,895,714 3,546,214 1,345,144 3,884,179
------------ ------------ ------------ ----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)..................... 234,059,930 101,890,108 96,773,056 8,749,531 10,397,104 11,016,347
Benefits and other policy-related
transactions (Note 3).................. (40,687,124) (38,404,209) (39,770,849) (5,971,751) (7,387,385) (6,286,070)
Net transfers among funds................. (259,049,840) (36,607,946) 4,776,165 7,704,724 2,645,675 953,149
------------ ------------ ------------ ----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions....... (65,677,034) 26,877,953 61,778,372 10,482,504 5,655,394 5,683,426
------------ ------------ ------------ ----------- ----------- -----------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).............. (49,726) (63,127) (36,640) (38,337) (22,170) (72,636)
------------ ------------ ------------ ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABL
TO POLICYOWNERS........................... (56,793,292) 34,739,563 69,637,446 13,990,381 6,978,368 9,494,969
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS,
BEGINNING OF PERIOD....................... 241,873,094 207,133,531 137,496,085 44,127,412 37,149,044 27,654,075
============ ============ ============ =========== =========== ===========
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, END
OF PERIOD................................. $185,079,802 $241,873,094 $207,133,531 $58,117,793 $44,127,412 $37,149,044
============ ============ ============ =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FIXED INCOME SERIES (CONTINUED):
------------------------------------------
ALLIANCE QUALITY
BOND FUND
------------------------------------------
1997 1996 1995
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
<S> <C> <C> <C>
Net investment income..................... $ 8,024,671 $ 8,103,671 $ 7,190,658
Net realized gain (loss).................. (504,580) (1,130,915) (632,666)
Change in unrealized appreciation /
(depreciation) on investments.......... 4,357,540 143,854 13,415,524
------------ ------------ ------------
Net increase (decrease) in net assets
from operations........................ 11,877,631 7,116,610 19,973,516
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)..................... 8,423,097 5,753,712 2,516,135
Benefits and other policy-related
transactions (Note 3).................. (3,002,993) (32,021,058) (3,189,044)
Net transfers among funds................. 12,678,032 6,117,471 2,462,969
------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions....... 18,098,136 (20,149,875) 1,790,060
------------ ------------ ------------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).............. (49,594) (39,868) (712,602)
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABL
TO POLICYOWNERS........................... 29,926,173 (13,073,133) 21,050,974
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS,
BEGINNING OF PERIOD....................... 125,214,313 138,287,446 117,236,472
============ ============ ============
NET ASSETS ATTRIBUTABLE TO POLICYOWNERS, END
OF PERIOD................................. $155,140,486 $125,214,313 $138,287,446
============ ============ ============
</TABLE>
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-11
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FIXED INCOME SERIES (CONTINUED):
-------------------------------------
ALLIANCE
HIGH YIELD
FUND
--------------------------------------
1997 1996 1995
----------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C> <C>
FROM OPERATIONS:
Net investment income............................ $ 12,128,952 $ 8,177,610 $ 6,147,199
Net realized gain (loss)......................... 7,302,187 7,058,612 (179,454)
Change in unrealized appreciation /
(depreciation) on investments................. 2,958,012 1,840,843 4,697,084
------------ ------------ -----------
Net increase (decrease) in net assets
from operations............................... 22,389,151 17,077,065 10,664,829
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)............................ 26,933,221 19,454,716 15,333,474
Benefits and other policy-
related transactions (Note 3)................. (14,530,462) (16,165,764) (8,211,013)
Net transfers among funds........................ 26,385,799 9,301,980 4,789,450
----------- ------------ -----------
Net increase (decrease) in net assets
from policy-related transactions.............. 38,788,558 12,590,932 11,911,911
------------ ------------ ------------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)..................... (189,179) (209,120) (100,679)
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO POLICYOWNERS..................... 60,988,530 29,458,877 22,476,061
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, BEGINNING OF PERIOD................ 101,389,839 71,930,962 49,454,901
------------ ------------ -----------
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, END OF PERIOD...................... $162,378,369 $101,389,839 $71,930,962
============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
EQUITY SERIES:
---------------------------------------------------------------------
EQ/PUTNAM
T. ROWE PRICE GROWTH & ALLIANCE
EQUITY INCOME INCOME VALUE GROWTH & INCOME
FUND FUND FUND
------------- ------------- ---------------------------------------
1997* 1997* 1997 1996 1995
----------- ---------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income............................ $ 115,907 $ 23,618 $ 277,338 $ 370,025 $ 310,961
Net realized gain (loss)......................... 110,474 28,304 5,536,668 1,948,613 2,791
Change in unrealized appreciation /
(depreciation) on investments................. 1,073,548 269,561 7,947,265 2,950,992 2,264,931
----------- ---------- ----------- ----------- -----------
Net increase (decrease) in net assets
from operations............................... 1,299,929 321,483 13,761,271 5,269,630 2,578,683
----------- ---------- ----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)............................ 2,540,460 1,149,748 17,923,903 11,382,745 6,464,035
Benefits and other policy-
related transactions (Note 3)................. (351,660) (154,351) (6,498,823) (2,909,569) (1,385,132)
Net transfers among funds........................ 14,259,773 4,539,465 25,301,886 5,211,758 5,274,221
----------- ---------- ----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions.............. 16,448,573 5,534,862 36,726,966 13,684,934 10,353,124
----------- ---------- ----------- ----------- -----------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)..................... (285,438) (191,983) (107,895) (106,424) (221,877)
----------- ---------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO POLICYOWNERS..................... 17,463,064 5,664,362 50,380,342 18,848,140 12,709,930
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, BEGINNING OF PERIOD................ -- -- 37,466,453 18,618,313 5,908,383
----------- ---------- ----------- ----------- -----------
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, END OF PERIOD...................... $17,463,064 $5,664,362 $87,846,795 $37,466,453 $18,618,313
=========== ========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
* Commencement of Operations on May 1, 1997.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-12
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
------------------------------------------------------
MERRILL
ALLIANCE LYNCH BASIC
EQUITY INDEX VALUE
FUND EQUITY FUND
--------------------------------------- ------------
1997 1996 1995 1997*
------------ ---------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income............................. $ 1,632,603 1,145,887 $ 675,576 $ 26,461
Net realized gain (loss).......................... 435,940 11,903,017 539,950 40,394
Change in unrealized appreciation /
(depreciation) on investments.................. 41,607,202 8,996,459 12,851,051 135,003
------------ ----------- ----------- ----------
Net increase (decrease) in net assets
from operations................................ 43,675,745 22,045,363 14,066,577 201,858
------------ ------------ ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)............................. 53,262,239 33,692,683 10,308,871 1,097,822
Benefits and other policy-
related transactions (Note 3).................. (18,975,147) (56,493,042) (2,111,532) (135,034)
Net transfers among funds......................... 67,867,827 23,434,912 18,305,589 4,661,128
------------ ----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions............... 102,154,919 634,553 26,502,928 5,623,916
------------ ---------- ----------- ----------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)...................... (136,089) (66,020) (71,293) (204,337)
------------ ----------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO POLICYOWNERS...................... 145,694,575 22,613,896 40,498,212 5,621,437
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, BEGINNING OF PERIOD................. 94,237,511 71,623,615 31,125,403 --
------------ ----------- ----------- ----------
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, END OF PERIOD....................... $239,932,086 $94,237,511 $71,623,615 $5,621,437
============ =========== =========== ==========
<CAPTION>
EQUITY SERIES (CONTINUED):
----------------------------------------------------------------
ALLIANCE MFS
COMMON STOCK RESEARCH
FUND FUND
------------------------------------------------ ----------
1997 1996 1995 1997*
-------------- -------------- -------------- ---------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income............................. $ (767,599) $ 3,505,756 $ 8,208,894 $ 7,315
Net realized gain (loss).......................... 218,655,522 187,552,444 80,631,861 88,145
Change in unrealized appreciation /
(depreciation) on investments.................. 272,798,112 112,608,618 183,872,928 249,382
-------------- -------------- -------------- ----------
Net increase (decrease) in net assets
from operations................................ 490,686,035 303,666,818 272,713,683 344,842
--------------- --------------- --------------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)............................. 282,279,826 271,193,481 216,068,996 1,177,137
Benefits and other policy-
related transactions (Note 3).................. (199,662,183) (154,302,728) (118,456,643) (162,042)
Net transfers among funds......................... 56,849,823 4,064,266 (34,354,864) 6,389,251
-------------- -------------- -------------- -----------
Net increase (decrease) in net assets
from policy-related transactions............... 139,467,466 120,955,019 63,257,489 7,404,346
-------------- -------------- ---------------- -----------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)...................... (86,740) (429,232) (392,099) (321,159)
-------------- -------------- -------------- ----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO POLICYOWNERS...................... 630,066,761 424,192,605 335,579,073 7,428,029
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, BEGINNING OF PERIOD................. 1,570,777,879 1,146,585,274 811,006,201 --
-------------- ------------- -------------- ----------
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, END OF PERIOD....................... $2,200,844,640 $1,570,777,879 $1,146,585,274 $7,428,029
============== ============== ============== ==========
</TABLE>
See Notes to Financial Statements.
* Commencement of Operations on May 1, 1997.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-13
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
----------------------------------------------------------------------------------------
ALLIANCE ALLIANCE
GLOBAL INTERNATIONAL
FUND FUND
------------------------------------------- -------------------------------------------
1997 1996 1995 1997 1996 1995**
------------- ----------- ------------- -------------- -------------- -----------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ............... $ 5,997,760 $ 4,705,326 $ 3,408,544 $ 1,089,454 $ 411,375 $ 159,029
Net realized gain (loss) ............ 56,837,641 23,774,539 12,264,394 2,267,768 709,281 50,951
Change in unrealized appreciation /
(depreciation) on investments .... (12,504,865) 22,092,458 33,395,316 (4,651,627) 1,189,887 667,906
------------ ------------ ------------ ----------- ---------- -----------
Net increase (decrease) in net assets
from operations .................. 50,330,536 50,572,323 49,068,254 (1,294,405) 2,310,543 877,886
------------ ------------ ------------ ----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............... 85,714,413 96,457,308 92,666,618 14,198,839 12,055,154 2,028,670
Benefits and other policy-
related transactions (Note 3) .... (48,793,564) (43,292,191) (37,507,499) (4,716,765) (2,295,079) (339,723)
Net transfers among funds ........... (89,131,113) (4,363,741) (12,472,104) (3,886,303) 17,095,516 9,885,952
------------ ------------ ------------ ----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions . (52,210,264) 48,801,376 42,687,015 5,595,771 26,855,591 11,574,899
------------ ------------ ------------ ----------- ----------- -----------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ........ (147,270) (93,415) (96,720) (27,091) (21,865) (20,847)
------------ ------------ ------------ ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO POLICYOWNERS ........ (2,026,998) 99,280,284 91,658,549 4,274,275 29,144,269 12,431,938
NET ASSETS ATTRIBUTABLE TO ............. -- -- -- -- -- --
POLICYOWNERS, BEGINNING OF PERIOD ... 432,777,304 333,497,020 241,838,471 41,576,207 12,431,938 --
------------ ------------ ------------ ----------- ------------ -----------
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, END OF PERIOD ......... $430,750,306 $432,777,304 $333,497,020 $45,850,482 $41,576,207 $12,431,938
============ ============ ============ =========== =========== ===========
</TABLE>
EQUITY SERIES (CONTINUED):
-------------------------------
MORGAN
STANLEY
T. ROWE PRICE EMERGING
INTERNATIONAL MARKETS
STOCK FUND EQUITY FUND
------------- ---------------
1997* 1997***
------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................... $ (23,939) $ 13,761
Net realized gain (loss)................. (50,331) (14,566)
Change in unrealized appreciation /
(depreciation) on investments......... (820,718) (1,079,388)
---------- -----------
Net increase (decrease) in net assets
from operations....................... (894,988) (1,080,193)
---------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................... 2,268,440 323,739
Benefits and other policy-
related transactions (Note 3)......... (295,221) (7,501)
Net transfers among funds................ 12,953,165 2,483,527
------------ -----------
Net increase (decrease) in net assets
from policy-related transactions...... 14,926,384 2,799,765
----------- -----------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)............. 60,283 807,804
----------- -----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO POLICYOWNERS............. 14,091,679 2,527,376
NET ASSETS ATTRIBUTABLE TO ----------- -----------
POLICYOWNERS, BEGINNING OF PERIOD........ -- --
----------- -----------
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, END OF PERIOD.............. $14,091,679 $ 2,527,376
=========== ===========
See Notes to Financial Statements.
* Commencement of Operations on May 1, 1997.
** Commencement of Operations on April 3, 1995.
*** Commencement of Operations on August 20, 1997.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-14
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
-------------------------------------------------------------------------------------
ALLIANCE WARBURG PINCUS ALLIANCE SMALL
AGGRESSIVE STOCK SMALL COMPANY CAP GROWTH
FUND VALUE FUND FUND
------------------------------------------------- ----------------- ----------------
1997 1996 1995 1997* 1997*
--------------- --------------- ------------- ----------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ............... $ (3,987,514) $ (2,425,125) $ (1,434,289) $ (23,238) $ (37,351)
Net realized gain (loss) ............ 107,947,093 163,630,203 73,464,436 140,194 (63,375)
Change in unrealized appreciation /
(depreciation) on investments .... (13,921,615) (33,653,883) 49,509,800 (228,709) 771,812
------------ ------------ ------------ ----------- -----------
Net increase (decrease) in net assets
from operations .................. 90,037,964 7,551,195 121,539,947 (111,753 671,086
------------ ------------ ------------ ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............... 179,662,167 167,830,465 121,962,483 4,397,634 2,947,848
Benefits and other policy-
related transactions (Note 3) .... 107,529,554) (85,246,883) (63,165,185) (608,891) (599,875)
Net transfers among funds ........... 1,712,877 28,481,572 19,367,834 20,737,304 19,670,856
------------ ------------ ------------ ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions . 73,845,490 111,065,154 78,165,132 24,526,047 22,018,829
------------ ------------ ------------ ----------- -----------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ........ (442,155) (205,349) (188,813) (114,120) (324,052
------------ ------------ ------------ ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO POLICYOWNERS ........ 163,441,299 238,411,000 199,516,266 24,300,174 22,365,863
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, BEGINNING OF PERIOD ... 793,599,131 555,188,131 355,671,865 -- --
------------ ------------ ------------ ----------- -----------
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, END OF PERIOD ......... $957,040,430 $793,599,131 $555,188,131 $24,300,174 $22,365,863
============ ============ ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
EQUITY
SERIES
(CONTINUED): ASSET ALLOCATION SERIES:
---------------- -----------------------------------------------
MFS EMERGING ALLIANCE
GROWTH CONSERVATIVE INVESTORS
COMPANIES FUND FUND
---------------- ------------- -------------- -------------
1997* 1997 1996 1995
---------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ............... $ 5,523 $ 6,151,782 $ 6,690,887 $ 7,247,815
Net realized gain (loss) ............ 458,032 6,305,200 3,677,543 689,721
Change in unrealized appreciation /
(depreciation) on investments .... 171,320 8,528,010 (2,661,985) 19,129,817
----------- ------------ ------------ ------------
Net increase (decrease) in net assets
from operations .................. 634,875 20,984,992 7,706,445 27,067,353
----------- ------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............... 1,598,358 30,425,833 38,133,118 41,419,959
Benefits and other policy-
related transactions (Note 3) .... (294,924) (24,998,155) (25,456,269 (22,866,003)
Net transfers among funds ........... 8,886,415 (18,978,233) (18,095,700 (3,379,296
----------- ------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions . 10,189,849 (13,550,555) (5,418,851 15,174,660
----------- ------------ ------------ ------------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ........ (449,170) (113,620) (36,213 (95,412)
----------- ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO POLICYOWNERS ........ 10,375,554 7,320,817 2,251,381 42,146,601
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, BEGINNING OF PERIOD ... -- 174,338,480 172,087,099 129,940,498
----------- ------------ ------------ ------------
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS, END OF PERIOD ......... $10,375,554 $181,659,297 $174,338,480 $172,087,099
=========== ============ ============ ============
</TABLE>
See Notes to Financial Statements.
* Commencement of Operations on May 1, 1997.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-15
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES (CONTINUED):
----------------------------------------------------------------
EQ/PUTNAM ALLIANCE
BALANCED GROWTH INVESTORS
FUND FUND
--------------- -----------------------------------------------
1997* 1997 1996 1995
--------------- ------------- -------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ............... $ 43,727 $ 14,710,285 $ 11,757,729 $ 13,059,547
Net realized gain (loss) ............ 31,680 53,312,210 75,274,214 9,174,038
Change in unrealized appreciation /
(depreciation) on investments .... 270,232 47,905,948 (14,635,180) 82,556,566
---------- ------------ ------------ ------------
Net increase (decrease) in net assets
from operations .................. 345,639 115,928,443 72,396,763 104,790,151
---------- ------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............... 213,829 139,280,509 159,654,177 155,616,059
Benefits and other policy-related
transactions (Note 3) ............ (60,092) (95,656,635) (81,943,749) (68,357,709)
Net transfers among funds ........... 1,458,185 (35,207,298) (7,652,116) (3,269,896)
---------- ------------ ------------ ------------
Net increase (decrease) in net assets
from policy related-transactions.. 1,611,922 8,416,576 70,058,312 83,988,454
---------- ------------ ------------ ------------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4) ..... (289,774) 79,090 (93,120) (120,493)
---------- ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO POLICYOWNERS ........ 1,667,787 124,424,109 142,361,955 188,658,112
NET ASSETS ATTRIBUTABLE TO POLICY
OWNERS, BEGINNING OF PERIOD ......... -- 698,239,621 555,877,666 367,219,554
========== ============ ============ ============
NET ASSETS ATTRIBUTABLE TO POLICY
OWNERS, END OF PERIOD ............... $1,667,787 $822,663,730 $698,239,621 $555,877,666
========== ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES (CONTINUED):
----------------------------------------------------------------
MERRILL
LYNCH
ALLIANCE WORLD
BALANCED STRATEGY
FUND FUND
----------------------------------------------- -------------
1997 1996 1995 1997*
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ............... $ 11,212,220 $ 10,604,542 $ 10,038,346 $ 14,446
Net realized gain (loss) ............ 27,027,612 33,240,237 8,427,606 35,369
Change in unrealized appreciation /
(depreciation) on investments .... 18,495,462 (714,363) 45,976,062 (37,926)
------------ ------------ ------------ ----------
Net increase (decrease) in net assets
from operations .................. 56,735,294 43,130,416 64,442,014 11,889
------------ ------------ ------------ ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............... 48,722,966 60,530,048 63,451,955 334,133
Benefits and other policy-related
transactions (Note 3) ............ (48,611,396) (50,274,632) (48,742,571) (41,646)
Net transfers among funds ........... (55,377,177) (22,122,080) (18,908,540) 1,374,499
------------ ------------ ------------ ----------
Net increase (decrease) in net assets
from policy related-transactions . (55,265,607) (11,866,664) (4,199,156) 1,666,986
------------ ------------ ------------ ----------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4) ..... (4,006) (134,906) (93,214) (94,148)
------------ ------------ ------------ ----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO POLICYOWNERS ........ 1,465,681 31,128,846 60,149,644 1,584,727
NET ASSETS ATTRIBUTABLE TO POLICY
OWNERS, BEGINNING OF PERIOD ......... 429,694,055 398,565,209 338,415,565 --
============ ============ ============ ==========
NET ASSETS ATTRIBUTABLE TO POLICY
OWNERS, END OF PERIOD ............... $431,159,736 $429,694,055 $398,565,209 $1,584,727
============ ============ ============ ==========
</TABLE>
See Notes to Financial Statements.
* Commencement of Operations on May 1, 1997.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-16
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
1. General
Effective January 1, 1997 Equitable Variable Life Insurance Company
("Equitable Variable Life" ) was merged into The Equitable Life Assurance
Society of the United States ("Equitable Life" ). From January 1, 1997,
Equitable Life is liable in place of Equitable Variable Life for the
liabilities and obligations of Equitable Variable Life, including
liabilities under policies and contracts issued by Equitable Variable Life,
and all of Equitable Variable Life's assets became assets of Equitable Life.
The merger had no effect on the net assets of the Separate Account
attributable to contract owners.
Equitable Life Separate Account FP (the Account) is organized as a unit
investment trust, a type of investment company, and is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940.
The Account consists of twenty-four investment funds: the Alliance Money
Market Fund, the Alliance Intermediate Government Securities Fund, the
Alliance Quality Bond Fund, the Alliance High Yield Fund, T. Rowe Price
Equity Income Fund, the EQ/Putnam Growth and Income Value Fund, the Alliance
Equity Index Fund, the Merrill Lynch Basic Value Equity Fund, the Alliance
Common Stock Fund, the MFS Research Fund, the Alliance Global Fund, the
Alliance International Fund, the T. Rowe Price International Stock Fund, the
Morgan Stanley Emerging Markets Equity Fund, the Alliance Aggressive Stock
Fund, the Warburg Pincus Small Company Value Fund, the Alliance Small Cap
Growth Fund, MFS Emerging Growth Companies Fund, the Alliance Conservative
Investors Fund, the EQ/Putnam Balanced Fund, the Alliance Growth Investors
Fund, the Alliance Balanced Fund, and the Merrill Lynch World Strategy Fund
("the Funds"). The assets in each fund are invested in shares of a
corresponding portfolio (Portfolio) of a mutual fund, Class IA shares of The
Hudson River Trust (HR Trust) or Class IB shares of EQ Advisors Trust (EQ
Trust) (Collectively known as the Trusts). Class IA shares are offered at
net asset value and are not subject to distribution fees imposed pursuant to
a distribution plan. Class IB shares are offered at net asset values and are
subject to distribution fees imposed under a distribution plan adopted in
1997 pursuant to Rule 12b-1 under the 1940 Act. The Trusts are open-end,
diversified management investment companies that invest separate account
assets of insurance companies. Each Portfolio has separate investment
objectives.
The Account supports the operations of Incentive Life, Incentive Life 2000,
Incentive Life Plus,(SM), IL Protector,(SM), IL COLI, flexible premium
variable life insurance policies, Champion 2000, modified premium variable
whole life insurance policies, Survivorship 2000, flexible premium joint
survivorship variable life insurance policies, and SP-Flex, variable life
insurance policies with additional premium option, collectively, the
"Policies." The Incentive Life 2000, Champion 2000 and Survivorship 2000
policies are herein referred to as the "Series 2000 Policies." Incentive
Life Plus (SM) policies offered with a prospectus dated on or after
September 15, 1995, are referred to as Incentive Life Plus (SM) Second
Series. Incentive Life Plus policies issued with a prior prospectus are
referred to as Incentive Life Plus Original Series. All Policies are issued
by Equitable Life. The assets of the Account are the property of Equitable
Life. However, the portion of the Account's assets attributable to the
Policies will not be chargeable with liabilities arising out of any other
business Equitable Life may conduct.
Policyowners may allocate amounts in their individual accounts to the Funds
of the Account and/or (except for SP-Flex policies) to the guaranteed
interest account of Equitable Life's General Account. Net transfers to
(from) the guaranteed interest account of the General Account and other
Separate Accounts of $165,714,430, $(7,511,567) and $6,569,672 for the years
ended 1997, 1996 and 1995, respectively, are included in Net Transfers among
Funds. The net assets of any Fund of the Account may not be less than the
aggregate of the policyowners' accounts allocated to that Fund. Additional
assets are set aside in Equitable Life's General Account to provide for (1)
the unearned portion of the monthly charges for mortality costs, and (2)
other policy benefits, as required under the state insurance law.
2. Significant Accounting Policies
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Investments are made in shares of the Trust and are valued at the net asset
values per share of the respective Portfolios. The net asset value is
determined by the Trust using the market or fair value of the underlying
assets of the Portfolio less liabilities.
Investment transactions are recorded on the trade date. Dividends are
recorded by HR Trust as income at the end of each quarter on the ex-dividend
date and by EQ Trust in the fourth quarter. Dividend and capital gain
distributions are automatically reinvested on the ex-dividend date. Realized
gains and losses include gains and losses on redemptions of the Trust's
shares (determined on the identified cost basis) and Trust distributions
representing the net realized gains on Trust investment transactions are
distributed by the Trust at the end of each year.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-17
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
2. Significant Accounting Policies (Continued)
The operations of the Account are included in the consolidated Federal
income tax return of Equitable Life. Under the provisions of the Policies,
Equitable Life has the right to charge the Account for Federal income tax
attributable to the Account. No charge is currently being made against the
Account for such tax since, under current tax law, Equitable Life pays no
tax on investment income and capital gains reflected in variable life
insurance policy reserves. However, Equitable Life retains the right to
charge for any Federal income tax incurred which is attributable to the
Account if the law is changed. Charges for state and local taxes, if any,
attributable to the Account also may be made.
3. Asset Charges
Under the Policies, Equitable Life assumes mortality and expense risks and,
to cover these risks, charges the daily net assets of the Account currently
at annual rates of 0.60% of the net assets attributable to Incentive Life,
Incentive Life 2000, Incentive Life Plus Second Series and Champion 2000
policyowners, 0.90% of net assets attributable to Survivorship 2000
policyowners, 0.80% for IL Protector policyowners, and 0.85% for SP-Flex
policyowners. Incentive Life Plus Original Series, and IL COLI deduct this
charge of 0.85% from the Policy Account. Under SP-Flex, Equitable Life also
charges the daily net assets of the Account for mortality and administrative
costs of 0.60% and 0.35%, respectively, of net assets attributable to
SP-Flex policies.
Under Incentive Life, Incentive Life Plus, Series 2000 and IL Protector
policies, mortality and administrative charges are assessed in a different
manner than SP-Flex policies.
Before amounts are remitted to the Account for Incentive Life, Incentive
Life Plus, IL COLI, and the Series 2000 Policies, Equitable Life deducts a
charge for taxes and either an initial policy fee (Incentive Life) or a
premium sales charge (Incentive Life Plus, and Series 2000 Policies) from
premiums. Under SP-Flex, the entire initial premium is allocated to the
Account. Before any additional premiums under SP-Flex are allocated to the
Account, however, an administrative charge is deducted.
The amounts attributable to Incentive Life, Incentive Life Plus, IL
Protector, IL COLI, and the Series 2000 policyowners' accounts are assessed
monthly by Equitable Life for mortality and administrative charges. These
charges are withdrawn from the Accounts along with amounts for additional
benefits. Under the Policies, amounts for certain policy-related
transactions (such as policy loans and surrenders) are transferred out of
the Separate Account.
4. Amounts Retained by Equitable Life in Separate Account FP
The amount retained by Equitable Life (surplus) in the Account arises
principally from (1) contributions from Equitable Life, (2) mortality and
expense charges and administrative charges accumulated in the account, and
(3) that portion, determined ratably, of the Account's investment results
applicable to those assets in the Account in excess of the net assets for
the Policies. Amounts retained by Equitable Life are not subject to charges
for mortality and expense charges and administrative charges.
Amounts retained by Equitable Life in the Account may be transferred at any
time by Equitable Life to its General Account.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-18
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
4. Amounts Retained by Equitable Life in Separate Account FP (Continued)
The following table shows the surplus contributions (withdrawals) by Equitable
Life by investment fund:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
INVESTMENT FUND 1997 1996 1995
--------------- ---- ---- ----
<S> <C> <C> <C>
Fixed Income Series:
Alliance Money Market -- -- $ (250,000)
Alliance Intermediate Government Securities -- -- (165,000)
Alliance Quality Bond -- $(125,000) (4,800,000)
Alliance High Yield -- -- (100,000)
Equity Series:
T. Rowe Price Equity Income $ 1,300,000 -- --
EQ/Putnam Growth & Income Value 1,200,000 -- --
Alliance Growth & Income -- (75,000) (685,000)
Alliance Equity Index -- -- --
Merrill Lynch Basic Value Equity 1,200,000 -- --
Alliance Common Stock -- (185,000) (630,000)
MFS Research 2,000,000 -- --
Alliance Global -- -- (130,000)
Alliance International -- -- 200,000
T. Rowe Price International Stock 4,000,000 -- --
Morgan Stanley Emerging Markets Equity 4,000,000 -- --
Alliance Aggressive Stock -- (125,000) (350,000)
Warburg Pincus Small Company Value 600,000 -- --
Alliance Small Cap Growth 1,200,000 -- --
MFS Emerging Growth Companies 2,000,000 -- --
Asset Allocation Series:
Alliance Conservative Investors -- (80,000) --
EQ/Putnam Balanced 2,000,000 -- --
Alliance Growth Investors -- (175,000) --
Alliance Balanced -- (90,000) --
Merrill Lynch World Strategy 2,000,000 -- --
</TABLE>
5. Distribution and Servicing Agreement
Equitable Life has entered into a Distribution and Servicing Agreement with
EQ Financial Consultants Inc., whereby registered representatives of EQ
Financial Consultants Inc., authorized as variable life insurance agents
under applicable state insurance laws, sell the Policies. The registered
representatives are compensated on a commission basis by Equitable Life.
6. Investment Returns
The tables on the following pages show the gross and net investment returns
with respect to the Funds for the periods shown. The net return for each
Fund is based upon beginning and ending net assets for a policy and is not
based on the average net assets in the Fund during such period. Gross return
is equal to the total return earned by the underlying Trust investment.
The Separate Account rates of return attributable to Incentive Life,
Incentive Life 2000, Incentive Life Plus Second Series and Champion 2000
policyowners are different than those attributable to Survivorship 2000,
Incentive Life Plus Original Series, IL Protector, IL COLI, and to SP-Flex
policyowners because asset charges are deducted at different rates under
each policy (see Note 3).
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-19
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
RATES OF RETURN:
INCENTIVE LIFE,
INCENTIVE LIFE 2000,
INCENTIVE LIFE PLUS SECOND SERIES
AND CHAMPION 2000*
<TABLE>
<CAPTION>
FIXED INCOME SERIES:
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- -------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 5.42% 5.33% 5.74% 4.02% 3.00% 3.56% 6.18% 8.24% 9.18% 7.32%
Net return................ 4.79% 4.70% 5.11% 3.39% 2.35% 2.94% 5.55% 7.59% 8.53% 6.68%
<CAPTION>
APRIL 1(A) TO
ALLIANCE INTERMEDIATE YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND 1997 1996 1995 1994 1993 1992 1991
- -------------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 7.29% 3.78% 13.33% (4.37)% 10.58% 5.60% 12.26%
Net return................ 6.65% 3.15% 12.65% (4.95)% 9.88% 4.96% 11.60%
<CAPTION>
OCTOBER 1(A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-----------------------------------------------------
ALLIANCE QUALITY BOND FUND 1997 1996 1995 1994 1993
- -------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return.............. 9.14% 5.36% 17.02% (5.10)% (0.51)%
Net return................ 8.49% 4.73% 16.32% (5.67)% (0.66)%
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ------------------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 18.47% 22.89% 19.92% (2.79)% 23.15% 12.31% 24.46% (1.12)% 5.13% 9.73%
Net return................ 17.76% 22.14% 19.20% (3.37)% 22.41% 11.64% 23.72% (1.71)% 4.50% 9.08%
</TABLE>
EQUITY SERIES:
MAY 1(A) TO
T. ROWE PRICE EQUITY DECEMBER 31,
-----------------
INCOME FUND 1997
- ----------- ----
Gross return.............. 22.11%
Net return................ 21.64%
MAY 1(A) TO
DECEMBER 31,
-----------------
EQ/PUTNAM GROWTH 1997
& INCOME VALUE FUND ----
Gross return.............. 16.23%
Net return................ 15.75%
OCTOBER 1(A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------
ALLIANCE GROWTH & INCOME FUND 1997 1996 1995 1994 1993
- ----------------------------- ---- ---- ---- ---- ----
Gross return.............. 26.90% 20.09% 24.07% (0.58)% (0.25)%
Net return................ 25.99% 19.36% 23.33% (1.17)% (0.41)%
SEPTEMBER 30(A)
YEARS ENDED DECEMBER 31, TO DECEMBER 31,
--------------------------------------------
ALLIANCE EQUITY INDEX FUND 1997 1996 1995 1994
- -------------------------- ---- ---- ---- ----
Gross return.............. 32.58% 22.39% 36.48% 1.08%
Net return................ 31.77% 21.65% 35.66% 0.58%
- -------------------------------
* Sales of Incentive Life 2000 and Champion 2000 commenced on March 2, 1992.
Sales of Incentive Life Plus Second Series commenced on September 15, 1995.
(a)Date as of which net premiums under the policies were first allocated to the
Fund. The gross return and the net return for the periods indicated are not
annual rates of return.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-20
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
RATES OF RETURN (CONTINUED)
INCENTIVE LIFE,
INCENTIVE LIFE 2000,
INCENTIVE LIFE PLUS SECOND SERIES
AND CHAMPION 2000*
EQUITY SERIES (CONTINUED):
MAY 1(A) TO
MERRILL LYNCH BASIC DECEMBER 31,
-----------------
VALUE EQUITY FUND 1997
- ----------------- ----
Gross return.............. 16.99%
Net return................ 16.55%
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- -------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 29.40% 24.28% 32.45% (2.14)% 24.84% 3.22% 37.88% (8.12)% 25.59% 22.43%
Net return................ 28.44% 23.53% 31.66% (2.73)% 24.08% 2.60% 37.06% (8.67)% 24.84% 21.70%
</TABLE>
MAY 1(A) TO
DECEMBER 31,
-----------------
MFS RESEARCH FUND 1997
- ----------------- ----
Gross return.............. 16.07%
Net return................ 15.59%
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE GLOBAL FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- -------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 11.66% 14.60% 18.81% 5.23% 32.09% (0.50)% 30.55% (6.07)% 26.93% 10.88%
Net return................ 10.88% 13.91% 18.11% 4.60% 31.33% (1.10)% 29.77% (6.63)% 26.17% 10.22%
</TABLE>
APRIL 3(A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------
ALLIANCE INTERNATIONAL FUND 1997 1996 1995
- --------------------------- ---- ---- ----
Gross return.............. (2.98)% 9.82% 11.29%
Net return................ (3.63)% 9.15% 10.79%
MAY 1(A) TO
T. ROWE PRICE DECEMBER 31,
-----------------
INTERNATIONAL STOCK FUND 1997
- ------------------------ ----
Gross return.............. (1.49)%
Net return................ (1.90)%
AUGUST 20(A) TO
MORGAN STANLEY EMERGING DECEMBER 31,
-----------------
MARKETS EQUITY FUND 1997
- ------------------- ----
Gross return.............. (20.16)%
Net return................ (20.37)%
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ------------------------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 10.94% 22.20% 31.63% (3.81)% 16.77% (3.16)% 86.86% 8.17% 43.50% 1.17%
Net return................ 10.14% 21.46% 30.85% (4.39)% 16.05% (3.74)% 85.75% 7.51% 42.64% 0.53%
</TABLE>
MAY 1(A) TO
WARBURG PINCUS SMALL DECEMBER 31,
-----------------
COMPANY VALUE FUND 1997
- ------------------ ----
Gross return.............. 19.15%
Net return................ 18.65%
- -------------------------------
* Sales of Incentive Life 2000 and Champion 2000 commenced on March 2, 1992.
Sales of Incentive Life Plus Second Series commenced on September 15, 1995.
(a)Date as of which net premiums under the policies were first allocated to the
Fund. The gross return and the net return for the periods indicated are not
annual rates of return.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-21
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
RATES OF RETURN (CONTINUED)
INCENTIVE LIFE,
INCENTIVE LIFE 2000,
INCENTIVE LIFE PLUS SECOND SERIES
AND CHAMPION 2000*
EQUITY SERIES (CONCLUDED):
MAY 1(A) TO
ALLIANCE SMALL CAP DECEMBER 31,
-----------------
GROWTH FUND 1997
- ----------- ----
Gross return.............. 26.74%
Net return................ 26.18%
MAY 1(A) TO
DECEMBER 31,
-----------------
MFS EMERGING GROWTH 1997
COMPANIES FUND ----
Gross return.............. 22.42%
Net return................ 21.95%
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES:
OCTOBER 2(A) TO
ALLIANCE CONSERVATIVE YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------------------------------------------
INVESTORS FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989
- -------------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 13.25% 5.21% 20.40% (4.10)% 10.76% 5.72% 19.87% 6.37% 3.09%
Net return................ 12.55% 4.57% 19.68% (4.67)% 10.15% 5.09% 19.16% 5.73% 2.94%
</TABLE>
MAY 1(A) TO
DECEMBER 31,
-----------------
EQ/PUTNAM BALANCED FUND 1997
- ----------------------- ----
Gross return.............. 14.38%
Net return................ 14.02%
<TABLE>
<CAPTION>
OCTOBER 2(A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989
- ------------------------------ ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 16.87% 12.61% 26.37% (3.15)% 15.26% 4.90% 48.89% 10.66% 3.98%
Net return................ 16.07% 11.93% 25.62% (3.73)% 14.58% 4.27% 48.01% 10.00% 3.82%
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE BALANCED FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ---------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 15.06% 11.68% 19.75% (8.02)% 12.28% (2.84)% 41.26% 0.24 % 25.83% 13.27%
Net return................ 14.30% 11.00% 19.03% (8.57)% 11.64% (3.42)% 40.42% (0.36)% 25.08% 12.59%
</TABLE>
MAY 1(A) TO
MERRILL LYNCH DECEMBER 31,
-----------------
WORLD STRATEGY FUND 1997
- ------------------- ----
Gross return.............. 4.70%
Net return................ 4.29%
- -------------------------------
* Sales of Incentive Life 2000 and Champion 2000 commenced on March 2, 1992.
Sales of Incentive Life Plus Second Series commenced on September 15, 1995.
(a)Date as of which net premiums under the policies were first allocated to the
Fund. The gross return and the net return for the periods indicated are not
annual rates of return.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-22
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
RATES OF RETURN (CONTINUED)
SURVIVORSHIP 2000
<TABLE>
<CAPTION>
FIXED INCOME SERIES:
AUGUST 17(A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------
ALLIANCE MONEY MARKET FUND 1997 1996 1995 1994 1993 1992
- -------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 5.42% 5.33% 5.74% 4.02% 3.00% 1.11%
Net return................ 4.47% 4.38% 4.80% 3.08% 2.04% 0.77%
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES FUND
Gross return.............. 7.29% 3.78% 13.33% (4.37)% 10.58% 0.90%
Net return................ 6.33% 2.84% 12.31% (5.23)% 9.55% 0.56%
<CAPTION>
OCTOBER 1(A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-----------------------------------------------------
ALLIANCE QUALITY BOND FUND 1997 1996 1995 1994 1993
- -------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return.............. 9.14% 5.36% 17.02% (5.10)% (0.51)%
Net return................ 8.16% 4.41% 15.97% (5.95)% (0.73)%
<CAPTION>
AUGUST 17(A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------
ALLIANCE HIGH YIELD FUND 1997 1996 1995 1994 1993 1992
- ------------------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 18.47% 22.89% 19.92% (2.79)% 23.15% 1.84%
Net return................ 17.40% 21.77% 18.84% (3.66)% 22.04% 1.50%
</TABLE>
EQUITY SERIES:
MAY 1(A) TO
T. ROWE PRICE EQUITY DECEMBER 31,
-----------------
INCOME FUND 1997
- ----------- ----
Gross return.............. 22.11%
Net return................ 21.40%
MAY 1(A) TO
DECEMBER 31,
-----------------
EQ/PUTNAM GROWTH 1997
& INCOME VALUE FUND ----
Gross return.............. 16.23%
Net return................ 15.52%
OCTOBER 1(A)
YEARS ENDED DECEMBER 31, TO DECEMBER 31,
------------------------------------------------
ALLIANCE GROWTH & INCOME FUND 1997 1996 1995 1994 1993
- ----------------------------- ---- ---- ---- ---- ----
Gross return.............. 26.90% 20.09% 24.07% (0.58)% (0.25)%
Net return................ 25.61% 19.00% 22.96% (1.47)% (0.48)%
MARCH 1(A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------
ALLIANCE EQUITY INDEX FUND 1997 1996 1995 1994
- -------------------------- ---- ---- ---- ----
Gross return.............. 32.58% 22.39% 36.48% 1.08%
Net return................ 31.38% 21.28% 35.26% 0.33%
- -------------------------------
(a)Date as of which net premiums under the policies were first allocated to the
Fund. The gross return and the net return for the periods indicated are not
annual rates of return.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-23
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
RATES OF RETURN (CONTINUED)
SURVIVORSHIP 2000
EQUITY SERIES (CONTINUED):
MAY 1(A) TO
MERRILL LYNCH BASIC DECEMBER 31,
-----------------
VALUE EQUITY FUND 1997
- ----------------- ----
Gross return.............. 16.99%
Net return................ 16.32%
<TABLE>
<CAPTION>
AUGUST 17(A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------
ALLIANCE COMMON STOCK FUND 1997 1996 1995 1994 1993 1992
- -------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 29.40% 24.28% 32.45% (2.14)% 24.84% 5.28%
Net return................ 28.06% 23.15% 31.26% (3.02)% 23.70% 4.93%
</TABLE>
MAY 1(A) TO
DECEMBER 31,
-----------------
MFS RESEARCH FUND 1997
- ----------------- ----
Gross return.............. 16.07%
Net return................ 15.36%
<TABLE>
<CAPTION>
AUGUST 17(A) TO
ALLIANCE GLOBAL FUND YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 11.66% 14.60% 18.81% 5.23% 32.09% 4.87%
Net return................ 10.54% 13.56% 17.75% 4.29% 30.93% 4.52%
</TABLE>
APRIL 3(A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------
ALLIANCE INTERNATIONAL FUND 1997 1996 1995
- --------------------------- ---- ---- ----
Gross return.............. (2.98)% 9.82% 11.29%
Net return................ (3.93)% 8.82% 10.55%
MAY 1(A) TO
T. ROWE PRICE DECEMBER 31,
-----------------
INTERNATIONAL STOCK FUND 1997
- ------------------------ ----
Gross return.............. (1.49)%
Net return................ (2.10)%
AUGUST 20(A) TO
MORGAN STANLEY EMERGING DECEMBER 31,
-----------------
MARKETS EQUITY FUND 1997
- ------------------- ----
Gross return.............. (20.16)%
Net return................ (20.46)%
- -------------------------------
(a) Date as of which net premiums under the policies were first allocated to the
Fund. The gross return and the net return for the periods indicated are not
annual rates of return.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-24
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONCLUDED)
DECEMBER 31, 1997
RATES OF RETURN (CONTINUED)
SURVIVORSHIP 2000
<TABLE>
<CAPTION>
EQUITY SERIES (CONCLUDED):
MARCH 1(A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK FUND 1997 1996 1995 1994 1993 1992
- ------------------------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 10.94% 22.20% 31.63% (3.81)% 16.77% 11.49%
Net return................ 9.81% 21.09% 30.46% (4.68)% 15.70% 11.11%
</TABLE>
MAY 1(A) TO
WARBURG PINCUS SMALL DECEMBER 31,
-----------------
COMPANY VALUE FUND 1997
- ------------------ ----
Gross return.............. 19.15%
Net return................ 18.41%
MAY 1(A) TO
DECEMBER 31,
-----------------
ALLIANCE SMALL CAP 1997
GROWTH FUND ----
Gross return.............. 26.74%
Net return................ 25.92%
MAY 1(A) TO
DECEMBER 31,
-----------------
MFS EMERGING GROWTH 1997
COMPANIES FUND ----
Gross return.............. 22.42%
Net return................ 21.70%
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES:
AUGUST 17(A) TO
ALLIANCE CONSERVATIVE YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------
INVESTORS FUND 1997 1996 1995 1994 1993 1992
- -------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 13.25% 5.21% 20.40% (4.10)% 10.76% 1.38%
Net return................ 12.21% 4.26% 19.32% (4.96)% 9.81% 1.04%
</TABLE>
MAY 1(A) TO
DECEMBER 31,
-----------------
EQ/PUTNAM BALANCED FUND 1997
- ----------------------- ----
Gross return.............. 14.38%
Net return................ 13.79%
<TABLE>
<CAPTION>
ALLIANCE GROWTH INVESTORS FUND
- ------------------------------ AUGUST 17(A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 16.87% 12.61% 26.37% (3.15)% 15.26% 6.89%
Net return................ 15.72% 11.59% 25.24% (4.02)% 14.24% 6.53%
ALLIANCE BALANCED FUND
Gross return.............. 15.06% 11.68% 19.75% (8.02)% 12.28% 5.37%
Net return................ 13.96% 10.67% 18.68% (8.84)% 11.30% 5.02%
</TABLE>
MAY 1(A) TO
MERRILL LYNCH DECEMBER 31,
-----------------
WORLD STRATEGY FUND 1997
- ------------------- ----
Gross return.............. 4.70%
Net return................ 4.08%
- -------------------------------
(a)Date as of which net premiums under the policies were first allocated to the
Fund. The gross return and the net return for the periods indicated are not
annual rates of return.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-25
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
RATES OF RETURN (CONTINUED)
INCENTIVE LIFE PLUS ORIGINAL SERIES*(B)
FIXED INCOME SERIES:
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
---- ---- ----
Alliance Money Market Fund............ 5.42% 5.33% 5.69%
Alliance Intermediate Government
Securities Fund....................... 7.29% 3.78% 13.31%
Alliance Quality Bond Fund............ 9.14% 5.36% 17.13%
Alliance High Yield Fund.............. 18.47% 22.89% 19.95%
EQUITY SERIES:
MAY 1 TO DECEMBER 31,
(A)
-------------------------
1997
T. Rowe Price Equity Income Fund...... 22.13%
EQ/Putnam Growth & Income
Value Fund............................ 14.48%
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
---- ---- ----
Alliance Growth & Income Fund......... 26.90% 20.09% 24.38%
Alliance Equity Index Fund............ 32.57% 22.38% 36.53%
MAY 1 TO DECEMBER 31,
(A)
-------------------------
1997
Merrill Lynch Basic Value
Equity Fund........................... 17.02%
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
---- ---- ----
Alliance Common Stock Fund............ 29.40% 24.28% 33.07%
MAY 1 TO DECEMBER 31,
(A)
-------------------------
1997
MFS Research Fund..................... 16.05%
YEARS ENDED DECEMBER 31,
----------------------------------------
1997 1996 1995
---- ---- ----
Alliance Global Fund.................. 11.66% 14.60% 19.38%
YEARS ENDED APRIL 30 TO
DECEMBER 31, DECEMBER 31, (A)
---------------------------------------
1997 1996 1995
---- ---- ----
Alliance International Fund........... (3.05)% 9.81% 11.29%
- -----------------------------------------
*Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
(a) Date as of which net premiums under the policies were first allocated to the
Fund. The returns for the periods indicated are not annual rates of return.
