Cover Page 497(d)
333-36696
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ACCUMULATOR LIFE(SM)
A MODIFIED SINGLE PREMIUM VARIABLE
LIFE INSURANCE POLICY
Please read this prospectus and keep it for future reference. It contains
important information that you should know before purchasing, or taking any
other action, under a policy. Also, at the end of this prospectus you will
find attached the prospectus for EQ Advisors Trust, which contains important
information about its Portfolios.
PROSPECTUS DATED JUNE 22, 2000
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This prospectus describes many aspects of an Accumulator Life policy, but is
not itself a policy. The policy is the actual contract that determines your
benefits and obligations under Accumulator Life. To make this prospectus
easier to read, we sometimes use different words than the policy. Equitable
Life or your financial professional can provide any further explanation about
your policy.
WHAT IS ACCUMULATOR LIFE?
Accumulator Life is issued by Equitable Life. It provides life insurance
coverage, plus the opportunity for you to earn a return in one or more of the
following variable investment options:
<TABLE>
<S> <C>
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VARIABLE INVESTMENT OPTIONS:
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o EQ/Aggressive Stock(1) o Lazard Large Cap Value
o Alliance Money Market o Lazard Small Cap Value
o Alliance High Yield o MFS Growth with Income
o Alliance Common Stock o MFS Research
o Alliance Small Cap Growth o MFS Emerging Growth
o EQ/Alliance Premier Growth Companies
o EQ/Alliance Technology(2) o Morgan Stanley Emerging
o BT Equity 500 Index Markets Equity
o BT Small Company Index o EQ/Putnam Growth & Income
o BT International Equity Index Value
o Capital Guardian U.S. Equity o EQ/Putnam Investors Growth
o Capital Guardian Research o EQ/Putnam International
o Capital Guardian International Equity
o J. P. Morgan Core Bond(3)
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</TABLE>
(1) Formerly named "Alliance Aggressive Stock."
(2) This option may not be available in California.
(3) Formerly named "JPM Core Bond."
Amounts that you allocate under your policy to any of the variable investment
options are invested in a corresponding "Portfolio" that is part of EQ
Advisors Trust, a mutual fund. Your investment results in a variable
investment option will depend on those of the related Portfolio. Any gains
will generally be tax deferred, and the life insurance benefits we pay if the
policy's insured person dies will generally be income tax free.
Your Accumulator Life policy likely will be a "modified endowment contract,"
which may subject you to special tax rules and penalties on any taxable
distributions, including loans. See "Tax information" later in this prospectus.
OTHER CHOICES YOU HAVE. You can tailor the policy to your needs. For example,
subject to our rules, you decide (1) how much you contribute to your policy,
which determines how much insurance coverage you initially have, (2) whether
to borrow or withdraw amounts you have accumulated and (3) whether to take
advantage of "free withdrawals," which do not incur surrender charges.
Additionally, if this policy is issued as the result of an exchange of another
policy under Section 1035 of the Internal Revenue Code, you have the option of
carrying over any loan from the exchanged policy to this Accumulator Life
policy, subject to our approval. The amount of loan you may carry over is
limited to 50% of your initial premium.
Your financial professional can provide you with information about all forms
of life insurance available from us and help you decide which may best meet
your needs. Replacing existing insurance with Accumulator Life or another
policy may not be to your advantage.
THE SECURITIES AND EXCHANGE COMMISSION ("SEC") HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE POLICIES ARE NOT
INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO
INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL.
<PAGE>
Contents of this prospectus
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2 CONTENTS OF THIS PROSPECTUS
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ACCUMULATOR LIFE
<TABLE>
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<S> <C>
What is Accumulator Life? Cover
Who is Equitable Life? 4
How to reach us 5
Charges and expenses you will pay 7
Risks you should consider 11
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1
POLICY FEATURES AND BENEFITS 12
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How you pay for your policy 12
Your death benefit guarantee 12
Policy "lapse" and termination 13
About your death benefit 13
Variable investment options within your policy 14
Your options for receiving policy proceeds 15
Your right to cancel within a certain number of days 16
Variations among Accumulator Life policies 16
Other Equitable Life Policies 16
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2
DETERMINING YOUR POLICY'S VALUE 17
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Your account value 17
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3
TRANSFERRING YOUR MONEY AMONG OUR
VARIABLE INVESTMENT OPTIONS 18
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Transfers you can make 18
Telephone and EQAccess transfers 18
Our dollar cost averaging service 18
Our asset rebalancing service 19
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</TABLE>
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"We," "our" and "us" refer to Equitable Life. "Financial professional" means
the registered representative who is offering you this policy.