(b) There are no Separate Account asset charges for this policy and therefore
the gross and net rates of return are the same. The rate of return for the
year ended December 31, 1995 indicated is not an annual rate of return.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-26
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
RATES OF RETURN (CONTINUED)
INCENTIVE LIFE PLUS ORIGINAL SERIES*(B)
EQUITY SERIES (CONCLUDED):
MAY 1 TO DECEMBER 31,
(A)
-------------------------
1997
T. Rowe Price International
Stock Fund............................ (1.50)%
AUGUST 20 TO DECEMBER
31, (A)
-------------------------
1997
Morgan Stanley Emerging Markets
Equity Fund........................... (20.19)%
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
---- ---- ----
Alliance Aggressive Stock Fund........ 10.94% 22.20% 33.00%
MAY 1 TO DECEMBER 31,
(A)
-------------------------
1997
Warburg Pincus Small Company 19.13%
Value Fund............................
Alliance Small Cap Growth Fund........ 26.69%
MFS Emerging Growth
Companies Fund........................ 22.44%
ASSET ALLOCATION SERIES:
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
---- ---- ----
Alliance Conservative Investors Fund.. 13.25% 5.21% 20.59%
MAY 1 TO DECEMBER 31,
(A)
-------------------------
1997
EQ/Putnam Balanced Fund............... 14.48%
YEARS ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
---- ---- ----
Alliance Growth Investors Fund........ 16.87% 12.61% 26.92%
Alliance Balanced Fund................ 15.06% 11.68% 20.32%
MAY 1 TO DECEMBER 31,
(A)
-------------------------
1997
Merrill Lynch World Strategy Fund..... 4.71%
- -----------------------------------------
*Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
(a) Date as of which net premiums under the policies were first allocated to the
Fund. The returns for the periods indicated are not annual rates of return.
(b) There are no Separate Account asset charges for this policy and therefore
the gross and net rates of return are the same. The rate of return for the
year ended December 31, 1995 indicated is not an annual rate of return.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-27
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
RATES OF RETURN (CONTINUED)
IL PROTECTOR*
FIXED INCOME SERIES:
YEAR ENDED AUGUST 5(A) TO
DECEMBER 31, DECEMBER 31,
------------------------------------
1997 1996
---- ----
ALLIANCE MONEY MARKET FUND
Gross return ......................... 5.42% 5.33%
Net return ........................... 4.57% 2.98%
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES
Gross return ......................... 7.29% 3.78%
Net return ........................... 6.43% 4.49%
ALLIANCE QUALITY BOND FUND
Gross return ......................... 9.14% 5.36%
Net return ........................... 8.27% 7.86%
ALLIANCE HIGH YIELD FUND
Gross return ......................... 18.47% 22.89%
Net return ........................... 17.52% 13.90%
EQUITY SERIES:
MAY 1(A) TO DECEMBER 31,
---------------------------
1997
T. ROWE PRICE EQUITY INCOME FUND
Gross return ......................... 22.11%
Net return ........................... 21.48%
EQ/PUTNAM GROWTH & INCOME
VALUE FUND
Gross return ......................... 16.23%
Net return ........................... 13.87%
YEAR ENDED AUGUST 5(A) TO
DECEMBER 31, DECEMBER 31,
---------------------------------------
1997 1996
---- ----
ALLIANCE GROWTH & INCOME FUND
Gross return ......................... 26.90% 20.09%
Net return ........................... 25.74% 15.63%
ALLIANCE EQUITY INDEX FUND
Gross return ......................... 32.58% 22.39%
Net return ........................... 31.51% 16.25%
- -----------------------------------------
*Sales of Incentive Life Protector commenced on August 5, 1996.
(a) Date as of which net premiums under the policies were first allocated to the
Fund. The returns for the periods indicated are not annual rates of return.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-28
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
RATES OF RETURN (CONTINUED)
IL PROTECTOR*
EQUITY SERIES (CONTINUED):
MAY 1(A) TO DECEMBER 31,
---------------------------
1997
MERRILL LYNCH BASIC VALUE
EQUITY FUND
Gross return ......................... 16.99%
Net return ........................... 16.40%
YEAR ENDED AUGUST 5(A) TO
DECEMBER 31, DECEMBER 31,
---------------------------------------
1997 1996
---- ----
ALLIANCE COMMON STOCK FUND
Gross return ......................... 29.40% 24.28%
Net return ........................... 28.18% 17.44%
MAY 1(A) TO DECEMBER 31,
---------------------------
1997
MFS RESEARCH FUND
Gross return ......................... 16.07%
Net return ........................... 15.43%
YEAR ENDED AUGUST 5(A) TO
DECEMBER 31, DECEMBER 31,
---------------------------------------
1997 1996
---- ----
ALLIANCE GLOBAL FUND
Gross return ......................... 11.66% 14.60%
Net return ........................... 10.65% 6.78%
ALLIANCE INTERNATIONAL FUND
Gross return ......................... (2.98)% 9.82%
Net return ........................... (3.83)% 2.11%
MAY 1(A) TO DECEMBER 31,
---------------------------
1997
T. ROWE PRICE INTERNATIONAL STOCK FUND
Gross return .........................
(1.49)%
Net return ........................... (2.03)%
AUGUST 20(A) TO DECEMBER
31,
---------------------------
1997
MORGAN STANLEY EMERGING MARKETS
EQUITY FUND
Gross return .........................
(20.16)%
Net return ........................... (20.43)%
- -----------------------------------------
*Sales of Incentive Life Protector commenced on August 5, 1996.
(a) Date as of which net premiums under the policies were first allocated to the
Fund. The returns for the periods indicated are not annual rates of return
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-29
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
RATES OF RETURN (CONTINUED)
IL PROTECTOR*
EQUITY SERIES (CONCLUDED):
YEAR ENDED AUGUST 5(A) TO
DECEMBER 31, DECEMBER 31,
---------------------------------------
1997 1996
---- ----
ALLIANCE AGGRESSIVE STOCK FUND
Gross return ......................... 10.94% 22.20%
Net return ........................... 9.92% 6.22%
MAY 1(A) TO DECEMBER 31,
---------------------------
1997
WARBURG PINCUS SMALL COMPANY
VALUE FUND
Gross return ......................... 19.15%
Net return ........................... 18.49%
ALLIANCE SMALL CAP GROWTH FUND
Gross return ......................... 26.74%
Net return ........................... 26.01%
MFS EMERGING GROWTH COMPANIES FUND
Gross return ......................... 22.42%
Net return ........................... 21.78%
ASSET ALLOCATION SERIES:
YEAR ENDED AUGUST 5(A) TO
DECEMBER 31, DECEMBER 31,
---------------------------------------
1997 1996
---- ----
ALLIANCE CONSERVATIVE INVESTORS FUND
Gross return ......................... 13.25% 5.21%
Net return ........................... 12.32% 7.94%
MAY 1(A) TO DECEMBER 31,
---------------------------
1997
EQ/PUTNAM BALANCED FUND
Gross return ......................... 14.38%
Net return ........................... 13.87%
YEAR ENDED AUGUST 5(A) TO
DECEMBER 31, DECEMBER 31,
---------------------------------------
1997 1996
---- ----
ALLIANCE GROWTH INVESTORS FUND
Gross return ......................... 16.87% 12.61%
Net return ........................... 15.84% 9.38%
ALLIANCE BALANCED FUND
Gross return ......................... 15.06% 11.68%
Net return ........................... 14.07% 8.67%
MAY 1(A) TO DECEMBER 31,
---------------------------
1997
MERRILL LYNCH WORLD STRATEGY FUND
Gross return ......................... 4.70%
Net return ........................... 4.15%
- -----------------------------------------
*Sales of Incentive Life Protector commenced on August 5, 1996.
(a) Date as of which net premiums under the policies were first allocated to the
Fund. The returns for the periods indicated are not annual rates of return.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-30
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
RATES OF RETURN (CONTINUED)
SP-FLEX
<TABLE>
<CAPTION>
FIXED INCOME SERIES:
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- -------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 5.42% 5.33% 5.74% 4.02% 3.00% 3.56% 6.17% 8.24% 9.18% 7.32%
Net return................ 3.54% 3.44% 3.86% 2.17% 1.13% 1.71% 4.29% 6.30% 7.24% 5.41%
<CAPTION>
APRIL 1(A) TO
ALLIANCE INTERMEDIATE YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND 1997 1996 1995 1994 1993 1992 1991
- -------------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 7.29% 3.78% 13.33% (4.37)% 10.58% 5.60% 12.10%
Net return................ 5.38% 1.91% 11.31% (6.08)% 8.57% 3.71% 10.59%
<CAPTION>
SEPTEMBER 1(A)
TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------------------------------------
ALLIANCE QUALITY BOND FUND 1997 1996 1995 1994
- -------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return.............. 9.14% 5.36% 17.02% (2.20)%
Net return................ 7.19% 3.47% 14.94% (2.35)%
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ------------------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 18.47% 22.89% 19.92% (2.79)% 23.15% 12.31% 24.46% (1.12)% 5.13% 9.73%
Net return................ 16.35% 20.68% 17.79% (4.52)% 20.96% 10.30% 22.25% (2.89)% 3.26% 7.78%
</TABLE>
EQUITY SERIES:
SEPTEMBER 1(A)
TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
--------------------------------------------------
ALLIANCE GROWTH & INCOME FUND 1997 1996 1995 1994
- ----------------------------- ---- ---- ---- ----
Gross return.............. 26.90% 20.09% 24.07% (3.40)%
Net return................ 24.50% 17.93% 21.87% (3.55)%
ALLIANCE EQUITY INDEX FUND 1997 1996 1995 1994
- -------------------------- ---- ---- ---- ----
Gross return.............. 32.58% 22.39% 36.48% (2.54)%
Net return................ 30.21% 20.19% 34.06% (2.69)%
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- -------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 29.40% 24.28% 32.45% (2.14)% 24.84% 3.23% 37.87% (8.12)% 25.59% 22.43%
Net return................ 26.91% 22.04% 30.10% (3.88)% 22.60% 1.38% 35.43% (9.76)% 23.36% 20.26%
ALLIANCE GLOBAL FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- -------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Gross return.............. 11.66% 14.60% 18.81% 5.23% 32.09% (0.50)% 30.55% (6.07)% 26.93% 10.88%
Net return................ 9.56% 12.54% 16.70% 3.36% 29.77% (2.28)% 28.23% (7.75)% 24.67% 8.90%
</TABLE>
YEARS ENDED APRIL 3(A) TO
DECEMBER 31, DECEMBER 31,
------------------------------------------------
ALLIANCE INTERNATIONAL FUND 1997 1996 1995
- --------------------------- ---- ---- ----
Gross return.............. (3.05)% 9.82% 11.29%
Net return................ (4.78)% 7.84% 9.82%
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ------------------------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 10.94% 22.20% 31.63% (3.81)% 16.77% (3.16)% 86.86% 8.17% 43.50% 1.17 %
Net return................ 8.83% 20.00% 29.30% (5.53)% 14.67% (4.89)% 83.54% 6.23% 40.95% (0.66)%
</TABLE>
- -------------------------------
(a)Date as of which net premiums under the policies were first allocated to the
Fund. The gross return and the net return for the periods indicated are not
annual rates of return.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-31
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS -- (CONCLUDED)
DECEMBER 31, 1997
RATES OF RETURN (CONCLUDED)
SP-FLEX
ASSET ALLOCATION SERIES:
<TABLE>
<CAPTION>
SEPTEMBER 1(A)
ALLIANCE CONSERVATIVE YEARS ENDED DECEMBER 31, TO
DECEMBER 31,
----------------------------------------------------------------
INVESTORS FUND 1997 1996 1995 1994
- -------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return.................. 13.25% 5.21% 20.40% (1.83)%
Net return.................... 11.21% 3.32% 18.26% (1.98)%
<CAPTION>
SEPTEMBER 1(A)
YEARS ENDED DECEMBER 31, TO
DECEMBER 31,
----------------------------------------------------------------
ALLIANCE GROWTH INVESTORS FUND 1997 1996 1995 1994
- ------------------------------ ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return.................. 16.87% 12.61% 26.37% (3.16)%
Net return.................... 14.69% 10.58% 24.12% (3.31)%
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE BALANCED FUND 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ---------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................. 15.06% 11.68% 19.75% (8.02)% 12.28% (2.83)% 41.27% 0.24 % 25.83% 13.27%
Net return.................... 12.94% 9.67% 17.62% (9.66)% 10.31% (4.57)% 38.75% (1.56)% 23.59% 11.25%
</TABLE>
- -------------------------------
(a) Date as of which net premiums under the policies were first allocated to the
Fund. The gross return and the net return for the periods indicated are not
annual rates of return.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-32
<PAGE>
February 10, 1998
Report of Independent Accountants
To the Board of Directors and Shareholders of
The Equitable Life Assurance Society of the United States
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, of shareholder's equity and of cash flows
present fairly, in all material respects, the financial position of The
Equitable Life Assurance Society of the United States and its subsidiaries
("Equitable Life") at December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of Equitable Life's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 2 to the consolidated financial statements, Equitable Life
changed its methods of accounting for long-duration participating life insurance
contracts and long-lived assets in 1996 and for loan impairments in 1995.
/s/ Price Waterhouse, LLP
- ---------------------------
Price Waterhouse LLP
New York, New York
February 10, 1998
F-1
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value............................. $ 19,630.9 $ 18,077.0
Mortgage loans on real estate............................................. 2,611.4 3,133.0
Equity real estate........................................................ 2,749.2 3,297.5
Policy loans.............................................................. 2,422.9 2,196.1
Other equity investments.................................................. 951.5 860.6
Investment in and loans to affiliates..................................... 731.1 685.0
Other invested assets..................................................... 624.7 25.4
----------------- -----------------
Total investments..................................................... 29,721.7 28,274.6
Cash and cash equivalents................................................... 300.5 538.8
Deferred policy acquisition costs........................................... 3,236.6 3,104.9
Amounts due from discontinued operations.................................... 572.8 996.2
Other assets................................................................ 2,685.2 2,552.2
Closed Block assets......................................................... 8,566.6 8,495.0
Separate Accounts assets.................................................... 36,538.7 29,646.1
----------------- -----------------
Total Assets................................................................ $ 81,622.1 $ 73,607.8
================= =================
LIABILITIES
Policyholders' account balances............................................. $ 21,579.5 $ 21,865.6
Future policy benefits and other policyholder's liabilities................. 4,553.8 4,416.6
Short-term and long-term debt............................................... 1,991.2 1,766.9
Other liabilities........................................................... 3,257.1 2,785.1
Closed Block liabilities.................................................... 9,073.7 9,091.3
Separate Accounts liabilities............................................... 36,306.3 29,598.3
----------------- -----------------
Total liabilities..................................................... 76,761.6 69,523.8
----------------- -----------------
Commitments and contingencies (Notes 10, 12, 13, 14 and 15)
SHAREHOLDER'S EQUITY
Common stock, $1.25 par value 2.0 million shares authorized, issued
and outstanding........................................................... 2.5 2.5
Capital in excess of par value.............................................. 3,105.8 3,105.8
Retained earnings........................................................... 1,235.9 798.7
Net unrealized investment gains............................................. 533.6 189.9
Minimum pension liability................................................... (17.3) (12.9)
----------------- -----------------
Total shareholder's equity............................................ 4,860.5 4,084.0
----------------- -----------------
Total Liabilities and Shareholder's Equity.................................. $ 81,622.1 $ 73,607.8
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee
income...................................................... $ 950.6 $ 874.0 $ 788.2
Premiums...................................................... 601.5 597.6 606.8
Net investment income......................................... 2,282.8 2,203.6 2,088.2
Investment (losses) gains, net................................ (45.2) (9.8) 5.3
Commissions, fees and other income............................ 1,227.2 1,081.8 897.1
Contribution from the Closed Block............................ 102.5 125.0 143.2
----------------- ----------------- -----------------
Total revenues.......................................... 5,119.4 4,872.2 4,528.8
----------------- ----------------- -----------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances.......... 1,266.2 1,270.2 1,248.3
Policyholders' benefits....................................... 978.6 1,317.7 1,008.6
Other operating costs and expenses............................ 2,203.9 2,075.7 1,775.8
----------------- ----------------- -----------------
Total benefits and other deductions..................... 4,448.7 4,663.6 4,032.7
----------------- ----------------- -----------------
Earnings from continuing operations before Federal
income taxes, minority interest and cumulative
effect of accounting change................................. 670.7 208.6 496.1
Federal income taxes.......................................... 91.5 9.7 120.5
Minority interest in net income of consolidated subsidiaries.. 54.8 81.7 62.8
----------------- ----------------- -----------------
Earnings from continuing operations before cumulative
effect of accounting change................................. 524.4 117.2 312.8
Discontinued operations, net of Federal income taxes.......... (87.2) (83.8) -
Cumulative effect of accounting change, net of Federal
income taxes................................................ - (23.1) -
----------------- ----------------- -----------------
Net Earnings.................................................. $ 437.2 $ 10.3 $ 312.8
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
Common stock, at par value, beginning and end of year......... $ 2.5 $ 2.5 $ 2.5
----------------- ----------------- -----------------
Capital in excess of par value, beginning and end of year..... 3,105.8 3,105.8 3,105.8
----------------- ----------------- -----------------
Retained earnings, beginning of year.......................... 798.7 788.4 475.6
Net earnings.................................................. 437.2 10.3 312.8
----------------- ----------------- -----------------
Retained earnings, end of year................................ 1,235.9 798.7 788.4
----------------- ----------------- -----------------
Net unrealized investment gains (losses), beginning of year... 189.9 396.5 (220.5)
Change in unrealized investment gains (losses)................ 343.7 (206.6) 617.0
----------------- ----------------- -----------------
Net unrealized investment gains, end of year.................. 533.6 189.9 396.5
----------------- ----------------- -----------------
Minimum pension liability, beginning of year.................. (12.9) (35.1) (2.7)
Change in minimum pension liability........................... (4.4) 22.2 (32.4)
-----------------
----------------- -----------------
Minimum pension liability, end of year........................ (17.3) (12.9) (35.1)
----------------- ----------------- -----------------
Total Shareholder's Equity, End of Year....................... $ 4,860.5 $ 4,084.0 $ 4,258.1
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
Net earnings.................................................. $ 437.2 $ 10.3 $ 312.8
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Interest credited to policyholders' account balances........ 1,266.2 1,270.2 1,248.3
Universal life and investment-type product
policy fee income......................................... (950.6) (874.0) (788.2)
Investment losses (gains)................................... 45.2 9.8 (5.3)
Change in Federal income tax payable........................ (74.4) (197.1) 221.6
Other, net.................................................. 169.4 330.2 80.5
----------------- ----------------- -----------------
Net cash provided by operating activities..................... 893.0 549.4 1,069.7
----------------- ----------------- -----------------
Cash flows from investing activities:
Maturities and repayments................................... 2,702.9 2,275.1 1,897.4
Sales....................................................... 10,385.9 8,964.3 8,867.1
Purchases................................................... (13,205.4) (12,559.6) (11,675.5)
(Increase) decrease in short-term investments............... (555.0) 450.3 (99.3)
Decrease in loans to discontinued operations................ 420.1 1,017.0 1,226.9
Sale of subsidiaries........................................ 261.0 - -
Other, net.................................................. (612.6) (281.0) (413.4)
----------------- ----------------- -----------------
Net cash used by investing activities......................... (603.1) (133.9) (196.8)
----------------- ----------------- -----------------
Cash flows from financing activities: Policyholders' account balances:
Deposits.................................................. 1,281.7 1,925.4 2,586.5
Withdrawals............................................... (1,886.8) (2,385.2) (2,657.1)
Net increase (decrease) in short-term financings............ 419.9 (.3) (16.4)
Additions to long-term debt................................. 32.0 - 599.7
Repayments of long-term debt................................ (196.4) (124.8) (40.7)
Payment of obligation to fund accumulated deficit of
discontinued operations................................... (83.9) - (1,215.4)
Other, net.................................................. (94.7) (66.5) (48.4)
----------------- ----------------- -----------------
Net cash used by financing activities......................... (528.2) (651.4) (791.8)
----------------- ----------------- -----------------
Change in cash and cash equivalents........................... (238.3) (235.9) 81.1
Cash and cash equivalents, beginning of year.................. 538.8 774.7 693.6
----------------- ----------------- -----------------
Cash and Cash Equivalents, End of Year........................ $ 300.5 $ 538.8 $ 774.7
================= ================= =================
Supplemental cash flow information
Interest Paid............................................... $ 217.1 $ 109.9 $ 89.6
================= ================= =================
Income Taxes Paid (Refunded)................................ $ 170.0 $ (10.0) $ (82.7)
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) ORGANIZATION
The Equitable Life Assurance Society of the United States ("Equitable
Life") is a wholly owned subsidiary of The Equitable Companies
Incorporated (the "Holding Company"). Equitable Life's insurance
business is conducted principally by Equitable Life and, prior to
December 31, 1996, its wholly owned life insurance subsidiary, Equitable
Variable Life Insurance Company ("EVLICO"). Effective January 1, 1997,
EVLICO was merged into Equitable Life, which continues to conduct the
Company's insurance business. Equitable Life's investment management
business, which comprises the Investment Services segment, is conducted
principally by Alliance Capital Management L.P. ("Alliance") and
Donaldson, Lufkin & Jenrette, Inc. ("DLJ"), an investment banking and
brokerage affiliate. AXA-UAP ("AXA"), a French holding company for an
international group of insurance and related financial services
companies, is the Holding Company's largest shareholder, owning
approximately 58.7% at December 31, 1997 (54.3% if all securities
convertible into, and options on, common stock were to be converted or
exercised).
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements are prepared in
conformity with generally accepted accounting principles ("GAAP") which
require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The accompanying consolidated financial statements include the accounts
of Equitable Life and its wholly owned life insurance subsidiary
(collectively, the "Insurance Group"); non-insurance subsidiaries,
principally Alliance, an investment advisory subsidiary, and, through
June 10, 1997, Equitable Real Estate Investment Management, Inc.
("EREIM"), a real estate investment management subsidiary which was sold
(see Note 5); and those partnerships and joint ventures in which
Equitable Life or its subsidiaries has control and a majority economic
interest (collectively, including its consolidated subsidiaries, the
"Company"). The Company's investment in DLJ is reported on the equity
basis of accounting. Closed Block assets and liabilities and results of
operations are presented in the consolidated financial statements as
single line items (see Note 6). Unless specifically stated, all
disclosures contained herein supporting the consolidated financial
statements exclude the Closed Block related amounts.
All significant intercompany transactions and balances have been
eliminated in consolidation other than intercompany transactions and
balances with the Closed Block and the discontinued operations (see Note
7).
The years "1997," "1996" and "1995" refer to the years ended December
31, 1997, 1996 and 1995, respectively.
Certain reclassifications have been made in the amounts presented for
prior periods to conform these periods with the 1997 presentation.
Closed Block
As of July 22, 1992, Equitable Life established the Closed Block for the
benefit of certain classes of individual participating policies for
which Equitable Life had a dividend scale payable in 1991 and which were
in force on that date. Assets were allocated to the Closed Block in an
amount which, together with anticipated revenues from policies included
in the Closed Block, was reasonably expected to be sufficient to support
such business, including provision for payment of claims, certain
expenses and taxes, and for continuation of dividend scales payable in
1991, assuming the experience underlying such scales continues.
F-6
<PAGE>
Assets allocated to the Closed Block inure solely to the benefit of the
holders of policies included in the Closed Block and will not revert to
the benefit of the Holding Company. No reallocation, transfer, borrowing
or lending of assets can be made between the Closed Block and other
portions of Equitable Life's General Account, any of its Separate
Accounts or any affiliate of Equitable Life without the approval of the
New York Superintendent of Insurance (the "Superintendent"). Closed
Block assets and liabilities are carried on the same basis as similar
assets and liabilities held in the General Account. The excess of Closed
Block liabilities over Closed Block assets represents the expected
future post-tax contribution from the Closed Block which would be
recognized in income over the period the policies and contracts in the
Closed Block remain in force.
Discontinued Operations
Discontinued operations consist of the business of the former Guaranteed
Interest Contract ("GIC") segment which includes the Group
Non-Participating Wind-Up Annuities ("Wind-Up Annuities") and the GIC
lines of business. An allowance was established for the premium
deficiency reserve for Wind-Up Annuities and estimated future losses of
the GIC line of business. Management reviews the adequacy of the
allowance each quarter and, during the 1997 and 1996 fourth quarter
reviews, the allowance for future losses was increased. Management
believes the allowance for future losses at December 31, 1997 is
adequate to provide for all future losses; however, the determination of
the allowance continues to involve numerous estimates and subjective
judgments regarding the expected performance of Discontinued Operations
Investment Assets. There can be no assurance the losses provided for
will not differ from the losses ultimately realized. To the extent
actual results or future projections of the discontinued operations
differ from management's current best estimates and assumptions
underlying the allowance for future losses, the difference would be
reflected in the consolidated statements of earnings in discontinued
operations. In particular, to the extent income, sales proceeds and
holding periods for equity real estate differ from management's previous
assumptions, periodic adjustments to the allowance are likely to result
(see Note 7).
Accounting Changes
In 1996, the Company changed its method of accounting for long-duration
participating life insurance contracts, primarily within the Closed
Block, in accordance with the provisions prescribed by SFAS No. 120,
"Accounting and Reporting by Mutual Life Insurance Enterprises and by
Insurance Enterprises for Certain Long-Duration Participating
Contracts". (See "Deferred Policy Acquisition Costs," "Policyholders'
Account Balances and Future Policy Benefits" and Note 6.)
The Company implemented SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," as of
January 1, 1996. SFAS No. 121 requires long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate the carrying value of such assets may
not be recoverable. Effective with SFAS No. 121's adoption, impaired
real estate is written down to fair value with the impairment loss being
included in investment gains (losses), net. Before implementing SFAS No.
121, valuation allowances on real estate held for the production of
income were computed using the forecasted cash flows of the respective
properties discounted at a rate equal to The Equitable's cost of funds.
The adoption of the statement resulted in the release of valuation
allowances of $152.4 million and recognition of impairment losses of
$144.0 million on real estate held for production of income. Real estate
which management has committed to disposing of by sale or abandonment is
classified as real estate held for sale. Valuation allowances on real
estate held for sale continue to be computed using the lower of
depreciated cost or estimated fair value, net of disposition costs.
Implementation of the SFAS No. 121 impairment requirements relative to
other assets to be disposed of resulted in a charge for the cumulative
effect of an accounting change of $23.1 million, net of a Federal income
tax benefit of $12.4 million, due to the writedown to fair value of
building improvements relating to facilities vacated in 1996.
In the first quarter of 1995, the Company adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan". Impaired loans
within SFAS No. 114's scope are to be measured based on the present
value of expected future cash flows discounted at the loan's effective
interest rate, at the loan's observable market price or the fair value
of the collateral if the loan is collateral dependent. The adoption of
this statement did not have a material effect on the level of the
allowances for possible losses or on the Company's consolidated
statements of earnings and shareholder's equity.
F-7
<PAGE>
New Accounting Pronouncements
In January 1998, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 132, "Employers' Disclosures about Pension and Other
Postretirement Benefits," which revises current note disclosure
requirements for employers' pension and other retiree benefits. SFAS No.
132 is effective for fiscal years beginning after December 15, 1997. The
Company will adopt the provisions of SFAS No. 132 in the 1998
consolidated financial statements.
In December 1997, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments". SOP
97-3 provides guidance for assessments related to insurance activities
and requirements for disclosure of certain information. SOP 97-3 is
effective for financial statements issued for periods beginning after
December 31, 1998. Restatement of previously issued financial statements
is not required. SOP 97-3 is not expected to have a material impact on
the Company's consolidated financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information". SFAS No. 131 establishes
standards for the way public business enterprises report information
about operating segments in annual and interim financial statements
issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major
customers. Generally, financial information will be required to be
reported on the basis used by management for evaluating segment
performance and for deciding how to allocate resources to segments. This
statement is effective for fiscal years beginning after December 15,
1997 and need not be applied to interim reporting in the initial year of
adoption. Restatement of comparative information for earlier periods is
required. Management is currently reviewing its definition of business
segments in light of the requirements of SFAS No. 131.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income". SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components in a full set of general purpose
financial statements. SFAS No. 130 requires an enterprise to classify
items of other comprehensive income by their nature in a financial
statement and display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in capital
in the equity section of a statement of financial position. This
statement is effective for fiscal years beginning after December 15,
1997. Reclassification of financial statements for earlier periods
provided for comparative purposes is required. The Company will adopt
the provisions of SFAS No. 130 in its 1998 consolidated financial
statements.
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities".
SFAS No. 125 specifies the accounting and reporting requirements for
transfers of financial assets, the recognition and measurement of
servicing assets and liabilities and extinguishments of liabilities.
SFAS No. 125 is effective for transactions occurring after December 31,
1996 and is to be applied prospectively. In December 1996, the FASB
issued SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125," which defers for one year the
effective date of provisions relating to secured borrowings and
collateral and transfers of financial assets that are part of repurchase
agreements, dollar-roll, securities lending and similar transactions.
Implementation of SFAS No. 125 did not have nor is SFAS No. 127 expected
to have a material impact on the Company's consolidated financial
statements.
Valuation of Investments
Fixed maturities identified as available for sale are reported at
estimated fair value. The amortized cost of fixed maturities is adjusted
for impairments in value deemed to be other than temporary.
Valuation allowances are netted against the asset categories to which
they apply.
F-8
<PAGE>
Mortgage loans on real estate are stated at unpaid principal balances,
net of unamortized discounts and valuation allowances. Valuation
allowances are based on the present value of expected future cash flows
discounted at the loan's original effective interest rate or the
collateral value if the loan is collateral dependent. However, if
foreclosure is or becomes probable, the measurement method used is
collateral value.
Real estate, including real estate acquired in satisfaction of debt, is
stated at depreciated cost less valuation allowances. At the date of
foreclosure (including in-substance foreclosure), real estate acquired
in satisfaction of debt is valued at estimated fair value. Impaired real
estate is written down to fair value with the impairment loss being
included in investment gains (losses), net. Valuation allowances on real
estate held for sale are computed using the lower of depreciated cost or
current estimated fair value, net of disposition costs. Depreciation is
discontinued on real estate held for sale. Prior to the adoption of SFAS
No. 121, valuation allowances on real estate held for production of
income were computed using the forecasted cash flows of the respective
properties discounted at a rate equal to the Company's cost of funds.
Policy loans are stated at unpaid principal balances.
Partnerships and joint venture interests in which the Company does not
have control or a majority economic interest are reported on the equity
basis of accounting and are included either with equity real estate or
other equity investments, as appropriate.
Common stocks are carried at estimated fair value and are included in
other equity investments.
Short-term investments are stated at amortized cost which approximates
fair value and are included with other invested assets.
Cash and cash equivalents includes cash on hand, amounts due from banks
and highly liquid debt instruments purchased with an original maturity
of three months or less.
All securities are recorded in the consolidated financial statements on
a trade date basis.
Net Investment Income, Investment Gains, Net and Unrealized Investment
Gains (Losses)
Net investment income and realized investment gains (losses)
(collectively, "investment results") related to certain participating
group annuity contracts which are passed through to the contractholders
are reflected as interest credited to policyholders' account balances.
Realized investment gains (losses) are determined by specific
identification and are presented as a component of revenue. Changes in
valuation allowances are included in investment gains or losses.
Unrealized investment gains and losses on fixed maturities available for
sale and equity securities held by the Company are accounted for as a
separate component of shareholder's equity, net of related deferred
Federal income taxes, amounts attributable to discontinued operations,
participating group annuity contracts and deferred policy acquisition
costs ("DAC") related to universal life and investment-type products and
participating traditional life contracts.
Recognition of Insurance Income and Related Expenses
Premiums from universal life and investment-type contracts are reported
as deposits to policyholders' account balances. Revenues from these
contracts consist of amounts assessed during the period against
policyholders' account balances for mortality charges, policy
administration charges and surrender charges. Policy benefits and claims
that are charged to expense include benefit claims incurred in the
period in excess of related policyholders' account balances.
F-9
<PAGE>
Premiums from participating and non-participating traditional life and
annuity policies with life contingencies generally are recognized as
income when due. Benefits and expenses are matched with such income so
as to result in the recognition of profits over the life of the
contracts. This match is accomplished by means of the provision for
liabilities for future policy benefits and the deferral and subsequent
amortization of policy acquisition costs.
For contracts with a single premium or a limited number of premium
payments due over a significantly shorter period than the total period
over which benefits are provided, premiums are recorded as income when
due with any excess profit deferred and recognized in income in a
constant relationship to insurance in force or, for annuities, the
amount of expected future benefit payments.
Premiums from individual health contracts are recognized as income over
the period to which the premiums relate in proportion to the amount of
insurance protection provided.
Deferred Policy Acquisition Costs
The costs of acquiring new business, principally commissions,
underwriting, agency and policy issue expenses, all of which vary with
and are primarily related to the production of new business, are
deferred. DAC is subject to recoverability testing at the time of policy
issue and loss recognition testing at the end of each accounting period.
For universal life products and investment-type products, DAC is
amortized over the expected total life of the contract group (periods
ranging from 15 to 35 years and 5 to 17 years, respectively) as a
constant percentage of estimated gross profits arising principally from
investment results, mortality and expense margins and surrender charges
based on historical and anticipated future experience, updated at the
end of each accounting period. The effect on the amortization of DAC of
revisions to estimated gross profits is reflected in earnings in the
period such estimated gross profits are revised. The effect on the DAC
asset that would result from realization of unrealized gains (losses) is
recognized with an offset to unrealized gains (losses) in consolidated
shareholder's equity as of the balance sheet date.
For participating traditional life policies (substantially all of which
are in the Closed Block), DAC is amortized over the expected total life
of the contract group (40 years) as a constant percentage based on the
present value of the estimated gross margin amounts expected to be
realized over the life of the contracts using the expected investment
yield. At December 31, 1997, the expected investment yield, excluding
policy loans, generally ranged from 7.53% grading to 7.92% over a 20
year period. Estimated gross margin includes anticipated premiums and
investment results less claims and administrative expenses, changes in
the net level premium reserve and expected annual policyholder
dividends. The effect on the amortization of DAC of revisions to
estimated gross margins is reflected in earnings in the period such
estimated gross margins are revised. The effect on the DAC asset that
would result from realization of unrealized gains (losses) is recognized
with an offset to unrealized gains (losses) in consolidated
shareholder's equity as of the balance sheet date.
For non-participating traditional life and annuity policies with life
contingencies, DAC is amortized in proportion to anticipated premiums.
Assumptions as to anticipated premiums are estimated at the date of
policy issue and are consistently applied during the life of the
contracts. Deviations from estimated experience are reflected in
earnings in the period such deviations occur. For these contracts, the
amortization periods generally are for the total life of the policy.
For individual health benefit insurance, DAC is amortized over the
expected average life of the contracts (10 years for major medical
policies and 20 years for disability income ("DI") products) in
proportion to anticipated premium revenue at time of issue.
Policyholders' Account Balances and Future Policy Benefits
Policyholders' account balances for universal life and investment-type
contracts are equal to the policy account values. The policy account
values represents an accumulation of gross premium payments plus
credited interest less expense and mortality charges and withdrawals.
F-10
<PAGE>
For participating traditional life policies, future policy benefit
liabilities are calculated using a net level premium method on the basis
of actuarial assumptions equal to guaranteed mortality and dividend fund
interest rates. The liability for annual dividends represents the
accrual of annual dividends earned. Terminal dividends are accrued in
proportion to gross margins over the life of the contract.
For non-participating traditional life insurance policies, future policy
benefit liabilities are estimated using a net level premium method on
the basis of actuarial assumptions as to mortality, persistency and
interest established at policy issue. Assumptions established at policy
issue as to mortality and persistency are based on the Insurance Group's
experience which, together with interest and expense assumptions,
include a margin for adverse deviation. When the liabilities for future
policy benefits plus the present value of expected future gross premiums
for a product are insufficient to provide for expected future policy
benefits and expenses for that product, DAC is written off and
thereafter, if required, a premium deficiency reserve is established by
a charge to earnings. Benefit liabilities for traditional annuities
during the accumulation period are equal to accumulated contractholders'
fund balances and after annuitization are equal to the present value of
expected future payments. Interest rates used in establishing such
liabilities range from 2.25% to 11.5% for life insurance liabilities and
from 2.25% to 13.5% for annuity liabilities.
During the fourth quarter of 1996, a loss recognition study of
participating group annuity contracts and conversion annuities ("Pension
Par") was completed which included management's revised estimate of
assumptions, such as expected mortality and future investment returns.
The study's results prompted management to establish a premium
deficiency reserve which decreased earnings from continuing operations
and net earnings by $47.5 million ($73.0 million pre-tax).
Individual health benefit liabilities for active lives are estimated
using the net level premium method and assumptions as to future
morbidity, withdrawals and interest. Benefit liabilities for disabled
lives are estimated using the present value of benefits method and
experience assumptions as to claim terminations, expenses and interest.
During the fourth quarter of 1996, the Company completed a loss
recognition study of the DI business which incorporated management's
revised estimates of future experience with regard to morbidity,
investment returns, claims and administration expenses and other
factors. The study indicated DAC was not recoverable and the reserves
were not sufficient. Earnings from continuing operations and net
earnings decreased by $208.0 million ($320.0 million pre-tax) as a
result of strengthening DI reserves by $175.0 million and writing off
unamortized DAC of $145.0 million related to DI products issued prior to
July 1993. The determination of DI reserves requires making assumptions
and estimates relating to a variety of factors, including morbidity and
interest rates, claims experience and lapse rates based on then known
facts and circumstances. Such factors as claim incidence and termination
rates can be affected by changes in the economic, legal and regulatory
environments and work ethic. While management believes its DI reserves
have been calculated on a reasonable basis and are adequate, there can
be no assurance reserves will be sufficient to provide for future
liabilities.
F-11
<PAGE>
Claim reserves and associated liabilities for individual DI and major
medical policies were $886.7 million and $869.4 million at December 31,
1997 and 1996, respectively. Incurred benefits (benefits paid plus
changes in claim reserves) and benefits paid for individual DI and major
medical policies (excluding reserve strengthening in 1996) are
summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Incurred benefits related to current year.......... $ 190.2 $ 189.0 $ 176.0
Incurred benefits related to prior years........... 2.1 69.1 67.8
----------------- ---------------- -----------------
Total Incurred Benefits............................ $ 192.3 $ 258.1 $ 243.8
================= ================ =================
Benefits paid related to current year.............. $ 28.8 $ 32.6 $ 37.0
Benefits paid related to prior years............... 146.2 153.3 137.8
----------------- ---------------- -----------------
Total Benefits Paid................................ $ 175.0 $ 185.9 $ 174.8
================= ================ =================
</TABLE>
Policyholders' Dividends
The amount of policyholders' dividends to be paid (including those on
policies included in the Closed Block) is determined annually by
Equitable Life's board of directors. The aggregate amount of
policyholders' dividends is related to actual interest, mortality,
morbidity and expense experience for the year and judgment as to the
appropriate level of statutory surplus to be retained by Equitable Life.
At December 31, 1997, participating policies, including those in the
Closed Block, represent approximately 21.2% ($50.2 billion) of directly
written life insurance in force, net of amounts ceded.
Federal Income Taxes
The Company files a consolidated Federal income tax return with the
Holding Company and its consolidated subsidiaries. Current Federal
income taxes are charged or credited to operations based upon amounts
estimated to be payable or recoverable as a result of taxable operations
for the current year. Deferred income tax assets and liabilities are
recognized based on the difference between financial statement carrying
amounts and income tax bases of assets and liabilities using enacted
income tax rates and laws.
Separate Accounts
Separate Accounts are established in conformity with the New York State
Insurance Law and generally are not chargeable with liabilities that
arise from any other business of the Insurance Group. Separate Accounts
assets are subject to General Account claims only to the extent the
value of such assets exceeds Separate Accounts liabilities.
Assets and liabilities of the Separate Accounts, representing net
deposits and accumulated net investment earnings less fees, held
primarily for the benefit of contractholders, and for which the
Insurance Group does not bear the investment risk, are shown as separate
captions in the consolidated balance sheets. The Insurance Group bears
the investment risk on assets held in one Separate Account, therefore,
such assets are carried on the same basis as similar assets held in the
General Account portfolio. Assets held in the other Separate Accounts
are carried at quoted market values or, where quoted values are not
available, at estimated fair values as determined by the Insurance
Group.
The investment results of Separate Accounts on which the Insurance Group
does not bear the investment risk are reflected directly in Separate
Accounts liabilities. For 1997, 1996 and 1995, investment results of
such Separate Accounts were $3,411.1 million, $2,970.6 million and
$1,963.2 million, respectively.
F-12
<PAGE>
Deposits to Separate Accounts are reported as increases in Separate
Accounts liabilities and are not reported in revenues. Mortality, policy
administration and surrender charges on all Separate Accounts are
included in revenues.
Employee Stock Option Plan
The Company accounts for stock option plans sponsored by the Holding
Company, DLJ and Alliance in accordance with the provisions of
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for
Stock Issued to Employees," and related interpretations. In accordance
with the opinion, compensation expense is recorded on the date of grant
only if the current market price of the underlying stock exceeds the
exercise price. See Note 21 for the pro forma disclosures for the
Holding Company, DLJ and Alliance required by SFAS No. 123, "Accounting
for Stock-Based Compensation".
3) INVESTMENTS
The following tables provide additional information relating to fixed
maturities and equity securities:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
----------------- ----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C> <C>
December 31, 1997
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 14,230.3 $ 785.0 $ 74.5 $ 14,940.8
Mortgage-backed.................... 1,702.8 23.5 1.3 1,725.0
U.S. Treasury securities and
U.S. government and
agency securities................ 1,583.2 83.9 .6 1,666.5
States and political subdivisions.. 673.0 6.8 .1 679.7
Foreign governments................ 442.4 44.8 2.0 485.2
Redeemable preferred stock......... 128.0 6.7 1.0 133.7
----------------- ----------------- ---------------- -----------------
Total Available for Sale............... $ 18,759.7 $ 950.7 $ 79.5 $ 19,630.9
================= ================= ================ =================
Equity Securities:
Common stock......................... $ 408.4 $ 48.7 $ 15.0 $ 442.1
================= ================= ================ =================
December 31, 1996
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 13,645.2 $ 451.5 $ 121.0 $ 13,975.7
Mortgage-backed.................... 2,015.9 11.2 20.3 2,006.8
U.S. Treasury securities and
U.S. government and
agency securities................ 1,539.4 39.2 19.3 1,559.3
States and political subdivisions.. 77.0 4.5 - 81.5
Foreign governments................ 302.6 18.0 2.2 318.4
Redeemable preferred stock......... 139.1 3.3 7.1 135.3
----------------- ----------------- ---------------- -----------------
Total Available for Sale............... $ 17,719.2 $ 527.7 $ 169.9 $ 18,077.0
================= ================= ================ =================
Equity Securities:
Common stock......................... $ 362.0 $ 49.3 $ 17.7 $ 393.6
================= ================= ================ =================
</TABLE>
F-13
<PAGE>
For publicly traded fixed maturities and equity securities, estimated
fair value is determined using quoted market prices. For fixed
maturities without a readily ascertainable market value, the Company has
determined an estimated fair value using a discounted cash flow
approach, including provisions for credit risk, generally based on the
assumption such securities will be held to maturity. Estimated fair
values for equity securities, substantially all of which do not have a
readily ascertainable market value, have been determined by the Company.
Such estimated fair values do not necessarily represent the values for
which these securities could have been sold at the dates of the
consolidated balance sheets. At December 31, 1997 and 1996, securities
without a readily ascertainable market value having an amortized cost of
$3,759.2 million and $3,915.7 million, respectively, had estimated fair
values of $3,903.9 million and $4,024.6 million, respectively.
The contractual maturity of bonds at December 31, 1997 is shown below:
<TABLE>
<CAPTION>
Available for Sale
------------------------------------
Amortized Estimated
Cost Fair Value
---------------- -----------------
(In Millions)
<S> <C> <C>
Due in one year or less................................................ $ 149.9 $ 151.3
Due in years two through five.......................................... 2,962.8 3,025.2
Due in years six through ten........................................... 6,863.9 7,093.0
Due after ten years.................................................... 6,952.3 7,502.7
Mortgage-backed securities............................................. 1,702.8 1,725.0
---------------- -----------------
Total.................................................................. $ 18,631.7 $ 19,497.2
================ =================
</TABLE>
Bonds not due at a single maturity date have been included in the above
table in the year of final maturity. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
The Insurance Group's fixed maturity investment portfolio includes
corporate high yield securities consisting of public high yield bonds,
redeemable preferred stocks and directly negotiated debt in leveraged
buyout transactions. The Insurance Group seeks to minimize the higher
than normal credit risks associated with such securities by monitoring
the total investments in any single issuer or total investment in a
particular industry group. Certain of these corporate high yield
securities are classified as other than investment grade by the various
rating agencies, i.e., a rating below Baa or National Association of
Insurance Commissioners ("NAIC") designation of 3 (medium grade), 4 or 5
(below investment grade) or 6 (in or near default). At December 31,
1997, approximately 17.85% of the $18,610.6 million aggregate amortized
cost of bonds held by the Insurance Group were considered to be other
than investment grade.
In addition to its holdings of corporate high yield securities, the
Insurance Group is an equity investor in limited partnership interests
which primarily invest in securities considered to be other than
investment grade.
Fixed maturity investments with restructured or modified terms are not
material.
F-14
<PAGE>
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Balances, beginning of year........................ $ 137.1 $ 325.3 $ 284.9
SFAS No. 121 release............................... - (152.4) -
Additions charged to income........................ 334.6 125.0 136.0
Deductions for writedowns and
asset dispositions............................... (87.2) (160.8) (95.6)
----------------- ---------------- -----------------
Balances, End of Year.............................. $ 384.5 $ 137.1 $ 325.3
================= ================ =================
Balances, end of year comprise:
Mortgage loans on real estate.................... $ 55.8 $ 50.4 $ 65.5
Equity real estate............................... 328.7 86.7 259.8
----------------- ---------------- -----------------
Total.............................................. $ 384.5 $ 137.1 $ 325.3
================= ================ =================
</TABLE>
At December 31, 1997, the carrying values of investments held for the
production of income which were non-income producing for the twelve
months preceding the consolidated balance sheet date were $12.6 million
of fixed maturities and $.9 million of mortgage loans on real estate.
At December 31, 1997 and 1996, mortgage loans on real estate with
scheduled payments 60 days (90 days for agricultural mortgages) or more
past due or in foreclosure (collectively, "problem mortgage loans on
real estate") had an amortized cost of $23.4 million (0.9% of total
mortgage loans on real estate) and $12.4 million (0.4% of total mortgage
loans on real estate), respectively.
The payment terms of mortgage loans on real estate may from time to time
be restructured or modified. The investment in restructured mortgage
loans on real estate, based on amortized cost, amounted to $183.4
million and $388.3 million at December 31, 1997 and 1996, respectively.
Gross interest income on restructured mortgage loans on real estate that
would have been recorded in accordance with the original terms of such
loans amounted to $17.2 million, $35.5 million and $52.1 million in
1997, 1996 and 1995, respectively. Gross interest income on these loans
included in net investment income aggregated $12.7 million, $28.2
million and $37.4 million in 1997, 1996 and 1995, respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1997 1996
------------------- -------------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses.................. $ 196.7 $ 340.0
Impaired mortgage loans without provision for losses............... 3.6 122.3
------------------- -------------------
Recorded investment in impaired mortgage loans..................... 200.3 462.3
Provision for losses............................................... (51.8) (46.4)
------------------- -------------------
Net Impaired Mortgage Loans........................................ $ 148.5 $ 415.9
=================== ===================
</TABLE>
Impaired mortgage loans without provision for losses are loans where the
fair value of the collateral or the net present value of the expected
future cash flows related to the loan equals or exceeds the recorded
investment. Interest income earned on loans where the collateral value
is used to measure impairment is recorded on a cash basis. Interest
income on loans where the present value method is used to measure
impairment is accrued on the net carrying value amount of the loan at
the interest rate used to discount the cash flows. Changes in the
present value attributable to changes in the amount or timing of
expected cash flows are reported as investment gains or losses.
F-15
<PAGE>
During 1997, 1996 and 1995, respectively, the Company's average recorded
investment in impaired mortgage loans was $246.9 million, $552.1 million
and $429.0 million. Interest income recognized on these impaired
mortgage loans totaled $15.2 million, $38.8 million and $27.9 million
($2.3 million, $17.9 million and $13.4 million recognized on a cash
basis) for 1997, 1996 and 1995, respectively.
The Insurance Group's investment in equity real estate is through direct
ownership and through investments in real estate joint ventures. At
December 31, 1997 and 1996, the carrying value of equity real estate
held for sale amounted to $1,023.5 million and $345.6 million,
respectively. For 1997, 1996 and 1995, respectively, real estate of
$152.0 million, $58.7 million and $35.3 million was acquired in
satisfaction of debt. At December 31, 1997 and 1996, the Company owned
$693.3 million and $771.7 million, respectively, of real estate acquired
in satisfaction of debt.
Depreciation of real estate is computed using the straight-line method
over the estimated useful lives of the properties, which generally range
from 40 to 50 years. Accumulated depreciation on real estate was $541.1
million and $587.5 million at December 31, 1997 and 1996, respectively.
Depreciation expense on real estate totaled $74.9 million, $91.8 million
and $121.7 million for 1997, 1996 and 1995, respectively.
4) JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information for real estate joint ventures
(29 and 34 individual ventures as of December 31, 1997 and 1996,
respectively) and for limited partnership interests accounted for under
the equity method, in which the Company has an investment of $10.0
million or greater and an equity interest of 10% or greater is as
follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
BALANCE SHEETS
Investments in real estate, at depreciated cost........................ $ 1,700.9 $ 1,883.7
Investments in securities, generally at estimated fair value........... 1,374.8 2,430.6
Cash and cash equivalents.............................................. 105.4 98.0
Other assets........................................................... 584.9 427.0
---------------- -----------------
Total Assets........................................................... $ 3,766.0 $ 4,839.3
================ =================
Borrowed funds - third party........................................... $ 493.4 $ 1,574.3
Borrowed funds - the Company........................................... 31.2 137.9
Other liabilities...................................................... 284.0 415.8
---------------- -----------------
Total liabilities...................................................... 808.6 2,128.0
---------------- -----------------
Partners' capital...................................................... 2,957.4 2,711.3
---------------- -----------------
Total Liabilities and Partners' Capital................................ $ 3,766.0 $ 4,839.3
================ =================
Equity in partners' capital included above............................. $ 568.5 $ 806.8
Equity in limited partnership interests not included above............. 331.8 201.8
Other.................................................................. 4.3 9.8
---------------- -----------------
Carrying Value......................................................... $ 904.6 $ 1,018.4
================ =================
</TABLE>
F-16
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures............. $ 310.5 $ 348.9 $ 463.5
Revenues of other limited partnership interests.... 506.3 386.1 242.3
Interest expense - third party..................... (91.8) (111.0) (135.3)
Interest expense - the Company..................... (7.2) (30.0) (41.0)
Other expenses..................................... (263.6) (282.5) (397.7)
----------------- ---------------- -----------------
Net Earnings....................................... $ 454.2 $ 311.5 $ 131.8
================= ================ =================
Equity in net earnings included above.............. $ 76.7 $ 73.9 $ 49.1
Equity in net earnings of limited partnerships
interests not included above..................... 69.5 35.8 44.8
Other.............................................. (.9) .9 1.0
-----------------
----------------- ---------------- -----------------
Total Equity in Net Earnings....................... $ 145.3 $ 110.6 $ 94.9
================= ================ =================
</TABLE>
5) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Fixed maturities................................... $ 1,459.4 $ 1,307.4 $ 1,151.1
Mortgage loans on real estate...................... 260.8 303.0 329.0
Equity real estate................................. 390.4 442.4 560.4
Other equity investments........................... 156.9 122.0 76.9
Policy loans....................................... 177.0 160.3 144.4
Other investment income............................ 181.7 217.4 273.0
----------------- ---------------- -----------------
Gross investment income.......................... 2,626.2 2,552.5 2,534.8
----------------- ---------------- -----------------
Investment expenses.............................. 343.4 348.9 446.6
----------------- ---------------- -----------------
Net Investment Income.............................. $ 2,282.8 $ 2,203.6 $ 2,088.2
================= ================ =================
</TABLE>
Investment gains (losses), net, including changes in the valuation
allowances, are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Fixed maturities................................... $ 88.1 $ 60.5 $ 119.9
Mortgage loans on real estate...................... (11.2) (27.3) (40.2)
Equity real estate................................. (391.3) (79.7) (86.6)
Other equity investments........................... 14.1 18.9 12.8
Sale of subsidiaries............................... 252.1 - -
Issuance and sales of Alliance Units............... - 20.6 -
Other.............................................. 3.0 (2.8) (.6)
----------------- ---------------- -----------------
Investment (Losses) Gains, Net..................... $ (45.2) $ (9.8) $ 5.3
================= ================ =================
</TABLE>
F-17
<PAGE>
Writedowns of fixed maturities amounted to $11.7 million, $29.9 million
and $46.7 million for 1997, 1996 and 1995, respectively, and writedowns
of equity real estate subsequent to the adoption of SFAS No. 121
amounted to $136.4 million and $23.7 million for 1997 and 1996,
respectively. In the fourth quarter of 1997, the Company reclassified
$1,095.4 million depreciated cost of equity real estate from real estate
held for the production of income to real estate held for sale.
Additions to valuation allowances of $227.6 million were recorded upon
these transfers. Additionally in the fourth quarter, $132.3 million of
writedowns on real estate held for production of income were recorded.
For 1997, 1996 and 1995, respectively, proceeds received on sales of
fixed maturities classified as available for sale amounted to $9,789.7
million, $8,353.5 million and $8,206.0 million. Gross gains of $166.0
million, $154.2 million and $211.4 million and gross losses of $108.8
million, $92.7 million and $64.2 million, respectively, were realized on
these sales. The change in unrealized investment gains (losses) related
to fixed maturities classified as available for sale for 1997, 1996 and
1995 amounted to $513.4 million, $(258.0) million and $1,077.2 million,
respectively.
For 1997, 1996 and 1995, investment results passed through to certain
participating group annuity contracts as interest credited to
policyholders' account balances amounted to $137.5 million, $136.7
million and $131.2 million, respectively.
On June 10, 1997, Equitable Life sold EREIM (other than its interest in
Column Financial, Inc.) ("ERE") to Lend Lease Corporation Limited ("Lend
Lease"), a publicly traded, international property and financial
services company based in Sydney, Australia. The total purchase price
was $400.0 million and consisted of $300.0 million in cash and a $100.0
million note maturing in eight years and bearing interest at the rate of
7.4%, subject to certain adjustments. Equitable Life recognized an
investment gain of $162.4 million, net of Federal income tax of $87.4
million as a result of this transaction. Equitable Life entered into
long-term advisory agreements whereby ERE will continue to provide
substantially the same services to Equitable Life's General Account and
Separate Accounts, for substantially the same fees, as provided prior to
the sale.
Through June 10, 1997 and the years ended December 31, 1996 and 1995,
respectively, the businesses sold reported combined revenues of $91.6
million, $226.1 million and $245.6 million and combined net earnings of
$10.7 million, $30.7 million and $27.9 million. Total combined assets
and liabilities as reported at December 31, 1996 were $171.8 million and
$130.1 million, respectively.
In 1996, Alliance acquired the business of Cursitor-Eaton Asset
Management Company and Cursitor Holdings Limited (collectively,
"Cursitor") for approximately $159.0 million. The purchase price
consisted of $94.3 million in cash, 1.8 million of Alliance's publicly
traded units ("Alliance Units"), 6% notes aggregating $21.5 million
payable ratably over four years, and substantial additional
consideration to be determined at a later date. The excess of the
purchase price, including acquisition costs and minority interest, over
the fair value of Cursitor's net assets acquired resulted in the
recognition of intangible assets consisting of costs assigned to
contracts acquired and goodwill of approximately $122.8 million and
$38.3 million, respectively. The Company recognized an investment gain
of $20.6 million as a result of the issuance of Alliance Units in this
transaction. On June 30, 1997, Alliance reduced the recorded value of
goodwill and contracts associated with Alliance's acquisition of
Cursitor by $120.9 million. This charge reflected Alliance's view that
Cursitor's continuing decline in assets under management and its reduced
profitability, resulting from relative investment underperformance, no
longer supported the carrying value of its investment. As a result, the
Company's earnings from continuing operations before cumulative effect
of accounting change for 1997 included a charge of $59.5 million, net of
a Federal income tax benefit of $10.0 million and minority interest of
$51.4 million. The remaining balance of intangible assets is being
amortized over its estimated useful life of 20 years. At December 31,
1997, the Company's ownership of Alliance Units was approximately 56.9%.
F-18
<PAGE>
Net unrealized investment gains (losses), included in the consolidated
balance sheets as a component of equity and the changes for the
corresponding years, are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Balance, beginning of year......................... $ 189.9 $ 396.5 $ (220.5)
Changes in unrealized investment gains (losses).... 543.3 (297.6) 1,198.9
Changes in unrealized investment losses
(gains) attributable to:
Participating group annuity contracts.......... 53.2 - (78.1)
DAC............................................ (89.0) 42.3 (216.8)
Deferred Federal income taxes.................. (163.8) 48.7 (287.0)
----------------- ---------------- -----------------
Balance, End of Year............................... $ 533.6 $ 189.9 $ 396.5
================= ================ =================
Balance, end of year comprises:
Unrealized investment gains on:
Fixed maturities............................... $ 871.2 $ 357.8 $ 615.9
Other equity investments....................... 33.7 31.6 31.1
Other, principally Closed Block................ 80.9 53.1 93.1
----------------- ---------------- -----------------
Total........................................ 985.8 442.5 740.1
Amounts of unrealized investment gains
attributable to:
Participating group annuity contracts........ (19.0) (72.2) (72.2)
DAC.......................................... (141.0) (52.0) (94.3)
Deferred Federal income taxes................ (292.2) (128.4) (177.1)
----------------- ---------------- -----------------
Total.............................................. $ 533.6 $ 189.9 $ 396.5
================= ================ =================
</TABLE>
6) CLOSED BLOCK
Summarized financial information for the Closed Block follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost,
$4,059.4 and $3,820.7)........................................... $ 4,231.0 $ 3,889.5
Mortgage loans on real estate........................................ 1,341.6 1,380.7
Policy loans......................................................... 1,700.2 1,765.9
Cash and other invested assets....................................... 282.7 336.1
DAC.................................................................. 775.2 876.5
Other assets......................................................... 235.9 246.3
----------------- -----------------
Total Assets......................................................... $ 8,566.6 $ 8,495.0
================= =================
Liabilities
Future policy benefits and policyholders' account balances........... $ 8,993.2 $ 8,999.7
Other liabilities.................................................... 80.5 91.6
----------------- -----------------
Total Liabilities.................................................... $ 9,073.7 $ 9,091.3
================= =================
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Premiums and other revenue......................... $ 687.1 $ 724.8 $ 753.4
Investment income (net of investment
expenses of $27.0, $27.3 and $26.7).............. 574.9 546.6 538.9
Investment losses, net............................. (42.4) (5.5) (20.2)
----------------- ---------------- -----------------
Total revenues............................... 1,219.6 1,265.9 1,272.1
----------------- ---------------- -----------------
Benefits and Other Deductions
Policyholders' benefits and dividends.............. 1,066.7 1,106.3 1,077.6
Other operating costs and expenses................. 50.4 34.6 51.3
----------------- ---------------- -----------------
Total benefits and other deductions.......... 1,117.1 1,140.9 1,128.9
----------------- ---------------- -----------------
Contribution from the Closed Block................. $ 102.5 $ 125.0 $ 143.2
================= ================ =================
</TABLE>
At December 31, 1997 and 1996, problem mortgage loans on real estate had
an amortized cost of $8.1 million and $4.3 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had an amortized cost of $70.5 million and $114.2 million,
respectively. At December 31, 1996, the restructured mortgage loans on
real estate amount included $.7 million of problem mortgage loans on
real estate.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 109.1 $ 128.1
Impaired mortgage loans without provision for losses................... .6 .6
---------------- -----------------
Recorded investment in impaired mortgages.............................. 109.7 128.7
Provision for losses................................................... (17.4) (12.9)
---------------- -----------------
Net Impaired Mortgage Loans............................................ $ 92.3 $ 115.8
================ =================
</TABLE>
During 1997, 1996 and 1995, the Closed Block's average recorded
investment in impaired mortgage loans was $110.2 million, $153.8 million
and $146.9 million, respectively. Interest income recognized on these
impaired mortgage loans totaled $9.4 million, $10.9 million and $5.9
million ($4.1 million, $4.7 million and $1.3 million recognized on a
cash basis) for 1997, 1996 and 1995, respectively.
Valuation allowances amounted to $18.5 million and $13.8 million on
mortgage loans on real estate and $16.8 million and $3.7 million on
equity real estate at December 31, 1997 and 1996, respectively. As of
January 1, 1996, the adoption of SFAS No. 121 resulted in the
recognition of impairment losses of $5.6 million on real estate held for
production of income. Writedowns of fixed maturities amounted to $3.5
million, $12.8 million and $16.8 million for 1997, 1996 and 1995,
respectively and writedowns of equity real estate subsequent to the
adoption of SFAS No. 121 amounted to $28.8 million for 1997.
In the fourth quarter of 1997, $72.9 million depreciated cost of equity
real estate held for production of income was reclassified to equity
real estate held for sale. Additions to valuation allowances of $15.4
million were recorded upon these transfers. Additionally, in the fourth
quarter, $28.8 million of writedowns on real estate held for production
of income were recorded.
Many expenses related to Closed Block operations are charged to
operations outside of the Closed Block; accordingly, the contribution
from the Closed Block does not represent the actual profitability of the
Closed Block operations. Operating costs and expenses outside of the
Closed Block are, therefore, disproportionate to the business outside of
the Closed Block.
F-20
<PAGE>
7) DISCONTINUED OPERATIONS
Summarized financial information for discontinued operations follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Mortgage loans on real estate........................................ $ 655.5 $ 1,111.1
Equity real estate................................................... 655.6 925.6
Other equity investments............................................. 209.3 300.5
Short-term investments............................................... 102.0 63.2
Other invested assets................................................ 41.9 50.9
----------------- -----------------
Total investments.................................................. 1,664.3 2,451.3
Cash and cash equivalents............................................ 106.8 42.6
Other assets......................................................... 253.9 242.9
----------------- -----------------
Total Assets......................................................... $ 2,025.0 $ 2,736.8
================= =================
Liabilities
Policyholders' liabilities........................................... $ 1,048.3 $ 1,335.9
Allowance for future losses.......................................... 259.2 262.0
Amounts due to continuing operations................................. 572.8 996.2
Other liabilities.................................................... 144.7 142.7
----------------- -----------------
Total Liabilities.................................................... $ 2,025.0 $ 2,736.8
================= =================
</TABLE>
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Investment income (net of investment
expenses of $97.3, $127.5 and $153.1)............ $ 188.6 $ 245.4 $ 323.6
Investment losses, net............................. (173.7) (18.9) (22.9)
Policy fees, premiums and other income............. .2 .2 .7
----------------- ---------------- -----------------
Total revenues..................................... 15.1 226.7 301.4
Benefits and other deductions...................... 169.5 250.4 326.5
Losses charged to allowance for future losses...... (154.4) (23.7) (25.1)
----------------- ---------------- -----------------
Pre-tax loss from operations....................... - - -
Pre-tax loss from strengthening of the
allowance for future losses...................... (134.1) (129.0) -
Federal income tax benefit......................... 46.9 45.2 -
----------------- ---------------- -----------------
Loss from Discontinued Operations.................. $ (87.2) $ (83.8) $ -
================= ================ =================
</TABLE>
The Company's quarterly process for evaluating the allowance for future
losses applies the current period's results of the discontinued
operations against the allowance, re-estimates future losses, and
adjusts the allowance, if appropriate. Additionally, as part of the
Company's annual planning process which takes place in the fourth
quarter of each year, investment and benefit cash flow projections are
prepared. These updated assumptions and estimates resulted in the need
to strengthen the allowance in 1997 and 1996, respectively.
In the fourth quarter of 1997, $329.9 million depreciated cost of equity
real estate was reclassified from equity real estate held for production
of income to real estate held for sale. Additions to valuation
allowances of $79.8 million were recognized upon these transfers.
Additionally, in the fourth quarter, $92.5 million of writedown on real
estate held for production of income were recognized.
Benefits and other deductions includes $53.3 million, $114.3 million and
$154.6 million of interest expense related to amounts borrowed from
continuing operations in 1997, 1996 and 1995, respectively.
F-21
<PAGE>
Valuation allowances amounted to $28.4 million and $9.0 million on
mortgage loans on real estate and $88.4 million and $20.4 million on
equity real estate at December 31, 1997 and 1996, respectively. As of
January 1, 1996, the adoption of SFAS No. 121 resulted in a release of
existing valuation allowances of $71.9 million on equity real estate and
recognition of impairment losses of $69.8 million on real estate held
for production of income. Writedowns of equity real estate subsequent to
the adoption of SFAS No. 121 amounted to $95.7 million and $12.3 million
for 1997 and 1996, respectively.
At December 31, 1997 and 1996, problem mortgage loans on real estate had
amortized costs of $11.0 million and $7.9 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had amortized costs of $109.4 million and $208.1 million,
respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 101.8 $ 83.5
Impaired mortgage loans without provision for losses................... .2 15.0
---------------- -----------------
Recorded investment in impaired mortgages.............................. 102.0 98.5
Provision for losses................................................... (27.3) (8.8)
---------------- -----------------
Net Impaired Mortgage Loans............................................ $ 74.7 $ 89.7
================ =================
</TABLE>
During 1997, 1996 and 1995, the discontinued operations' average
recorded investment in impaired mortgage loans was $89.2 million, $134.8
million and $177.4 million, respectively. Interest income recognized on
these impaired mortgage loans totaled $6.6 million, $10.1 million and
$4.5 million ($5.3 million, $7.5 million and $.4 million recognized on a
cash basis) for 1997, 1996 and 1995, respectively.
At December 31, 1997 and 1996, discontinued operations had carrying
values of $156.2 million and $263.0 million, respectively, of real
estate acquired in satisfaction of debt.
8) SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
Short-term debt...................................................... $ 422.2 $ 174.1
----------------- -----------------
Long-term debt:
Equitable Life:
6.95% surplus notes scheduled to mature 2005....................... 399.4 399.4
7.70% surplus notes scheduled to mature 2015....................... 199.7 199.6
Other.............................................................. .3 .5
----------------- -----------------
Total Equitable Life........................................... 599.4 599.5
----------------- -----------------
Wholly Owned and Joint Venture Real Estate:
Mortgage notes, 5.87% - 12.00% due through 2006.................... 951.1 968.6
----------------- -----------------
Alliance:
Other.............................................................. 18.5 24.7
----------------- -----------------
Total long-term debt................................................. 1,569.0 1,592.8
----------------- -----------------
Total Short-term and Long-term Debt.................................. $ 1,991.2 $ 1,766.9
================= =================
</TABLE>
F-22
<PAGE>
Short-term Debt
Equitable Life has a $350.0 million bank credit facility available to
fund short-term working capital needs and to facilitate the securities
settlement process. The credit facility consists of two types of
borrowing options with varying interest rates and expires in June 2000.
The interest rates are based on external indices dependent on the type
of borrowing and at December 31, 1997 range from 5.88% to 8.50%. There
were no borrowings outstanding under this bank credit facility at
December 31, 1997.
Equitable Life has a commercial paper program with an issue limit of
$500.0 million. This program is available for general corporate purposes
used to support Equitable Life's liquidity needs and is supported by
Equitable Life's existing $350.0 million bank credit facility. At
December 31, 1997, $50.0 million was outstanding under this program.
During 1996, Alliance entered into a $250.0 million five-year revolving
credit facility with a group of banks. Under the facility, the interest
rate, at the option of Alliance, is a floating rate generally based upon
a defined prime rate, a rate related to the London Interbank Offered
Rate ("LIBOR") or the Federal funds rate. A facility fee is payable on
the total facility. The revolving credit facility will be used to
provide back-up liquidity for Alliance's $250.0 million commercial paper
program, to fund commission payments to financial intermediaries for the
sale of Class B and C shares under Alliance's mutual fund distribution
system, and for general working capital purposes. At December 31, 1997,
Alliance had $72.0 million in commercial paper outstanding and there
were no borrowings under the revolving credit facility.
Long-term Debt
Several of the long-term debt agreements have restrictive covenants
related to the total amount of debt, net tangible assets and other
matters. The Company is in compliance with all debt covenants.
On December 18, 1995, Equitable Life issued, in accordance with Section
1307 of the New York Insurance Law, $400.0 million of surplus notes
having an interest rate of 6.95% scheduled to mature in 2005 and $200.0
million of surplus notes having an interest rate of 7.70% scheduled to
mature in 2015 (together, the "Surplus Notes"). Proceeds from the
issuance of the Surplus Notes were $596.6 million, net of related
issuance costs. Payments of interest on, or principal of, the Surplus
Notes are subject to prior approval by the Superintendent.
The Company has pledged real estate, mortgage loans, cash and securities
amounting to $1,164.0 million and $1,406.4 million at December 31, 1997
and 1996, respectively, as collateral for certain long-term debt.
At December 31, 1997, aggregate maturities of the long-term debt based
on required principal payments at maturity for 1998 and the succeeding
four years are $565.8 million, $201.4 million, $8.6 million, $1.7
million and $1.8 million, respectively, and $790.6 million thereafter.
9) FEDERAL INCOME TAXES
A summary of the Federal income tax expense in the consolidated
statements of earnings is shown below:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current.......................................... $ 186.5 $ 97.9 $ (11.7)
Deferred......................................... (95.0) (88.2) 132.2
----------------- ---------------- -----------------
Total.............................................. $ 91.5 $ 9.7 $ 120.5
================= ================ =================
</TABLE>
F-23
<PAGE>
The Federal income taxes attributable to consolidated operations are
different from the amounts determined by multiplying the earnings before
Federal income taxes and minority interest by the expected Federal
income tax rate of 35%. The sources of the difference and the tax
effects of each are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Expected Federal income tax expense................ $ 234.7 $ 73.0 $ 173.7
Non-taxable minority interest...................... (38.0) (28.6) (22.0)
Adjustment of tax audit reserves................... (81.7) 6.9 4.1
Equity in unconsolidated subsidiaries.............. (45.1) (32.3) (19.4)
Other.............................................. 21.6 (9.3) (15.9)
----------------- ---------------- -----------------
Federal Income Tax Expense......................... $ 91.5 $ 9.7 $ 120.5
================= ================ =================
</TABLE>
The components of the net deferred Federal income taxes are as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
--------------------------------- ---------------------------------
Assets Liabilities Assets Liabilities
--------------- ---------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C> <C>
Compensation and related benefits...... $ 257.9 $ - $ 259.2 $ -
Other.................................. 30.7 - - 1.8
DAC, reserves and reinsurance.......... - 222.8 - 166.0
Investments............................ - 405.7 - 328.6
--------------- ---------------- --------------- ---------------
Total.................................. $ 288.6 $ 628.5 $ 259.2 $ 496.4
=============== ================ =============== ===============
</TABLE>
The deferred Federal income taxes impacting operations reflect the net
tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes. The sources of these temporary differences
and the tax effects of each are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
DAC, reserves and reinsurance...................... $ 46.2 $ (156.2) $ 63.3
Investments........................................ (113.8) 78.6 13.0
Compensation and related benefits.................. 3.7 22.3 30.8
Other.............................................. (31.1) (32.9) 25.1
----------------- ---------------- -----------------
Deferred Federal Income Tax
(Benefit) Expense................................ $ (95.0) $ (88.2) $ 132.2
================= ================ =================
</TABLE>
The Internal Revenue Service (the "IRS") is in the process of examining
the Company's consolidated Federal income tax returns for the years 1989
through 1991. Management believes these audits will have no material
adverse effect on the Company's results of operations.
F-24
<PAGE>
10) REINSURANCE AGREEMENTS
The Insurance Group assumes and cedes reinsurance with other insurance
companies. The Insurance Group evaluates the financial condition of its
reinsurers to minimize its exposure to significant losses from reinsurer
insolvencies. Ceded reinsurance does not relieve the originating insurer
of liability. The effect of reinsurance (excluding group life and
health) is summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Direct premiums.................................... $ 448.6 $ 461.4 $ 474.2
Reinsurance assumed................................ 198.3 177.5 171.3
Reinsurance ceded.................................. (45.4) (41.3) (38.7)
----------------- ---------------- -----------------
Premiums........................................... $ 601.5 $ 597.6 $ 606.8
================= ================ =================
Universal Life and Investment-type Product
Policy Fee Income Ceded.......................... $ 61.0 $ 48.2 $ 44.0
================= ================ =================
Policyholders' Benefits Ceded...................... $ 70.6 $ 54.1 $ 48.9
================= ================ =================
Interest Credited to Policyholders' Account
Balances Ceded................................... $ 36.4 $ 32.3 $ 28.5
================= ================ =================
</TABLE>
Effective January 1, 1994, all in force business above $5.0 million was
reinsured. During 1996, the Company's retention limit on joint
survivorship policies was increased to $15.0 million. The Insurance
Group also reinsures the entire risk on certain substandard underwriting
risks as well as in certain other cases.
The Insurance Group cedes 100% of its group life and health business to
a third party insurance company. Premiums ceded totaled $1.6 million,
$2.4 million and $260.6 million for 1997, 1996 and 1995, respectively.
Ceded death and disability benefits totaled $4.3 million, $21.2 million
and $188.1 million for 1997, 1996 and 1995, respectively. Insurance
liabilities ceded totaled $593.8 million and $652.4 million at December
31, 1997 and 1996, respectively.
11) EMPLOYEE BENEFIT PLANS
The Company sponsors qualified and non-qualified defined benefit plans
covering substantially all employees (including certain qualified
part-time employees), managers and certain agents. The pension plans are
non-contributory. Equitable Life's benefits are based on a cash balance
formula or years of service and final average earnings, if greater,
under certain grandfathering rules in the plans. Alliance's benefits are
based on years of credited service, average final base salary and
primary social security benefits. The Company's funding policy is to
make the minimum contribution required by the Employee Retirement Income
Security Act of 1974 ("ERISA").
Components of net periodic pension cost (credit) for the qualified and
non-qualified plans are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Service cost....................................... $ 32.5 $ 33.8 $ 30.0
Interest cost on projected benefit obligations..... 128.2 120.8 122.0
Actual return on assets............................ (307.6) (181.4) (309.2)
Net amortization and deferrals..................... 166.6 43.4 155.6
----------------- ---------------- -----------------
Net Periodic Pension Cost (Credit)................. $ 19.7 $ 16.6 $ (1.6)
================= ================ =================
</TABLE>
F-25
<PAGE>
The funded status of the qualified and non-qualified pension plans is as
follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Actuarial present value of obligations:
Vested............................................................... $ 1,702.6 $ 1,672.2
Non-vested........................................................... 3.9 10.1
---------------- -----------------
Accumulated Benefit Obligation......................................... $ 1,706.5 $ 1,682.3
================ =================
Plan assets at fair value.............................................. $ 1,867.4 $ 1,626.0
Projected benefit obligations.......................................... 1,801.3 1,765.5
---------------- -----------------
Projected benefit obligations (in excess of) or less than plan assets.. 66.1 (139.5)
Unrecognized prior service cost........................................ (9.9) (17.9)
Unrecognized net loss from past experience different
from that assumed.................................................... 95.0 280.0
Unrecognized net asset at transition................................... 3.1 4.7
Additional minimum liability........................................... - (19.3)
---------------- -----------------
Prepaid Pension Cost.................................................. $ 154.3 $ 108.0
================ =================
</TABLE>
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of projected benefit
obligations were 7.25% and 4.07%, respectively, at December 31, 1997 and
7.5% and 4.25%, respectively, at December 31, 1996. As of January 1,
1997 and 1996, the expected long-term rate of return on assets for the
retirement plan was 10.25%.
The Company recorded, as a reduction of shareholders' equity, an
additional minimum pension liability of $17.3 million and $12.9 million,
net of Federal income taxes, at December 31, 1997 and 1996,
respectively, primarily representing the excess of the accumulated
benefit obligation of the qualified pension plan over the accrued
liability.
The pension plan's assets include corporate and government debt
securities, equity securities, equity real estate and shares of group
trusts managed by Alliance.
Prior to 1987, the qualified plan funded participants' benefits through
the purchase of non-participating annuity contracts from Equitable Life.
Benefit payments under these contracts were approximately $33.2 million,
$34.7 million and $36.4 million for 1997, 1996 and 1995, respectively.
The Company provides certain medical and life insurance benefits
(collectively, "postretirement benefits") for qualifying employees,
managers and agents retiring from the Company (i) on or after attaining
age 55 who have at least 10 years of service or (ii) on or after
attaining age 65 or (iii) whose jobs have been abolished and who have
attained age 50 with 20 years of service. The life insurance benefits
are related to age and salary at retirement. The costs of postretirement
benefits are recognized in accordance with the provisions of SFAS No.
106. The Company continues to fund postretirement benefits costs on a
pay-as-you-go basis and, for 1997, 1996 and 1995, the Company made
estimated postretirement benefits payments of $18.7 million, $18.9
million and $31.1 million, respectively.
F-26
<PAGE>
The following table sets forth the postretirement benefits plan's
status, reconciled to amounts recognized in the Company's consolidated
financial statements:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Service cost....................................... $ 4.5 $ 5.3 $ 4.0
Interest cost on accumulated postretirement
benefits obligation.............................. 34.7 34.6 34.7
Net amortization and deferrals..................... 1.9 2.4 (2.3)
----------------- ---------------- -----------------
Net Periodic Postretirement Benefits Costs......... $ 41.1 $ 42.3 $ 36.4
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Accumulated postretirement benefits obligation:
Retirees............................................................. $ 388.5 $ 381.8
Fully eligible active plan participants.............................. 45.7 50.7
Other active plan participants....................................... 56.6 60.7
---------------- -----------------
490.8 493.2
Unrecognized prior service cost........................................ 40.3 50.5
Unrecognized net loss from past experience different
from that assumed and from changes in assumptions.................... (140.6) (150.5)
---------------- -----------------
Accrued Postretirement Benefits Cost................................... $ 390.5 $ 393.2
================ =================
</TABLE>
Since January 1, 1994, costs to the Company for providing these medical
benefits available to retirees under age 65 are the same as those
offered to active employees and costs to the Company of providing these
medical benefits will be limited to 200% of 1993 costs for all
participants.
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefits obligation was 8.75% in 1997,
gradually declining to 2.75% in the year 2009 and in 1996 was 9.5%,
gradually declining to 3.5% in the year 2009. The discount rate used in
determining the accumulated postretirement benefits obligation was 7.25%
and 7.50% at December 31, 1997 and 1996, respectively.
If the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefits obligation as of December 31, 1997
would be increased 7%. The effect of this change on the sum of the
service cost and interest cost would be an increase of 8%.
12) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivatives
The Insurance Group primarily uses derivatives for asset/liability risk
management and for hedging individual securities. Derivatives mainly are
utilized to reduce the Insurance Group's exposure to interest rate
fluctuations. Accounting for interest rate swap transactions is on an
accrual basis. Gains and losses related to interest rate swap
transactions are amortized as yield adjustments over the remaining life
of the underlying hedged security. Income and expense resulting from
interest rate swap activities are reflected in net investment income.
The notional amount of matched interest rate swaps outstanding at
December 31, 1997 and 1996, respectively, was $1,353.4 million and
$649.9 million. The average unexpired terms at December 31, 1997 ranged
from 1.5 to 3.8 years. At December 31, 1997, the cost of terminating
outstanding matched swaps in a loss position was $10.9 million and the
unrealized gain on outstanding matched swaps in a gain position was
$38.9 million. The Company has no intention of terminating these
contracts prior to maturity. During 1996 and 1995, net gains of $.2
million and $1.4 million, respectively, were recorded in connection with
interest rate swap activity. Equitable Life has implemented an interest
rate cap program designed to hedge crediting rates on interest-sensitive
individual annuities contracts. The outstanding notional amounts at
F-27
<PAGE>
December 31, 1997 of contracts purchased and sold were $7,250.0 million
and $875.0 million, respectively. The net premium paid by Equitable Life
on these contracts was $48.5 million and is being amortized ratably over
the contract periods ranging from 1 to 5 years. Income and expense
resulting from this program are reflected as an adjustment to interest
credited to policyholders' account balances.
Substantially all of DLJ's activities related to derivatives are, by
their nature trading activities which are primarily for the purpose of
customer accommodations. DLJ enters into certain contractual agreements
referred to as derivatives or off-balance-sheet financial instruments
involving futures, forwards and options. DLJ's derivative activities
consist of writing over-the-counter ("OTC") options to accommodate its
customer needs, trading in forward contracts in U.S. government and
agency issued or guaranteed securities and in futures contracts on
equity-based indices, interest rate instruments and currencies and
issuing structured products based on emerging market financial
instruments and indices. DLJ's involvement in swap contracts and
commodity derivative instruments is not significant.
Fair Value of Financial Instruments
The Company defines fair value as the quoted market prices for those
instruments that are actively traded in financial markets. In cases
where quoted market prices are not available, fair values are estimated
using present value or other valuation techniques. The fair value
estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument,
including estimates of the timing and amount of expected future cash
flows and the credit standing of counterparties. Such estimates do not
reflect any premium or discount that could result from offering for sale
at one time the Company's entire holdings of a particular financial
instrument, nor do they consider the tax impact of the realization of
unrealized gains or losses. In many cases, the fair value estimates
cannot be substantiated by comparison to independent markets, nor can
the disclosed value be realized in immediate settlement of the
instrument.