When we address the reader of this prospectus with words such as "you" and
"your," we mean the person or persons having the right or responsibility that
the prospectus is discussing at that point. This usually is the policy's owner.
If a policy has more than one owner, all owners must join in the exercise of any
rights an owner has under the policy, and the word "owner" therefore refers
to all owners.
When we use the word "state," we also mean any other local jurisdiction
whose laws or regulations affect a policy.
We do not offer Accumulator Life in all states. This prospectus does not offer
Accumulator Life anywhere such offers are not lawful. Equitable Life does not
authorize any information or representation about the offering other than that
contained or incorporated in this prospectus, in any current supplements
thereto, or in any related sales materials authorized by Equitable Life.
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3 CONTENTS OF THIS PROSPECTUS
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<TABLE>
<S> <C>
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4
ACCESSING YOUR MONEY 20
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Borrowing from your policy 20
Making withdrawals from your policy 21
Surrendering your policy for its net cash surrender
value 22
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5
TAX INFORMATION 23
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Basic tax treatment for you and your beneficiary 23
Tax treatment of distributions to you 23
Effect of policy on interest deductions taken by
business entities 25
Requirement that we diversify investments 25
Estate, gift, and generation-skipping taxes 25
Employee benefit programs 26
Our taxes 26
When we withhold taxes from distributions 26
Possibility of future tax changes 26
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6
MORE INFORMATION ABOUT PROCEDURES
THAT APPLY TO YOUR POLICY 28
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Ways to make premium and loan payments 28
Requirements for surrender requests 28
Ways we pay policy proceeds 28
Assigning your policy 28
Dates and prices at which policy events occur 29
Policy issuance 30
Gender-neutral policies 30
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7
MORE INFORMATION ABOUT OTHER MATTERS 31
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Your voting privileges 31
About our Separate Account FP 31
About our general account 32
Transfers of your account value 32
Telephone and EQAccess requests 32
Deducting policy charges 33
Suicide and certain misstatements 34
When we pay policy proceeds 34
Changes we can make 34
Reports we will send you 35
Legal proceedings 35
Illustrations of policy benefits 35
SEC registration statement 35
How we market the policies 35
Insurance regulation that applies to Equitable Life 36
Directors and principal officers 37
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8
FINANCIAL STATEMENTS OF SEPARATE
ACCOUNT FP AND EQUITABLE LIFE 45
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Separate Account FP financial statements FSA-1
Equitable Life financial statements F-1
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APPENDICES
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I - Our data on market performance A-1
II - An index of key words and phrases B-1
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EQ ADVISORS TRUST PROSPECTUS (follows
after page B-1 of this prospectus, but is not a part of
this prospectus)
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</TABLE>
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Who is Equitable Life?
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4 WHO IS EQUITABLE LIFE?
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We are The Equitable Life Assurance Society of the United States ("Equitable
Life"), a New York stock life insurance corporation. We have been doing
business since 1859. Equitable Life is a subsidiary of AXA Financial, Inc.
(previously The Equitable Companies Incorporated). The majority shareholder of
AXA Financial, Inc. is AXA, a French holding company for an international
group of insurance and related financial services companies. As a majority
shareholder, and under its other arrangements with Equitable Life and
Equitable Life's parent, AXA exercises significant influence over the
operations and capital structure of Equitable Life and its parent. No company
other than Equitable Life, however, has any legal responsibility to pay
amounts that Equitable Life owes under the policies.
AXA Financial, Inc. and its consolidated subsidiaries managed approximately
$497.5 billion in assets as of March 31, 2000. For more than 100 years
Equitable Life has been among the largest insurance companies in the United
States. We are licensed to sell life insurance and annuities in all fifty
states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
Our home office is located at 1290 Avenue of the Americas, New York, N.Y.
10104.
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5 WHO IS EQUITABLE LIFE?
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HOW TO REACH US
To obtain (1) any forms you need for communicating with us, (2) unit values
and other values under your policy, and (3) any other information or materials
that we provide in connection with your policy or the Portfolios, you can
contact us
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BY MAIL:
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at the Post Office Box for our Administrative Office:
Equitable Life - EDI Service Center
P.O. Box 1047
Charlotte, North Carolina 28210-1047
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BY EXPRESS DELIVERY ONLY:
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at the Street Address for our Administrative Office:
Equitable Life - EDI Service Center
10840 Ballantyne Commons Parkway
Charlotte, North Carolina 28277
1-704-341-7000 (for express delivery purposes only)
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BY TOLL-FREE PHONE:
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1-888-228-6690
(automated system available 22 hours a day, from 6 AM to 4
AM, Eastern Time; customer service representative available
weekdays 8 AM to 9 PM, Eastern Time)
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BY FAX:
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1-704-551-2310
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BY INTERNET:
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Our Web site (www.equitable.com) can also provide you
information. You can access your policy information through
our Web site by enrolling in EQAccess.
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We require that the following types of communications be
on specific forms we provide for that purpose:
(1) request for dollar cost averaging (our automatic transfer service);
(2) authorization for telephone transfers by a person who is not both the
insured person and the owner;
(3) request for asset rebalancing; and
(4) designation of new policy owner(s).
We also have specific forms that we recommend you use for the following:
(a) policy surrenders;
(b) address changes;
(c) beneficiary changes;
(d) transfers between variable investment options; and
(e) changes in allocation percentages for loan repayments, deductions and any
additional premium payment.
You can change your allocation percentages and/or transfer among investment
options (1) by toll-free phone or (2) over the Internet, through EQAccess.
This feature is anticipated to be available in EQAccess by the end of 2000.
For more information about transaction requests you can make by phone or over
the Internet, see "Telephone and EQAccess transfers" and "Telephone and
EQAccess requests" later in this prospectus.
Except for properly authorized telephone or Internet transactions, any notice
or request that does not use our standard form must be in writing. It must be
dated and signed by you and should also specify your name, the insured
person's name (if different), your policy number, and adequate details about
the notice you wish to give or other action you wish us to take. We may
require you to return your policy to us before we make certain policy changes
that you may request.
The proper person to sign forms, notices and requests would normally be the
owner or any other person that our procedures permit to exercise the right or
privilege in question. If there are joint owners all must sign. Any
irrevocable beneficiary or assignee that we have on our records also must sign
certain types of requests.
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6 WHO IS EQUITABLE LIFE?
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You should send all requests and notices to our Administrative Office at the
addresses specified above. We will also accept requests and notices by fax at
the above number, if we believe them to be genuine. We reserve the right,
however, to require an original signature before acting on any faxed item. You
must send all payments to our Administrative Office at the above addresses;
except that you should send any payments for which we have billed you to the
address on the billing notice.
We reserve the right to limit access to telephone, Internet or fax services if
we determine that you are engaged in a market timing strategy. See "Transfers
of your account value - Market timing" later in this prospectus.
<PAGE>
Charges and expenses you will pay
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7 CHARGES AND EXPENSES YOU WILL PAY
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TABLE OF POLICY CHARGES
This table shows the charges that we deduct under the terms of your policy.
For more information about some of these charges, see "Deducting policy
charges" later in this prospectus.
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<S> <C> <C> <C>
CHARGES WE DEDUCT FROM None
AMOUNTS YOU CONTRIBUTE
TO YOUR POLICY:
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CHARGES WE DEDUCT FROM Cost of insurance charges The maximum charges are specified in
YOUR POLICY'S VALUE EACH your policy. We currently limit this
MONTH charge to 1.15% (effective annual rate)
of your policy's account value(1), unless
the maximum charge specified by your
policy is less. However, we may increase
this 1.15% rate up to the maximum
charges specified in your policy.(2), (3)
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Charge for administration .50% (effective annual rate) of your
and taxes policy's account value.(3)
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Guaranteed minimum death .20% (effective annual rate) of your
benefit charge policy's account value. (We may increase
this rate up to .50%.)(3)
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CHARGES WE DEDUCT FROM Mortality and expense risk 1.35% (effective annual rate) of the
YOUR POLICY'S UNIT VALUES charge value you have in our variable investment
EACH DAY: options.