Certain financial instruments are excluded, particularly insurance
liabilities other than financial guarantees and investment contracts.
Fair market value of off-balance-sheet financial instruments of the
Insurance Group was not material at December 31, 1997 and 1996.
Fair values for mortgage loans on real estate are estimated by
discounting future contractual cash flows using interest rates at which
loans with similar characteristics and credit quality would be made.
Fair values for foreclosed mortgage loans and problem mortgage loans are
limited to the estimated fair value of the underlying collateral if
lower.
Fair values of policy loans are estimated by discounting the face value
of the loans from the time of the next interest rate review to the
present, at a rate equal to the excess of the current estimated market
rates over the current interest rate charged on the loan.
The estimated fair values for the Company's association plan contracts,
supplementary contracts not involving life contingencies ("SCNILC") and
annuities certain, which are included in policyholders' account
balances, and guaranteed interest contracts are estimated using
projected cash flows discounted at rates reflecting expected current
offering rates.
The estimated fair values for variable deferred annuities and single
premium deferred annuities ("SPDA"), which are included in
policyholders' account balances, are estimated by discounting the
account value back from the time of the next crediting rate review to
the present, at a rate equal to the excess of current estimated market
rates offered on new policies over the current crediting rates.
F-28
<PAGE>
Fair values for long-term debt is determined using published market
values, where available, or contractual cash flows discounted at market
interest rates. The estimated fair values for non-recourse mortgage debt
are determined by discounting contractual cash flows at a rate which
takes into account the level of current market interest rates and
collateral risk. The estimated fair values for recourse mortgage debt
are determined by discounting contractual cash flows at a rate based
upon current interest rates of other companies with credit ratings
similar to the Company. The Company's carrying value of short-term
borrowings approximates their estimated fair value.
The following table discloses carrying value and estimated fair value
for financial instruments not otherwise disclosed in Notes 3, 6 and 7:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------------
1997 1996
--------------------------------- ---------------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
--------------- ---------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C> <C>
Consolidated Financial Instruments:
Mortgage loans on real estate.......... $ 2,611.4 $ 2,822.8 $ 3,133.0 $ 3,394.6
Other limited partnership interests.... 509.4 509.4 467.0 467.0
Policy loans........................... 2,422.9 2,493.9 2,196.1 2,221.6
Policyholders' account balances -
investment contracts................. 12,611.0 12,714.0 12,908.7 12,992.2
Long-term debt......................... 1,569.0 1,531.5 1,592.8 1,557.7
Closed Block Financial Instruments:
Mortgage loans on real estate.......... 1,341.6 1,420.7 1,380.7 1,425.6
Other equity investments............... 86.3 86.3 105.0 105.0
Policy loans........................... 1,700.2 1,784.2 1,765.9 1,798.0
SCNILC liability....................... 27.6 30.3 30.6 34.9
Discontinued Operations Financial
Instruments:
Mortgage loans on real estate.......... 655.5 779.9 1,111.1 1,220.3
Fixed maturities....................... 38.7 38.7 42.5 42.5
Other equity investments............... 209.3 209.3 300.5 300.5
Guaranteed interest contracts.......... 37.0 34.0 290.7 300.5
Long-term debt......................... 102.0 102.1 102.1 102.2
</TABLE>
13) COMMITMENTS AND CONTINGENT LIABILITIES
The Company has provided, from time to time, certain guarantees or
commitments to affiliates, investors and others. These arrangements
include commitments by the Company, under certain conditions: to make
capital contributions of up to $202.6 million to affiliated real estate
joint ventures; and to provide equity financing to certain limited
partnerships of $362.1 million at December 31, 1997, under existing loan
or loan commitment agreements.
Equitable Life is the obligor under certain structured settlement
agreements which it had entered into with unaffiliated insurance
companies and beneficiaries. To satisfy its obligations under these
agreements, Equitable Life owns single premium annuities issued by
previously wholly owned life insurance subsidiaries. Equitable Life has
directed payment under these annuities to be made directly to the
beneficiaries under the structured settlement agreements. A contingent
liability exists with respect to these agreements should the previously
wholly owned subsidiaries be unable to meet their obligations.
Management believes the satisfaction of those obligations by Equitable
Life is remote.
The Insurance Group had $47.4 million of letters of credit outstanding
at December 31, 1997.
F-29
<PAGE>
14) LITIGATION
Equitable Life recently agreed to settle, subject to court approval,
previously disclosed cases brought by persons insured under Lifetime
Guaranteed Renewable Major Medical Insurance Policies issued by
Equitable Life (the "Policies") in New York (Golomb et al. v. The
Equitable Life Assurance Society of the United States), Pennsylvania
(Malvin et al. v. The Equitable Life Assurance Society of the United
States), Texas (Bowler et al. v. The Equitable Life Assurance Society of
the United States), Florida (Bachman v. The Equitable Life Assurance
Society of the United States) and California (Fletcher v. The Equitable
Life Assurance Society of the United States). Plaintiffs in these cases
claimed that Equitable Life's method for determining premium increases
breached the terms of certain forms of the Policies and was
misrepresented. Plaintiffs in Bowler and Fletcher also claimed that
Equitable Life misrepresented to policyholders in Texas and California,
respectively, that premium increases had been approved by insurance
departments in those states and determined annual rate increases in a
manner that discriminated against policyholders in those states in
violation of the terms of the Policies, representations to policyholders
and/or state law. The New York trial court dismissed the Golomb action
with prejudice and plaintiffs appealed. In Bowler and Fletcher,
Equitable Life denied the material allegations of the complaints and
filed motions for summary judgment which have been fully briefed. The
Malvin action was stayed indefinitely pending the outcome of proceedings
in Golomb and in Fletcher the magistrate concluded that the case should
be remanded to California state court and Equitable Life appealed that
determination to the district judge. On December 23, 1997, Equitable
Life entered into a settlement agreement, subject to court approval,
which would result in the dismissal with prejudice of each of the five
pending actions and the resolution of all similar claims on a nationwide
basis.
The settlement agreement provides for the creation of a nationwide class
consisting of all persons holding, and paying premiums on, the Policies
at any time since January 1, 1988. An amended complaint will be filed in
the federal district court in Tampa, Florida (where the Florida action
is pending), that would assert claims of the kind previously made in the
cases described above on a nationwide basis, on behalf of policyholders
in the nationwide class, which consists of approximately 127,000 former
and current policyholders. If the settlement is approved, Equitable Life
would pay $14,166,000 in exchange for release of all claims for past
damages on claims of the type described in the five pending actions and
the amended complaint. Costs of administering the settlement and any
attorneys' fees awarded by the court to plaintiffs' counsel would be
deducted from this fund before distribution of the balance to the class.
In addition to this payment, Equitable Life will provide future relief
to current holders of certain forms of the Policies in the form of an
agreement to be embodied in the court's judgment, restricting the
premium increases Equitable Life can seek on these Policies in the
future. The parties estimate the present value of these restrictions at
$23,333,000, before deduction of any attorneys' fees that may be awarded
by the court. The estimate is based on assumptions about future events
that cannot be predicted with certainty and accordingly the actual value
of the future relief may differ. The parties to the settlement shortly
will be asking the court to approve preliminarily the settlement and
settlement class and to permit distribution of notice of the settlement
to policyholders, establish procedures for objections, an opportunity to
opt out of the settlements as it affects past damages, and a court
hearing on whether the settlement should be finally approved. Equitable
Life cannot predict whether the settlement will be approved or, if it is
not approved, the outcome of the pending litigations. As noted,
proceedings in Malvin were stayed indefinitely; proceedings in the other
actions have been stayed or deferred to accommodate the settlement
approval process.
A number of lawsuits have been filed against life and health insurers in
the jurisdictions in which Equitable Life and its subsidiaries do
business involving insurers' sales practices, alleged agent misconduct,
alleged failure to properly supervise agents, and other matters. Some of
the lawsuits have resulted in the award of substantial judgments against
other insurers, including material amounts of punitive damages, or in
substantial settlements. In some states, juries have substantial
discretion in awarding punitive damages. Equitable Life, Equitable
Variable Life Insurance Company ("EVLICO," which was merged into
Equitable Life effective January 1, 1997, but whose existence continues
for certain limited purposes, including the defense of litigation) and
The Equitable of Colorado, Inc. ("EOC"), like other life and health
insurers, from time to time are involved in such litigation. Among
litigations pending against Equitable Life, EVLICO and EOC of the type
referred to in this paragraph are the litigations described in the
following seven paragraphs.
F-30
<PAGE>
An action was instituted on April 6, 1995 against Equitable Life and its
wholly owned subsidiary, EOC, in New York state court, entitled Sidney
C. Cole, et al. v. The Equitable Life Assurance Society of the United
States and The Equitable of Colorado, Inc. The action is brought by the
holders of a joint survivorship whole life policy issued by EOC. The
action purports to be on behalf of a class consisting of all persons who
from January 1, 1984 purchased life insurance policies sold by Equitable
Life and EOC based upon allegedly uniform sales presentations and policy
illustrations. The complaint puts in issue various alleged sales
practices that plaintiffs assert, among other things, misrepresented the
stated number of years that the annual premium would need to be paid.
Plaintiffs seek damages in an unspecified amount, imposition of a
constructive trust, and seek to enjoin Equitable Life and EOC from
engaging in the challenged sales practices. In June 1996, the Court
issued a decision and order dismissing with prejudice plaintiffs' causes
of action for fraud, constructive fraud, breach of fiduciary duty,
negligence, and unjust enrichment, and dismissing without prejudice
plaintiffs' cause of action under the New York State consumer protection
statute. The only remaining causes of action are for breach of contract
and negligent misrepresentation. In April 1997, plaintiffs noticed an
appeal from the court's June 1996 order. Subsequently, Equitable Life
and EOC noticed a cross-appeal from so much of the June 1996 order that
denied their motion to dismiss. Briefing on the appeals is scheduled to
begin on February 23, 1998. In June 1997, plaintiffs filed their
memorandum of law and affidavits in support of their motion for class
certification. That memorandum states that plaintiffs seek to certify a
class solely on their breach of contract claims, and not on their
negligent misrepresentation claim. Plaintiffs' class certification
motion has been fully briefed by the parties and is sub judice. In
August 1997, Equitable Life and EOC moved for summary judgment
dismissing plaintiffs' remaining claims of breach of contract and
negligent misrepresentation. Defendants' summary judgment motion has
been fully briefed by the parties. On January 5, 1998, plaintiffs filed
a note of issue (placing the case on the trial calendar).
On May 21, 1996, an action entitled Elton F. Duncan, III v. The
Equitable Life Assurance Society of the United States was commenced
against Equitable Life in the Civil District Court for the Parish of
Orleans, State of Louisiana. The action originally was brought by an
individual who purchased a whole life policy from Equitable Life in
1989. In September 1997, with leave of the court, plaintiff filed a
second amended petition naming six additional policyholder plaintiffs
and three new sales agent defendants. The sole named individual
defendant in the original petition is also named as a defendant in the
second amended petition. Plaintiffs purport to represent a class
consisting of all persons who purchased whole life or universal life
insurance policies from Equitable Life from January 1, 1981 through July
22, 1992. Plaintiffs allege improper sales practices based on
allegations of misrepresentations concerning one or more of the
following: the number of years that premiums would need to be paid; a
policy's suitability as an investment vehicle; and the extent to which a
policy was a proper replacement policy. Plaintiffs seek damages,
including punitive damages, in an unspecified amount. In October 1997,
Equitable Life filed (i) exceptions to the second amended petition,
asserting deficiencies in pleading of venue and vagueness; and (ii) a
motion to strike certain allegations. On January 23, 1998, the court
heard argument on Equitable Life's exceptions and motion to strike.
Those motions are sub judice. Motion practice regarding discovery
continues.
On July 26, 1996, an action entitled Michael Bradley v. Equitable
Variable Life Insurance Company was commenced in New York state court,
Kings County. The action is brought by the holder of a variable life
insurance policy issued by EVLICO. The plaintiff purports to represent a
class consisting of all persons or entities who purchased one or more
life insurance policies issued by EVLICO from January 1, 1980. The
complaint puts at issue various alleged sales practices and alleges
misrepresentations concerning the extent to which the policy was a
proper replacement policy and the number of years that the annual
premium would need to be paid. Plaintiff seeks damages, including
punitive damages, in an unspecified amount and also seeks injunctive
relief prohibiting EVLICO from canceling policies for failure to make
premium payments beyond the alleged stated number of years that the
annual premium would need to be paid. EVLICO answered the complaint,
denying the material allegations. In September 1996, Equitable Life,
EVLICO and EOC made a motion to have this proceeding moved from Kings
County Supreme Court to New York County for joint trial or consolidation
with the Cole action. The motion was denied by the Court in Cole in
January 1997. Plaintiff then moved for certification of a nationwide
class consisting of all persons or entities who, since January 1, 1980,
were sold one or more life insurance products based on
misrepresentations as to the number of years that the annual premium
would need to be paid, and/or who were allegedly induced to purchase
additional policies from EVLICO using the cash value accumulated in
existing policies. Defendants have opposed this motion. Discovery and
briefing regarding plaintiff's motion for class certification are
ongoing.
F-31
<PAGE>
On December 12, 1996, an action entitled Robert E. Dillon v. The
Equitable Life Assurance Society of the United States and The Equitable
of Colorado, was commenced in the United States District Court for the
Southern District of Florida. The action is brought by an individual who
purchased a joint whole life policy from EOC in 1988. The complaint puts
in issue various alleged sales practices and alleges misrepresentations
concerning the alleged impropriety of replacement policies issued by
Equitable Life and EOC and alleged misrepresentations regarding the
number of years premiums would have to be paid on the defendants'
policies. Plaintiff alleges claims for breach of contract, fraud,
negligent misrepresentation, money had and received, unjust enrichment
and imposition of a constructive trust. Plaintiff purports to represent
two classes of persons. The first is a "contract class," consisting of
all persons who purchased whole or universal life insurance policies
from Equitable Life and EOC and from whom Equitable Life and EOC have
sought additional payments beyond the number of years allegedly promised
by Equitable Life and EOC. The second is a "fraud class," consisting of
all persons with an interest in policies issued by Equitable Life and
EOC at any time since October 1, 1986. Plaintiff seeks damages in an
unspecified amount, and also seeks injunctive relief attaching Equitable
Life's and EOC's profits from their alleged sales practices. In May
1997, plaintiff served a motion for class certification. In July 1997,
the parties submitted to the Court a joint scheduling report, joint
scheduling order and a confidentiality stipulation and order. The Court
signed the latter stipulation, and the others remain sub judice. Further
briefing on plaintiff's class certification motion will await entry of a
scheduling order and further class certification discovery, which has
commenced and is on-going. In January 1998, the judge assigned to the
case recused himself, and the case was reassigned. Defendants are to
serve their answer in February 1998.
On January 3, 1996, an amended complaint was filed in an action entitled
Frank Franze Jr. and George Busher, individually and on behalf of all
others similarly situated v. The Equitable Life Assurance Society of the
United States, and Equitable Variable Life Insurance Company, No.
94-2036 in the United States District Court for the Southern District of
Florida. The action was brought by two individuals who purchased
variable life insurance policies. The plaintiffs purport to represent a
nationwide class consisting of all persons who purchased variable life
insurance policies from Equitable Life and EVLICO since September 30,
1991. The amended complaint alleges that Equitable Life's and EVLICO's
agents were trained not to disclose fully that the product being sold
was life insurance. Plaintiffs allege violations of the Federal
securities laws and seek rescission of the contracts or compensatory
damages and attorneys' fees and expenses. Equitable Life and EVLICO have
answered the amended complaint, denying the material allegations and
asserting certain affirmative defenses. Motion practice regarding
discovery continues.
On January 9, 1997, an action entitled Rosemarie Chaviano, individually
and on behalf of all others similarly situated v. The Equitable Life
Assurance Society of the United States, and Equitable Variable Life
Insurance Company, was filed in Massachusetts state court making claims
similar to those in the Franze action and alleging violations of the
Massachusetts securities laws. The plaintiff purports to represent all
persons in Massachusetts who purchased variable life insurance contracts
from Equitable Life and EVLICO from January 9, 1993 to the present. The
Massachusetts action seeks rescission of the contracts or compensatory
damages, attorneys' fees, expenses and injunctive relief. Plaintiff
filed an amended complaint in April 1997. In July 1997, Equitable Life
served a motion to dismiss the amended complaint or, in the alternative,
for summary judgment. On September 12, 1997, plaintiff moved for class
certification. This motion is scheduled for hearing on February 18,
1998.
On September 11, 1997, an action entitled Pamela L. and James A. Luther,
individually and as representatives of all people similarly situated v.
The Equitable Life Assurance Society of the United States, The Equitable
Companies Incorporated, and Casey Cammack, individually and as agent for
The Equitable Life Assurance Society of the United States and The
Equitable Companies Incorporated, was filed in Texas state court. The
action was brought by holders of a whole life policy and the beneficiary
under that policy. Plaintiffs purport to represent a nationwide class of
persons having an ownership or beneficial interest in whole and
universal life policies issued by Equitable Life from January 1, 1982
through December 31, 1996. Also included in the purported class are
persons having an ownership interest in variable annuities purchased
from Equitable Life from January 1, 1992 to the present. The complaint
puts in issue the allegations that uniform sales presentations,
illustrations, and materials that Equitable Life agents used
misrepresented the stated number of years that premiums would need to be
paid and misrepresented the extent to which the policies at issue were
F-32
<PAGE>
proper replacement policies. Plaintiffs seek compensatory damages,
attorneys' fees and expenses. In October 1997, Equitable Life served a
general denial of the allegations against it. The same day, the Holding
Company entered a special appearance contesting the court's jurisdiction
over it. In November 1997, Equitable Life filed a plea in abatement,
which, under Texas law, stayed further proceedings in the case because
plaintiffs had not served a demand letter. Plaintiffs served a demand
letter upon Equitable Life and the Holding Company, the response to
which is due 60 days thereafter. Although the outcome of litigation
cannot be predicted with certainty, particularly in the early stages of
an action, the Company's management believes that the ultimate
resolution of the Cole, Duncan, Bradley, Dillon, Franze, Chaviano and
Luther litigations should not have a material adverse effect on the
financial position of the Company. The Company's management cannot make
an estimate of loss, if any, or predict whether or not any such
litigation will have a material adverse effect on the Company's results
of operations in any particular period.
On September 12, 1997, the United States District Court for the Northern
District of Alabama, Southern Division, entered an order certifying
James Brown as the representative of a class consisting of "[a]ll
African-Americans who applied but were not hired for, were discouraged
from applying for, or would have applied for the position of Sales Agent
in the absence of the discriminatory practices, and/or procedures in the
[former] Southern Region of The Equitable from May 16, 1987 to the
present." The second amended complaint in James W. Brown, on behalf of
others similarly situated v. The Equitable Life Assurance Society of the
United States, alleges, among other things, that Equitable Life
discriminated on the basis of race against African-American applicants
and potential applicants in hiring individuals as sales agents.
Plaintiffs seek a declaratory judgment and affirmative and negative
injunctive relief, including the payment of back-pay, pension and other
compensation. Although the outcome of any litigation cannot be predicted
with certainty, the Company's management believes that the ultimate
resolution of this matter should not have a material adverse effect on
the financial position of the Company. The Company's management cannot
make an estimate of loss, if any, or predict whether or not such matter
will have a material adverse effect on the Company's results of
operations in any particular period.
The U.S. Department of Labor ("DOL") is conducting an investigation of
Equitable Life's management of the Prime Property Fund ("PPF"). PPF is
an open-end, commingled real estate separate account of Equitable Life
for pension clients. Equitable Life serves as investment manager in PPF
and retains EREIM as advisor. Equitable Life agreed to indemnify the
purchaser of EREIM (which Equitable Life sold in June 1997) with respect
to any fines, penalties and rebates to clients in connection with this
investigation. In early 1995, the DOL commenced a national investigation
of commingled real estate funds with pension investors, including PPF.
The investigation appears to be focused principally on appraisal and
valuation procedures in respect of fund properties. The most recent
request from the DOL seems to reflect, at least in part, an interest in
the relationship between the valuations for those properties reflected
in appraisals prepared for local property tax proceedings and the
valuations used by PPF for other purposes. At no time has the DOL made
any specific allegation that Equitable Life or EREIM has acted
improperly and Equitable Life and EREIM believe that any such allegation
would be without foundation. While the outcome of this investigation
cannot be predicted with certainty, the Company's management believes
that the ultimate resolution of this matter should not have a material
adverse effect on the financial position of the Company. The Company's
management cannot make an estimate of loss, if any, or predict whether
or not this investigation will have a material adverse effect on the
Company's results of operations in any particular period.
On July 25, 1995, a Consolidated and Supplemental Class Action Complaint
("Complaint") was filed against Alliance North American Government
Income Trust, Inc. (the "Fund"), Alliance and certain other defendants
affiliated with Alliance, including the Holding Company, alleging
violations of Federal securities laws, fraud and breach of fiduciary
duty in connection with the Fund's investments in Mexican and Argentine
securities. The Complaint, which sought certification of a plaintiff
class of persons who purchased or owned Class A, B or C shares of the
Fund from March 27, 1992 through December 23, 1994, sought an
unspecified amount of damages, costs, attorneys' fees and punitive
damages. The principal allegations are that the Fund purchased debt
securities issued by the Mexican and Argentine governments in amounts
that were not permitted by the Fund's investment objective, and that
there was no shareholder vote to change the investment objective to
permit purchases in such amounts. The Complaint further alleged that the
decline in the value of the Mexican and Argentine securities held by the
Fund caused the Fund's net asset value to decline to the detriment of
the Fund's shareholders. On September 26, 1996, the United States
District Court for the Southern District of
F-33
<PAGE>
New York granted the defendants' motion to dismiss all counts of the
Complaint ("First Decision"). On October 11, 1996, plaintiffs filed a
motion for reconsideration of the First Decision. On November 25, 1996,
the court denied plaintiffs' motion for reconsideration of the First
Decision. On October 29, 1997, the United States Court of Appeals for
the Second Circuit issued an order granting defendants' motion to strike
and dismissing plaintiffs' appeal of the First Decision. On October 29,
1996, plaintiffs filed a motion for leave to file an amended complaint.
The principal allegations of the proposed amended complaint are that (i)
the Fund failed to hedge against the risks of investing in foreign
securities despite representations that it would do so, (ii) the Fund
did not properly disclose that it planned to invest in mortgage-backed
derivative securities and (iii) two advertisements used by the Fund
misrepresented the risks of investing in the Fund. On July 15, 1997, the
District Court denied plaintiffs' motion for leave to file an amended
complaint and ordered that the case be dismissed ("Second Decision").
The plaintiffs have appealed the Second Decision to the United States
Court of Appeals for the Second Circuit. While the ultimate outcome of
this matter cannot be determined at this time, management of Alliance
does not expect that it will have a material adverse effect on
Alliance's results of operations or financial condition.
On January 26, 1996, a purported purchaser of certain notes and warrants
to purchase shares of common stock of Rickel Home Centers, Inc.
("Rickel") filed a class action complaint against Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC") and certain other defendants
for unspecified compensatory and punitive damages in the U. S. District
Court for the Southern District of New York. The suit was brought on
behalf of the purchasers of 126,457 units consisting of $126,457,000
aggregate principal amount of 13 1/2% senior notes due 2001 and 126,457
warrants to purchase shares of common stock of Rickel issued by Rickel
in October 1994. The complaint alleges violations of federal securities
laws and common law fraud against DLJSC, as the underwriter of the units
and as an owner of 7.3% of the common stock of Rickel, Eos Partners,
L.P., and General Electric Capital Corporation, each as owners of 44.2%
of the common stock of Rickel, and members of the board of directors of
Rickel, including a DLJSC managing director. The complaint seeks to hold
DLJSC liable for alleged misstatements and omissions contained in the
prospectus and registration statement filed in connection with the
offering of the units, alleging that the defendants knew of financial
losses and a decline in value of Rickel in the months prior to the
offering and did not disclose such information. The complaint also
alleges that Rickel failed to pay its semi-annual interest payment due
on the units on December 15, 1995, and that Rickel filed a voluntary
petition for reorganization pursuant to Chapter 11 of the Bankruptcy
Code on January 10, 1996. DLJSC intends to defend itself vigorously
against all of the allegations contained in the complaint. Although
there can be no assurance, DLJ does not believe that the outcome of this
litigation will have a material adverse effect on its financial
condition. Due to the early stage of this litigation, based on the
information currently available to it, DLJ's management cannot make an
estimate of loss, if any, or predict whether or not such litigation will
have a material adverse effect on DLJ's results of operations in any
particular period.
In October 1995, DLJSC was named as a defendant in a purported class
action filed in a Texas State Court on behalf of the holders of $550.0
million principal amount of subordinated redeemable discount debentures
of National Gypsum Corporation ("NGC") canceled in connection with a
Chapter 11 plan of reorganization for NGC consummated in July 1993. The
named plaintiff in the State Court action also filed an adversary
proceeding in the U.S. Bankruptcy Court for the Northern District of
Texas seeking a declaratory judgment that the confirmed NGC plan of
reorganization does not bar the class action claims. Subsequent to the
consummation of NGC's plan of reorganization, NGC's shares traded for
values substantially in excess of, and in 1995 NGC was acquired for a
value substantially in excess of, the values upon which NGC's plan of
reorganization was based. The two actions arise out of DLJSC's
activities as financial advisor to NGC in the course of NGC's Chapter 11
reorganization proceedings. The class action complaint alleges that the
plan of reorganization submitted by NGC was based upon projections by
NGC and DLJSC which intentionally understated forecasts, and provided
misleading and incorrect information in order to hide NGC's true value
and that defendants breached their fiduciary duties by, among other
things, providing false, misleading or incomplete information to
deliberately understate the value of NGC. The class action complaint
seeks compensatory and punitive damages purportedly sustained by the
class. On October 10, 1997, DLJSC and
F-34
<PAGE>
others were named as defendants in a new adversary proceeding in the
Bankruptcy Court brought by the NGC Settlement Trust, an entity created
by the NGC plan of reorganization to deal with asbestos-related claims.
The Trust's allegations are substantially similar to the claims in the
State Court action. In court papers dated October 16, 1997, the State
Court plaintiff indicated that he would intervene in the Trust's
adversary proceeding. On January 21, 1998, the Bankruptcy Court ruled
that the State Court plaintiff's claims were not barred by the NGC plan
of reorganization insofar as they alleged nondisclosure of certain cost
reductions announced by NGC in October 1993. The Texas State Court
action, which had been removed to the Bankruptcy Court, has been
remanded back to the state court, which remand is being opposed by
DLJSC. DLJSC intends to defend itself vigorously against all of the
allegations contained in the complaints. Although there can be no
assurance, DLJ does not believe that the ultimate outcome of this
litigation will have a material adverse effect on its financial
condition. Due to the early stage of such litigation, based upon the
information currently available to it, DLJ's management cannot make an
estimate of loss, if any, or predict whether or not such litigation will
have a material adverse effect on DLJ's results of operations in any
particular period.
In November and December 1995, DLJSC, along with various other parties,
was named as a defendant in a number of purported class actions filed in
the U.S. District Court for the Eastern District of Louisiana. The
complaints allege violations of the federal securities laws arising out
of a public offering in 1994 of $435.0 million of first mortgage notes
of Harrah's Jazz Company and Harrah's Jazz Finance Corp. The complaints
seek to hold DLJSC liable for various alleged misstatements and
omissions contained in the prospectus dated November 9, 1994. On
February 26, 1997, the parties agreed to a settlement of these actions,
subject to the District Court's approval, which was granted on July 31,
1997. The settlement is also subject to approval by the U.S. Bankruptcy
Court for the Eastern District of Louisiana of proposed modifications to
a confirmed plan of reorganization for Harrah's Jazz Company and
Harrah's Jazz Finance Corp., and the satisfaction or waiver of all
conditions to the effectiveness of the plan, as provided in the plan.
There can be no assurance of the Bankruptcy Court's approval of the
modifications to the plan of reorganization, or that the conditions to
the effectiveness of the plan will be satisfied or waived. In the
opinion of DLJ's management, the settlement, if approved, will not have
a material adverse effect on DLJ's results of operations or on its
consolidated financial condition.
In addition to the matters described above, Equitable Life and its
subsidiaries and DLJ and its subsidiaries are involved in various legal
actions and proceedings in connection with their businesses. Some of the
actions and proceedings have been brought on behalf of various alleged
classes of claimants and certain of these claimants seek damages of
unspecified amounts. While the ultimate outcome of such matters cannot
be predicted with certainty, in the opinion of management no such matter
is likely to have a material adverse effect on the Company's
consolidated financial position or results of operations.
15) LEASES
The Company has entered into operating leases for office space and
certain other assets, principally data processing equipment and office
furniture and equipment. Future minimum payments under noncancelable
leases for 1998 and the succeeding four years are $93.5 million, $84.4
million, $70.2 million, $56.4 million, $47.0 million and $489.3 million
thereafter. Minimum future sub-lease rental income on these
noncancelable leases for 1998 and the succeeding four years are $7.3
million, $5.9 million, $3.8 million, $2.4 million, $.8 million and $2.9
million thereafter.
At December 31, 1997, the minimum future rental income on noncancelable
operating leases for wholly owned investments in real estate for 1997
and the succeeding four years are $247.0 million, $238.1 million, $218.7
million, $197.9 million, $169.1 million and $813.0 million thereafter.
F-35
<PAGE>
16) OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Compensation costs................................. $ 721.5 $ 704.8 $ 628.4
Commissions........................................ 409.6 329.5 314.3
Short-term debt interest expense................... 31.7 8.0 11.4
Long-term debt interest expense.................... 121.2 137.3 108.1
Amortization of policy acquisition costs........... 287.3 405.2 317.8
Capitalization of policy acquisition costs......... (508.0) (391.9) (391.0)
Rent expense, net of sub-lease income.............. 101.8 113.7 109.3
Cursitor intangible assets writedown............... 120.9 - -
Other.............................................. 917.9 769.1 677.5
----------------- ---------------- -----------------
Total.............................................. $ 2,203.9 $ 2,075.7 $ 1,775.8
================= ================ =================
</TABLE>
During 1997, 1996 and 1995, the Company restructured certain operations
in connection with cost reduction programs and recorded pre-tax
provisions of $42.4 million, $24.4 million and $32.0 million,
respectively. The amounts paid during 1997, associated with cost
reduction programs, totaled $22.8 million. At December 31, 1997, the
liabilities associated with cost reduction programs amounted to $62.0
million. The 1997 cost reduction program include costs related to
employee termination and exit costs. The 1996 cost reduction program
included restructuring costs related to the consolidation of insurance
operations' service centers. The 1995 cost reduction program included
relocation expenses, including the accelerated amortization of building
improvements associated with the relocation of the home office.
Amortization of DAC in 1996 included a $145.0 million writeoff of DAC
related to DI contracts.
17) INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
Equitable Life is restricted as to the amounts it may pay as dividends
to the Holding Company. Under the New York Insurance Law, the
Superintendent has broad discretion to determine whether the financial
condition of a stock life insurance company would support the payment of
dividends to its shareholders. For 1997, 1996 and 1995, statutory net
loss totaled $351.7 million, $351.1 million and $352.4 million,
respectively. No amounts are expected to be available for dividends from
Equitable Life to the Holding Company in 1998.
At December 31, 1997, the Insurance Group, in accordance with various
government and state regulations, had $19.7 million of securities
deposited with such government or state agencies.
F-36
<PAGE>
Accounting practices used to prepare statutory financial statements for
regulatory filings of stock life insurance companies differ in certain
instances from GAAP. The following reconciles the Insurance Group's
statutory change in surplus and capital stock and statutory surplus and
capital stock determined in accordance with accounting practices
prescribed by the New York Insurance Department with net earnings and
equity on a GAAP basis.
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Net change in statutory surplus and
capital stock.................................... $ 203.6 $ 56.0 $ 78.1
Change in asset valuation reserves................. 147.1 (48.4) 365.7
----------------- ---------------- -----------------
Net change in statutory surplus, capital stock
and asset valuation reserves..................... 350.7 7.6 443.8
Adjustments:
Future policy benefits and policyholders'
account balances............................... (31.1) (298.5) (66.0)
DAC.............................................. 220.7 (13.3) 73.2
Deferred Federal income taxes.................... 103.1 108.0 (158.1)
Valuation of investments......................... 46.8 289.8 189.1
Valuation of investment subsidiary............... (555.8) (117.7) (188.6)
Limited risk reinsurance......................... 82.3 92.5 416.9
Issuance of surplus notes........................ - - (538.9)
Postretirement benefits.......................... (3.1) 28.9 (26.7)
Other, net....................................... 30.3 12.4 115.1
GAAP adjustments of Closed Block................. 3.6 (9.8) 15.7
GAAP adjustments of discontinued operations...... 189.7 (89.6) 37.3
----------------- ---------------- -----------------
Net Earnings of the Insurance Group................ $ 437.2 $ 10.3 $ 312.8
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Statutory surplus and capital stock................ $ 2,462.5 $ 2,258.9 $ 2,202.9
Asset valuation reserves........................... 1,444.6 1,297.5 1,345.9
----------------- ---------------- -----------------
Statutory surplus, capital stock and asset
valuation reserves............................... 3,907.1 3,556.4 3,548.8
Adjustments:
Future policy benefits and policyholders'
account balances............................... (1,336.1) (1,305.0) (1,006.5)
DAC.............................................. 3,236.6 3,104.9 3,075.8
Deferred Federal income taxes.................... (370.8) (306.1) (452.0)
Valuation of investments......................... 783.5 286.8 417.7
Valuation of investment subsidiary............... (1,338.6) (782.8) (665.1)
Limited risk reinsurance......................... (254.2) (336.5) (429.0)
Issuance of surplus notes........................ (539.0) (539.0) (538.9)
Postretirement benefits.......................... (317.5) (314.4) (343.3)
Other, net....................................... 203.7 126.3 4.4
GAAP adjustments of Closed Block................. 814.3 783.7 830.8
GAAP adjustments of discontinued operations...... 71.5 (190.3) (184.6)
----------------- ---------------- -----------------
Equity of the Insurance Group...................... $ 4,860.5 $ 4,084.0 $ 4,258.1
================= ================ =================
</TABLE>
F-37
<PAGE>
18) BUSINESS SEGMENT INFORMATION
The Company has two major business segments: Insurance Operations and
Investment Services. Interest expense related to debt not specific to
either business segment is presented as Corporate interest expense.
Information for all periods is presented on a comparable basis.
Insurance Operations offers a variety of traditional, variable and
interest-sensitive life insurance products, disability income, annuity
products, mutual fund and other investment products to individuals and
small groups and administers traditional participating group annuity
contracts with conversion features, generally for corporate qualified
pension plans, and association plans which provide full service
retirement programs for individuals affiliated with professional and
trade associations. This segment includes Separate Accounts for
individual insurance and annuity products.
Investment Services provides investment fund management, primarily to
institutional clients. This segment includes the Company's equity
interest in DLJ and Separate Accounts which provide various investment
options for group clients through pooled or single group accounts.
Intersegment investment advisory and other fees of approximately $81.9
million, $127.5 million and $124.1 million for 1997, 1996 and 1995,
respectively, are included in total revenues of the Investment Services
segment. These fees, excluding amounts related to the GIC Segment of
$5.1 million, $15.7 million and $14.7 million for 1997, 1996 and 1995,
respectively, are eliminated in consolidation.
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Insurance operations............................... $ 3,684.2 $ 3,770.6 $ 3,614.6
Investment services................................ 1,455.1 1,126.1 949.1
Consolidation/elimination.......................... (19.9) (24.5) (34.9)
----------------- ---------------- -----------------
Total.............................................. $ 5,119.4 $ 4,872.2 $ 4,528.8
================= ================ =================
Earnings (loss) from continuing operations before Federal income taxes,
minority interest and cumulative effect of accounting change
Insurance operations............................... $ 250.3 $ (36.6) $ 303.1
Investment services................................ 485.7 311.9 224.0
Consolidation/elimination.......................... - .2 (3.1)
----------------- ---------------- -----------------
Subtotal..................................... 736.0 275.5 524.0
Corporate interest expense......................... (65.3) (66.9) (27.9)
----------------- ---------------- -----------------
Total.............................................. $ 670.7 $ 208.6 $ 496.1
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Insurance operations................................................... $ 68,305.9 $ 60,464.9
Investment services.................................................... 13,719.8 13,542.5
Consolidation/elimination.............................................. (403.6) (399.6)
---------------- -----------------
Total.................................................................. $ 81,622.1 $ 73,607.8
================ =================
</TABLE>
F-38
<PAGE>
19) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations for 1997 and 1996, are summarized
below:
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------------------------
March 31 June 30 September 30 December 31
----------------- ----------------- ------------------ ------------------
(In Millions)
<S> <C> <C> <C> <C>
1997
Total Revenues................ $ 1,266.0 $ 1,552.8 $ 1,279.0 $ 1,021.6
================= ================= ================== ==================
Earnings from Continuing
Operations before
Cumulative Effect
of Accounting Change........ $ 117.4 $ 222.5 $ 145.1 $ 39.4
================= ================= ================== ==================
Net Earnings (Loss)........... $ 114.1 $ 223.1 $ 144.9 $ (44.9)
================= ================= ================== ==================
1996
Total Revenues................ $ 1,176.5 $ 1,199.4 $ 1,198.4 $ 1,297.9
================= ================= ================== ==================
Earnings (Loss) from
Continuing Operations
before Cumulative Effect
of Accounting Change........ $ 94.8 $ 87.1 $ 93.2 $ (157.9)
================= ================= ================== ==================
Net Earnings (Loss)........... $ 71.7 $ 87.1 $ 93.2 $ (241.7)
================= ================= ================== ==================
</TABLE>
Net earnings for the three months ended December 31, 1997 includes a
charge of $212.0 million related to additions to valuation allowances on
and writeoffs of real estate of $225.2 million, and reserve
strengthening on discontinued operations of $84.3 million offset by a
reversal of prior years tax reserves of $97.5 million. Net earnings for
the three months ended December 31, 1996 includes a charge of $339.3
million related to writeoffs of DAC on DI contracts of $94.3 million and
reserve strengthenings on DI business of $113.7 million, Pension Par of
$47.5 million and Discontinued Operations of $83.8 million.
20) INVESTMENT IN DLJ
At December 31, 1997, the Company's ownership of DLJ interest was
approximately 34.4%. The Company's ownership interest will be further
reduced upon the issuance of common stock after the vesting of
forfeitable restricted stock units acquired by and/or the exercise of
options granted to certain DLJ employees. DLJ restricted stock units
represents forfeitable rights to receive approximately 5.2 million
shares of DLJ common stock through February 2000.
The results of operations of DLJ are accounted for on the equity basis
and are included in commissions, fees and other income in the
consolidated statements of earnings. The Company's carrying value of DLJ
is included in investment in and loans to affiliates in the consolidated
balance sheets.