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CHARGES WE DEDUCT FROM Surrender (turning in) of your A surrender charge based on the policy's
YOUR ACCOUNT VALUE AT THE policy during its first 9 years age and a percentage of the initial
TIME OF THE TRANSACTION: premium(4), as follows:
Policy Year Percentage Charge
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1 10 %
2 9.5
3 9
4 8.5
5 8
6 7
7 5
8 3
9 1
10 and later 0
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Partial withdrawal during the A surrender charge equal to the applicable
first 9 years percentage specified above, applied to
amounts of partial withdrawals in any
policy year that cumulatively exceed 15%
of: your policy account value less
outstanding loans and loan interest, as of
the end of the previous policy year.(5)
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</TABLE>
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8 CHARGES AND EXPENSES YOU WILL PAY
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<TABLE>
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<S> <C> <C>
CHARGES WE DEDUCT FROM Transfers among investment No charge for any transfer. (We may,
YOUR ACCOUNT VALUE AT THE options however, increase this charge up to $25
TIME OF THE TRANSACTION: per transfer.)(6)
(CONTINUED)
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Requesting a policy illustration No charge. (We may, however, increase this
charge up to $25 per illustration request,
if you request more than one in any policy
year.)
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</TABLE>
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1 "Account value" is defined below in "Determining your policy's value." The
account value used to determine the amount of each monthly charge is the
account value on the date the charge is due.
2 See "Monthly cost of insurance charge" later in this prospectus.
3 Not applicable after the insured person reaches age 100.
4 For purposes of this calculation, the amount of the initial premium would be
reduced by the amounts of any prior partial withdrawals that were subject
to a surrender charge.
5 Over the life of your policy, the cumulative amount of your partial
withdrawals on which we impose any surrender charge will not exceed the
amount of your initial premium.
6 No charge, however, would ever apply to a transfer made through our dollar
cost averaging or asset rebalancing services.
<PAGE>
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9 CHARGES AND EXPENSES YOU WILL PAY
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YOU ALSO BEAR YOUR PROPORTIONATE SHARE OF ALL FEES AND EXPENSES PAID BY A
"PORTFOLIO" THAT CORRESPONDS TO ANY VARIABLE INVESTMENT OPTION YOU ARE USING:
This table shows the fees and expenses paid by each Portfolio for the year
ended December 31, 1999. These fees and expenses are reflected in the
Portfolio's net asset value each day. Therefore, they reduce the investment
return of the Portfolio and of the related variable investment option. Actual
fees and expenses are likely to fluctuate from year to year. All figures are
expressed as an annual percentage of each Portfolio's daily average net
assets.
<TABLE>
<CAPTION>
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1999 FEES AND EXPENSES
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TOTAL FEE WAIVERS NET TOTAL
MANAGEMENT OTHER ANNUAL AND/OR EXPENSE ANNUAL
FEE(1) 12B-1 FEE EXPENSES(2) EXPENSES REIMBURSEMENTS(3) EXPENSES
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<S> <C> <C> <C> <C> <C> <C>
EQ/Aggressive Stock 0.60% 0.25% 0.04% 0.89% - 0.89%
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Alliance Common Stock 0.46% 0.25% 0.04% 0.75% - 0.75%
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Alliance High Yield 0.60% 0.25% 0.05% 0.90% - 0.90%
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Alliance Money Market 0.34% 0.25% 0.05% 0.64% - 0.64%
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EQ/Alliance Premier Growth(4) 0.90% 0.25% 0.23% 1.38% 0.23% 1.15%
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Alliance Small Cap Growth(5) 0.75% 0.25% 0.07% 1.07% - 1.07%
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EQ/Alliance Technology(6) 0.90% 0.25% 0.10% 1.25% 0.10% 1.15%
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BT Equity 500 Index 0.25% 0.25% 0.18% 0.68% 0.08% 0.60%
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BT Small Company Index 0.25% 0.25% 0.71% 1.21% 0.46% 0.75%
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BT International Equity Index 0.35% 0.25% 0.49% 1.09% 0.09% 1.00%
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Capital Guardian International(4) 0.85% 0.25% 0.66% 1.76% 0.56% 1.20%
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Capital Guardian Research(4) 0.65% 0.25% 0.47% 1.37% 0.42% 0.95%
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Capital Guardian U.S. Equity(4) 0.65% 0.25% 0.34% 1.24% 0.29% 0.95%
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J.P. Morgan Core Bond 0.45% 0.25% 0.20% 0.90% 0.10% 0.80%
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Lazard Large Cap Value 0.65% 0.25% 0.21% 1.11% 0.16% 0.95%
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Lazard Small Cap Value 0.75% 0.25% 0.26% 1.26% 0.16% 1.10%
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MFS Emerging Growth Companies 0.65% 0.25% 0.17% 1.07% 0.07% 1.00%
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MFS Growth with Income 0.60% 0.25% 0.37% 1.22% 0.27% 0.95%
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MFS Research 0.65% 0.25% 0.17% 1.07% 0.12% 0.95%
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Morgan Stanley Emerging Markets Equity 1.15% 0.25% 1.00% 2.40% 0.65% 1.75%
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EQ/Putnam Growth & Income Value 0.60% 0.25% 0.16% 1.01% 0.06% 0.95%
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EQ/Putnam Investors Growth 0.65% 0.25% 0.19% 1.09% 0.14% 0.95%
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EQ/Putnam International Equity 0.85% 0.25% 0.32% 1.42% 0.17% 1.25%
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</TABLE>
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10 CHARGES AND EXPENSES YOU WILL PAY
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(1) The management fees shown reflect revised management fees, effective on
or about May 1, 2000, which were approved by shareholders. The management
fees shown for EQ/Putnam Growth & Income Value and Lazard Large Cap Value
do not reflect the waiver of a portion of each Portfolio's investment
management fees that is currently in effect. The management fee for each
Portfolio cannot be increased without a vote of each Portfolio's
shareholders.
(2) On October 18, 1999, the Alliance Portfolios (other than EQ/Alliance
Premier Growth and EQ/Alliance Technology) became part of EQ Advisors
Trust. Other Expenses for these Portfolios have been restated to reflect
the estimated expenses that would have been incurred, had these
Portfolios been portfolios of EQ Advisors Trust for the full year ended
December 31, 1999. The restated expenses reflect an increase of 0.01% for
each of these Portfolios.
(3) Equitable Life, EQ Advisors Trust's manager, has entered into an Expense
Limitation Agreement with respect to certain Portfolios, which is
effective from May 1, 2000 through April 30, 2001. Under this Agreement,
Equitable Life has agreed to waive or limit its fees and assume other
expenses of each of these Portfolios, if necessary, in an amount that
limits each Portfolio's Total Annual Expenses (exclusive of interest,
taxes, brokerage commissions, capitalized expenditures and extraordinary
expenses) to not more than the amounts specified above as Net Total Annual
Expenses. Portfolios that show "-" in this column have no expense
limitation arrangement in effect. See the EQ Advisors Trust prospectus for
more information about the Expense Limitation Agreement. The expense
limitations for the BT Equity 500 Index, MFS Emerging Growth Companies,
MFS Growth with Income, MFS Research, EQ/Putnam International Equity and
EQ/Putnam Growth & Income Value Portfolios reflect an increase effective
on May 1, 2000. The expense limitation for the Lazard Small Cap Value
Portfolio reflects a decrease effective on May 1, 2000.
(4) Initial seed capital was invested in the EQ/Alliance Premier Growth,
Capital Guardian U.S. Equity, Capital Guardian Research and Capital
Guardian International Portfolios on April 30, 1999; thus, Other Expenses
for these Portfolios have been estimated.
(5) Prior to October 18, 1999, Total Annual Expenses for the Alliance Small
Cap Growth Portfolio were limited to 1.20% under an expense limitation
arrangement which is no longer in effect. The amounts shown have been
restated to reflect the expenses that would have been incurred in 1999,
absent the expense limitation arrangement.
(6) Expenses shown are based on estimates for 2000. Initial seed capital was
invested in the EQ/Alliance Technology Portfolio on May 2, 2000.
<PAGE>
Risks you should consider
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11 RISKS YOU SHOULD CONSIDER
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HOW WE ALLOCATE CHARGES AMONG YOUR
VARIABLE INVESTMENT OPTIONS
Generally, all monthly charges will be deducted in the same proportion as the
allocation that you provide in your policy application, unless you instruct us
otherwise. If we cannot deduct the charge as your most current instructions
direct, we will allocate the deduction among your variable investment options
proportionately to your value in each.