F-39
<PAGE>
Summarized balance sheets information for DLJ, reconciled to the
Company's carrying value of DLJ, are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Assets:
Trading account securities, at market value............................ $ 16,535.7 $ 15,728.1
Securities purchased under resale agreements........................... 22,628.8 20,598.7
Broker-dealer related receivables...................................... 28,159.3 16,858.8
Other assets........................................................... 3,182.0 2,318.1
---------------- -----------------
Total Assets........................................................... $ 70,505.8 $ 55,503.7
================ =================
Liabilities:
Securities sold under repurchase agreements............................ $ 36,006.7 $ 29,378.3
Broker-dealer related payables......................................... 25,706.1 19,409.7
Short-term and long-term debt.......................................... 3,670.6 2,704.5
Other liabilities...................................................... 2,860.9 2,164.0
---------------- -----------------
Total liabilities...................................................... 68,244.3 53,656.5
DLJ's company-obligated mandatorily redeemed preferred
securities of subsidiary trust holding solely debentures of DLJ...... 200.0 200.0
Total shareholders' equity............................................. 2,061.5 1,647.2
---------------- -----------------
Total Liabilities, Cumulative Exchangeable Preferred Stock and
Shareholders' Equity................................................. $ 70,505.8 $ 55,503.7
================ =================
DLJ's equity as reported............................................... $ 2,061.5 $ 1,647.2
Unamortized cost in excess of net assets acquired in 1985
and other adjustments................................................ 23.5 23.9
The Holding Company's equity ownership in DLJ.......................... (740.2) (590.2)
Minority interest in DLJ............................................... (729.3) (588.6)
---------------- -----------------
The Company's Carrying Value of DLJ.................................... $ 615.5 $ 492.3
================ =================
</TABLE>
Summarized statements of earnings information for DLJ reconciled to the
Company's equity in earnings of DLJ is as follows:
<TABLE>
<CAPTION>
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Commission, fees and other income...................................... $ 2,356.8 $ 1,818.2
Net investment income.................................................. 1,652.1 1,074.2
Dealer, trading and investment gains, net.............................. 631.6 598.4
---------------- -----------------
Total revenues......................................................... 4,640.5 3,490.8
Total expenses including income taxes.................................. 4,232.3 3,199.5
---------------- -----------------
Net earnings........................................................... 408.2 291.3
Dividends on preferred stock........................................... 12.1 18.7
---------------- -----------------
Earnings Applicable to Common Shares................................... $ 396.1 $ 272.6
================ =================
DLJ's earnings applicable to common shares as reported................. $ 396.1 $ 272.6
Amortization of cost in excess of net assets acquired in 1985.......... (1.3) (3.1)
The Holding Company's equity in DLJ's earnings......................... (156.8) (107.8)
Minority interest in DLJ............................................... (109.1) (73.4)
---------------- -----------------
The Company's Equity in DLJ's Earnings................................. $ 128.9 $ 88.3
================ =================
</TABLE>
F-40
<PAGE>
21) ACCOUNTING FOR STOCK-BASED COMPENSATION
The Holding Company sponsors a stock option plan for employees of
Equitable Life. DLJ and Alliance each sponsor their own stock option
plans for certain employees. The Company has elected to continue to
account for stock-based compensation using the intrinsic value method
prescribed in APB No. 25. Had compensation expense for the Holding
Company, DLJ and Alliance Stock Option Incentive Plan options been
determined based on SFAS No. 123's fair value based method, the
Company's pro forma net earnings for 1997, 1996 and 1995 would have
been:
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C>
Net Earnings:
As Reported............................................. $ 437.2 $ 10.3 $ 312.8
Pro Forma............................................... $ 426.3 $ 3.3 $ 311.3
</TABLE>
The fair value of options granted after December 31, 1994, used as a
basis for the above pro forma disclosures, was estimated as of the date
of grants using the Black-Scholes option pricing model. The option
pricing assumptions for 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
Holding Company DLJ Alliance
------------------------------ ------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
-------------------- --------- ---------- ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividend yield.... 0.48% 0.80% 0.96% 0.86% 1.54% 1.85% 8.00% 8.00% 8.00%
Expected volatility 20.00% 20.00% 20.00% 33.00% 25.00% 25.00% 26.00% 23.00% 23.00%
Risk-free interest
rate............ 5.99% 5.92% 6.83% 5.96% 6.07% 5.86% 5.70% 5.80% 6.00%
Expected life..... 5 years 5 years 5 years 5 years 5 years 5 years 7.6 years 7.43 years 7.43 years
Weighted average
grant-date fair
value per option $12.25 $6.94 $5.90 $22.45 $9.35 $7.36 $4.36 $2.69 $2.24
</TABLE>
F-41
<PAGE>
A summary of the Holding Company, DLJ and Alliance's option plans is as
follows:
<TABLE>
<CAPTION>
Holding Company DLJ Alliance
----------------------------- ----------------------------- -----------------------------
Options Options Options
Outstanding Outstanding Outstanding
Weighted Weighted Weighted
Average Average Average
Shares Exercise Shares Exercise Units Exercise
(In Millions) Price (In Millions) Price (In Millions) Price
--------------- ------------- --------------- ------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of
January 1, 1995........ 6.8 $20.31 - 3.8 $15.46
Granted................ .4 $20.27 9.2 $27.00 1.8 $20.54
Exercised.............. (.1) $20.00 - (.5) $11.20
Expired................ (.1) $20.00 - -
Forfeited.............. (.3) $22.24 - (.3) $16.64
--------------- ------------- ---------------
Balance as of
December 31, 1995...... 6.7 $20.27 9.2 $27.00 4.8 $17.72
Granted................ .7 $24.94 2.1 $32.54 .7 $25.12
Exercised.............. (.1) $19.91 - (.4) $13.64
Expired................ - - -
Forfeited.............. (.6) $20.21 (.2) $27.00 (.1) $19.32
--------------- ------------- ---------------
Balance as of
December 31, 1996...... 6.7 $20.79 11.1 $28.06 5.0 $19.07
Granted................ 3.2 $41.85 3.2 $61.07 1.1 $36.56
Exercised.............. (1.6) $20.26 (.1) $32.03 (.6) $16.11
Forfeited.............. (.4) $23.43 (.1) $27.51 (.2) $21.28
--------------- ------------- ---------------
Balance as of
December 31, 1997...... 7.9 $29.05 14.1 $35.56 5.3 $22.82
=============== ============= ===============
</TABLE>
F-42
<PAGE>
Information about options outstanding and exercisable at December 31,
1997 is as follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------------- ------------------------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices (In Millions) Life (Years) Price (In Millions) Price
--------------------- ----------------- ----------------- --------------- ------------------- ----------------
Holding
Company
----------------------
<S> <C> <C> <C> <C> <C>
$18.125 -$27.75 4.8 5.84 $20.94 3.0 $20.41
$28.50 -$45.25 3.1 9.57 $41.84 - -
----------------- -------------------
$18.125 -$45.25 7.9 7.29 $29.05 3.0 $20.41
================= ================= =============== =================== ================
DLJ
----------------------
$27.00 -$35.99 10.9 8.0 $28.05 4.9 $27.58
$36.00 -$50.99 .8 9.3 $40.04 - -
$51.00 -$76.00 2.4 9.8 $67.77 - -
----------------- -------------------
$27.00 -$76.00 14.1 8.4 $35.56 4.9 $27.58
================= ================= ================ =================== =================
Alliance
----------------------
$ 6.0625 -$17.75 1.1 3.86 $13.20 1.0 $13.04
$19.375 -$19.75 .8 7.34 $19.39 .3 $19.39
$19.875 -$21.375 1.1 8.28 $20.13 .6 $20.19
$22.25 -$27.50 1.3 9.81 $23.81 .4 $23.29
$36.9375 -$37.5625 1.0 9.95 $36.95 - -
----------------- -------------------
$ 6.0625 -$37.5625 5.3 7.58 $22.82 2.3 $17.43
================= ================== ============== ====================== =============
</TABLE>
F-43
<PAGE>
APPENDIX A
MANAGEMENT
Here is a list of our directors and, to the extent they are responsible for
variable life insurance operations, our principal officers and a brief statement
of their business experience for the past five years. Unless otherwise noted,
their address is 1290 Avenue of the Americas, New York, New York 10104.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- -------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Francoise Colloc'h Director of Equitable since July 1992. Senior Executive Vice President, Human
AXA-UAP Resources and Communications of AXA-UAP ("AXA-UAP"), and various positions with
23, Avenue Matignon AXA-UAP affiliated companies. Director of the Holding Company.
75008 Paris, France
- -------------------------------------------------------------------------------------------------------------------------------
Henri de Castries Director of Equitable since September 1993. Director and Chairman of the Board of
AXA-UAP the Holding Company since April 1998. Prior thereto, Vice Chairman of the Board of
23, Avenue Matignon the Holding Company since February 1996. Senior Executive Vice President, Financial
75008 Paris, France Services and Life Insurance Activities of AXA-UAP since 1996. Also Director or
Officer of various subsidiaries and affiliates of the AXA-UAP Group (formerly known
as the AXA Group). Director of other Equitable affiliates. Previously held other
officerships with the AXA Group.
- -------------------------------------------------------------------------------------------------------------------------------
Joseph L. Dionne Director of Equitable since May 1982. Chairman and Chief Executive of The
The McGraw-Hill Companies McGraw-Hill Companies. Director of the Holding Company.
1221 Avenue of the Americas
New York, NY 10020
- -------------------------------------------------------------------------------------------------------------------------------
Denis Duverne Director of Equitable since February 1998. Senior Vice President of AXA-UAP.
AXA-UAP Director since February 1996, Alliance. Director since February 1997, Donaldson
23, Avenue Matignon Lufkin & Jenrette ("DLJ").
75008 Paris, France
- -------------------------------------------------------------------------------------------------------------------------------
William T. Esrey Director of Equitable since July 1986. Chairman and Chief Executive Officer of
Sprint Corporation Sprint Corporation. Director of the Holding Company.
P.O. Box 11315
Kansas City, MO 64112
- -------------------------------------------------------------------------------------------------------------------------------
Jean-Rene Fourtou Director of Equitable since July 1992. Chairman and Chief Executive Officer of
Rhone-Poulenc S.A. Rhone-Poulenc S.A. Member of the Supervisory Board of AXA-UAP since January 1997.
25, Quai Paul Doumer Director of the Holding Company.
92408 Courbevoie Cedex
France
- -------------------------------------------------------------------------------------------------------------------------------
Norman C. Francis Director of Equitable since March 1989. President of Xavier University of Louisiana.
Xavier University of Louisiana
7325 Palmetto Street
New Orleans, LA 70125
- -------------------------------------------------------------------------------------------------------------------------------
Donald J. Greene Director of Equitable since July 1991. Partner, LeBoeuf, Lamb, Greene & MacRae.
LeBouef, Lamb, Greene & MacRae Director of the Holding Company.
125 West 55th Street
New York, NY 10019-4513
- -------------------------------------------------------------------------------------------------------------------------------
John T. Hartley Director of Equitable since August 1987. Currently a Director and retired Chairman
Harris Corporation and Chief Executive Officer of Harris Corporation (retired July 1995); previously
1025 NASA Boulevard held other officerships with Harris Corporation. Director of the Holding Company.
Melbourne, FL 32919
- -------------------------------------------------------------------------------------------------------------------------------
John H.F. Haskell, Jr. Director of Equitable since July 1992. Managing Director of SBC Warburg Dillon Read,
SBC Warburg Dillon Read, Inc. Inc. and member of its Board of Directors. Director of the Holding Company.
535 Madison Avenue
New York, NY 10028
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- -------------------------------------------------------------------------------------------------------------------------------
DIRECTORS (continued)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Mary R. (Nina) Henderson Director of Equitable since December 1996. President of Bestfoods Grocery (formerly
Bestfoods Grocery CPC Specialty Markets Group) of BESTFOODS (formerly CPC International, Inc.) since
BESTFOODS 1993. Prior thereto, President of CPC Specialty Products and Best Foods Exports.
International Plaza Director of the Holding Company.
700 Sylvan Avenue
Englewood Cliffs, NJ 07632-9976
- -------------------------------------------------------------------------------------------------------------------------------
W. Edwin Jarmain Director of Equitable since July 1992. President of Jarmain Group Inc.; also an
Jarmain Group Inc. Officer or Director of several affiliated companies. Chairman and Director of FCA
121 King Street West International Ltd. Director of various AXA affiliated companies. Previously held
Suite 2525 other officerships with FCA International. Director of the Holding Company.
Toronto, Ontario M5H 3T9
Canada
- -------------------------------------------------------------------------------------------------------------------------------
G. Donald Johnston, Jr. Director of Equitable since January 1986. Retired Chairman and Chief Executive
184-400 Ocean Road Officer of JWT Group, Inc. and J. Walter Thompson Company.
John's Island
Vero Beach, FL 32963
- -------------------------------------------------------------------------------------------------------------------------------
George T. Lowy Director of Equitable since July 1992. Partner, Cravath, Swaine & Moore.
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
- -------------------------------------------------------------------------------------------------------------------------------
Didier Pineau-Valencienne Director of Equitable since February 1996. Chairman and Chief Executive Officer of
Schneider S.A. Schneider S.A. and Chairman or Director of numerous subsidiaries and affiliated
64/70, Avenue Jean-Baptiste Clement companies of Schneider. Director of AXA-UAP and the Holding Company.
92646 Boulogne-Billancourt Cedex
France
- -------------------------------------------------------------------------------------------------------------------------------
George J. Sella, Jr. Director of Equitable since May 1987. Retired Chairman and Chief Executive Officer
P.O. Box 397 of American Cyanamid Company (retired April 1993); previously held other
Newton, NJ 07860 officerships with American Cyanamid. Director of the Holding Company.
- -------------------------------------------------------------------------------------------------------------------------------
Dave H. Williams Director of Equitable since March 1991. Chairman and Chief Executive Officer of
Alliance Capital Management Alliance and Chairman or Director of numerous subsidiaries and affiliated companies
Corporation of Alliance. Director of the Holding Company.
1345 Avenue of the Americas
New York, NY 10105
- -------------------------------------------------------------------------------------------------------------------------------
OFFICERS AND DIRECTORS
- -------------------------------------------------------------------------------------------------------------------------------
Michael Hegarty Director of Equitable since January 1998. President since January 1998 and Chief
Operating Officer since February 1998, Equitable. Vice Chairman since April 1998,
Senior Executive Vice President (January 1998 to April 1998), and Director and Chief
Operating Officer (both since January 1998), the Holding Company. Vice Chairman
(from 1996 to 1997), Chase Manhattan Corporation. Vice Chairman (from 1995 to 1996)
and Senior Executive Vice President (from 1991 to 1995), Chemical Bank. Executive
Vice President, Chief Operating Officer and Director since March 1998, Equitable
Investment Corporation ("EIC"), ACMC, Inc. ("ACMC") and Equitable Capital Management
Corporation ("ECMC").
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- -------------------------------------------------------------------------------------------------------------------------------
OFFICERS AND DIRECTORS (continued)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Edward D. Miller Director of Equitable since August 1997. Chairman of the Board since January 1998,
Chief Executive Officer since August 1997, President (August 1997 to January 1998),
Equitable. Director, President and Chief Executive Officer, all since August 1997,
the Holding Company. Senior Vice Chairman, Chase Manhattan Corporation (March 1996
to April 1997). President (January 1994 to March 1996) and Vice Chairman (December
1991 to January 1994), Chemical Bank. Director, Alliance (since August 1997), DLJ
(since November 1997), ECMC (since March 1998) and ACMC (since March 1998).
Director, Chairman, President and Chief Executive Officer since March 1998, EIC.
- -------------------------------------------------------------------------------------------------------------------------------
Stanley B. Tulin Director of Equitable since February 1998. Vice Chairman of the Board since February
1998 and Chief Financial Officer since April 1996, Equitable. Executive Vice
President since May 1996 and Chief Financial Officer since May 1997, the Holding
Company. Vice President since March 1997, EQAT. Director since July 1997, Alliance.
Director, Executive Vice President and Chief Financial Officer since June 1997, EIC.
Director, Chairman, President and Chief Executive Officer since July 1997, ACMC.
Prior thereto, Chairman, Insurance Consulting and Actuarial Practice, Coopers &
Lybrand, L.L.P.
- -------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- -------------------------------------------------------------------------------------------------------------------------------
Leon B. Billis Executive Vice President and Chief Information Officer (since February 1998),
Equitable. Previously held other officerships with Equitable.
- -------------------------------------------------------------------------------------------------------------------------------
Harvey Blitz Senior Vice President and Deputy Chief Financial Officer, Equitable. Senior Vice
President, the Holding Company. Vice President and Chief Financial Officer since
March 1997, EQAT. Chairman, Frontier Trust Company ("Frontier"). Executive Vice
President since November 1996 and Director, EQ Financial Consultants, Inc. ("EQF").
Director until May 1997, Equitable Distributors, Inc. ("EDI") and Director and
Officer of various Equitable affiliates. Previously held other officerships with
Equitable and its affiliates.
- -------------------------------------------------------------------------------------------------------------------------------
Kevin R. Byrne Senior Vice President and Treasurer, Equitable and the Holding Company. Treasurer,
EquiSource and Frontier. Vice President and Treasurer, Equitable Casualty Insurance
Company ("Casualty") and EQAT (since March 1997). Previously held other
officerships with Equitable and its affiliates.
- -------------------------------------------------------------------------------------------------------------------------------
Judy A. Faucett Senior Vice President and Actuary, Equitable, since September 1996. Partner and
Senior Actuarial Consultant, Coopers & Lybrand L.L.P. (January 1989 to August 1996).
- -------------------------------------------------------------------------------------------------------------------------------
Alvin H. Fenichel Senior Vice President and Controller, Equitable and the Holding Company. Previously
held other officerships with Equitable and its affiliates.
- -------------------------------------------------------------------------------------------------------------------------------
Paul J. Flora Senior Vice President and Auditor, Equitable. Vice President and Auditor, the
Holding Company, since September 1994. Vice President/Auditor, National Westminster
Bank (November 1984 to June 1993).
- -------------------------------------------------------------------------------------------------------------------------------
Mark A. Hug Senior Vice President since April 1997, Equitable. Prior thereto, Vice President,
Aetna.
- -------------------------------------------------------------------------------------------------------------------------------
Robert E. Garber Executive Vice President and General Counsel, Equitable and the Holding Company.
Previously held other officerships with Equitable and its affiliates.
- -------------------------------------------------------------------------------------------------------------------------------
Jerome S. Golden Executive Vice President since November 1997, Equitable. Prior thereto, President,
Income Management Group (May 1994 to November 1997), Equitable. Chairman and Chief
Executive Officer (February 1995 to December 1997), EDI. Owner (November 1993 to May
1994), JG Resources.
- -------------------------------------------------------------------------------------------------------------------------------
Donald R. Kaplan Vice President and Chief Compliance Officer, Equitable. Previously held other
officerships with Equitable.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- -------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Michael S. Martin Senior Vice President, and Chief Marketing Officer since January 1997, Equitable.
Prior thereto, Senior Vice President. Chairman and Chief Executive Officer, EQF.
Vice President, EQAT (since March 1997) and HRT (until March 1998). Director,
Equitable Underwriting and Sales Agency (Bahamas), Ltd. (since May 1996) and
Colorado (since January 1995). Previously held other officerships with
Equitable and its affiliates.
- -------------------------------------------------------------------------------------------------------------------------------
Douglas Menkes Senior Vice President and Corporate Actuary since June 1997, Equitable. Prior
thereto, Consulting Actuary, Milliman & Robertson, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
Peter D. Noris Executive Vice President and Chief Investment Officer, Equitable. Executive Vice
President since May 1995 and Chief Investment Officer since July 1995, the Holding
Company. Trustee, HRT, and Chairman, President and Trustee since March 1997, EQAT.
Director, Alliance, since July 1995. Executive Vice President, EQF, since November
1996. Prior to May 1995, Vice President/Manager, Insurance Companies Investment
Strategies Group, Salomon Brothers, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
Anthony C. Pasquale Senior Vice President, Equitable. Director, Chairman and Chief Operating Officer,
Casualty, since September 1997. Previously held other officerships with
Equitable and its affiliates.
- -------------------------------------------------------------------------------------------------------------------------------
Pauline Sherman Vice President, Secretary and Associate General Counsel, Equitable and the Holding
Company, both since September 1995. Previously held other officerships with
Equitable.
- -------------------------------------------------------------------------------------------------------------------------------
Richard V. Silver Senior Vice President since February 1995 and Deputy General Counsel since June
1996, Equitable. Director, EQF. Previously held other officerships with
Equitable and its affiliates.
- -------------------------------------------------------------------------------------------------------------------------------
Jose S. Suquet Senior Executive Vice President since August 1994, Chief Distribution Officer since
December 1997 and Chief Agency Officer (August 1994 to December 1997), Equitable.
Prior thereto, Agency Manager. Executive Vice President since May 1996, the Holding
Company. Vice President since March 1998, HRT.
- -------------------------------------------------------------------------------------------------------------------------------
A-4
</TABLE>
<PAGE>
Appendix B
COMMUNICATING PERFORMANCE DATA
In reports or other communications to policyowners or in advertising material,
we may describe general economic and market conditions affecting the Separate
Account and the Trusts and may compare the performance or ranking of the
Separate Account Funds and the Trusts' portfolios with (1) that of other
insurance company separate accounts or mutual funds included in the rankings
prepared by Lipper Analytical Services, Inc., Morningstar, Inc. or similar
investment services that monitor the performance of insurance company separate
accounts or mutual funds, (2) other appropriate indices of investment securities
and averages for peer universes of funds, or (3) data developed by us derived
from such indices or averages. Advertisements or other communications furnished
to present or prospective policyowners may also include evaluations of a
Separate Account Fund or Trust portfolio by financial publications that are
nationally recognized such as Barron's, Morningstar's Variable Annuities / Life,
Business Week, Forbes, Fortune, Institutional Investor, Money, Kiplinger's
Personal Finance, Financial Planning, Investment Adviser, Investment Management
Weekly, Money Management Letter, Investment Dealers Digest, National
Underwriter, Pension & Investments, USA Today, Investor's Daily, The New York
Times, The Wall Street Journal, the Los Angeles Times and the Chicago Tribune.
Performance data for peer universes of funds with similar investment objectives
are compiled by Lipper Analytical Services, Inc. (Lipper) in its Lipper Variable
Insurance Products Performance Analysis Service (Lipper Survey) and Morningstar,
Inc. in the Morningstar Variable Annuity / Life Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 funds
underlying variable annuity and life insurance products. The Lipper Survey
divides these actively managed funds into 25 categories by portfolio objectives.
The Lipper Survey contains two different universes, which differ in terms of the
types of fees reflected in performance data. The "Separate Account" universe
reports performance data net of investment management fees, direct operating
expenses and asset-based charges applicable under variable insurance and annuity
contracts. The "Mutual Fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects
asset-based charges that relate only to the underlying mutual fund.
The Morningstar Report consists of over 700 variable life and annuity funds, all
of which report their data net of investment management fees, direct operating
expenses and separate account level charges.
LONG-TERM MARKET TRENDS
As a tool for understanding how different investment strategies may affect
long-term results, it may be useful to consider the historical returns on
different types of assets. The following chart presents historical return trends
for various types of securities. The information presented, while not directly
related to the performance of the Funds of the Separate Account or the Trusts'
portfolios, may help to provide a perspective on the potential returns of
different asset classes over different periods of time. By combining this
information with your knowledge of your own financial needs, you may be able to
better determine how you wish to allocate your premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long or short-term debt securities, although
common stocks have been subject to more dramatic changes in value over short
periods of time. The Common Stock Fund of the Separate Account may, therefore,
be a desirable selection for policyowners who are willing to accept such risks.
Policyowners who have a need to limit short-term risk, may find it preferable to
allocate a smaller percentage of their net premiums to those funds that invest
primarily in common stock. Any investment in securities, whether equity or debt,
involves varying degrees of potential risk, in addition to offering varying
degrees of potential reward.
The chart on page B-2 illustrates the average annual compound rates of return
over selected time periods between December 31, 1926 and December 31, 1997 for
common stocks, long-term government bonds, long-term corporate bonds,
intermediate-term government bonds and Treasury Bills. The Consumer Price Index
is shown as a measure of inflation for comparison purposes. The average annual
returns assume the reinvestment of dividends, capital gains and interest.
The information presented is an historical record of unmanaged groups of
securities and is neither an estimate nor a guarantee of future results. In
addition, investment management fees and expenses and charges associated with a
variable life insurance policy, are not reflected.
The rates of return illustrated do not represent returns of the Separate Account
or the Trusts and do not constitute a representation that the performance of the
Separate Account Funds or the Trusts' portfolios will correspond to rates of
return such as those illustrated in the chart. For a comparative illustration of
performance results of The Hudson River Trust, see page B-1 of the HRT
prospectus. For a comparative illustration of performance results of certain
public mutual funds which are similar to the EQAT portfolios and managed by
EQAT's Advisers, see page A-1 of the EQAT prospectus.
B-1
<PAGE>
AVERAGE ANNUAL RATES OF RETURN
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
FOR THE
FOLLOWING LONG-TERM LONG-TERM INTERMEDIATE- U.S. CONSUMER
PERIODS ENDING COMMON GOVERNMENT CORPORATE TERM GOV'T TREASURY PRICE
12/31/97: STOCKS BONDS BONDS BONDS BILLS INDEX
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year................. 33.36% 15.85% 12.95% 8.38% 5.26% 1.92%
3 years................ 31.15 14.76 13.36 8.93 5.35 2.59
5 years................ 20.24 10.51 9.22 6.40 4.57 2.64
10 years................ 18.05 11.32 10.85 8.33 5.44 3.43
20 years................ 16.65 10.39 10.29 9.51 7.29 4.90
30 years................ 12.12 8.63 8.86 8.52 6.77 5.34
40 years................ 12.30 6.71 7.09 7.10 5.85 4.44
50 years................ 13.12 5.70 6.07 6.04 4.99 3.94
60 years................ 12.53 5.31 5.54 5.44 4.18 4.11
Since 1926.............. 10.99 5.19 5.71 5.25 3.77 3.17
Inflation Adjusted 7.58 1.96 2.46 2.02 0.58
Since 1926..............
</TABLE>
- -------------------
Source: Ibbotson, Roger G. and Rex A. Sinquefield, STOCKS, BONDS, BILLS, AND
INFLATION (SBBI), 1982, updated in STOCKS, BONDS, BILLS, AND INFLATION 1998
YEARBOOK,(TM) Ibbotson Associates, Inc., Chicago. All rights reserved.
Common Stocks (S&P 500) -- Standard and Poor's Composite Index, an unmanaged
weighted index of the stock performance of 500 industrial, transportation,
utility and financial companies.
Long-Term Government Bonds -- Measured using a one-bond portfolio constructed
each year containing a bond with approximately a twenty-year maturity and a
reasonably current coupon.
Long-Term Corporate Bonds -- For the period 1969 - 1997, represented by the
Salomon Brothers Long-Term, High-Grade Corporate Bond Index; for the period 1946
- - 1968, the Salomon Brothers' Index was backdated using Salomon Brothers'
monthly yield data and a methodology similar to that used by Salomon for 1969 -
1997; for the period 1926 - 1945, the Standard and Poor's monthly High-Grade
Corporate Composite yield data were used, assuming a 4 percent coupon and a
twenty-year maturity.
Intermediate-Term Government Bonds -- Measured by a one-bond portfolio
constructed each year containing a bond with approximately a five-year maturity.
U.S. Treasury Bills -- Measured by rolling over each month a one-bill portfolio
containing, at the beginning of each month, the bill having the shortest
maturity not less than one month.
Inflation -- Measured by the Consumer Price Index for all Urban Consumers
(CPI-U), not seasonally adjusted.
- --------------------------------------------------------------------------------
B-2
<PAGE>
INCENTIVE LIFE(TM)
Prospectus Dated May 1, 1994
Incentive Life is a flexible premium variable life insurance policy issued by
Equitable Variable Life Insurance Company (Equitable Variable), a wholly-owned
subsidiary of The Equitable Life Assurance Society of the United States
(Equitable).
You may decide the amount of premiums to invest and when, within limits. Other
than the initial premium, there are no required premiums (however, under certain
conditions, additional premiums may be needed to keep the policy in effect). Net
premiums are deposited in a Policy Account.
Policy Account values increase or decrease with credited interest and reflect
certain deductions and charges. You may allocate your Policy Account value to a
guaranteed fixed return and variable return investment strategies. The Hudson
River Trust (Trust) is the mutual fund which provides the underlying basis for
the variable return investment strategies. The Trust is a series fund with
twelve different investment portfolios:
<TABLE>
<S> <C> <C>
o Money Market o Growth & Income Asset Allocation Series:
o Intermediate Government Securities o Equity Index o Conservative Investors
o Quality Bond o Common Stock o Growth Investors
o High Yield o Global
o Balanced o Aggressive Stock
</TABLE>
You may draw upon the Policy Account value through loans, partial withdrawals or
policy surrender, within limits. A charge will apply if the policy is
surrendered during the first ten policy years. The charge may also apply if you
reduce the Face Amount or if the policy lapses.
Incentive Life provides a death benefit if the insured person dies while the
policy is in effect. You may choose either a fixed benefit equal to the Face
Amount of the policy or a variable benefit equal to the Face Amount plus the
Policy Account value. You can change the Face Amount and death benefit option,
within limits. The policy will lapse if the Net Cash Surrender Value (Policy
Account value less any applicable Surrender Charge and any loan and accrued loan
interest) is insufficient to pay the policy's monthly deductions and you do not
make the required payment.
Ask your Equitable agent to determine if changing, or adding to, your existing
insurance coverage with Incentive Life would be to your advantage. You may
examine the policy for a limited period after your initial payment and, if you
are not satisfied for any reason, you may return the policy for a full refund of
premiums paid.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. THIS
PROSPECTUS CONTAINS INFORMATION THAT SHOULD BE KNOWN BEFORE INVESTING IN
INCENTIVE LIFE. THIS PROSPECTUS IS NOT VALID UNLESS IT IS ATTACHED TO A CURRENT
PROSPECTUS FOR THE HUDSON RIVER TRUST.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Copyright 1994 Equitable Variable Life Insurance Company. All rights reserved.
VM 485
<PAGE>
TABLE OF CONTENTS
PAGE
----
SUMMARY OF INCENTIVE LIFE FEATURES.................................. 1
PART 1 -- DETAILED INFORMATION ABOUT EQUITABLE VARIABLE AND
INCENTIVE LIFE INVESTMENT CHOICES......................... 4
THE COMPANY THAT ISSUES INCENTIVE LIFE.................... 4
Equitable Variable...................................... 4
Our Parent, Equitable................................... 4
THE SEPARATE ACCOUNT AND THE TRUST........................ 4
The Separate Account.................................... 4
The Trust............................................... 4
The Trust's Investment Adviser.......................... 4
Investment Policies Of The Trust's Portfolios........... 5
THE GUARANTEED INTEREST DIVISION.......................... 6
Amounts In The Guaranteed Interest Division............. 6
Adding Interest In The Guaranteed Interest Division..... 6
Transfers From The Guaranteed Interest Division......... 6
PART 2 -- DETAILED INFORMATION ABOUT INCENTIVE LIFE................. 7
FLEXIBLE PREMIUMS......................................... 7
DEATH BENEFITS............................................ 7
CHANGES IN INSURANCE PROTECTION........................... 8
Changing The Face Amount................................ 8
Changing The Death Benefit Option....................... 8
Substitution Of Insured Person.......................... 8
When Policy Changes Go Into Effect...................... 9
MATURITY BENEFITS......................................... 9
LIVING BENEFIT OPTION..................................... 9
ADDITIONAL BENEFITS MAY BE AVAILABLE...................... 9
YOUR POLICY ACCOUNT VALUE................................. 9
Amounts In The Separate Account......................... 9
How We Determine The Unit Value......................... 9
Transfers Of Policy Account Value...................... 10
Automatic Transfer Service............................. 10
Telephone Transfers.................................... 10
Charge For Transfers................................... 10
BORROWING FROM YOUR POLICY ACCOUNT....................... 11
How To Request A Loan.................................. 11
Policy Loan Interest................................... 11
When Interest Is Due................................... 11
Repaying The Loan...................................... 11
The Effects Of A Policy Loan........................... 11
PARTIAL WITHDRAWALS FROM YOUR POLICY ACCOUNT............. 11
Partial Withdrawal Charges............................. 12
Allocation Of Withdrawals And Charges.................. 12
The Effects Of A Partial Withdrawal.................... 12
Surrender For Net Cash Surrender Value................. 12
DEDUCTIONS AND CHARGES................................... 12
Deductions From Your Premiums.......................... 12
Deductions From Your Policy Account.................... 12
How Policy Account Charges Are Allocated............... 13
Charges Against The Separate Account................... 13
Trust Charges.......................................... 13
Surrender Charge....................................... 13
ADDITIONAL INFORMATION ABOUT INCENTIVE LIFE.............. 14
Your Policy Can Lapse.................................. 14
You May Reinstate The Policy........................... 14
Policy Periods, Anniversaries, Dates And Ages.......... 14
TAX EFFECTS.............................................. 15
Policy Proceeds........................................ 15
Diversification........................................ 16
Policy Changes......................................... 16
Tax Changes............................................ 17
Estate And Generation Skipping Taxes................... 17
Pension And Profit-Sharing Plans....................... 17
Other Employee Benefit Programs........................ 17
Our Taxes.............................................. 17
When We Withhold Income Taxes.......................... 17
PART 3 -- ADDITIONAL INFORMATION................................... 18
YOUR VOTING PRIVILEGES................................... 18
Trust Voting Privileges................................ 18
How We Determine Your Voting Shares.................... 18
Separate Account Voting Rights......................... 18
OUR RIGHT TO CHANGE HOW WE OPERATE....................... 18
OUR REPORTS TO POLICYOWNERS.............................. 18
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY.............. 18
YOUR PAYMENT OPTIONS..................................... 19
YOUR BENEFICIARY......................................... 19
ASSIGNING YOUR POLICY.................................... 19
WHEN WE PAY POLICY PROCEEDS.............................. 19
DIVIDENDS................................................ 20
REGULATION............................................... 20
SPECIAL CIRCUMSTANCES.................................... 20
DISTRIBUTION............................................. 21
LEGAL PROCEEDINGS........................................ 21
ACCOUNTING AND ACTUARIAL EXPERTS......................... 21
ADDITIONAL INFORMATION................................... 22
MANAGEMENT............................................... 22
PART 4 -- ILLUSTRATIONS OF POLICY BENEFITS......................... 24
SEPARATE ACCOUNT FP FINANCIAL STATEMENTS........................ FSA-1
EQUITABLE VARIABLE FINANCIAL STATEMENTS............................ F-1
APPENDIX A -- COMMUNICATING PERFORMANCE DATA....................... A-1
LONG-TERM MARKET TRENDS.............................. A-1
- --------------------------------------------------------------------------------
In this prospectus "we," "our" and "us" mean Equitable Variable Life Insurance
Company (Equitable Variable), a New York stock life insurance company. "You" and
"your" mean the owner of the policy. We refer to the person who is covered by
the policy as the "insured person" because the insured person and the
policyowner may not be the same. Unless indicated otherwise, the discussion in
this prospectus assumes that there is no policy loan outstanding and that the
policy is not in a grace period.
THE POLICY IS NOT AVAILABLE IN ALL JURISDICTIONS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE. EQUITABLE VARIABLE DOES NOT AUTHORIZE ANY INFORMATION OR
REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS PROSPECTUS OTHER THAN
AS CONTAINED IN THIS PROSPECTUS OR ANY ATTACHED SUPPLEMENT THERETO OR IN ANY
SUPPLEMENTAL SALES MATERIAL AUTHORIZED BY EQUITABLE VARIABLE.
<PAGE>
SUMMARY OF INCENTIVE LIFE FEATURES
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE TERMS OF THE POLICY
WHEN ISSUED AND THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS (SEE TABLE OF CONTENTS ON OPPOSITE PAGE).
INVESTMENT FEATURES
FLEXIBLE PREMIUMS
o Premiums may be invested whenever and in whatever amount you determine,
within limits. Other than the initial premium there are no scheduled or
required premium payments (however, under certain conditions, additional
premiums may be needed to keep a policy in effect).
POLICY ACCOUNT
o Net premiums are put in your Policy Account and can be allocated to a
Guaranteed Interest Division and to one or more of the divisions of Equitable
Variable's Separate Account FP (the Separate Account). The Separate Account
divisions invest in corresponding portfolios of the Trust. You may adjust
this allocation by changing your allocation percentages or by transfers among
the Separate Account divisions and the Guaranteed Interest Division.
o REQUESTS FOR TRANSFERS OUT OF THE GUARANTEED INTEREST DIVISION CAN ONLY BE
MADE ON OR WITHIN 30 DAYS OF A POLICY ANNIVERSARY. SUCH TRANSFERS WILL BE
EFFECTIVE AS OF THE DATE WE RECEIVE YOUR REQUEST, BUT NO EARLIER THAN THE
POLICY ANNIVERSARY; TRANSFERS INTO THE GUARANTEED INTEREST DIVISION AND AMONG
ALL SEPARATE ACCOUNT DIVISIONS MAY BE MADE AT ANY TIME. Transfers are subject
to the rules discussed under TRANSFERS FROM THE GUARANTEED INTEREST DIVISION
on page 6 and TRANSFERS OF POLICY ACCOUNT VALUE on page 10.
o There is no minimum guaranteed cash value for amounts allocated to the
Separate Account divisions. The value of amounts allocated to the Guaranteed
Interest Division will depend on the interest rates declared and guaranteed
each year by Equitable Variable (4 1/2% minimum).
REDEMPTION
o Loans may be taken against 90% of a policy's Cash Surrender Value (Policy
Account value less any applicable surrender charge) subject to certain
conditions. Loan interest accrues daily at a rate determined annually.
Currently, amounts set aside to secure the loan earn interest at a rate 1%
lower than the rate charged for policy loan interest. See BORROWING FROM YOUR
POLICY ACCOUNT on page 11.
o Partial Withdrawals of Net Cash Surrender Value (Cash Surrender Value less
any loan and accrued loan interest) may be taken after the first policy year,
subject to our approval and certain conditions. See PARTIAL WITHDRAWALS FROM
YOUR POLICY ACCOUNT on page 11.
o The policy may be surrendered for its Net Cash Surrender Value, less any lien
securing a Living Benefit payment, at which time insurance coverage will end.
INSURANCE PROTECTION FEATURES
DEATH BENEFITS
o Option A, a fixed benefit equal to the policy's Face Amount.
o Option B, a variable benefit that equals the Face Amount plus the Policy
Account value.
o In some cases a higher death benefit may apply in order to meet Federal
income tax law requirements.
o After the first year, you can change the Face Amount and death benefit
option, within limits. The minimum Face Amount is $50,000.
MATURITY BENEFITS
o A maturity benefit equal to the amount in your Policy Account less any policy
loan, any lien securing a Living Benefit payment and accrued interest, is
payable on the policy anniversary nearest the insured person's 95th birthday
(Final Policy Date), if the insured person is still living on that date.
LIVING BENEFIT
o The Living Benefit rider enables the policyowner to receive a portion of the
policy's death benefit (excluding death benefits payable under certain
riders) if the insured has a terminal illness. The Living Benefit rider will
be added to most policies at issue for no additional cost. The Living Benefit
rider is not available in certain states, including New Jersey.
ADDITIONAL BENEFITS
o Disability waiver, accidental death, term insurance on an additional insured
person, children's term insurance and substitution of insured person riders
are available.
DEDUCTIONS AND CHARGES
FROM PREMIUMS
o Applicable charges for taxes imposed by states and other jurisdictions. Such
taxes currently range between .75% and 5%.
o Administrative charge of $250 from the first premium if you select annual
planned premiums.
1
<PAGE>
FROM THE POLICY ACCOUNT
o Administrative charge during the first policy year that is currently $31 per
month if you selected semi-annual or more frequent planned premiums ($6 per
month if you selected annual planned premiums), and during subsequent policy
years, $6 per month regardless of the planned premium schedule you selected
(subject to $8 per month maximum).
o Monthly cost of insurance charge and monthly charge for any additional
benefits.
o Transaction charges (for partial withdrawals, Face Amount increases and
certain investment division transfers).
o During the first ten policy years, a surrender charge applies if the policy
lapses or is surrendered for its Net Cash Surrender Value or if the Face
Amount is reduced. The maximum charge is equivalent to 50% of one annual
premium for a comparable traditional life insurance policy; after the first
six policy years, the charge declines 20% per year.
FROM THE SEPARATE ACCOUNT
o 60% per annum charge for certain mortality and expense risks.
FROM THE TRUST
o Trust shares are purchased at net asset value which reflects investment
management fees and other direct expenses. Investment management fees are
charged at the maximum annual rates of .35% of net assets for the Equity
Index Portfolio, .40% of net assets for Common Stock, Money Market and
Balanced Portfolios; .50% for Aggressive Stock and Intermediate Government
Securities Portfolios and .55% for High Yield, Global, Conservative
Investors, Growth Investors, Quality Bond and the Growth & Income Portfolios.
VARIATIONS
o Equitable Variable is subject to the insurance laws and regulations in every
jurisdiction in which Incentive Life is sold. As a result, the terms of
Incentive Life may vary from jurisdiction to jurisdiction. The terms of
Incentive Life may also vary where special circumstances result in a
reduction in our costs.
o A modified version of Incentive Life may be offered where certain conditions
are met.
ADDITIONAL INFORMATION
CANCELLATION RIGHT
o You have a right to examine the policy. If for any reason you are not
satisfied with it, you may cancel the policy within the time limits described
below. You may cancel the policy by sending it to our Administrative Office
with a written request to cancel. Insurance coverage ends when you send your
request.
o Your request to cancel the policy must be postmarked no later than the latest
of the following three dates: (i) 10 days after you receive the policy, (ii)
10 days after we mail a written notice telling you about your rights to
cancel (Notice of Withdrawal Right); or (iii) 45 days after you sign Part I
of the policy application.
o If you cancel the policy, we will refund the premiums you paid. In certain
cases where the policy was purchased as a result of an exchange of an
existing life insurance policy, we may reinstate the prior policy. The
cancellation right may vary in certain states. There may be income tax and
withholding implications associated with cancellation.
LAPSE
o The policy will lapse if the Net Cash Surrender Value is insufficient to
cover monthly charges. If this occurs, you will be notified and given the
opportunity to maintain the policy in force by paying additional premiums.
You may be able to reinstate a lapsed policy within a limited time period,
but this will require additional evidence of insurability.
TAX EFFECTS
o Generally, under current Federal income tax law, death benefits are not
subject to income tax and Policy Account earnings are not subject to income
tax as long as they remain in the Policy Account. Loans, partial withdrawals,
surrender, maturity, lapse or a substitution of insured may result in
recognition of income for tax purposes.
2
<PAGE>
RATES OF RETURN
The rates of return shown below are based on the actual investment performance
of The Hudson River Trust portfolios, after deduction for investment management
fees and direct Trust operating expenses, for periods ending December 31, 1993.
The historical performance of the Common Stock and Money Market Portfolios for
periods prior to March 22, 1985 has been adjusted to reflect current investment
management fees of .40% per annum and estimated direct operating expenses of the
Trust of .10% per annum. The Common Stock Portfolio and its predecessors have
been in existence since 1976. No return information is provided for the Equity
Index Portfolio, since it received its initial funding on March 1, 1994.
These rates of return are not illustrative of how actual investment performance
will affect the benefits under your policy. Moreover, these rates of return are
not an estimate or guarantee of future performance.
THESE RATES OF RETURN ARE FOR THE TRUST ONLY AND DO NOT REFLECT THE
ADMINISTRATIVE AND COST OF INSURANCE CHARGES, THE MORTALITY AND EXPENSE RISK
CHARGE AND THE SURRENDER CHARGE APPLICABLE UNDER AN INCENTIVE LIFE POLICY.
<TABLE>
<CAPTION>
PERIODS ENDING 12/31/93
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS SINCE INCEPTION(a)
--------- ------ ------- ------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Money Market.......................... 3.00% 4.23% 6.00% 6.95% -- 7.83%
Intermediate Gov't. Securities........ 10.58 -- -- -- -- 10.25
Quality Bond (b)...................... -- -- -- -- -- (0.51)
High Yield............................ 23.15 19.85 12.35 -- -- 10.84
Balanced.............................. 12.28 15.52 14.42 -- -- 13.95
Growth & Income (b)................... -- -- -- -- -- (0.25)
Common Stock.......................... 24.84 21.12 15.44 15.27 17.52% 14.87
Global................................ 32.09 19.73 15.36 -- -- 11.22
Aggressive Stock...................... 16.77 28.32 26.81 -- -- 21.97
The Asset Allocation Series:
Conservative Investors................ 10.76 11.98 -- -- -- 10.69
Growth Investors...................... 15.26 21.67 -- -- -- 18.69
----------
<FN>
(a) The Growth & Income and Quality Bond Portfolios received their initial
funding on October 1, 1993; the Intermediate Government Securities Portfolio
on April 1, 1991; the Conservative Investors and the Growth Investors
Portfolios on October 2, 1989; the Global Portfolio on August 27, 1987; the
High Yield Portfolio on January 2, 1987; the Aggressive Stock and Balanced
Portfolios on January 27, 1986; the predecessor of the Money Market
Portfolio on July 13, 1981; and the predecessor of the Common Stock
Portfolio on January 13, 1976.
(b) Unannualized.
</FN>
</TABLE>
Additional investment performance information appears in the attached Trust
prospectus.
3
<PAGE>
PART 1: DETAILED INFORMATION ABOUT EQUITABLE VARIABLE AND
INCENTIVE LIFE INVESTMENT CHOICES
THE COMPANY THAT ISSUES INCENTIVE LIFE
EQUITABLE VARIABLE. Equitable Variable was organized in 1972 in New York State
as a stock life insurance company. We are a wholly-owned subsidiary of The
Equitable Life Assurance Society of the United States. We are licensed to do
business in all 50 states, Puerto Rico, the Virgin Islands and the District of
Columbia. At December 31, 1993, we had approximately $81.6 billion face amount
of variable life insurance in force.
We sell both traditional and innovative forms of life insurance designed to give
policyowners maximum choice and flexibility. Additional forms of life insurance
are available through our parent, Equitable. Your Equitable agent can provide
information about all forms of life insurance available from us and Equitable
and help you decide which may best meet your objectives.
OUR PARENT, EQUITABLE. Equitable, a New York stock life insurance company, has
been in business since 1859. Equitable and its subsidiaries managed
approximately $174 billion as of December 31, 1993. Equitable's assets do not
back the benefits that we pay under our policies. Equitable's home office is 787
Seventh Avenue, New York, New York 10019.
Equitable is a wholly-owned subsidiary of The Equitable Companies Incorporated
(the Holding Company). The largest stockholder of the Holding Company is AXA, a
French insurance holding company. AXA currently owns 49% of the outstanding
shares of common stock of the Holding Company plus convertible preferred stock
and redeemable preferred stock. Under its investment arrangements with Equitable
and the Holding Company, AXA is able to exercise significant influence over the
operations and capital structure of the Holding Company, Equitable and their
subsidiaries. After September 19, 1994 (or earlier under certain circumstances)
AXA will be able to increase its ownership of the Holding Company's common stock
by converting certain convertible securities it currently owns or through
purchases. AXA is the principal holding company for most of the companies in one
of the largest insurance groups in Europe. The majority of AXA's stock is
controlled by a group of five French mutual insurance companies.
THE SEPARATE ACCOUNT AND THE TRUST
THE SEPARATE ACCOUNT. The Separate Account was established on April 19, 1985
under the Insurance Law of the State of New York. The Separate Account is a type
of investment company called a unit investment trust and is registered with the
Securities and Exchange Commission (SEC) under the Investment Company Act of
1940. This registration does not involve any supervision by the SEC of the
management or investment policies of the Separate Account.
Under New York law, we own the assets of the Separate Account and use them to
support your policy and other variable life insurance policies. The portion of
the Separate Account's assets supporting these policies may not be used to
satisfy liabilities arising out of any other business we may conduct. This means
that the assets supporting Policy Account values maintained in the Separate
Account are not subject to the claims of our other creditors. We may also retain
in the Separate Account amounts owed to us for charges or other permitted
allocations. Because such retained amounts do not support Policy Account values,
we may transfer them from the Separate Account to our general account.
THE TRUST. The Separate Account has several divisions, each of which invests in
shares of a corresponding portfolio of the Trust. The Trust is an open-end
diversified management investment company, more commonly called a mutual fund.
As a "series" type of mutual fund, it issues several different "series" of
stock, each of which relates to a different Trust portfolio with a different
investment policy. The Trust does not impose a sales charge or "load" for buying
and selling its shares. The Trust's shares are bought and sold by our Separate
Account at net asset value. The Trust's custodian is The Chase Manhattan Bank,
N.A.
The Trust sells its shares to separate accounts of insurance companies, both
affiliated and not affiliated with Equitable. We currently do not foresee any
disadvantages to our policyowners arising out of this. However, the Trust's
Board of Trustees intends to monitor events in order to identify any material
irreconcilable conflicts that possibly may arise and to determine what action,
if any, should be taken in response. If we believe that the Trust's response to
any of those events insufficiently protects our policyowners, we will see to it
that appropriate action is taken to protect our policyowners. Also, if we ever
believe that any of the Trust's portfolios is so large as to impair materially
the investment performance of a portfolio or the Trust, we will examine other
investment options.
THE TRUST'S INVESTMENT ADVISER. The Trust is advised by Alliance Capital
Management L.P. (Alliance). Alliance is registered as an investment adviser
under the Investment Advisers Act of 1940 (the Advisers Act). Alliance, a
publicly-traded limited partnership, is indirectly majority-owned by Equitable.
Alliance acts as an investment adviser to various separate accounts and general
accounts of Equitable and other affiliated insurance companies. Alliance also
provides management and consulting services to mutual funds, endowment funds,
insurance companies, foreign entities, qualified and non-tax qualified corporate
funds, public and private pension and profit-sharing plans, foundations and
tax-exempt organizations. As of December 31, 1993, Alliance was managing
approximately $115 billion in assets.
Alliance's main office is 1345 Avenue of the Americas, New York, New York 10105.
4
<PAGE>
The advisory fee payable by the Trust is based on the following annual
percentages of the value of each portfolio's daily average net assets:
<TABLE>
<CAPTION>
DAILY AVERAGE NET ASSETS
----------------------------------------
FIRST NEXT OVER
PORTFOLIO $350 MILLION $400 MILLION $750 MILLION
- --------- ------------ ------------ ------------
<S> <C> <C> <C>
Common Stock, Money Market and Balanced.......................................... .400% .375% .350%
Aggressive Stock and Intermediate Gov't. Securities.............................. .500% .475% .450%
High Yield, Global, Conservative Investors and
Growth Investors............................................................. .550% .525% .500%
</TABLE>
<TABLE>
<CAPTION>
FIRST NEXT OVER
PORTFOLIO $500 MILLION $500 MILLION $1 BILLION
- --------- ------------ ------------ ----------
<S> <C> <C> <C>
Quality Bond and Growth & Income................................................. .550% .525% .500%
</TABLE>
<TABLE>
<CAPTION>
FIRST NEXT OVER
PORTFOLIO $750 MILLION $750 MILLION $1.5 BILLION
- --------- ------------ ------------ ------------
<S> <C> <C> <C>
Equity Index..................................................................... .350% .300% .250%
</TABLE>
INVESTMENT POLICIES OF THE TRUST'S PORTFOLIOS. Each portfolio has a different
investment objective which it tries to achieve by following separate investment
policies. The objectives and policies of each portfolio will affect its return
and its risks. There is no guarantee that these objectives will be achieved. The
policies and objectives of the Trust's portfolios are as follows:
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- --------- ----------------- ---------
<S> <C> <C>
MONEY MARKET............... Primarily high quality short-term money market High level of current income while
instruments. preserving assets and maintaining
liquidity.
INTERMEDIATE............... Primarily debt securities issued or guaranteed by High current income consistent with
GOVERNMENT the U.S. Government, its agencies and relative stability of capital.
SECURITIES instrumentalities. Each investment will have a
final maturity of not more than 10 years or a
duration not exceeding that of a 10-year
Treasury note.
QUALITY BOND............... Primarily investment grade fixed-income securities. High current income consistent with
preservation of capital.
HIGH YIELD................. Primarily a diversified mix of high yield, High return by maximizing current
fixed-income securities involving greater income and, to the extent consistent
volatility of price and risk of principal and with that objective, capital apprecia-
income than high quality fixed-income securities. tion.
The medium and lower quality debt securities in
which the portfolio may invest are known as "junk
bonds."
BALANCED................... Primarily common stocks, publicly-traded debt High return through a combination of
securities and high quality money market current income and capital
instruments. appreciation.
GROWTH & INCOME............ Primarily common stocks and securities convertible High return through a combination of
into common stocks. current income and capital
appreciation.
EQUITY INDEX............... Selected securities in the Standard & Poor's 500 Total return before Trust expenses
Index which the advisor believes will, in the that approximates the total return
aggregate, approximate the performance results of performance of the Standard & Poor's
the Index. 500 Index, including reinvestment of
dividends, at a risk level consistent
with that of the Index.
COMMON STOCK............... Primarily common stock and other equity-type Long-term growth of capital and
instruments. increasing income.
GLOBAL..................... Primarily equity securities of non-United States Long-term growth of capital.
as well as United States companies.
AGGRESSIVE STOCK........... Primarily common stocks and other equity-type Long-term growth of capital.
securities issued by medium and other smaller
sized companies with strong growth potential.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- --------- ----------------- ---------
<S> <C> <C>
ASSET ALLOCATION SERIES:
CONSERVATIVE............... Diversified mix of publicly-traded, fixed-income High total return without, in the
INVESTORS and equity securities; asset mix and security adviser's opinion, undue risk to
selection are primarily based upon factors principal.
expected to reduce risk.
GROWTH INVESTORS........... Diversified mix of publicly-traded, fixed-income High total return consistent with the
and equity securities; asset mix and security adviser's determination of reasonable
selection based upon factors expected to increase risk.
possibility of high long-term return.
</TABLE>
Because Policy Account values may be invested in mutual fund options, Incentive
Life offers an opportunity for the Cash Surrender Value to appreciate more
rapidly than it would under comparable fixed-benefit whole-life insurance. You
must, however, accept the risk that if investment performance is unfavorable,
the Cash Surrender Value may not appreciate as rapidly and, indeed, may decrease
in value.
More detailed information about the Trust, its investment policies, risks,
expenses and all other aspects of its operations, appears in its prospectus,
which is attached to this prospectus, and in its Statement of Additional
Information referred to therein.
THE GUARANTEED INTEREST DIVISION
YOU MAY ALLOCATE SOME OR ALL OF YOUR POLICY ACCOUNT TO THE GUARANTEED INTEREST
DIVISION, WHICH IS FUNDED BY OUR GENERAL ACCOUNT AND PAYS INTEREST AT A DECLARED
RATE GUARANTEED FOR EACH POLICY YEAR. THE PRINCIPAL, AFTER DEDUCTIONS, IS ALSO
GUARANTEED. THE GENERAL ACCOUNT SUPPORTS OUR INSURANCE AND ANNUITY OBLIGATIONS,
INCLUDING THE GUARANTEED INTEREST DIVISION. BECAUSE OF APPLICABLE EXEMPTIVE AND
EXCLUSIONARY PROVISIONS, PARTICIPATIONS IN THE GUARANTEED INTEREST DIVISION HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER THE GUARANTEED
INTEREST DIVISION NOR THE GENERAL ACCOUNT HAS BEEN REGISTERED AS AN INVESTMENT
COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940. ACCORDINGLY, NEITHER THE
GENERAL ACCOUNT, THE GUARANTEED INTEREST DIVISION NOR ANY INTERESTS THEREIN ARE
GENERALLY SUBJECT TO REGULATION UNDER THESE ACTS. WE HAVE BEEN ADVISED THAT THE
STAFF OF THE SEC HAS NOT MADE A REVIEW OF THE DISCLOSURES RELATING TO THE
GENERAL ACCOUNT AND THE GUARANTEED INTEREST DIVISION. SUCH DISCLOSURES ARE
INCLUDED IN THIS PROSPECTUS FOR YOUR INFORMATION. THESE DISCLOSURES, HOWEVER,
MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL
SECURITIES LAW RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN
PROSPECTUSES.
AMOUNTS IN THE GUARANTEED INTEREST DIVISION. You may accumulate amounts in the
Guaranteed Interest Division by allocating net premium and loan repayments to
that Division, transferring amounts from the divisions of the Separate Account
to the Guaranteed Interest Division or earning interest on amounts you already
have in the Guaranteed Interest Division. A Living Benefit payment will also
result in amounts being transferred to the Guaranteed Interest Division. See
LIVING BENEFIT OPTION on page 9. In addition, any policy loan is secured by an
amount in your Policy Account equal to the outstanding loan. This amount remains
part of the Policy Account but is assigned to the Guaranteed Interest Division.
We refer to this amount as the loaned amount in the Guaranteed Interest
Division.
The amount you have in the Guaranteed Interest Division at any time is the sum
of all net premiums and loan repayments allocated to that Division, all
transfers into that Division (including amounts securing any policy loan or
Living Benefit payment) plus earned interest, less amounts transferred out or
withdrawn, and monthly deductions allocated to, this Division.
ADDING INTEREST IN THE GUARANTEED INTEREST DIVISION. We pay a declared interest
rate on all amounts that you have in the Guaranteed Interest Division. At policy
issuance, and prior to each policy anniversary, we declare the rates that will
apply to amounts in the Guaranteed Interest Division for the following policy
year. Different rates may apply to policies currently being issued and
previously issued policies. These annual interest rates will never be less than
the minimum guaranteed interest rate of 4 1/2%. Different rates are also paid on
unloaned and loaned amounts in the Guaranteed Interest Division. See POLICY LOAN
INTEREST on page 11. Amounts securing a Living Benefit payment are considered
unloaned amounts for purposes of crediting interest.
Interest is compounded daily at an effective annual rate that equals the
declared rate for each policy year. We credit interest on unloaned amounts in
the Guaranteed Interest Division at the end of each policy month. Interest is
credited on any loaned amount in the Guaranteed Interest Division on each policy
anniversary and at any time you repay a policy loan in full. Credited interest
on the loaned amount is allocated to the Separate Account divisions and to the
unloaned portion of the Guaranteed Interest Division in accordance with your
premium allocation percentages.
TRANSFERS FROM THE GUARANTEED INTEREST DIVISION. Once during each policy year,
you may request a transfer from your unloaned amount in the Guaranteed Interest
Division to one or more of the divisions of the Separate Account. If we receive
your transfer request within 30 days prior to your policy anniversary, the
transfer will be made on your policy anniversary. If we receive your request on
or within 30 days after your policy anniversary, the transfer will be made as of
the date we receive your request. You may transfer up to 25% of your unloaned
value in the Guaranteed Interest Division as of the transfer date or the minimum
transfer amount, whichever is more. The minimum transfer amount is the minimum
transfer amount shown on the Information Page of your policy (the Policy
Information Page) or your total unloaned value in the Guaranteed Interest
Division on the transfer date, whichever is less. Amounts securing a Living
Benefit payment may not be transferred from the Guaranteed Interest Division.
6
<PAGE>
PART 2: DETAILED INFORMATION ABOUT INCENTIVE LIFE
FLEXIBLE PREMIUMS
You may choose the amount and frequency of premium payments, as long as they are
within the limits described below. We determine the applicable minimum initial
premium based on the age, sex, rating class and smoker/non-smoker status of the
insured person, the initial Face Amount of the policy (the minimum Face Amount
is $50,000) and any additional benefits selected. In certain situations,
however, no distinction is made based on the sex of the insured person. See COST
OF INSURANCE CHARGE on page 12. You may choose to pay a higher initial premium.
The full initial premium you indicated on your application must be paid on or
before the date on which the policy is delivered to you. No insurance under your
policy will take effect (a) until a policy is delivered and the full initial
premium is paid while the person proposed to be insured is living and (b) unless
the information in the application continues to be true and complete, without
material change, as of the time the initial premium is paid.
Your first premium payment should be given to your agent or broker and must be
by check or money order drawn on a U.S. bank in U.S. dollars and made payable to
Equitable Variable. Any additional premiums must be sent directly to our
Administrative Office. We will not accept cash payments. If you have submitted
the full initial premium with your application, we may, subject to certain
conditions, provide a limited amount of temporary insurance on the proposed
insured. You may review a copy of our Temporary Insurance Agreement on request.
On your application you provide us with initial instructions as to how to
allocate your net premiums and monthly charges among the Separate Account
divisions and the Guaranteed Interest Division. Allocation percentages may be
any whole number from zero to 100, but the sum must equal 100. These allocations
will go into effect on the first business day that follows the 20th calendar day
after the Issue Date of your policy. The Issue Date is shown on the Policy
Information Page and is the date we actually issue your policy. The date your
allocation instructions take effect is known as the Allocation Date. Our
business days are described in HOW WE DETERMINE THE UNIT VALUE on page 9.
Until the Allocation Date, any net premiums credited to your Policy Account will
be allocated to the Separate Account's Money Market Division, and any monthly
charges incurred will be deducted from the Money Market Division. On the
Allocation Date, all amounts then in your Policy Account will be allocated in
accordance with the directions contained in your policy application. We
establish the interest rate applicable to amounts in the Guaranteed Interest
Division as of the Register Date shown on the Policy Information Page and on
each policy anniversary. See ADDING INTEREST IN THE GUARANTEED INTEREST DIVISION
on page 6 and POLICY PERIODS, ANNIVERSARIES, DATES AND AGES on page 14.
We may delay the Allocation Date for the same reasons that we would also delay
effecting a transfer request. There will be no charge for the transfer out of
the Money Market Division on the Allocation Date and that transfer will not
count as one of the four free transfers per policy year. See TRANSFERS OF POLICY
ACCOUNT VALUE on page 10.
You may change the allocation percentages of net premiums or of monthly
deductions by writing to our Administrative Office and indicating the changes
you wish to make. These changes will go into effect as of the date your request
is received at our Administrative Office, but no earlier than the first business
day following the Allocation Date, and will affect transactions on and after
such date.
Although premiums are flexible, the Policy Information Page will show a
"planned" periodic premium. You determine the planned premium (within limits set
by us) when you apply for the policy. The planned premium is not necessarily
designed to equal the amount of premiums that will keep your policy in effect.
You may make the planned payment or skip the planned payment. We will send
premium reminder notices based on your planned premium. You may ask us not to
send notices by writing to our Administration Office. We reserve the right to
limit the amount of any premium payments you make which are in addition to your
planned premium.
Generally, premiums may be paid at any time and in any amount, as long as each
payment is at least $100. (Policies issued in some states may have different
minimum premium payments.) This minimum may be increased if we give you 90 days
written notice. We may return premium payments if we determine that they would
cause your policy to become a modified endowment contract or to cease to qualify
as life insurance under Federal income tax law. We may also make such changes to
the policy as we deem necessary to continue to qualify the policy as life
insurance. See TAX EFFECTS on page 15 for an explanation of modified endowment
contracts, the special tax consequences of such contracts and how your policy
might become a modified endowment contract.
If you stop paying premiums, your policy will continue in effect until the Net
Cash Surrender Value can no longer cover the monthly deductions from your Policy
Account. See YOUR POLICY CAN LAPSE on page 14.
DEATH BENEFITS
We pay a benefit to the beneficiary of the policy when the insured person dies.
This benefit will be equal to the death benefit under your policy plus any
additional benefits included in your policy and then due, less any policy loan,
any lien securing a Living Benefit payment and accrued interest. If the insured
person dies during a grace period, we will also deduct any overdue monthly
deductions.
You may choose between two death benefit options:
o OPTION A provides a death benefit equal to the policy's Face Amount. Except
as described below, the Option A benefit is fixed.
o OPTION B provides a death benefit equal to the Face Amount of the policy PLUS
the amount in your Policy Account on the day the insured person dies. Under
Option B, the value of the benefit is variable and fluctuates with the amount
in your Policy Account.
7
<PAGE>
Policyowners who prefer to have favorable investment experience reflected in
increased insurance coverage should choose Option B. Policyowners who prefer to
have insurance coverage that does not vary in amount and lower cost of insurance
charges should choose Option A.
Under both options, a higher death benefit may apply. This higher benefit is a
percentage multiple of the amount in your Policy Account. The percentage is
based on provisions of Federal tax law which require a minimum death benefit in
relation to cash value for your policy to qualify as life insurance. The higher
death benefit will be the amount in your Policy Account on the day the insured
person dies times the percentage for the insured person's age (nearest birthday)
at the beginning of the policy year of the insured person's death. The
percentage declines as the insured person gets older. For ages that are not
shown on the following table, the applicable percentage multiples will decrease
by a ratable portion for each full year.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TABLE OF DEATH BENEFITS BASED ON POLICY ACCOUNT VALUES
INSURED 40 or 45 50 55 60 65 70 75 to 95
PERSON'S AGE under 90
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
POLICY ACCOUNT 250% 215% 185% 150% 130% 120% 115% 105% 100%
PERCENTAGE MULTIPLE
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
For example, if the insured person were 40 years old and you had a Policy
Account value of $100,000, the death benefit would be at least 250% of $100,000
or $250,000.
CHANGES IN INSURANCE PROTECTION
CHANGING THE FACE AMOUNT. You may request a change in the Face Amount any time
after the first policy year by sending a written request to our Administrative
Office. See TAX EFFECTS on page 15 for the tax consequences of changing the Face
Amount. Any change will be subject to our approval and the following conditions:
o To increase the Face Amount, you must provide satisfactory evidence that the
insured person is still insurable. The cost of insurance rate for the amount
of the increase will be based on the rating class, attained age and
smoker/non-smoker status of the insured person on the date of the increase
and on the insured person's sex. If the insured person has become a more
expensive risk we will ask you if you want to pay the higher cost of
insurance charges before we process the change.
o Any increase must be at least $10,000. Monthly deductions from your Policy
Account for the cost of insurance will generally increase, beginning on the
date the increase takes effect. An administrative charge of $1.50 for each
additional $1,000 of insurance (up to a maximum charge of $250) will be
deducted from your Policy Account. See HOW POLICY ACCOUNT CHARGES ARE
ALLOCATED on page 13.
o You may reduce the Face Amount but not below the minimum we require to issue
this policy at the time of the reduction. Any reduction must be at least
$10,000. Monthly deductions from your Policy Account for the cost of
insurance will generally decrease, beginning on the date the decrease in Face
Amount takes effect. If you reduce the Face Amount during the first ten
policy years, we will deduct a pro rata share of the applicable surrender
charge from the Policy Account. See SURRENDER CHARGE on page 13.
o Our current procedure is to disapprove a requested decrease if it would cause
a death benefit based on the Policy Account percentage multiple to apply. See
DEATH BENEFITS on page 7.
Reductions will be applied to prior increases in the Face Amount, if any, in the
reverse order in which such increases occurred, and then to the original Face
Amount.
CHANGING THE DEATH BENEFIT OPTION. At any time after the first policy year while
your policy is in force, you may change the death benefit option by sending a
written request to our Administrative Office. See TAX EFFECTS on page 15 for the
tax consequences of changing the death benefit option.
o If you change from OPTION A TO OPTION B, the Face Amount will be decreased by
the amount in your Policy Account on the date of the change. We may not allow
such a change if it would reduce the Face Amount below the minimum required
to issue this policy at the time of the reduction.
o If you change from OPTION B TO OPTION A, the Face Amount of insurance will be
increased by the amount in the Policy Account on the date of the change.
These increases and decreases in Face Amount are made so that the amount of the
death benefit remains the same on the date of the change. When the death benefit
remains the same, there is no change in the net amount at risk, which is the
amount on which cost of insurance charges are based (see COST OF INSURANCE
CHARGE on page 12). We do not require evidence of insurability for the increase
in Face Amount when you change from Option B to Option A, nor do we make any
charge for this increase. We will not charge a surrender charge for the decrease
in Face Amount when you change from Option A to Option B.
SUBSTITUTION OF INSURED PERSON. If you provide satisfactory evidence that the
person proposed to be insured is insurable then, subject to certain
restrictions, you may, after the first policy year, substitute the insured
person under your policy. If you do so, the cost of insurance charges may change
but we will not change the surrender charge. Since substituting the insured
person is a taxable event and may have other tax consequences as well, you
should consult your tax adviser prior to substituting the insured person under
your policy. As a condition to substituting the insured person, we may require
you to sign a form acknowledging the tax consequences of making this change.
8
<PAGE>
WHEN POLICY CHANGES GO INTO EFFECT. A substitution of insured person, or change
in Face Amount or death benefit option, will go into effect at the beginning of
the policy month that coincides with or follows the date we approve the request
for the change. In some cases, we may not approve a change because it might
disqualify your policy as life insurance under applicable Federal tax law. In
other cases there may be tax consequences as a result of the change. See TAX
EFFECTS on page 15.
MATURITY BENEFITS
If the insured person is still living on the policy anniversary nearest his or
her 95th birthday (Final Policy Date), we will pay you the amount in the Policy
Account net of any policy loan, any lien securing a Living Benefit payment and
accrued interest. The policy will then terminate. You may choose to have this
benefit paid in installments. See TAX EFFECTS on page 15 and YOUR PAYMENT
OPTIONS on page 19.
LIVING BENEFIT OPTION
Subject to regulatory approval in your state and our underwriting guidelines,
our new Living Benefit rider will be added to your policy at issue. The Living
Benefit rider is not available in certain states, including New Jersey. The
Living Benefit rider enables the policyowner to receive a portion of the
policy's death benefit (excluding death benefits payable under certain riders)
if the insured person has a terminal illness. Certain eligibility requirements
apply when you submit a Living Benefit claim (for example, satisfactory evidence
of less than six month life expectancy). There is no additional charge for the
rider, but we will deduct an administrative charge of $250 from the proceeds of
the Living Benefit payment. This charge may be less in some states. In addition,
if you tell us that you do not wish to have the rider added at issue, but you
later ask to add it, additional underwriting will be required and there will be
a $100 administrative charge.
When a Living Benefit claim is paid, Equitable Variable establishes a lien
against the policy. The amount of the lien is the sum of the Living Benefit
payment and any accrued interest on that payment. Interest will be charged at a
rate equal to the greater of: (i) the yield on a 90-day Treasury bill and (ii)
the maximum adjustable policy loan interest rate permitted in the state your
policy is delivered. See BORROWING FROM YOUR POLICY ACCOUNT -- POLICY LOAN
INTEREST on page 11.
Until a death benefit is paid, or the policy is surrendered, a portion of the
lien is allocated to the policy's Cash Surrender Value. This liened amount will
be transferred to the Guaranteed Interest Division where it will earn interest
at the same rate as unloaned amounts. See THE GUARANTEED INTEREST DIVISION on
page 6. This liened amount will not be available for loans, transfers or partial
withdrawals. Any death benefit, maturity benefit or Net Cash Surrender Value
payable upon policy surrender will be reduced by the amount of the lien.
Unlike a death benefit received by a beneficiary after the death of an insured,
receipt of a Living Benefit payment may be taxable as a distribution under the
policy. See TAX EFFECTS on page 15 for a discussion of the tax treatment of
distributions under the policy. Consult your tax adviser. Receipt of a Living
Benefit payment may also affect a policyowner's eligibility for certain
government benefits or entitlements. You should contact your Equitable agent if
you wish to make a claim under the rider.
ADDITIONAL BENEFITS MAY BE AVAILABLE
Your policy may include additional benefits. A charge will be deducted from your
Policy Account monthly for each additional benefit you choose. These benefits
are subject to our rules and may be cancelled by you at any time. More details
will be included in your policy if you choose any of these benefits. The
following additional benefits are currently available: disability waiver
benefit, accidental death benefit, children's term insurance and term insurance
on an additional insured person.
If the disability waiver goes into effect, we will not permit Face Amount
increases or decreases and the death benefit will be changed to Option B.
YOUR POLICY ACCOUNT VALUE
The amount in your Policy Account is the sum of the amounts you have in the
Guaranteed Interest Division and in the various divisions of the Separate
Account. Your Policy Account also reflects various charges. See DEDUCTIONS AND
CHARGES on page 12.
AMOUNTS IN THE SEPARATE ACCOUNT. Amounts allocated, transferred or added to a
Separate Account division are used to purchase units of that division. Units are
redeemed from a Separate Account division when amounts are withdrawn,
transferred or deducted for charges or capitalized loan interest. The number of
units purchased or redeemed in a division of the Separate Account is calculated
by dividing the dollar amount of the transaction by the division's unit value
calculated after the close of business that day. On any given day, the value you
have in a division of the Separate Account is the unit value for that division
times the number of units credited to you in that division.
HOW WE DETERMINE THE UNIT VALUE. We determine unit values for the divisions of
the Separate Account at the end of each business day. Generally, a business day
is any day we are open and the New York Stock Exchange is open for trading. We
are closed on national business holidays, including Martin Luther King Day, and
also the Friday after Thanksgiving. Additionally, we may choose to close on the
day immediately preceding or following a national business holiday or due to
emergency conditions. We will not process any policy transactions as of such
days other than a policy anniversary report, monthly charge deduction and the
payment of death benefit proceeds. The unit value for any business day is equal
to the unit value for the preceding business day multiplied by the net
investment factor for that division on that business day.
A net investment factor is determined for each division of the Separate Account
every business day as follows: first, we take the net asset value of a share in
the corresponding Trust portfolio at the close of business that day as reported
by the Trust, and we add the per share amount of any dividends or capital gains
distributions paid by the Trust on that day. We divide this amount by the per
share net asset value on the preceding business day. Then, we subtract a daily
asset charge for each calendar day between business days (for example, a Monday
calculation may include charges for Saturday, Sunday and Monday). The daily
charge is guaranteed not to exceed an effective annual rate of .60%. See CHARGES
AGAINST THE SEPARATE ACCOUNT on page 13. Finally, we reserve the right to
subtract any daily charge for taxes or amounts set aside as a reserve for taxes.
For current Incentive Life unit values, call (212) 714-5015.
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TRANSFERS OF POLICY ACCOUNT VALUE. You may request a transfer of amounts from
any division of the Separate Account to any other division of the Separate
Account or to the Guaranteed Interest Division. Special rules apply to transfers
out of the Guaranteed Interest Division. See TRANSFERS FROM THE GUARANTEED
INTEREST DIVISION on page 6.
You may make a transfer by telephone or by submitting a written transfer request
to our Administrative Office. Transfer request forms are available from your
Equitable agent or from our Administrative Office. Special rules apply to
telephone transfers. See TELEPHONE TRANSFERS below.
The minimum amount which may be transferred on any date will be shown on the
Policy Information Page and is usually $500. This minimum need not come from any
one division or be transferred to any one division as long as the total amount
transferred that day, including any amounts transferred to or from the
Guaranteed Interest Division, at least equals the minimum. However, we will
transfer the entire amount in any division of the Separate Account even if it is
less than the minimum specified in your policy. A lower minimum amount applies
to our Automatic Transfer Service which is described below.
Transfers take effect on the date we receive your request, but no earlier than
the first business day following the Allocation Date. When part of a transfer
request cannot be processed, we will not process any part of the request. This
could occur, for example, where the request does not comply with our transfer
limitations, or where the request is for a transfer of an amount greater than
currently allocated to that division. We may delay making a transfer if the New
York Stock Exchange is closed or the SEC has declared that an emergency exists.
In addition, we may delay transfers where permitted under applicable law.
AUTOMATIC TRANSFER SERVICE. The Automatic Transfer Service enables you to make
automatic monthly transfers out of the Money Market Division into the other
Separate Account divisions.
To start using this service you must first complete a special election form that
is available from your agent or our Administrative Office. You must also have a
minimum of $5,000 in the Money Market Division on the date the Automatic
Transfer Service is scheduled to begin. You can elect up to eight Separate
Account investment divisions for monthly transfers, but the minimum amount that
may be transferred to each division each month is $50.
If you elect the Automatic Transfer Service with your policy application, the
automatic transfers will begin in the second policy month following the
Allocation Date. If you elect the Automatic Transfer Service after your
application has been submitted, automatic transfers will begin on the next
monthly processing date after we receive your election form at our
Administrative Office. See POLICY PERIODS, ANNIVERSARIES, DATES AND AGES on page
14.
The Automatic Transfer Service will remain in effect until the earliest of the
following events: (1) the funds in the Money Market Division are insufficient to
cover the automatic transfer amount; (2) the policy is in a grace period; (3) we
receive at our Administrative Office your written instruction to cancel the
Automatic Transfer Service; or (4) we receive notice of death under the policy.
Using the Automatic Transfer Service does not guarantee a profit or protect
against loss in a declining market.
TELEPHONE TRANSFERS. In order to make transfers by telephone, you must first
complete and return an authorization form. Authorization forms can be obtained
from your Equitable agent or our Administrative Office. The completed form MUST
be returned to our Administrative Office before requesting a telephone transfer.
Telephone transfers may be requested on each day we are open to transact
business. You will receive the division's unit values as of the close of
business on the day you call. We do not accept telephone transfer requests after
3:00 p.m. Eastern Time. Only one telephone transfer request is permitted per day
and it may not be revoked at any time. The telephone transfer requests are
automatically recorded and are invalid if incomplete information is given,
portions of the request are inaudible, no authorization form is on file, or the
request does not comply with the transfer limitations described above.
Procedures have been established by Equitable Variable that are considered to be
reasonable and are designed to confirm that instructions communicated by
telephone are genuine. Such procedures include requiring certain personal
identification information prior to acting on telephone instructions and
providing written confirmation of instructions communicated by telephone. If
Equitable Variable does not employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, it may be liable for any
losses arising out of any action on its part or any failure or omission to act
as a result of its own negligence, lack of good faith, or willful misconduct. In
light of the procedures established, Equitable Variable will not be liable for
following telephone instructions that it reasonably believes to be genuine.
During times of extreme market activity it may be impossible to contact us to
make a telephone transfer. If this occurs, you should submit a written transfer
request to our Administrative Office. Our rules on telephone transfers are
subject to change and we reserve the right to discontinue telephone transfers in
the future.
CHARGE FOR TRANSFERS. We have reserved the right under your policy to make a
charge of up to $25 if you make more than four transfers of Policy Account value
in a policy year. Currently we are charging $25 per transfer after the twelfth
transfer. All transfers made on one transfer request form will count as one
transfer, and all transfers made in one telephone request will count as one
transfer. Transfers made through the Automatic Transfer Service or on the
Allocation Date will not count toward the twelve free transfers. No charge will
ever apply to the transfer of all of your amounts in the Separate Account to the
Guaranteed Interest Division.
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BORROWING FROM YOUR POLICY ACCOUNT
You may borrow up to 90% of your policy's Cash Surrender Value using only your
policy as security for the loan. Any new loan must be at least the minimum
amount shown on the Policy Information Page, usually $500. If you request an
additional loan, the additional amount requested will be added to the amount of
any outstanding loan and accrued loan interest. Any amount that secures a loan
remains part of your Policy Account but is assigned to the Guaranteed Interest
Division. This loaned amount earns an interest rate expected to be different
from the interest rate for unloaned amounts. Amounts securing a Living Benefit
payment are not available for policy loans.
HOW TO REQUEST A LOAN. You may request a loan by writing to our Administrative
Office. You should tell us how much of the loan you want taken from your
unloaned amount in the Guaranteed Interest Division and how much you want taken
from your amounts in the divisions of the Separate Account. If you request a
loan from a division of the Separate Account, we will redeem units sufficient to
cover that part of the loan and transfer the amount to the loaned portion of the
Guaranteed Interest Division. The amounts you have in each division will be
determined as of the day your request for a loan is received at our
Administrative Office.
If you do not indicate how you wish to allocate it, the loan will be allocated
according to the deduction allocation percentages applicable to your Policy
Account. If the loan cannot be allocated based on these percentages, it will be
allocated based on the proportions of your unloaned amounts in the Guaranteed
Interest Division and your value in each division of the Separate Account to the
unloaned value of your Policy Account.
POLICY LOAN INTEREST. Interest on a policy loan accrues daily at an adjustable
interest rate. We determine the rate at the beginning of each policy year. The
same rate applies to any outstanding policy loans and any new amounts you borrow
during the year. You will be notified of the current rate when you apply for a
loan. The maximum rate is the greater of 5 1/2%, or the "Published Monthly
Average" for the month that ends two months before the interest rate is set. The
"Published Monthly Average" is the Monthly Average Corporates yield shown in
Moody's Corporate Bond Yield Averages published by Moody's Investors Service,
Inc. If this average is no longer published, we will use any successor or the
average established by the insurance supervisory official of the jurisdiction in
which the policy is delivered. We will not charge more than the maximum rate
permitted by applicable law. We may also set a rate lower than the maximum.
Any change in the rate from one year to the next will be at least 1/2%. Your
maximum loan interest rate will only change, therefore, if the Published Monthly
Average differs from the previous interest rate by at least 1/2 of 1%. You will
be notified in advance of any increase in the interest rate on any loan you have
outstanding.
When you borrow on your policy, the amount of your loan is set aside in the
Guaranteed Interest Division where it earns a declared rate for loaned amounts.
Loaned amounts are expected to earn interest at a lower rate than the rate you
are charged for policy loan interest. Currently the rate we credit on loaned
amounts is 1% less than the rate we charge for policy loan interest. These loan
spreads are those currently in effect and are not guaranteed. However, the
interest credited on loaned amounts will never be less than 4 1/2%.
WHEN INTEREST IS DUE. Interest is due on each policy anniversary. If you do not
pay the interest when it is due, it will be added to your outstanding loan and
allocated based on the deduction allocation percentages for your Policy Account
which are then in effect. This means an additional loan is made to pay the
interest and amounts are transferred from the investment divisions to make the
loan. If the interest cannot be allocated on this basis, it will be allocated as
described above for allocating your loan.
REPAYING THE LOAN. You may repay all or part of a policy loan at any time. While
you have a policy loan and your policy is not in grace, we assume that any money
you send us is meant to repay the loan. If you wish to have any of these
payments applied as premium payments, you must specifically so indicate in
writing. Any amount not needed to repay a loan and accrued loan interest will be
applied as a premium payment. We will first allocate loan repayments to our
Guaranteed Interest Division until the amount of any loans originally allocated
to that division have been repaid. After you have repaid this amount, you may
choose how you want us to allocate the balance of any additional repayments. If
you do not provide specific instructions, repayments will be allocated on the
basis of your premium allocation percentages.
THE EFFECTS OF A POLICY LOAN. A loan will have a permanent effect on the value
of your Policy Account and, therefore, on the benefits under your policy, even
if the loan is repaid. The loaned amount in the Guaranteed Interest Division
will not be available for investment in the divisions of the Separate Account or
in the unloaned portion of the Guaranteed Interest Division. Whether you earn
more or less with the loaned amount set aside depends on the investment
experience of the divisions of the Separate Account and the rates declared for
the unloaned portion of the Guaranteed Interest Division. The amount of any
policy loan and accrued loan interest will reduce the proceeds paid from your
policy upon the death of the insured person, policy maturity or policy
surrender. In addition, a loan will reduce the amount available for you to
withdraw from your policy. See TAX EFFECTS on page 15 for the tax consequences
of a policy loan. A loan may also affect the length of time that your insurance
remains in force because the amount set aside to secure your loan cannot be used
to cover the monthly deductions. See YOUR POLICY CAN LAPSE on page 14.
PARTIAL WITHDRAWALS FROM YOUR POLICY ACCOUNT
At any time after the first policy year while the insured person is living, you
may request a partial withdrawal of your Net Cash Surrender Value by writing to
our Administrative Office. Any such withdrawal is subject to our approval and to
certain conditions. Amounts securing a Living Benefit payment are not available
for partial withdrawals. In addition, we reserve the right to decline a request
for a partial withdrawal. Under our current rules, a withdrawal must:
o be at least $500,
o not cause the death benefit to fall below the minimum Face Amount for which
we would issue the policy at the time, and
o not cause the policy to fail to qualify as life insurance under applicable
tax law.
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PARTIAL WITHDRAWAL CHARGES. When you make a partial withdrawal, an expense
charge of $25 or 2% of the amount withdrawn, whichever is less, will be deducted
from your Policy Account.
ALLOCATION OF WITHDRAWALS AND CHARGES. You may specify how much of the
withdrawal you want taken from amounts you have in each division of the Separate
Account and the unloaned portion of the Guaranteed Interest Division. If you do
not specifically indicate, we will make the withdrawal on the basis of your
deduction allocation percentages. The related expense charge is deducted from
the amount you have remaining in each division and the unloaned portion of the
Guaranteed Interest Division, based on the proportion that the amount withdrawn
from each bears to the total amount withdrawn. If we cannot make the withdrawal
or deduct the expense charge in the manner discussed above, we will make the
withdrawal and deduction based on the proportions of your unloaned amounts in
the Guaranteed Interest Division and the divisions of the Separate Account to
the total unloaned value of your Policy Account.
THE EFFECTS OF A PARTIAL WITHDRAWAL. A partial withdrawal reduces the amount you
have in your Policy Account. Normally, it also reduces the Cash Surrender Value
and the death benefit on a dollar-for-dollar basis, but does not affect the net
amount at risk, which is the difference between the current death benefit and
the amount in your Policy Account. If you selected death benefit Option A, the
Face Amount of your policy will be reduced so that generally there will be no
change in the net amount at risk. However, under either option, if the death
benefit is based on the Policy Account percentage multiple, the reduction in
death benefit would be greater and the net amount at risk would be reduced. See
DEATH BENEFITS on page 7. The withdrawal and these reductions will be effective
as of the date your request is received at our Administrative Office. See TAX
EFFECTS on page 15 for the tax consequences of a reduction in benefits and a
partial withdrawal.
SURRENDER FOR NET CASH SURRENDER VALUE. The Cash Surrender Value is the amount
in your Policy Account minus the surrender charge described under SURRENDER
CHARGE on page 14. The Net Cash Surrender Value equals the Cash Surrender Value
minus any loan and accrued loan interest.
You may surrender your policy for its Net Cash Surrender Value at any time while
the insured person is living. We will deduct from the Net Cash Surrender Value
any amount securing a Living Benefit payment. You may surrender the policy by
sending a written request and the policy to our Administrative Office. We will
compute the Net Cash Surrender Value as of the date we receive your request and
the policy at our Administrative Office. All insurance coverage under your
policy will end on that date. See TAX EFFECTS on page 15 for the tax
consequences of a policy surrender.
DEDUCTIONS AND CHARGES
DEDUCTIONS FROM YOUR PREMIUMS. Charges for applicable taxes are deducted from
all premiums and an initial administrative charge may be deducted from your
first premium. The balance of each premium (the net premium) is placed in your
Policy Account.
o CHARGES FOR APPLICABLE TAXES and all additional charges imposed on premium
payments by states and certain jurisdictions are deducted from each premium
payment. The amount of the tax may vary depending on the jurisdiction in
which the insured person resides. Such taxes currently range between .75% and
5%. This tax is incurred by Equitable Variable, so you cannot deduct it on
your income tax return.
This charge will be increased or decreased to reflect any legislative changes
in the applicable tax. In addition, if an insured person changes his or her
place of residence, you should notify us to change the charge to the tax rate
of the new jurisdiction.
o INITIAL ADMINISTRATIVE CHARGE. If you intend to invest premiums annually
(annual mode), and indicate this on your application, a $250 initial
administrative charge will be deducted from your first premium to cover the
costs of issuing your policy such as application processing, medical
examinations, establishment of policy records and underwriting costs
(determining insurability and assigning the insured person to a risk class).
This charge is designed to reimburse us for expenses and we do not expect a
profit from it. This charge will not apply to semi-annual, quarterly or
monthly payment modes.
DEDUCTIONS FROM YOUR POLICY ACCOUNT. At the beginning of each policy month, the
following charges are deducted from your Policy Account:
o ADMINISTRATIVE CHARGE. The current administrative charge is $31 per month
during the first policy year if you selected semi-annual or more frequent
planned premiums ($6 per month if you selected annual planned premiums).
During subsequent policy years, the administrative charge is currently $6 per
month regardless of the planned premium schedule you selected. This charge is
guaranteed never to be more than $8 per month.
This charge is designed to cover the continuing costs of maintaining your
policy, such as billing, policy transactions and policyowner communications.
In the case of policies not on an annual mode, the higher first year monthly
charge is also intended to cover the costs discussed above under INITIAL
ADMINISTRATIVE CHARGE. This charge is designed to reimburse us for expenses
and we do not expect to profit from it.
o COST OF INSURANCE CHARGE. The cost of insurance charge is calculated by
multiplying the net amount at risk at the beginning of the policy month by
the monthly cost of insurance rate applicable to the insured person at that
time. The net amount at risk is the difference between the current death
benefit and the amount in your Policy Account.
Your cost of insurance charge will vary from month to month with changes in
the net amount at risk. For example, if the current death benefit for the
month is increased because the death benefit is based on a percentage
multiple of the Policy Account, then the net amount at risk for the month
will increase. Assuming the percentage multiple is not in effect, increases
or decreases to the Policy Account will result in a corresponding increase or
decrease to the net amount at risk under Option A policies, but no
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change to the net amount at risk under Option B policies. Increases or
decreases to the Policy Account can result from making premium payments,
investment experience or the deduction of charges.