CHANGES IN CHARGES
We reserve the right in the future to (1) make a charge for certain taxes or
reserves set aside for taxes (see "Our taxes" below), (2) make a charge for
the operating expenses of our variable investment options (including, without
limitation, SEC registration fees and related legal counsel fees and auditing
fees), (3) make a charge of up to $25 for each transfer among variable
investment options that you make, (4) make a charge of up to $25 each time you
request a policy illustration, if you request more than one in any policy year
or (5) modify your monthly cost of insurance charge or your guaranteed minimum
death benefit charge, but not above the maximum rates stated in your policy.
Any changes that we make in our current charges or charge rates will be by
class of insured person and will be based on changes in future expectations
about such factors as investment earnings, mortality experience, the length of
time policies will remain in effect, expenses and taxes. Any changes in
charges may apply to then outstanding policies, as well as to new policies,
but we will not raise any charges above any maximums discussed in this
prospectus and shown in your policy.
Some of the principal risks of investing in a policy are as follows:
o Your policy's account value and death benefit will increase or decrease
based, in part, on the performance of your variable investment options.
o You may have to pay a surrender charge, taxes or tax penalties if you make
a surrender or partial withdrawal under a policy or take a policy loan.
o We can increase certain charges without your consent, within limits stated
in your policy. See the "Changes in charges" above, which specifies which
charges can be increased.
Your policy permits other transactions that also have risks. These and other
risks and benefits of investing in a policy are discussed in detail throughout
this prospectus.
<PAGE>
1
Policy features and benefits
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12 POLICY FEATURES AND BENEFITS
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HOW YOU PAY FOR YOUR POLICY
INITIAL PREMIUM. We call the amount you contribute to your policy a "premium."
The minimum premium we require is $25,000. This includes any amount of loans
that are being "carried over" from a previous policy. See "Loans transferred
from an old policy" below. The amount of insurance initially provided by your
policy is based on the amount of your premium. Once you make your initial
premium payment under your policy, you may only make one additional premium
payment, subject to the conditions below.
ADDITIONAL PREMIUM. On your 10th policy anniversary, if your death benefit is
below the initial death benefit, subject to our approval as specified below,
you may make one additional premium payment. The amount of the additional
premium is limited to an amount that will restore your initial death benefit.
(See "About your death benefit" below for a discussion of how your death
benefit can vary over time.)
This premium must be received by us within 60 days after your 10th policy
anniversary. Any premium payment received before or after this period, or any
premium payment in excess of the permitted amount, will be returned to you.
You must provide us with satisfactory evidence of insurability for us to
approve this additional payment. We also may refuse to accept any additional
premium payment if this would cause the policy to fail to qualify as life
insurance under federal tax law. See "Tax Information" for a discussion of the
tax consequences of making this additional payment.
SIMPLIFIED QUALIFICATION FOR COVERAGE. We will use a simplified process to
qualify many insured persons for coverage (the "underwriting process") under
the Accumulator Life policies. This process reduces underwriting questions and
requirements. The underwriting procedures we use in any particular case,
however, will depend on the age of the insured person, the amount of the
premium payment and the other risk characteristics of the insured person, and
may involve our full underwriting process.
If we accept your application to purchase Accumulator Life, the cost of your
insurance coverage will be the same regardless of the extent to which we use a
simplified underwriting process in your case. The cost of insurance rate will
be the same for all insured persons of the same gender and age, regardless of
whether they are tobacco users and regardless of their other insurance risk
characteristics. Therefore, you may be able to obtain more economical coverage
by purchasing a policy that uses more traditional underwriting procedures than
Accumulator Life, if the insured person is willing to undergo such procedures
and has relatively favorable insurance risk characteristics. You may consult
your financial professional for further information.
LOANS TRANSFERRED FROM AN OLD POLICY. Subject to our discretion and
administrative procedures, we may permit you to pay for your Accumulator Life
policy by an exchange of an existing life insurance policy. We may also permit
you to transfer (or carry over) any existing loan from your old policy to your
new Accumulator Life policy. See "Borrowing from your policy" below for more
information regarding these types of loans.