The monthly cost of insurance rate applicable to your policy will be based on
our current monthly cost of insurance rates. After the first policy year, the
current monthly cost of insurance rates may be changed from time to time.
However, the current rates will never be more than the guaranteed maximum
rates set forth in your policy. The guaranteed rates are based on the
Commissioner's 1980 Standard Ordinary Male and Female Mortality Tables.
The current and guaranteed monthly cost of insurance rates are determined
based on the sex, age and rating class of the insured person and the Face
Amount of the policy at the time of the charge. In addition, the current
rates also vary depending on the duration of the policy (i.e., the length of
time since a policy has been issued) and on whether the insured person is a
non-smoker.
The current rate for a policy after the tenth policy year is less than the
rate that applies during the first ten policy years for a policy of the same
Face Amount on an insured person of the same sex, age, rating class and
smoker status. This cost of insurance charge reduction applies on a current
basis and is not guaranteed. Because Incentive Life was first offered in
1986, no cost of insurance charge reflecting a reduction for duration has yet
been made by Equitable Variable.
Lower current cost of insurance rates apply at most ages for insured persons
who qualify as non-smokers. To qualify, an insured person must be at standard
risk and must meet additional requirements that relate to smoking habits. In
addition, the insured person must be age twenty or over. Insured persons who
are under twenty years of age may ask us to review their current smoking
habits when they reach their twentieth birthday.
Congress and the legislatures of various states have from time to time
considered legislation that would require insurance rates to be the same for
males and females of the same age and risk class. In addition, employers and
employee organizations should consider, in consultation with counsel, the
impact of Title VII of the Civil Rights Act of 1964 on the purchase of
Incentive Life in connection with an employment-related insurance or benefit
plan. The United States Supreme Court held, in a 1983 decision, that, under
Title VII, optional annuity benefits under a deferred compensation plan could
not vary on the basis of sex.
o CHARGES FOR ADDITIONAL BENEFITS. The cost of any additional benefits you
choose will be deducted monthly. Your policy contains tables showing the
guaranteed maximum rates for all of these insurance costs.
Any changes in the cost of insurance, charges for additional benefits or
administrative charges will be by class of insured person and will be based on
changes in future expectations about such factors as investment earnings,
mortality, the length of time policies will remain in effect, expenses and
taxes.
In addition to the monthly deductions from your Policy Account described above,
we charge fees for certain policy transactions: see PARTIAL WITHDRAWALS FROM
YOUR POLICY ACCOUNT on page 11, CHANGES IN INSURANCE PROTECTION on page 8,
TRANSFERS OF POLICY ACCOUNT VALUE on page 10. Also, if, after your policy is
issued, you request more than one illustration in a policy year, we may charge a
fee. See ILLUSTRATIONS OF POLICY BENEFITS in Part 24.
HOW POLICY ACCOUNT CHARGES ARE ALLOCATED. Generally, deductions from your Policy
Account for monthly charges are made from the divisions of our Separate Account
and the unloaned portion of our Guaranteed Interest Division in accordance with
the deduction allocation percentages specified in your application unless you
instruct us in writing to do otherwise. See FLEXIBLE PREMIUMS on page 7. If a
deduction cannot be made in accordance with these percentages, it will be made
based on the proportion that your unloaned amounts in the Guaranteed Interest
Division and your amounts in the divisions of the Separate Account bear to the
total unloaned value of your Policy Account.
CHARGES AGAINST THE SEPARATE ACCOUNT. These charges are reflected in the unit
values for the divisions of the Separate Account. See HOW WE DETERMINE THE UNIT
VALUE on page 9.
o A charge for assuming MORTALITY AND EXPENSE RISKS will be made. The annual
rate is .60%. We are committed to fulfilling our obligations under the policy
and providing service to you over the lifetime of your policy. Despite the
uncertainty of future events, we guarantee that monthly administrative and
insurance deductions from your Policy Account will never be greater than the
maximum amounts shown in your policy. In making this guarantee, we assume the
mortality risk that insured persons will live for shorter periods than we
estimated. When this happens, we have to pay a greater amount of death
benefit than we expected to pay in relation to the cost of insurance charges
we received. We also assume the expense risk that the cost of issuing and
administering policies will be greater than we expected. If the amount
collected from this charge exceeds losses from the risks assumed, it will be
to our profit.
o We reserve the right to make a charge in the future for taxes or reserves set
aside for taxes, which will reduce the investment experience of the divisions
of the Separate Account. See TAX EFFECTS on page 15.
TRUST CHARGES. Our Separate Account purchases shares of the Trust at net asset
value. That price reflects investment management fees and other direct expenses
that have already been deducted from the assets of the Trust. The Trust does not
impose a sales charge. See THE TRUST'S INVESTMENT ADVISER on page 4.
SURRENDER CHARGE. No deductions are made from premiums for sales expenses. We
incur various sales and promotional expenses in connection with selling
Incentive Life, such as commissions, the cost of preparing sales literature,
other promotional activities and other direct and indirect expenses. We pay
these expenses from our own resources, including any surrender charge we might
collect and any profit we may earn on the charges deducted under the policy.
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There is a difference between the amount in your Policy Account and the Cash
Surrender Value of your policy for the first ten policy years. This difference
is the surrender charge, a contingent deferred sales load. It is a contingent
load because you pay it only if you surrender your policy (or reduce its Face
Amount or let it lapse) during the first ten policy years. It is a deferred load
because we do not deduct it from your premiums. Because the surrender charge is
contingent and deferred, the amount we might collect in a policy year is not
related to the actual sales expenses for that year.
To determine surrender charges, "target" premiums are used. Target premiums are
not based on the "planned" premium you determine. See FLEXIBLE PREMIUMS on page
7. In general, a target premium would equal the amount of annual premium
necessary to maintain a fixed whole life insurance policy for the same face
amount on the life of the insured person. Target premiums are based on the age
of the insured person and the initial Face Amount of the policy. Except in
certain circumstances, the sex of the insured person is also a factor in
determining target premiums. See COST OF INSURANCE CHARGE on page 12.
The maximum surrender charge for your policy will be shown on the Policy
Information Page and will equal 50% of one target premium. This maximum will not
vary based on the amount of premiums you pay or when you pay them. After the
first six policy years, this maximum surrender charge begins to decrease by 20%
per year. After ten years, there is no surrender charge.
Subject to the maximum, the surrender charge is calculated based on actual
premium payments. The surrender charge equals 30% of premium payments made
during the first policy year up to the amount of one target premium and 9% of
any additional premiums paid during the first ten policy years.
Attempting to structure the timing and amount of premium payments to reduce the
potential surrender charge below the maximum is not recommended. Paying small
amounts of premium in the policy's first ten years to reduce the potential
surrender charge could increase the risk that your policy will lapse. If
payments are structured in this manner, the amounts in your Policy Account would
need to receive favorable investment performance for your policy not to lapse
(performance in which, as a result of the payment structure, you would not fully
participate).
If you request a Face Amount reduction during the first ten policy years, we
will consider it a partial surrender and may deduct a portion of the surrender
charge. If you increase the Face Amount and later ask for a decrease, a
surrender charge will apply only to a decrease below the original Face Amount.
Generally, the pro rata surrender charge for a partial surrender will be
determined by dividing the amount of the Face Amount decrease (below the initial
Face Amount) by the initial Face Amount and multiplying that fraction by the
surrender charge. See TAX EFFECTS on page 15 for a discussion of the tax
consequences of changing the Face Amount.
ADDITIONAL INFORMATION ABOUT INCENTIVE LIFE
YOUR POLICY CAN LAPSE. Your insurance coverage under Incentive Life continues as
long as the Net Cash Surrender Value of the policy is enough to pay the monthly
deductions. The Net Cash Surrender Value equals the Cash Surrender Value minus
any loan and accrued loan interest. If the Net Cash Surrender Value at the
beginning of any policy month is less than the deductions for that month, a
61-day grace period will begin. We will notify you, and any assignees on our
records, in writing, that the grace period has begun and indicate the payment
that is needed to avoid policy lapse at the end of the grace period. The
required payment will approximate an amount which would increase the Net Cash
Surrender Value to cover total monthly deductions for three months (without
regard to any investment performance in the Policy Account).
The required payment and any residual Policy Account value will be used to cover
the overdue deductions. However, if your Policy Account has unfavorable
investment experience, the required payment may not be sufficient to cover the
overdue deductions on the date we receive the payment. In this case, a new
61-day grace period will begin.
If we do not receive payment within the 61 days, your policy will lapse without
value. We will withdraw any amount left in your Policy Account and apply this
amount to the overdue deductions, any applicable surrender charge and any unpaid
loan and accrued loan interest. We will inform you, and any assignee, at last
known addresses that your policy has ended without value. See TAX EFFECTS on
page 15 for the potential tax consequences of policy lapse.
YOU MAY REINSTATE THE POLICY. You may reinstate the policy within three years
after it lapses if:
o you provide evidence that the insured person (and any other person insured
under a rider) is still insurable, and
o you make the premium payment that we require to reinstate the policy.
The effective date of the reinstated policy will be the beginning of the policy
month which coincides with or follows the date we approve your reinstatement
application. Upon reinstatement, there will be no further surrender charges
applied against the policy. Previous loans will not be reinstated. Some states
may vary the time period and conditions for reinstatement.
POLICY PERIODS, ANNIVERSARIES, DATES AND AGES. When an application for an
Incentive Life policy is completed and submitted to us, we decide whether or not
to issue the policy. This decision is made based on the information in the
application and our standards for issuing insurance and classifying risks. If we
decide not to issue a policy, any premium paid will be refunded.
The Issue Date, shown on the Policy Information Page, is the date your policy is
actually issued. Generally, contestability is measured from the Issue Date, as
is the suicide exclusion.
The Final Policy Date is the policy anniversary nearest the insured person's
95th birthday. The policy ends on that date and the maturity benefit is paid if
the insured person is still alive.
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The Register Date, also shown on the Policy Information Page, is used to measure
policy years and policy months. Charges and deductions under the policy are
first made as of the Register Date. As to when coverage under the policy begins,
see FLEXIBLE PREMIUMS on page 7.
Generally, we determine the Register Date based upon when we receive your full
initial premium. In most cases:
o If you submit the full initial premium to your Equitable agent at the time
you sign the application, and we issue the policy as it was applied for, then
the Register Date will be the later of (a) the date part I of the policy
application was signed or, (b) the date part II of the policy application was
signed by a medical professional.
o If we do not receive your full initial premium at our Administrative Office
before the Issue Date or, if the policy is not issued as applied for, the
Register Date will be the same as the Issue Date.
We may permit corporate policyowners to backdate a Register Date (up to six
months) in order to coordinate a single premium payment date for all employees.
We may also permit policyowners to advance a Register Date (up to three months)
in employer-sponsored payroll deduction cases. Backdating the Register Date (up
to six months) may also be permitted to save age.
The investment start date is the date that your initial net premium begins to
vary with the investment performance of the divisions of the Separate Account or
accrue interest in the Guaranteed Interest Division. Generally, the investment
start date will be the same as the Register Date if the full initial premium is
received at our Administrative Office before the Register Date. Otherwise, the
investment start date will be the date the full initial premium is received at
our Administrative Office. Thus, to the extent that your first premium is
received before the Register Date, there will be a period during which the
initial premium will not be invested. The investment start date for policies
with backdated Register Dates will also be the date the premium is received at
our Administrative Office. Any subsequent premium payment received after the
investment start date for the initial premium payment will begin to experience
investment performance as of the date such payment is received at our
Administrative Office. Remember, your net initial premium may be temporarily
allocated to the Money Market Division of the Separate Account prior to
allocation in accordance with your instructions.
See FLEXIBLE PREMIUMS on page 7.
Generally, when we refer to the age of the insured person, we mean his or her
age on the birthday nearest to the beginning of the particular policy year.
TAX EFFECTS
This discussion is based on our understanding of the effect of the current
Federal income tax laws as currently interpreted on Incentive Life policies
owned by U.S. resident individuals. The tax effects on corporate taxpayers
subject to the Federal alternative minimum tax, non-U.S. residents and non-U.S.
citizens, may be different. This discussion is general in nature, and should not
be considered tax advice, for which you should consult your legal or tax
adviser.
POLICY PROCEEDS. An Incentive Life policy will be treated as "life insurance"
for Federal income tax purposes if it meets the definitional requirement of the
Internal Revenue Code (the Code) and as long as the portfolios of the Trust
satisfy the diversification requirements under the Code. We believe that
Incentive Life will meet these requirements, and that under Federal income tax
law:
o the death benefit received by the beneficiary under your Incentive Life
policy will not be subject to Federal income tax; and
o as long as your policy remains in force, increases in the Policy Account
value as a result of interest or investment experience will not be subject to
Federal income tax unless and until there is a distribution from your policy,
such as a loan or a partial withdrawal.
Special tax rules may apply, however, if you transfer your ownership of the
policy. Consult your tax adviser before any transfer of your policy.
The Federal income tax consequences of a distribution from your policy will
depend on whether your policy is determined to be a "modified endowment." The
character of any income recognized will be ordinary income as opposed to capital
gain.
A MODIFIED ENDOWMENT IS a life insurance policy which fails to meet a
"seven-pay" test. In general, a policy will fail the seven-pay test if the
cumulative amount of premiums paid under the policy at any time during the first
seven policy years exceeds a calculated premium level. The calculated seven-pay
premium level is based on a hypothetical policy issued on the same insured
person and for the same initial death benefit which, under specified conditions
(which include the absence of expense, administrative and surrender charges),
would be fully paid for after seven level annual premiums. Your policy will be
treated as a modified endowment unless the cumulative premiums paid under your
policy, at all times during the first seven policy years, are less than or equal
to the cumulative seven-pay premiums which would have been paid under the
hypothetical policy on or before such times.
Whenever there is a "material change" under a policy, it will generally be
treated as a new contract for purposes of determining whether the policy is a
modified endowment, and subjected to a new seven-pay period and a new seven-pay
limit. The new seven-pay limit would be determined taking into account, under a
downward adjustment formula, the Policy Account value of the policy at the time
of such change. A materially changed policy would be considered a modified
endowment if it failed to satisfy the new seven-pay limit. A material change
would occur if there was a substitution of the insured person, and could also
occur as a result of a change in death benefit option, the selection of
additional benefits, an increase in Face Amount and certain other changes.
If the benefits under your policy are reduced during the first seven policy
years after entering into the policy (or within seven years after a material
change), for example, by requesting a decrease in Face Amount or in some cases
by making partial withdrawals or terminating additional benefits under a rider,
the calculated seven-pay premium level will be redetermined based on the reduced
level of benefits and applied retroactively for purposes of the seven-pay test.
If the premiums previously paid are greater than the recalculated seven-pay
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premium level limits, the policy will become a modified endowment. Generally, a
life insurance policy which is received in exchange for a modified endowment
will also be considered a modified endowment.
Changes made to a life insurance policy, for example, a decrease in benefits, a
policy lapse or the reinstatement of a lapsed policy, may have other effects on
your policy, including impacting the maximum amount of premiums that can be paid
under the policy, as well as the maximum amount of Policy Account value that may
be maintained under the policy. In some cases, action may be necessary for your
policy to continue to qualify as life insurance. See POLICY CHANGES below.
IF YOUR INCENTIVE LIFE POLICY IS NOT A MODIFIED ENDOWMENT, as long as it remains
in force, a loan under your policy will be treated as indebtedness and no part
of the loan will be subject to current Federal income tax. Interest on the loan
will generally not be tax deductible. After the first fifteen policy years, the
proceeds from a partial withdrawal will not be subject to Federal income tax
except to the extent such proceeds exceed your "Basis" in your policy. Your
Basis in your policy generally will equal the premiums you have paid less any
amounts previously recovered through tax-free policy distributions. During the
first fifteen policy years, the proceeds from a partial withdrawal could be
subject to Federal income tax to the extent your Policy Account value exceeds
your Basis in your policy. The portion subject to tax will depend upon the ratio
of your death benefit to the Policy Account value (or in some cases the premiums
paid) under your policy and the age of the insured person at the time of the
withdrawal. In addition, if at any time your policy is surrendered, the excess,
if any, of your Cash Surrender Value (which includes the amount of policy loan
and accrued loan interest) over your Basis will be subject to Federal income
tax. In addition, if a policy lapses while there is a policy loan, the
cancellation of such loan and accrued loan interest will be treated as a
distribution and could be subject to tax under the above rules. Upon the Final
Policy Date of the policy, the excess of the amount of any benefit paid, not
taking into account any reduction for any loan and accrued loan interest, over
your Basis in the policy, will be subject to Federal income tax.
IF YOUR POLICY IS A MODIFIED ENDOWMENT, any distribution from your policy will
be taxed on an "income-first" basis. Distributions for this purpose include a
loan (including any increase in the loan amount to pay interest on an existing
loan or an assignment or a pledge to secure a loan) or partial withdrawal. Any
such distributions will be considered taxable income to you to the extent your
Policy Account value exceeds your Basis in the policy. For modified endowments,
your Basis would be increased by the amount of any prior loan under your policy
that was considered taxable income to you. For purposes of determining the
taxable portion of any distribution, all modified endowments issued by the same
insurer or an affiliate to the same policyowner (excluding certain qualified
plans) during any calendar year are to be aggregated. The Secretary of the
Treasury has authority to prescribe additional rules to prevent avoidance of
"income-first" taxation on distributions from modified endowments.
A 10% penalty tax will also apply to the taxable portion of a distribution from
a modified endowment. The penalty tax will not, however, apply to distributions
(i) to taxpayers 59 1/2 years of age or older, (ii) in the case of a disability
(as defined in the Code) or (iii) received as part of a series of substantially
equal periodic annuity payments for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer and his
beneficiary. If your policy is surrendered, the excess, if any, of your Cash
Surrender Value over your Basis will be subject to Federal income tax and,
unless one of the above exceptions applies, the 10% penalty tax. If your policy
lapses while there is a policy loan, the cancellation of such loan and accrued
loan interest will be treated as a distribution to the extent not previously
treated as such and could be subject to tax, including the penalty tax, as
described under the above rules. In addition, upon the Final Policy Date the
excess of the amount of any benefit paid, not taking into account any reduction
for any loan and accrued loan interest, over your Basis in the policy, will be
subject to Federal income tax and, unless an exception applies, a 10% penalty
tax.
If your policy becomes a modified endowment, distributions that occur during the
policy year it becomes a modified endowment and any subsequent policy year will
be taxed as described in the two preceding paragraphs. In addition distributions
from a policy within two years before it becomes a modified endowment will be
subject to tax in this manner. THIS MEANS THAT A DISTRIBUTION MADE FROM A POLICY
THAT IS NOT A MODIFIED ENDOWMENT COULD LATER BECOME TAXABLE AS A DISTRIBUTION
FROM A MODIFIED ENDOWMENT. The Secretary of the Treasury has been authorized to
prescribe rules which would treat similarly other distributions made in
anticipation of a policy becoming a modified endowment.
DIVERSIFICATION. Under Section 817(h) of the Code, the Secretary of the Treasury
has the authority to set standards for diversification of the investments
underlying variable life insurance policies. The Treasury Department has issued
final regulations regarding the diversification requirements. Failure to meet
these requirements would disqualify your policy as a variable life insurance
policy under Section 7702 of the Code. If this were to occur, you would be
subject to Federal income tax on the income under the policy. The Separate
Account, through the Trust, intends to comply with these requirements.
In connection with the issuance of the then temporary diversification
regulations, the Treasury Department stated that it anticipated the issuance of
regulations or rulings prescribing the circumstances in which the ability of a
policyowner to direct his investment to particular divisions of a separate
account may cause the policyowner, rather than the insurance company, to be
treated as the owner of the assets in the account. If you were considered the
owner of the assets of the Separate Account, income and gains from the account
would be included in your gross income for Federal income tax purposes. Under
current law we believe that Equitable Variable, and not the owner of the policy,
would be considered the owner of the assets of the Separate Account.
POLICY CHANGES. For you and your beneficiary to receive the tax treatment
discussed above, your policy must initially qualify and continue to qualify as
life insurance under Sections 7702 and 817(h) of the Code. We have reserved in
the policy the right to decline to accept all or part of any premium payments,
decline to change death benefits, or decline to make partial withdrawals that we
believe would cause your policy to fail to qualify. We may also make changes in
the policy or its riders or require additional premium payments or make
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distributions from the policy to the extent we deem necessary to qualify your
policy as life insurance for tax purposes. Any such change will apply uniformly
to all policies that are affected. You will be given advance written notice of
such changes.
TAX CHANGES. The United States Congress has in the past considered, is currently
considering and may in the future consider legislation that, if enacted, could
change the tax treatment of life insurance policies. In addition, the Treasury
Department may amend existing regulations, issue new regulations, or adopt new
interpretations of existing laws. State tax laws or, if you are not a United
States resident, foreign tax laws, may affect the tax consequences to you, the
insured or your beneficiary. These laws may change from time to time without
notice and, as a result, the tax consequences may be altered. There is no way of
predicting whether, when or in what form any such change would be adopted. Any
such change could have retroactive effect regardless of the date of enactment.
We suggest you consult your legal or tax adviser.
ESTATE AND GENERATION SKIPPING TAXES. If the insured person is the policyowner,
the death benefit under Incentive Life will generally be includable in the
policyowner's estate for purposes of Federal estate tax. If the policyowner is
not the insured person, under certain conditions only the Cash Surrender Value
of the policy would be so includable. Federal estate tax is integrated with
Federal gift tax under a unified rate schedule. In general, estates less than
$600,000 will not incur a Federal estate tax liability. In addition, an
unlimited marital deduction may be available for Federal estate tax purposes.
As a general rule, if a "transfer" is made to a person two or more generations
younger than the policyowner, a generation skipping tax may be payable at rates
similar to the maximum estate tax rate in effect at that time. The generation
skipping tax provisions generally apply to "transfers" which would be subject to
the gift and estate tax rules. Individuals are generally allowed an aggregate
generation skipping tax exemption of $1 million. If we believe a generation
skipping tax may be payable, we may be required to withhold tax from benefits
payable unless we receive proper written evidence that no such tax is payable.
Because these rules are complex, you should consult with your tax adviser for
specific information, especially where benefits are passing to younger
generations, as opposed to a spouse or a child.
The particular situation of each policyowner or beneficiary will determine how
ownership or receipt of policy proceeds will be treated for purposes of Federal
estate and generation skipping taxes as well as state and local estate,
inheritance and other taxes.
PENSION AND PROFIT-SHARING PLANS. If Incentive Life policies are purchased by a
fund which forms part of a pension or profit-sharing plan qualified under
Sections 401(a) or 403 of the Code for the benefit of participants covered under
the plan, the Federal income tax treatment of such policies will be somewhat
different from that described above.
If purchased as part of a pension or profit-sharing plan, the current cost of
insurance for the net amount at risk is treated as a "current fringe benefit"
and is required to be included annually in the plan participant's gross income.
This cost (generally referred to as the "P.S. 58" cost) is reported to the
participant annually. If the plan participant dies while covered by the plan and
the policy proceeds are paid to the participant's beneficiary, then the excess
of the death benefit over the Policy Account value will not be subject to
Federal income tax. However, the Policy Account value will generally be taxable
to the extent it exceeds the sum of $5,000 plus the participant's cost basis in
the policy. The participant's cost basis will generally include the costs of
insurance previously reported as income to the participant. Special rules may
apply if the participant had borrowed from his Policy Account or was an
owner-employee under the plan.
There are limits on the amounts of life insurance that may be purchased on
behalf of a participant in a pension or profit-sharing plan. Complex rules, in
addition to those discussed above, apply whenever life insurance is purchased by
a tax qualified plan.
OTHER EMPLOYEE BENEFIT PROGRAMS. Complex rules may apply when a policy is held
by an employer or a trust, or acquired by an employee, in connection with the
provision of employee benefits. These policyowners also must consider whether
the policy was applied for by or issued to a person having an insurable interest
under applicable state law, as the lack of insurable interest may, among other
things, affect the qualification of the policy as life insurance for Federal
income tax purposes and the right of the beneficiary to death benefits.
Employees and employer-created trusts may be subject to reporting, disclosure,
and fiduciary obligations under the Employee Retirement Income Security Act of
1974 (ERISA). You should consult your legal adviser.
OUR TAXES. Under the life insurance company tax provisions of the Code, variable
life insurance is treated in a manner consistent with fixed life insurance. The
operations of the Separate Account are reported in our Federal income tax return
but we currently pay no income tax on investment income and capital gains
reflected in variable life insurance policy reserves. Therefore, no charge is
currently being made to any division of the Separate Account for taxes. We
reserve the right to make a charge in the future if we incur income tax which is
attributable to the Separate Account. If such a charge is made, it would be set
aside as a provision for taxes which we would keep in the affected division
rather than in our General Account. We anticipate that our variable life
policyowners would benefit from any investment earnings that are not needed to
maintain this provision.
We may have to pay state, local or other taxes in addition to applicable taxes
based on premiums. At present, these taxes are not substantial. If they
increase, charges may be made for such taxes when they are attributable to the
Separate Account.
WHEN WE WITHHOLD INCOME TAXES. Generally, unless you provide us with a written
election to the contrary before we make the distribution, we are required to
withhold income tax from any portion of the money you receive if the withdrawal
of money from your Policy Account or the surrender or the maturity of your
policy is a taxable transaction. If you do not wish us to withhold tax from the
payment, or if enough is not withheld, you may have to make tax payments later.
You may also have to pay penalties under the tax rules if your withholding and
estimated tax payments are insufficient. In some cases, where generation
skipping taxes may apply, we may also be required to withhold for such taxes
unless we are provided satisfactory written notification that no such taxes are
due.
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PART 3: ADDITIONAL INFORMATION
YOUR VOTING PRIVILEGES
TRUST VOTING PRIVILEGES. As explained in Part 1, we invest the assets in the
divisions of our Separate Account in shares of the corresponding Trust
portfolios. Equitable Variable is the legal owner of the shares and will attend,
and has the right to vote at, any meeting of the Trust's shareholders. Among
other things, we may vote on any matters described in the Trust's prospectus or
requiring a vote by shareholders under the Investment Company Act of 1940 (the
Act).
Even though we own the shares, to the extent required by the Act, you will have
the opportunity to tell us how to vote the number of shares that can be
attributed to your policy. We will vote those shares at meetings of Trust
shareholders according to your instructions. If we do not receive instructions
in time from all policyowners, we will vote shares in a portfolio for which no
instructions have been received in the same proportion as we vote shares for
which we have received instructions in that portfolio. We will vote any Trust
shares that we are entitled to vote directly due to amounts we have accumulated
in our Separate Account in the same proportions that all policyowners vote,
including those who participate in other separate accounts. If the Federal
securities laws or regulations or interpretations of them change so that we are
permitted to vote shares of the Trust in our own right or to restrict
policyowner voting, we may do so.
HOW WE DETERMINE YOUR VOTING SHARES. You may participate in voting only on
matters concerning the Trust portfolios corresponding to the Separate Account
divisions to which your Policy Account is allocated. The number of Trust shares
in each division that are attributable to your policy is determined by dividing
the amount in your Policy Account allocated to that division by the net asset
value of one share of the corresponding Trust portfolio as of the record date
set by the Trust's Board for the Trust's shareholders meeting. The record date
for this purpose must be at least 10 and no more than 90 days before the meeting
of the Trust. Fractional shares are counted.
If you are entitled to give us voting instructions, we will send you proxy
material and a form for providing voting instructions. In certain cases, we may
disregard instructions relating to changes in the Trust's adviser or the
investment policies of its portfolios. We will advise you if we do and detail
the reasons in the next semiannual report to policyowners.
SEPARATE ACCOUNT VOTING RIGHTS. Under the Act, certain actions (such as some of
those described under OUR RIGHT TO CHANGE HOW WE OPERATE below) may require
policyowner approval. In that case, you will be entitled to one vote for every
$100 of value you have in the divisions of the Separate Account. We will cast
votes attributable to amounts we have in the divisions of the Separate Account
in the same proportions as votes cast by policyowners.
OUR RIGHT TO CHANGE HOW WE OPERATE
In addition to changing or adding investment companies, we have the right to
modify how we or the Separate Account operate. We intend to comply with
applicable law in making any changes and, if necessary, we will seek policyowner
approval. We have the right to:
o add divisions to, or remove divisions from, the Separate Account, combine two
or more divisions within the Separate Account, or withdraw assets relating to
Incentive Life from one division and put them into another;
o register or end the registration of the Separate Account under the Act;
o operate the Separate Account under the direction of a committee or discharge
such a committee at any time (the committee may be composed entirely of
persons who are "interested persons" of Equitable Variable under the Act);
o restrict or eliminate any voting rights of policyowners or other people who
have voting rights that affect the Separate Account;
o operate the Separate Account or one or more of the divisions in any other
form the law allows, including a form that allows us to make direct
investments. Our Separate Account may be charged an advisory fee if its
investments are made directly rather than through an investment company. We
may make any legal investments we wish. In choosing these investments, we
will rely on our own or outside counsel for advice. In addition, we may
disapprove any change in investment advisers or in investment policy unless a
law or regulation provides differently.
If any changes are made that result in a material change in the underlying
investments of a division, you will be notified as required by law. We may, for
example, cause the division to invest in a mutual fund other than, or in
addition to, the Trust. If you then wish to transfer the amount you have in that
division to another division of the Separate Account or to the Guaranteed
Interest Division, you may do so, without charge, by contacting our
Administrative Office. At the same time, you may also change how your net
premiums and deductions are allocated.
OUR REPORTS TO POLICYOWNERS
Shortly after the end of each policy year you will receive a report that
includes information about your policy's current death benefit, Policy Account
value, Cash Surrender Value and policy loan. Notices will be sent to you to
confirm premium payments (except premiums paid through an automated
arrangement), transfers of amounts between investment divisions and certain
other policy transactions.
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY
We can challenge the validity of your insurance policy based on material
misstatements in your application and any application for change. However, there
are some limits on how and when we can challenge the policy.
o We cannot challenge the policy after it has been in effect, during the
insured person's lifetime, for two years from the date the policy was issued
or reinstated. Some states may require that we measure this time in some
other way.
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o We cannot challenge any policy change that requires evidence of insurability
(such as an increase in Face Amount or a substitution of insured) after the
change has been in effect for two years during the insured person's lifetime.
o We cannot challenge an additional benefit rider that provides benefits in the
event that the insured person becomes totally disabled after two years from
the later of the Issue Date or the date as of which the additional benefit
rider became effective. We can require proof of continuing disability while
such a rider is in effect as specified in the rider.
If the insured person dies within the time that we may challenge the validity of
the policy, we may delay payment until we decide whether to challenge the
policy. If the insured person's age or sex is misstated on any application, the
death benefit and any additional benefits provided will be those which would be
purchased by the most recent deduction for the cost of insurance and the cost of
any additional benefits at the insured person's correct age and sex.
If the insured person commits suicide within two years after the date on which
the policy was issued, the death benefit will be limited to the total of all
premiums that have been paid to the time of death minus any outstanding policy
loan, accrued loan interest and any partial withdrawals of Net Cash Surrender
Value. If the insured person commits suicide within two years after the
effective date of an increase in Face Amount that you requested, we will pay the
death benefit based on the Face Amount which was in effect before the increase,
plus the monthly cost of insurance deductions for the increase (including the
transaction charge for the Face Amount increase). A new two-year suicide and
contestability period will begin on the date of substitution following a
substitution of insured. (Some states require that we measure this time by some
other date.)
YOUR PAYMENT OPTIONS
Policy benefits or other payments, such as the Net Cash Surrender Value, may be
paid immediately in one sum or you may choose another form of payment for all or
part of the money. Payments under these options are not affected by the
investment experience of any division of the Separate Account. Instead, interest
accrues pursuant to the options chosen.
You will make a choice of payment option (or any later changes) and your choice
will take effect in the same way as it would if you were changing a beneficiary.
(See YOUR BENEFICIARY below). If you do not arrange for a specific form of
payment before the insured person dies, the beneficiary will be paid through the
Equitable Access Account. See WHEN WE PAY POLICY PROCEEDS below. The beneficiary
will then have a choice of payment options. However, if you do make an
arrangement with us for how the money will be paid, the beneficiary cannot
change the choice after the insured person dies. Different payment options may
result in different tax consequences.
The beneficiary or any other person who is entitled to receive payment may name
a successor to receive any amount that we would otherwise pay to that person's
estate if that person died. The person who is entitled to receive payment may
change the successor at any time.
We must approve any arrangements that involve more than one payment option, or a
payee who is not a natural person (for example, a corporation), or a payee who
is a fiduciary. Also, the details of all arrangements will be subject to our
rules at the time the arrangements are selected and take effect. This includes
rules on the minimum amount we will pay under an option, minimum amounts for
installment payments, withdrawal or commutation rights (your rights to receive
payments over time, for which we may offer a lump sum payment), the naming of
people who are entitled to receive payment and their successors, and the ways of
proving age and survival.
YOUR BENEFICIARY
You name your beneficiary when you apply for the policy. The beneficiary is
entitled to the insurance benefits of the policy. You may change the beneficiary
during the insured person's lifetime by writing to our Administrative Office. If
no beneficiary is living when the insured person dies, we will pay the death
benefit in equal shares to the insured person's surviving children. If there are
no surviving children, we will pay the death benefit to the insured person's
estate.
ASSIGNING YOUR POLICY
You may assign (transfer) your rights in the policy to someone else as
collateral for a loan or for some other reason. A copy of the assignment must be
forwarded to our Administrative Office. We are not responsible for any payment
we make or any action taken before we receive notice of the assignment or for
the validity of the assignment. An absolute assignment is a change of ownership.
BECAUSE THERE MAY BE TAX CONSEQUENCES INCLUDING THE LOSS OF INCOME TAX-FREE
TREATMENT FOR ANY DEATH BENEFIT PAYABLE TO THE BENEFICIARY, YOU SHOULD CONSULT
YOUR TAX ADVISER PRIOR TO MAKING AN ASSIGNMENT.
WHEN WE PAY POLICY PROCEEDS
We will pay any death benefits, maturity benefit, Net Cash Surrender Value or
loan proceeds within seven days after we receive the last required form or
request (and other documents that may be required for payment of death benefits)
at our Administrative Office. Death benefits are determined as of the date of
death of the insured person and will not be affected by subsequent changes in
the unit values of the divisions of the Separate Account. Death benefits will
generally be paid through the Equitable Access Account, an interest bearing
checking account. A beneficiary will have immediate access to the proceeds by
writing a check on the account. We pay interest from the date of death to the
date the Equitable Access Account is closed. If an Equitable agent helps the
beneficiary of a policy to prepare the documents that are required for payment
of the death benefit, we will send the Equitable Access Account checkbook to the
agent within seven days after we receive the required documents. The agent will
deliver the checkbook to the beneficiary.
19
<PAGE>
We may, however, delay payment if we contest the policy. We may also delay
payment if we cannot determine the amount of the payment because the New York
Stock Exchange is closed, because trading in securities has been restricted by
the SEC, or because the SEC has declared that an emergency exists. In addition,
if necessary to protect our policyowners, we may delay payment where permitted
under applicable law.
We may defer payment of any Net Cash Surrender Value or loan amount (except a
loan to pay a premium to us) from the Guaranteed Interest Division for up to six
months after we receive your request. We will pay interest of at least 3% a year
from the date we receive your request if we delay more than 30 days in paying
you such amounts from the Guaranteed Interest Division.
DIVIDENDS
No dividends are paid on the policy described in this prospectus.
REGULATION
We are regulated and supervised by the New York State Insurance Department. In
addition, we are subject to the insurance laws and regulations in every
jurisdiction where we sell policies. As a result, the provisions of the
Incentive Life policy may vary somewhat from jurisdiction to jurisdiction. State
variations will be covered by a supplement to this prospectus or policy
endorsement as appropriate.
The Second Series Incentive Life policy (Plan No. 88-300) has been filed with
and approved by insurance officials in 50 states, Puerto Rico and the Virgin
Islands. No Incentive Life policy is available in the District of Columbia. We
submit annual reports on our operations and finances to insurance officials in
all the jurisdictions where we sell policies. The officials are responsible for
reviewing our reports to be sure that we are financially sound.
SPECIAL CIRCUMSTANCES
Equitable Variable may vary the charges and other terms of Incentive Life where
special circumstances result in sales or administrative expenses or mortality
risks that are different than those normally associated with Incentive Life
policies. These variations will be made only in accordance with uniform rules
that we establish.
OUR SPECIAL OFFER POLICY. In 1989, Equitable Variable introduced its Second
Series Incentive Life policy, which is the policy described in this prospectus.
Subject to the rules discussed below, Equitable Variable will offer a modified
version of the First Series Incentive Life policy (the "Special Offer Policy")
to qualified offerees. Set forth below are modifications to the discussion in
this prospectus which are appropriate with respect to the Special Offer Policy.
o ADDING INTEREST IN THE GUARANTEED INTEREST DIVISION (page 6). Interest
credited to any loaned amounts in the Guaranteed Interest Division is
allocated to the unloaned portion of the Guaranteed Interest Division at the
end of the policy month.
o FLEXIBLE PREMIUMS (page 7). We have not reserved the right to limit the
amount of any premium payments which are in addition to your planned premium.
o TRANSFERS OF POLICY ACCOUNT VALUE (page 10). You may tell us how much of the
charge, if any, for transfers of Policy Account value to allocate to your
values in each of the divisions of the Separate Account or to the unloaned
value in the Guaranteed Interest Division. If you do not provide specific
instructions, we will allocate the charge as described under HOW POLICY
ACCOUNT CHARGES ARE ALLOCATED on page 13.
o BORROWING FROM YOUR POLICY ACCOUNT (page 11). You may borrow up to 100% of
your policy's Net Cash Surrender Value.
o PARTIAL WITHDRAWALS FROM YOUR POLICY ACCOUNT (page 11). We have not reserved
the right to decline a request for a partial withdrawal. However, any such
request will be subject to our approval and the conditions listed on page 11.
o ALLOCATION OF WITHDRAWALS AND CHARGES (page 12). You may specify how much of
the withdrawal you want taken from your amounts in each of the divisions of
the Separate Account and your unloaned amounts in the Guaranteed Interest
Division. If you do not provide specific instructions or we cannot make the
withdrawal in accordance with your directions, we will withdraw the amount in
the manner described for deductions under HOW POLICY ACCOUNT CHARGES ARE
ALLOCATED on page 13. Unless you specify otherwise, the charge for partial
withdrawals will also be deducted in this manner.
o DEDUCTIONS FROM YOUR PREMIUMS (page 12). Regardless of the mode of premium
payment selected on your application, a $250 administrative charge will be
deducted from your initial premium.
o CURRENT COST OF INSURANCE RATES are generally less than those under the
Second Series Incentive Life policy. However, the current rates for females
at certain ages and for females who do not qualify as non-smokers are higher
than those that are applicable to females under the Second Series Incentive
Life policy. Moreover, the current annual cost of insurance rates under the
Special Offer Policy for male non-smokers at certain issue ages in later
policy years may be higher than rates under the Second Series Incentive Life
policy for these insureds, but over the life of the contract the cumulative
current cost of insurance rates for the Special Offer Policy are lower than
those under the Second Series Incentive Life policy. Also, if the Face Amount
of a Special Offer Policy is reduced below $200,000, higher current cost of
insurance rates will apply.
The current rates for the Special Offer Policy, unlike those for the Second
Series Incentive Life policy, do not vary depending on duration. This means
that the current rate is the same for all Special Offer Policies of the same
Face Amount on an insured person of the same age, rating class and smoker
status -- regardless of how many policy years the policies have been in
effect.
THE MAXIMUM COST OF INSURANCE RATES under the Special Offer Policy are the
same as those that apply to males under the Second Series policy. As a
result, a female would have higher maximum rates under the Special Offer
Policy than under the Second Series policy. The maximum rates will be set
forth in the Special Offer Policy when it is issued. See COST OF INSURANCE
CHARGE on page 12.
20
<PAGE>
o THE SURRENDER CHARGES imposed on face amount decreases will be modified by
shortening to five years the period to which the pro-rata surrender charge
applies, and by not imposing this charge unless the cumulative reduction in
Face Amount for a policy exceeds 20% of the initial Face Amount. The modified
surrender charges will be set forth in the Special Offer Policy when it is
issued. See SURRENDER CHARGE on page 13.
Under Equitable Variable's current rules, the Special Offer Policy will be
offered where the following conditions are met:
o an employer-employee relationship is present;
o a minimum of five policies are issued, each on the life of a different
eligible insured person;
o the persons proposed to be insured under the policies are deemed by us to be
highly compensated individuals;
o the initial Face Amount of each of the policies is $500,000 or greater;
o the minimum initial premium under each of the policies is remitted to
Equitable Variable by the employer; and
o certain undertakings, which may be required by Equitable Variable in certain
situations, have been submitted to Equitable Variable.
EQUITABLE VARIABLE MAY MODIFY THESE RULES FROM TIME TO TIME AND MAY ALSO
TERMINATE OFFERING THE SPECIAL OFFER POLICY AT ANY TIME.
DISTRIBUTION
Prior to May 1, 1994, we were the principal underwriter of the Trust under a
Distribution Agreement. In addition, Equitable distributed our policies under a
Sales Agreement. Effective May 1, 1994, these underwriting and distribution
responsibilities will be transferred to Equico Securities, Inc. (Equico), a
wholly-owned subsidiary of Equitable, whose principal business address is 1755
Broadway, New York, NY 10019. Equico is registered with the SEC as a
broker-dealer under the Securities Exchange Act of 1934 (the Exchange Act) and
is a member of the National Association of Securities Dealers, Inc. Equico will
be paid a fee for its services as distributor of our policies.
We sell our policies through agents who are licensed by state insurance
officials to sell our variable life policies. These agents are also registered
representatives of Equico. The agent who sells you this policy receives sales
commissions from Equitable. We reimburse Equitable from our own resources,
including any Surrender Charges we might collect. Generally, during the first
policy year, the agent will receive an amount equal to a maximum of 40% of the
premiums paid up to a certain amount and 3% of the premiums paid in excess of
that amount. For policy years two through ten, the agent receives an amount up
to a maximum of 8% of the premiums paid up to a certain amount and 3% of the
premiums paid in excess of that amount; and, for years eleven and later, the
agent receives an amount up to 3% of the premiums paid. Following a Face Amount
increase, commissions on a portion of the premium will be calculated using first
year commission rates. Agents with limited years of service may be paid
differently. Commissions paid to agents based upon refunded premiums may be
recovered.
We also sell our policies through independent brokers who are licensed by state
insurance officials to sell our variable life policies. They will also be
registered representatives either of Equico or of another company registered
with the SEC as a broker-dealer under the Exchange Act. The commissions for
independent brokers will be no more than those for agents and the same policy
for recovery of commissions applies. Commissions will be paid through the
registered broker-dealer.
Equitable performs certain sales and administrative duties for us, pursuant to a
written agreement which is automatically renewed each year, unless either party
terminates. Under this agreement, we pay Equitable for salary costs and other
services and an amount for indirect costs incurred through our use of Equitable
personnel and facilities. We also reimburse Equitable for sales expenses related
to business other than variable life insurance policies. The amounts paid and
accrued to Equitable by us under the sales and services agreements totalled
approximately $355.7 million in 1993, $374.9 million in 1992, and $336.6 million
in 1991.
LEGAL PROCEEDINGS
We are not involved in any material legal proceedings.
ACCOUNTING AND ACTUARIAL EXPERTS
The financial statements of Equitable Variable and of the Separate Account
included in this prospectus have been audited for the year ended December 31,
1993 by Price Waterhouse and for the years ended December 31, 1992 and 1991 by
Deloitte & Touche, as stated in their respective reports. The financial
statements of the Separate Account and Equitable Variable for the year ended
December 31, 1993 included in this prospectus have been so included in reliance
on the report of Price Waterhouse, independent accountants, given on the
authority of such firm as experts in accounting and auditing. The financial
statements of the Separate Account and Equitable Variable for the years ended
December 31, 1992 and 1991 included in this prospectus have been so included in
reliance on the reports of Deloitte & Touche, independent accountants, given
upon the authority of such firm as experts in accounting and auditing.
The financial statements of Equitable Variable contained in this prospectus
should be considered only as bearing upon the ability of Equitable Variable to
meet its obligations under the Incentive Life policies. They should not be
considered as bearing upon the investment experience of the divisions of the
Separate Account.
Actuarial matters in this prospectus have been examined by Barbara Fraser,
F.S.A., M.A.A.A., who is a Vice President and Actuary of Equitable. Her opinion
on actuarial matters is filed as an exhibit to the Registration Statement we
filed with the SEC.
21
<PAGE>
ADDITIONAL INFORMATION
We have filed a Registration Statement relating to the Separate Account and the
variable life insurance policy described in this prospectus with the SEC. The
Registration Statement, which is required by the Securities Act of 1933,
includes additional information that is not required in this prospectus under
the rules and regulations of the SEC. If you would like the additional
information, you may obtain it from the SEC's main office in Washington, D.C.
You will have to pay a fee for the material.
MANAGEMENT
Here is a list of our directors and principal officers and a brief statement of
their business experience for the past five years. Unless otherwise noted, the
following persons have been involved in the management of Equitable and its
subsidiaries in various positions for the last five years. Unless otherwise
noted, their address is 787 Seventh Avenue, New York, New York 10019.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ---------------- ----------------------
DIRECTORS
<S> <C>
Michel Beaulieu.............. Director of Equitable Variable since February 1992. Senior Vice President, Equitable, since
September 1991; prior thereto, Chief Life Actuary AXA group 1989 to 1991; Managing Director
Blondeau & CIE (France) 1986 to 1989. Director, Equity & Law (London).
Jerry de St Paer............. Director of Equitable Variable since April 1992. Executive Vice President & Chief Financial
Officer, Equitable, since April 1992; prior thereto, Executive Vice President since December
1990; Senior Vice President & Treasurer June 1990 to December 1990; Senior Vice President,
Equitable Investment Corporation January 1987 to January 1991; Executive Vice President & Chief
Financial Officer, Equitable Companies Inc. since May 1992; Director, Economic Services
Corporation & various Equitable subsidiaries.
William T. McCaffrey......... Director of Equitable Variable since February 1987. Executive Vice President, Equitable, since
February 1986 and Chief Administrative Officer since February 1988; prior thereto, various
other Equitable positions. Director, Equitable Foundation since September 1986.
Harvey Blitz................. Director of Equitable Variable since October 1992. Senior Vice President, Equitable since
September 1987. Senior Vice President, The Equitable Companies, Incorporated, since July 1992.
Director, Equico Securities, Inc., since September 1992; The Equitable of Colorado, since
September 1992; Traditional Equinet Business Corporation of New York and its subsidiaries since
October 1992.
Christophe Dupont-Madinier... Director of Equitable Variable since February 1993. Senior Vice President, AXA (Paris, France),
since 1988. Director, Donaldson, Lufkin & Jenrette, Inc.; Alliance Capital Management
Corporation, Equitable Real Estate Investment Management, Inc.
Pascal Thebe................. Director of Equitable Variable since February 1993. Vice President, Equitable, since March
1993. Prior thereto, Vice President, AXA (Paris), since March 1992; Vice President, Alpha
Assurances, since June 1989; Actuary, Drout Assurances, since 1986.
OFFICERS--DIRECTORS
James M. Benson.............. President, Equitable Variable since December, 1993; Vice Chairman of the Board, Equitable
Variable since July 1993. President and Chief Operating Officer, Equitable, February 1994 to
present; Senior Executive Vice President, April 1993 to February 1994. Prior thereto,
President, Management Compensation Group, 1983 to February 1993.
Gordon Dinsmore.............. Senior Vice President, Equitable Variable, since February 1991. Senior Vice President,
Equitable since September 1989; prior thereto, various other Equitable positions. Director and
Senior Vice President, March 1991 to present, Equitable of Colorado; Director, FHJV Holdings,
Inc., December 1990 to present; Director, Equitable Capital Securities Corporation, August 1993
to present, and Director Equitable Foundation, May 1991 to present.
Richard H. Jenrette.......... Senior Investment Officer, Equitable Variable, since September 1988; Chairman and Chief
Executive Officer, The Equitable Companies Incorporated, since May 1992; Chairman of Executive
Committee, Equitable, since February 1994. Prior thereto, Chairman since May 1987. Chairman and
Chief Executive Officer from May 1990 to September 1992. Chairman, Donaldson, Lufkin and
Jenrette, Inc., since December 1973. Director, AXA since July 1991 and various other Equitable
subsidiaries. Director, McGraw-Hill, Inc., since January 1993.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ---------------- ----------------------
<S> <C>
OFFICERS--DIRECTORS (Continued)
James S. Kalmer.............. Senior Vice President, Equitable Variable, since February 1991. Vice President since December
1987. Senior Vice President, Equitable, since September 1989, prior thereto, Vice President.
Director, Traditional Equinet Business Corporation of New York (TRAEBCO) and its subsidiaries
since March 1991.
Joseph J. Melone............. Chairman of the Board and Chief Executive Officer, Equitable Variable, since November 1990;
Chairman of the Board and Chief Executive Officer, Equitable, February 1994 to present;
President and Chief Executive Officer, September 1992 to February 1994; President and Chief
Operating Officer from November 1990 to September 1992. President and Chief Operating Officer
of The Equitable Companies Incorporated since July 1992. Prior thereto, President, The
Prudential Insurance Company of America, since December 1984. Director, Equity & Law (United
Kingdom) and various other Equitable subsidiaries.
Brian O'Neil................. Senior Vice President and Chief Investment Officer, Equitable Variable, since October 1992.
Executive Vice President & Chief Investment Officer, Equitable, since April 1992; prior
thereto; Senior Vice President since February 1989; Vice President from July 1988 to February
1989. Senior Vice President, Equitable Capital, from November 1987 to March 1989.
Samuel B. Shlesinger......... Senior Vice President, Equitable Variable, since February 1988. Senior Vice President and
Actuary, Equitable; prior thereto, Vice President and Actuary.
Dennis D. Witte.............. Senior Vice President, Equitable Variable, since February 1991; Senior Vice President,
Equitable, since July 1990; prior thereto, various other Equitable positions.
OFFICERS
J. Thomas Liddle, Jr......... Senior Vice President and Chief Financial Officer, Equitable Variable, since February 1986.
Senior Vice President, Equitable since April 1991; prior thereto, Vice President and Actuary,
Equitable.
Franklin Kennedy, III........ Vice President, Equitable Variable, since August 1981. Senior Vice President, Alliance Capital
1345 Avenue of the Americas Management Corporation, July 1993 to present; Senior Vice President, Equitable Capital
New York, New York 10105 Management Corporation, March 1987 to July 1993. Vice President, The Hudson River Trust.
Managing Director and Chief Investment Officer, Equitable Investment Management Corporation,
from November 1983 to January 1987.
William A. Narducci.......... Vice President and Chief Claims Officer, Equitable Variable since February 1989. Vice
200 Plaza Drive President, Equitable since February 1988; prior thereto, Assistant Vice President.
Secaucus, New Jersey 07096
John P. Natoli............... Vice President and Chief Underwriting Officer, Equitable Variable, since February 1988. Vice
2 Penn Plaza President, Equitable.
New York, New York 10121
Molly K. Heines.............. Secretary, Equitable Variable, since February 1991; Vice President and Secretary, Equitable,
since July 1990; prior thereto, Vice President & Counsel.
Kevin R. Byrne............... Treasurer, Equitable Variable, since September 1990; Vice President and Treasurer, Equitable
Life since September 1993; prior thereto, Vice President from March 1989 to September 1993.
Vice President and Treasurer, The Equitable Companies Incorporated, September 1993 to present;
Frontier Trust since August 1990; Traditional Equinet Business Corporation of New York
(TRAEBCO) and its subsidiaries October 1990 to present.
Stephen Hogan................ Vice President and Controller, Equitable Variable, February 1994 to present. Vice President,
Equitable, January 1994 to present; prior thereto, Controller, John Hancock subsidiaries, from
1987 to December 1993.
</TABLE>
23
<PAGE>
PART 4: ILLUSTRATIONS OF POLICY BENEFITS
To help clarify how the key financial elements of the policy work, a series of
tables has been prepared. The tables show how death benefits, Policy Account and
Cash Surrender Values ("policy benefits") under hypothetical Incentive Life
policies could vary over time if the divisions of our Separate Account had
CONSTANT hypothetical gross annual investment returns of 0%, 6% or 12% over the
years covered by each table. Actual policy benefits will differ from those shown
in the tables if the annual investment returns AVERAGE 0%, 6% or 12% over a
period of years but go above or below those figures in individual policy years.
Actual policy benefits will also differ, depending on your premium allocations
to each division, if the overall actual rates of return averaged 0%, 6% or 12%,
but went above or below those figures for the individual investment divisions.
The tables are for a 40 year old standard risk male non-smoker. Planned premium
payments of $3,000 for an initial Face Amount of $200,000 are assumed to be paid
at the beginning of each policy year. The difference between the Policy Account
and the Cash Surrender Values in the first ten years is the surrender charge.
See SURRENDER Charge on page 14.
The tables illustrate cost of insurance and expense charges (policy cost
factors) at both the current rates and at the maximum rates guaranteed in the
policies. Beginning in year eleven, the current charges reflect the lower
current cost of insurance rates applicable to policies in effect for longer than
ten policy years. The amounts shown at the end of each policy year reflect a
daily charge against the Separate Account investment divisions of .60% for
mortality and expense risks, .50% for investment management and .10% for direct
Trust expenses. The assumption for investment management fees is no less than
the average of the effective annual advisory fees applicable to each Trust
portfolio during 1993 and the maximum advisory fee for the Equity Index
Portfolio. The charge reflected for direct Trust expenses is no less than the
aggregate actual charges incurred by the portfolios of the Trust as a percentage
of aggregate average daily Trust net assets during 1993. The effect of these
adjustments is that on a 0% gross rate of return the net rate of return would be
- -1.20%, on 6% it would be 4.73%, and on 12% it would be 10.66%. Remember,
however, that investment management fees and direct Trust expenses vary by
portfolio. See THE TRUST'S INVESTMENT ADVISER on page 4.
The Tables assume an initial administrative charge of $250 and an applicable tax
rate of 2% of premiums for the deduction for premium taxes. There are tables for
both death benefit Option A and death benefit Option B and each option is
illustrated using current and guaranteed policy cost factors. The current tables
assume that the monthly administrative charge remains constant at $6. The
guaranteed tables assume that the monthly charge is $6 in the first year and $8
thereafter. The tables reflect the fact that no charge is currently made for
Federal taxes. If a charge is made for those taxes in the future, it will take a
higher rate of return to produce after-tax returns of 0%, 6% or 12%.
The second column of each table shows the effect of an amount equal to the
premiums invested to earn interest, after taxes, of 5% compounded annually.
These tables show that if a policy is returned in its very early years for
payment of its Cash Surrender Value, that Cash Surrender Value will be low in
comparison to the amount of the premiums accumulated with interest. Thus, the
cost of owning your policy for a relatively short time will be high.
The internal rate of return on Cash Surrender Value is equivalent to an interest
rate (after taxes) at which an amount equal to the illustrated premiums could
have been invested outside the Policy to arrive at the Cash Surrender Value of
the Policy. The internal rate of return on the death benefit is equivalent to an
interest rate (after taxes) at which an amount equal to the illustrated premiums
could have been invested outside the Policy to arrive at the death benefit of
the Policy. The internal rate of return is compounded annually, and the premiums
are assumed to be paid at the beginning of each policy year.
INDIVIDUAL ILLUSTRATIONS. On request, we will furnish you with a comparable
illustration based on the age and sex of the proposed insured person, standard
risk assumptions and an initial Face Amount and planned premium of your choice.
If you purchase a policy, we will, on request, deliver an individualized
illustration reflecting the planned premium you have chosen and the insured
person's actual risk class. Upon request after issuance, we will also provide a
comparable illustration reflecting your actual Policy Account value. If you
request illustrations more than once in any policy year, we may charge for the
illustration.
24
<PAGE>
INCENTIVE LIFE
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
PLANNED PREMIUM $3,000 INITIAL FACE AMOUNT $200,000
MALE AGE 40
NON-SMOKER DEATH BENEFIT OPTION A
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT(2) POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ------------------------------ ----------------------------- -----------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -------- -------- -------- ------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 $200,000 $200,000 $200,000 $ 2,223 $ 2,369 $ 2,515 $ 1,474 $ 1,620 $ 1,766
2 6,458 200,000 200,000 200,000 4,648 5,093 5,555 3,629 4,074 4,536
3 9,930 200,000 200,000 200,000 7,016 7,918 8,892 5,876 6,778 7,752
4 13,577 200,000 200,000 200,000 9,332 10,853 12,563 8,192 9,713 11,423
5 17,406 200,000 200,000 200,000 11,593 13,901 16,599 10,453 12,761 15,459
6 21,426 200,000 200,000 200,000 13,800 17,068 21,044 12,660 15,928 19,904
7 25,647 200,000 200,000 200,000 15,930 20,337 25,919 15,018 19,425 25,007
8 30,080 200,000 200,000 200,000 17,986 23,716 31,275 17,302 23,032 30,591
9 34,734 200,000 200,000 200,000 19,976 27,219 37,174 19,520 26,763 36,718
10 39,620 200,000 200,000 200,000 21,899 30,850 43,677 21,671 30,622 43,449
15 67,972 200,000 200,000 200,000 31,113 51,852 88,626 31,113 51,852 88,626
20 104,158 200,000 200,000 220,001 39,113 78,063 164,180 39,113 78,063 164,180
25 (age 65) $150,340 $200,000 $200,000 $353,037 $44,977 $110,499 $289,375 $44,977 $110,499 $289,375
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON CASH SURRENDER VALUES ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ACCUMULATED --------------------------- ---------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
------ ----------- ------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 -50.85% -46.00% -41.14% 6,566.67% 6,566.67% 6,566.67%
2 6,458 -29.18 -23.19 -17.25 668.03 668.03 668.03
3 9,930 -19.85 -13.52 -7.28 267.20 267.20 267.20
4 13,577 -14.70 -8.28 -1.96 153.63 153.63 153.63
5 17,406 -11.81 -5.34 1.01 103.51 103.51 103.51
6 21,426 -9.98 -3.48 2.88 76.08 76.08 76.08
7 25,647 -8.39 -1.95 4.37 59.05 59.05 59.05
8 30,080 -7.33 -0.92 5.37 47.57 47.57 47.57
9 34,734 -6.57 -0.18 6.09 39.36 39.36 39.36
10 39,620 -6.01 0.37 6.64 33.24 33.24 33.24
15 67,972 -4.77 1.75 8.08 17.17 17.17 17.17
20 104,158 -4.28 2.44 8.85 10.46 10.46 11.23
25 (age 65) $150,340 -4.21% 2.86% 9.28% 6.90% 6.90% 10.53%
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE VALUES FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE VALUES
FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE
INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT
AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF THE ACTUAL RATES
OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
25
<PAGE>
INCENTIVE LIFE
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
PLANNED PREMIUM $3,000 INITIAL FACE AMOUNT $200,000
MALE AGE 40
NON-SMOKER DEATH BENEFIT OPTION A
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT(2) POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ------------------------------ ----------------------------- -----------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -------- -------- -------- ------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 $200,000 $200,000 $200,000 $ 2,223 $ 2,369 $ 2,515 $ 1,474 $ 1,620 $ 1,766
2 6,458 200,000 200,000 200,000 4,368 4,804 5,258 3,349 3,785 4,239
3 9,930 200,000 200,000 200,000 6,440 7,307 8,247 5,300 6,167 7,107
4 13,577 200,000 200,000 200,000 8,436 9,878 11,504 7,296 8,738 10,364
5 17,406 200,000 200,000 200,000 10,356 12,520 15,060 9,216 11,380 13,920
6 21,426 200,000 200,000 200,000 12,193 15,229 18,943 11,053 14,089 17,803
7 25,647 200,000 200,000 200,000 13,948 18,011 23,189 13,036 17,099 22,277
8 30,080 200,000 200,000 200,000 15,618 20,865 27,838 14,934 20,181 27,154
9 34,734 200,000 200,000 200,000 17,199 23,792 32,933 16,743 23,336 32,477
10 39,620 200,000 200,000 200,000 18,685 26,792 38,523 18,457 26,564 38,295
15 67,972 200,000 200,000 200,000 24,383 42,756 76,001 24,383 42,756 76,001
20 104,158 200,000 200,000 200,000 26,069 59,873 137,900 26,069 59,873 137,900
25 (age 65) $150,340 $200,000 $200,000 $295,407 $21,697 $77,659 $242,137 $21,697 $77,659 $242,137
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON CASH SURRENDER VALUES ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ACCUMULATED --------------------------- ---------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
------ ----------- ------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 -50.85% -46.00% -41.14% 6,566.67% 6,566.67% 6,566.67%
2 6,458 -33.11 -27.05 -21.04 668.03 668.03 668.03
3 9,930 -24.23 -17.74 -11.35 267.20 267.20 267.20
4 13,577 -18.94 -12.29 -5.78 153.63 153.63 153.63
5 17,406 -15.82 -9.07 -2.48 103.51 103.51 103.51
6 21,426 -13.80 -6.96 -0.31 76.08 76.08 76.08
7 25,647 -11.95 -5.14 1.48 59.05 59.05 59.05
8 30,080 -10.67 -3.87 2.74 47.57 47.57 47.57
9 34,734 -9.75 -2.93 3.67 39.36 39.36 39.36
10 39,620 -9.07 -2.22 4.39 33.24 33.24 33.24
15 67,972 -8.14 -0.64 6.31 17.17 17.17 17.17
20 104,158 -8.84 -0.02 7.39 10.46 10.46 10.46
25 (age 65) $150,340 -11.66% 0.27% 8.14% 6.90% 6.90% 9.41%
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE VALUES FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE VALUES
FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE
INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT
AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF THE ACTUAL RATES
OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
26
<PAGE>
INCENTIVE LIFE
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
PLANNED PREMIUM $3,000 INITIAL FACE AMOUNT $200,000
MALE AGE 40
NON-SMOKER DEATH BENEFIT OPTION B
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT(2) POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ------------------------------ ----------------------------- -----------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -------- -------- -------- ------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 $202,219 $202,364 $202,510 $ 2,219 $ 2,364 $ 2,510 $ 1,470 $ 1,615 $ 1,761
2 6,458 204,634 205,077 205,538 4,634 5,077 5,538 3,615 4,058 4,519
3 9,930 206,987 207,884 208,854 6,987 7,884 8,854 5,847 6,744 7,714
4 13,577 209,281 210,793 212,491 9,281 10,793 12,491 8,141 9,653 11,351
5 17,406 211,513 213,802 216,477 11,513 13,802 16,477 10,373 12,662 15,337
6 21,426 213,684 216,919 220,853 13,684 16,919 20,853 12,544 15,779 19,713
7 25,647 215,767 220,120 225,630 15,767 20,120 25,630 14,855 19,208 24,718
8 30,080 217,766 223,411 230,853 17,766 23,411 30,853 17,082 22,727 30,169
9 34,734 219,687 226,802 236,575 19,687 26,801 36,575 19,231 26,346 36,119
10 39,620 221,528 230,294 242,847 21,528 30,294 42,847 21,300 30,066 42,619
15 67,972 230,213 250,198 285,575 30,213 50,198 85,575 30,213 50,198 85,575
20 104,158 237,352 274,100 355,145 37,352 74,100 155,145 37,352 74,100 155,145
25 (age 65) $150,340 $241,716 $301,502 $467,469 $41,716 $101,502 $267,469 $41,716 $101,502 $267,469
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON CASH SURRENDER VALUES ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ACCUMULATED --------------------------- ---------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
------ ----------- ------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 -51.00% -46.16% -41.31% 6,640.62% 6,645.47% 6,650.32%
2 6,458 -29.37 -23.40 -17.47 677.41 678.31 679.23
3 9,930 -20.07 -13.75 -7.52 271.92 272.51 273.16
4 13,577 -14.93 -8.52 -2.21 156.99 157.52 158.12
5 17,406 -12.05 -5.60 0.74 106.25 106.78 107.39
6 21,426 -10.24 -3.75 2.60 78.47 79.02 79.67
7 25,647 -8.67 -2.23 4.08 61.22 61.79 62.51
8 30,080 -7.62 -1.21 5.07 49.58 50.19 50.97
9 34,734 -6.88 -0.49 5.77 41.25 41.90 42.75
10 39,620 -6.34 0.04 6.30 35.03 35.72 36.66
15 67,972 -5.17 1.35 7.68 18.70 19.61 21.05
20 104,158 -4.77 1.97 8.38 11.84 12.99 15.04
25 (age 65) $150,340 -4.88% 2.25% 8.78% 8.13% 9.54% 12.26%
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE VALUES FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE VALUES
FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE
INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT
AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF THE ACTUAL RATES
OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
27
<PAGE>
INCENTIVE LIFE
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
PLANNED PREMIUM $3,000 INITIAL FACE AMOUNT $200,000
MALE AGE 40
NON-SMOKER DEATH BENEFIT OPTION B
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT(2) POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ------------------------------ ----------------------------- -----------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -------- -------- -------- ------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 $202,219 $202,364 $202,510 $ 2,219 $ 2,364 $ 2,510 $ 1,470 $ 1,615 $ 1,761
2 6,458 204,348 204,782 205,234 4,348 4,782 5,234 3,329 3,763 4,215
3 9,930 206,396 207,257 208,189 6,396 7,257 8,189 5,256 6,117 7,049
4 13,577 208,358 209,785 211,394 8,358 9,785 11,394 7,218 8,645 10,254
5 17,406 210,233 212,367 214,873 10,233 12,367 14,873 9,093 11,227 13,733
6 21,426 212,014 214,998 218,646 12,014 14,998 18,646 10,874 13,858 17,506
7 25,647 213,700 217,677 222,744 13,700 17,677 22,744 12,788 16,765 21,832
8 30,080 215,286 220,401 227,194 15,286 20,401 27,194 14,602 19,717 26,510
9 34,734 216,768 223,166 232,028 16,768 23,166 32,028 16,312 22,710 31,572
10 39,620 218,139 225,965 237,277 18,139 25,965 37,277 17,911 25,737 37,049
15 67,972 222,944 240,071 270,986 22,944 40,071 70,986 22,944 40,071 70,986
20 104,158 223,042 252,752 321,068 23,042 52,752 121,068 23,042 52,752 121,068
25 (age 65) $150,340 $216,376 $260,970 $395,276 $16,376 $60,970 $195,276 $16,376 $60,970 $195,276
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON CASH SURRENDER VALUES ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ACCUMULATED --------------------------- ---------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
------ ----------- ------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 -51.00% -46.16% -41.31% 6,640.62% 6,645.47% 6,650.32%
2 6,458 -33.39 -27.35 -21.35 676.84 677.71 678.62
3 9,930 -24.58 -18.11 -11.73 271.52 272.10 272.72
4 13,577 -19.33 -12.70 -6.19 156.66 157.16 157.73
5 17,406 -16.24 -9.51 -2.93 105.95 106.45 107.02
6 21,426 -14.25 -7.43 -0.79 78.19 78.70 79.31
7 25,647 -12.43 -5.63 0.97 60.95 61.47 62.14
8 30,080 -11.18 -4.39 2.21 49.31 49.86 50.59
9 34,734 -10.29 -3.48 3.11 40.98 41.57 42.36
10 39,620 -9.65 -2.81 3.80 34.76 35.38 36.25
15 67,972 -9.01 -1.46 5.51 18.35 19.16 20.48
20 104,158 -10.36 -1.24 6.29 11.34 12.34 14.24
25 (age 65) $150,340 -15.27% -1.63% 6.74% 7.41% 8.62% 11.23%
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE VALUES FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE VALUES
FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE
INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT
AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF THE ACTUAL RATES
OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
28
<PAGE>
APPENDIX A
COMMUNICATING PERFORMANCE DATA
In reports or other communications to policyowners or in advertising material,
we may describe general economic and market conditions affecting the Separate
Account and the Trust and may compare the performance or ranking of the Separate
Account investment divisions and Trust portfolios with (1) that of other
insurance company separate accounts or mutual funds included in the rankings
prepared by Lipper Analytical Services, Inc., Morningstar, Inc. or similar
investment services that monitor the performance of insurance company separate
accounts or mutual funds, (2) other appropriate indices of investment securities
and averages for peer universes of funds, or (3) data developed by us derived
from such indices or averages. Advertisements or other communications furnished
to present or prospective policyowners may also include evaluations of a
Separate Account Division or Trust portfolio by financial publications that are
nationally recognized such as Barron's, Morningstar's Variable Annuity/Life
Sourcebook, Business Week, Forbes, Fortune, Institutional Investor, Money,
Kiplinger's Personal Finance, Financial Planning, Investment Adviser, Investment
Management Weekly, Money Management Letter, Investment Dealers Digest, National
Underwriter, Pension & Investments Age, USA Today, Investor's Daily, the New
York Times, The Wall Street Journal, the Los Angeles Times and the Chicago
Tribune.
Performance data for peer universes of funds with similar investment objectives
are compiled by Lipper Analytical Services, Inc. (Lipper) in its Lipper Variable
Insurance Products Performance Analysis Service (Lipper Survey) and Morningstar,
Inc. in the Morningstar Variable Annuity/Life Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 funds
underlying variable annuity and life insurance products. The Lipper Survey
divides these actively managed funds into 25 categories by portfolio objectives.
The Lipper Survey contains two different universes, which differ in terms of the
types of fees reflected in performance data. The "Separate Account" universe
reports performance data net of investment management fees, direct operating
expenses and asset-based charges applicable under variable insurance and annuity
contracts. The "Mutual Fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects
asset-based charges that relate only to the underlying mutual fund. This means
that the performance data reported by the Trust may appear relatively more
favorable than the performance data reported by the Separate Account divisions.
The Morningstar 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.
LONG-TERM MARKET TRENDS
As a tool for understanding how different investment strategies may affect
long-term results, it may be useful to consider the historical returns on
different types of assets. The following chart presents historical return trends
for various types of securities. The information presented, while not directly
related to the performance of the investment divisions of the Separate Account
or the Trust portfolios, may help to provide a perspective on the potential
returns of different asset classes over different periods of time. By combining
this information with your knowledge of your own financial needs, you may be
able to better determine how you wish to allocate your Incentive Life premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long or short-term debt securities, although
common stocks have been subject to more dramatic changes in value over short
periods of time. The Common Stock Division of the Separate Account may,
therefore, be a desirable selection for policyowners who are willing to accept
such risks. Policyowners who have a need to limit short-term risk, may find it
preferable to allocate a smaller percentage of their net premiums to those
investment divisions that invest primarily in common stock. Any investment in
securities, whether equity or debt, involves varying degrees of potential risk,
in addition to offering varying degrees of potential reward.
The chart on page A-2 illustrates the average annual compound rates of return
over selected time periods between December 31, 1925 and December 31, 1993 for
common stocks, long-term government bonds, long-term corporate bonds,
intermediate-term government bonds and Treasury Bills. The Consumer Price Index
is shown as a measure of inflation for comparison purposes. The average annual
returns assume the reinvestment of dividends, capital gains and interest.
The information presented is an historical record of unmanaged groups of
securities and is neither an estimate nor a guarantee of future results. In
addition, investment management fees and expenses and charges associated with a
variable life insurance policy, are not reflected.
The rates of return illustrated do not represent returns of the Separate Account
or the Trust and do not constitute a representation that the performance of the
investment divisions of the Separate Account or the Trust will correspond to
rates of return such as those illustrated in the chart. For a comparative
illustration of performance results of The Hudson River Trust, see page A-1 of
the Trust's prospectus.
A-1
<PAGE>
AVERAGE ANNUAL RATES OF RETURN
<TABLE>
<CAPTION>
INTER-
LONG-TERM LONG-TERM MEDIATE- U.S. CONSUMER
COMMON GOVT. CORPORATE TERM GOVT. TREAS. PRICE
STOCKS BONDS BONDS BONDS BILLS INDEX
------ ----- ----- ----- ----- -----
FOR THE
FOLLOWING
PERIODS ENDING
12/31/93:
- --------
<S> <C> <C> <C> <C> <C> <C>
1 year .......... 9.99% 18.24% 13.19% 11.24% 2.90% 3.00%
3 years ......... 15.63 15.08 14.07 11.25 3.99 2.99
5 years ......... 14.50 13.84 13.00 11.35 5.61 3.94
10 years ......... 14.94 14.41 14.00 11.43 6.35 3.73
20 years ......... 12.76 10.10 10.16 9.85 7.49 5.92
30 years ......... 10.46 7.37 7.69 8.17 6.65 5.32
40 years ......... 11.80 6.01 6.43 6.80 5.55 4.32
50 years ......... 12.30 5.21 5.57 5.74 4.61 4.35
60 years ......... 11.42 5.11 5.54 5.43 3.86 4.10
Since 1926 ....... 10.33 5.02 5.59 5.25 3.69 3.13
Inflation Adjusted
Since 1926 ....... 6.98 1.83 2.38 2.06 0.54 N/A
- ----------
<FN>
*Source: Ibbotson, Roger G. and Rex A. Sinquefield, STOCKS, BONDS, BILLS, AND
INFLATION (SBBI), 1982, updated in STOCKS, BONDS, BILLS, AND INFLATION 1994
YEARBOOK(TM), Ibbotson Associates, Inc., Chicago. All rights reserved.
Common Stocks (S&P 500)--Standard and Poor's Composite Index, an unmanaged
weighted index of the stock performance of 500 industrial, transportation,
utility and financial companies.
Long-term Government Bonds--Measured using a one-bond portfolio constructed
each year containing a bond with approximately a twenty year maturity and a
reasonably current coupon.
Long-term Corporate Bonds--For the period 1969-1993, represented by the Salomon
Brothers Long-Term, High-Grade Corporate Bond Index; for the period 1946-1968,
the Salomon Brothers' Index was backdated using Salomon Brothers' monthly yield
data and a methodology similar to that used by Salomon for 1969-1993; for the
period 1926-1945, the Standard and Poor's monthly High-Grade Corporate
Composite yield data were used, assuming a 4 percent coupon and a twenty year
maturity.
Intermediate-term Government Bonds--Measured by a one-bond portfolio
constructed each year containing a bond with approximately a five year
maturity.
U.S. Treasury Bills--Measured by rolling over each month a one-bill portfolio
containing, at the beginning of each month, the bill having the shortest
maturity not less than one month.
Inflation--Measured by the Consumer Price Index for all Urban Consumers
(CPI-U), not seasonally adjusted.
</FN>
</TABLE>
A-2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VM 485
HRT 102 (5/90)
- --------------------------------------------------------------------------------
---------------
BULK RATE
U.S. POSTAGE
PAID
Mailing Address: NEW YORK, N.Y.
2 Penn Plaza PERMIT NO. 8048
New York, New York 10121 ---------------
ADDRESS CORRECTION REQUESTED
RETURN POSTAGE GUARANTEED
<PAGE>
PART II
REPRESENTATION REGARDING REASONABLENESS OF
AGGREGATE POLICY FEES AND CHARGES
Equitable represents that the fees and charges deducted under the Policies
described in this Registration Statement, in the aggregate, are reasonable in
relation to the services rendered, the expenses to be incurred, and the risks
assumed by Equitable under the Policies, Equitable bases its representation on
its assessment of all of the facts and circumstances, including such relevant
factors as: the nature and extent of such services, expenses and risks, the need
for Equitable to earn a profit, the degree to which the Policies include
innovative features, and regulatory standards for the grant of exemptive relief
under the Investment Company Act of 1940 used prior to October 1996, including
the range of industry practice. This representation applies to all policies sold
pursuant to this Registration Statement, including those sold on the terms
specifically described in the prospectuses contained herein, or any variations
therein, based on supplements, data pages or riders to any policies or
prospectuses, or otherwise.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
Reconciliation and Tie, previously filed with this Registration Statement
File No. 333-17669 on December 11, 1996.
The Supplement dated May 1, 1998 consisting of 86 pages.
The Prospectus of Equitable Variable dated May 1, 1994 consisting of 65 pages.
Representation regarding reasonableness of aggregate policy fees and charges.
Undertaking to file reports, previously filed with this Registration Statement
File No. 333-17669 on December 11, 1996.
Undertaking pursuant to Rule 484(b)(1) under the Securities Act of 1933,
previously filed with this Registration Statement File No. 333-17669 on
December 11,1996.
The signatures.
Written Consents of the following persons:
Independent Public Accountants (see exhibit 6)
<TABLE>
<CAPTION>
The following exhibits: Exhibits required by Article IX, paragraph A of Form
N-8B-2:
<S> <C> <C>
1-A(1)(a)(i) Certified resolutions re Authority to Market Variable Life Insurance
and Establish Separate Accounts, previously filed with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(2) Inapplicable.
1-A(3)(a) See Exhibit 1-A(8).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
1-A(3)(b) Broker-Dealer and General Agent Sales Agreement, previously
filed with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(3)(c) See Exhibit 1-A(8)(i).
1-A(4) Inapplicable.
1-A(5)(a)(i) Flexible Premium Life Insurance Policy (85-300),
previously filed with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(a)(ii) Flexible Premium Life Insurance Policy (88-300),
previously filed with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(b) Name Change Endorsement (S97-1),
previously filed with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(c) Accidental Death Benefit Rider (R85-401),
including state variation, previously filed
with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(d) Term Insurance Rider (R85-403), including
state variation, previously filed with
this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(e) Children's Term Insurance Rider (R85-404),
including state variations, previously filed
with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(f) Exchange Privilege Rider (R85-405), including
state variations, previously filed with
this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(g) Limitation on Amount of Insurance Rider (85-406),
previously filed with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(h) Disability Rider - Waiver of Monthly Deductions,
including state variations (R85-408), previously filed with
this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(i) Universal Life Exchange Program Riders,
previously filed with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(j) Pro Rata Surrender Charge Endorsement (S.87-289),
previously filed with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(k) Premium Tax Endorsement (S.88-294), previously filed
with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(l) Monthly Cost of Insurance Endorsement
(S.88-295, Non-Smoker, Standard Risk),
previously filed with this Registration Statement File No.
333-17669 on December 11, 1996.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
1-A(5)(m) Asset Allocation Endorsement (S.89-301),
previously filed with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(n) Guaranteed Interest Division Transfer Endorsement (S.89-303)
and Guaranteed Interest Division Transfer
Rider (R.89-303) for use with Policy No. 85-300 (Investment Options Rider),
previously filed with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(5)(o) Accelerated Death Benefit Rider, previously filed with this Registration Statement File No.
333-17669 on December 11, 1996
1-A(5)(p) Free Look Rider, previously filed with this Registration Statement File No.
333-17669 on December 11, 1996
1-A(6)(a) Declaration and Charter of Equitable, as amended January 1, 1997, previously filed with this
Registration Statement File No. 333-17669 on April 30, 1997.
1-A(6)(b) By-Laws of Equitable, as amended November 21, 1996, previously filed with this
Registration Statement File No. 333-17669 on April 30, 1997.
1-A(7) Inapplicable.
1-A(8) Distribution and Servicing Agreement among EQ
Financial Consultants (formerly known as Equico
Securities, Inc.), Equitable and Equitable
Variable dated as of May 1,1994, previously filed
with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(8)(i) Schedule of Commissions, previously filed with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(9)(a) Agreement and Plan of Merger of Equitable
Variable with and into Equitable dated
September 19, 1996, previously filed with
this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(9)(b) Form of Participation Agreement among EQ Advisors Trust, Equitable,
Equitable Distributors, Inc. and EQ Financial Consultants, Inc.,
incorporated by reference to the this Registration Statement of EQ Advisors
Trust on Form N-1A (File Nos. 333-17217 and 811-07953).
Other Exhibits:
1-A(10)(a) Application EV4-200T, previously filed with this Registration Statement File No.
333-17669 on December 11, 1996.
1-A(10)(b) The Universal Life Exchange Program Application, previously filed with this Registration
Statement File No. 333-17669 on December 11, 1996.
2(a)(i) Opinion and Consent of Mary P. Breen, Vice President
and Associate General Counsel of Equitable, previously filed with this Registration
Statement File No. 333-17669 on December 11, 1996.
2(a)(ii) Opinion and Consent of Mary P. Breen, Vice President and Associate General
Counsel of Equitable, previously filed with this Registration Statement File
No. 333-17669 on April 30, 1997.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
2(b)(i) Opinion and Consent, dated April 24, 1995, of
Barbara Fraser, F.S.A., M.A.A.A., Vice
President of Equitable, previously filed with
this Registration Statement File No.
333-17669 on December 11, 1996.
2(b)(ii) Opinion and Consent, dated April 26, 1994, of
Barbara Fraser, F.S.A., M.A.A.A., Vice
President of Equitable, previously filed with
this Registration Statement File No.
333-17669 on December 11, 1996.
2(b)(iii) Consent dated December 9, 1996 of Barbara Fraser, F.S.A., M.A.A.A.,
Vice President of Equitable, relating to
Exhibits 2(b)(i) and 2(b)(ii), previously filed
with this Registration Statement File No. 333-17669
on December 11, 1996.
3 Inapplicable.
4 Inapplicable.
6 Consent of Independent Public Accountant.
7 Powers of Attorney.
8 Description of Equitable's Issuance, Transfer and Redemption Procedures for Policies
pursuant to Rule 6e-3(T)(b)(12)(iii) under the Investment Company Act of 1940,
previously filed with this Registration Statement File No. 333-17669 on December 11, 1996.
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it meets all the requirements for effectiveness of this amendment
to the Registration Statement pursuant to paragraph (b) of Rule 485 under the
Securities Act of 1933 and has duly caused this amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, and its seal to be hereunto affixed and attested, in the City and
State of New York, on the 27th day of April, 1998.
SEPARATE ACCOUNT FP OF THE EQUITABLE
LIFE ASSURANCE SOCIETY OF THE UNITED STATES
By: THE EQUITABLE LIFE
ASSURANCE SOCIETY OF
THE UNITED STATES,
DEPOSITOR
By: /s/ Judy A. Faucett
------------------------------
(Judy A. Faucett)
Senior Vice President
Attest: /s/ Linda Galasso
------------------------
(Linda Galasso)
Assistant Secretary
April 27, 1998
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Depositor
certifies that it meets all the requirements for effectiveness of this amendment
to the Registration Statement pursuant to paragraph (b) of Rule 485 under the
Securities Act of 1933 and it has duly caused this amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City and State of New York, on the 27th day of April, 1998.
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: /s/ Judy A. Faucett
--------------------------------
(Judy A. Faucett)
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
PRINCIPAL EXECUTIVE OFFICERS:
*Edward D. Miller Chairman of the Board and
Chief Executive Officer
*Michael Hegarty President and Chief Operating Officer
PRINCIPAL FINANCIAL OFFICER:
*Stanley B. Tulin Vice Chairman of the Board
and Chief Financial Officer
PRINCIPAL ACCOUNTING OFFICER:
/s/ Alvin H. Fenichel
- --------------------------
Alvin H. Fenichel Senior Vice President and Controller
April 27, 1998
*DIRECTORS:
Francoise Colloc'h Donald J. Greene George T. Lowy
Henri de Castries John T. Hartley Edward D. Miller
Joseph L. Dionne John H.F. Haskell, Jr. Didier Pineau-Valencienne
Denis Duverne Michael Hegarty George J. Sella, Jr.
William T. Esrey Mary R. (Nina) Henderson Stanley B. Tulin
Jean-Rene Fourtou W. Edwin Jarmain Dave H. Williams
Norman C. Francis G. Donald Johnston, Jr.
*By: /s/ Judy A. Faucett
-----------------------
(Judy A. Faucett)
Attorney-in-Fact
April 27, 1998
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT NO. TAG VALUE
- ----------- ---------
<S> <C> <C>
6 Consent of Independent Public Accountant. EX-99.6 CONSENT
7 Powers of Attorney. EX-99.7 POW ATTY
</TABLE>
II-7
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus Supplement constituting part of
this Post-Effective Amendment No. 2 to the Registration Statement No. 333-17669
on Form S-6 of (1) our report dated February 10, 1998 relating to the financial
statements of The Equitable Life Assurance Society of the United States Separate
Account FP for the year ended December 31, 1997, and (2) our report dated
February 10, 1998 relating to the consolidated financial statements of The
Equitable Life Assurance Society of the United States for the year ended
December 31, 1997, which reports appear in such Prospectus Supplement. We also
consent to the reference to us under the heading "Financial Statements" in the
Prospectus Supplement.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
New York, New York
April 27, 1998
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 20th day of February, 1998
/s/ Francoise Colloc'h
----------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 2nd day of March, 1998
/s/ Henri de Castries
---------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Joseph L. Dionne
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Denis Duverne
-----------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ William T. Esrey
--------------------
William T. Esrey
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 23th day of February, 1998
/s/ Jean-Rene Fourtou
---------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Norman C. Francis
---------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Donald J. Greene
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ John T. Hartley
-------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ John H.F. Haskell, Jr.
--------------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 26th day of January, 1998
/s/ Michael Hegarty
-------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Mary R. (Nina) Henderson
----------------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 29th day of January, 1998
/s/ W. Edwin Jarmain
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 2nd day of February, 1998
/s/ G. Donald Johnston, Jr.
---------------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ George T. Lowy
------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Edward D. Miller
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 17th day of February, 1998
/s/ Didier Pineau-Valencienne
-----------------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 4th day of February, 1998
/s/ George J. Sella Jr.
-----------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Stanley B. Tulin
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Dave H. Williams
--------------------
59838