YOUR DEATH BENEFIT GUARANTEE
Provided that your policy does not have an outstanding loan, we guarantee that
your policy will not terminate, even if your policy's "net cash surrender
value" is not sufficient to pay a monthly deduction that has become due. ("Net
cash surrender value" is explained under "Surrendering your policy for its net
cash surrender value" below.) In this circumstance, we will waive any monthly
deductions (for cost of insurance charges, the charge for administration and
taxes and the guaranteed minimum death benefit charge) in excess of your
policy's account value. We guarantee that your death benefit will not be less
than the guaranteed minimum death benefit, regardless of investment
performance, provided you have no outstanding loans. (See the discussions of
death benefit and guaranteed minimum death benefit below.)
<PAGE>
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13 POLICY FEATURES AND BENEFITS
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POLICY "LAPSE" AND TERMINATION
If you have an outstanding loan, your policy will lapse (also referred to in
your policy as "default") if it does not have enough "net cash surrender
value" to pay your policy's monthly charges when due. If this occurs, you will
have a 61-day grace period during which you will have to pay a minimum
specified amount to keep your policy from terminating. This amount equals the
lesser of (1) the amount we estimate is needed to increase your net cash
surrender value enough to pay three months of charges (without regard to loan
interest or investment performance) or (2) the amount needed to repay your
loan and loan interest. We will decline any payment less than the minimum
specified amount and treat amounts in excess of this amount as an additional
loan repayment. Amounts in excess of your outstanding loan and accrued
interest will be returned to you.
We will mail a notice to you at your last known address if your policy lapses
and enters a grace period. The grace period will start on the date the notice
is mailed. You may not make any transfers or request any other policy changes
during a grace period. If we receive the amount requested before the end of
the grace period, but due to poor investment performance your net cash
surrender value is still insufficient to pay your policy's monthly deductions,
and there is still a loan outstanding, we will send you a written notice that
a new 61-day grace period has begun (starting on the date that the second
notice is mailed) and request an additional payment. If we do not receive your
required payment by the end of a grace period, your policy will terminate
without value and all coverage under your policy will cease. We will mail an
additional notice to you if your policy terminates.
You may owe taxes (and tax penalties) if your policy terminates while you have
a loan outstanding, even though you receive no additional money from your
policy at that time. See "Tax information," below.
RESTORING A TERMINATED POLICY. To have your policy "restored" (put back in
force), you must apply within six months after the date of termination. In
some states, you may have a longer period of time. You must also present
evidence of insurability satisfactory to us and make the required payment
(which will include paying back your policy loan in full). Your policy
contains additional information about the required payment and about the
values and terms of the policy after it is restored.
ABOUT YOUR DEATH BENEFIT
In your application to buy an Accumulator Life policy, you tell us the amount
of the premium you want to pay. This determines the amount of your initial
death benefit, as well as your initial guaranteed minimum death benefit.
If the insured person dies, we pay a life insurance "death benefit" to the
"beneficiary" you have named. The death benefit under your policy equals the
greater of (i) the policy's guaranteed minimum death benefit (as described
below) on the date of the insured person's death or (ii) the policy's "account
value" on the date of the insured person's death multiplied by a factor
specified in your policy. The factor depends on the insured person's age and
gender. Representative factors are as follows:
<TABLE>
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AGE* 35 40 45 50 55 60 70
Female: 4.646 3.940 3.363 2.886 2.489 2.157 1.647
Male: 3.971 3.370 2.877 2.472 2.140 1.873 1.488
80 90 99-OVER
Female: 1.319 1.140 1.025
Male: 1.256 1.128 1.025
--------------------------------------------------------------------------------------------------------
</TABLE>
* For the policy year of the insured person's death.
Your policy's "account value" is the total of the amounts that you have in the
variable investment options, as well as amounts we are holding to secure any
outstanding policy loans. (Account value is discussed in more detail under
"Determining your policy's value" below.) Because the amount of the death
benefit is generally based on your policy's account value, the amount of death
benefit generally changes from day to day, as many factors (including
investment performance, charges and partial withdrawals) affect your policy's
account value. As set forth above, the death benefit also depends on the death
benefit factor for
<PAGE>
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14 POLICY FEATURES AND BENEFITS
--------------------------------------------------------------------------------
the insured person's age at death. This factor decreases as the insured person
grows older. Therefore, the policy's death benefit will also decrease over
time, unless the policy's account value increases by a sufficient amount to
offset the impact of the decreasing death benefit factor.
Your policy's "GUARANTEED MINIMUM DEATH BENEFIT" is equal to the sum of the
initial premium payment and any permitted additional premium payment, adjusted
for any partial withdrawals. A partial withdrawal will result in a reduction
in the guaranteed minimum death benefit; the benefit is reduced by the
proportion that the partial withdrawal amount bears to your policy's account
value prior to the withdrawal.
ADJUSTMENTS TO DEATH BENEFIT PROCEEDS. We will reduce the death benefit
proceeds by the amount of any outstanding policy loan and loan interest and by
any amount of monthly charges under the policy that remain unpaid because the
insured person died during a grace period.
VARIABLE INVESTMENT OPTIONS WITHIN YOUR POLICY
We will initially put all of your account value that is not attributable to
policy loans into our Alliance Money Market variable investment option. On the
first business day following the twentieth day after your policy is issued
(the "Allocation Date"), we will re-allocate that investment in accordance
with the allocation instructions you give in your application to purchase a
policy. These allocation instructions also serve as instructions for
allocating monthly deductions, loan repayments and credited loan interest,
unless you instruct us otherwise. You can change any allocation percentages at
any time, but this will not affect any prior allocations. Changes requested
prior to the Allocation Date are effective on the Allocation Date. The
allocation percentages that you specify must always be in whole numbers and
total exactly 100%.
-------------------------------------------------------------------------------
You can choose among variable investment options.
-------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS. The available variable investment options are
listed on the front cover of this prospectus. (Your policy and other
supplemental materials may refer to these as "Investment Funds.") The
investment results you will achieve in any one of these options will depend on
the investment performance of the corresponding Portfolio that shares the same
name as that option. That Portfolio follows investment practices, policies and
objectives that are appropriate to the variable investment option you have
chosen. The advisors who make the investment decisions for each Portfolio are
as follows:
o Alliance Capital Management L.P. (for each "Alliance" or "EQ/Alliance"
option; also, jointly advises EQ/Aggressive Stock)
o Bankers Trust Company (for the "BT" options)
o Capital Guardian Trust Company (for the "Capital Guardian" options)
o J.P. Morgan Investment Management Inc. (for the "J. P. Morgan" option)
o Lazard Asset Management (for both "Lazard" options)
o Massachusetts Financial Services Company (for the "MFS" options; also,
jointly advises EQ/Aggressive Stock)
o Morgan Stanley Asset Management Inc. (for the "Morgan Stanley" option)
o Putnam Investment Management, Inc. (for the "EQ/Putnam" options)
Each Portfolio is a part of EQ Advisors Trust. Equitable Life
serves as investment manager of EQ Advisors Trust. As such,
<PAGE>
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15 POLICY FEATURES AND BENEFITS
--------------------------------------------------------------------------------
Equitable Life oversees the activities of the above-listed advisors with
respect to EQ Advisors Trust and is responsible for retaining or discontinuing
the services of those advisors. (Prior to September 1999, EQ Financial
Consultants, Inc., the predecessor to AXA Advisors, LLC and an affiliate of
Equitable Life, served as investment manager to EQ Advisors Trust.) You will
find other important information about each Portfolio in the separate
prospectus for EQ Advisors Trust attached at the end of this prospectus. We
may add or delete variable investment options or Portfolios at any time.
YOUR OPTIONS FOR RECEIVING POLICY PROCEEDS
BENEFICIARY OF DEATH BENEFIT. You designate your policy's beneficiary in your
policy application. You can change the beneficiary at any other time during
the insured person's life. If no beneficiary is living when the insured person
dies, we will pay the death benefit proceeds in equal shares to the insured
person's surviving children. If there are no surviving children, we will
instead pay the insured person's estate.
PAYMENT OPTIONS FOR DEATH BENEFIT. In your policy application, or at any other
time during the insured person's life, you may choose among several payment
options for all or part of any death benefit proceeds that subsequently become
payable. These payment options are described in the policy and may result in
varying tax consequences. A payment option selected by the policy's owner
cannot be changed by the beneficiary after the insured person dies. The terms
and conditions of each option are set out in a separate contract that we will
send to the payee when a payment option goes into effect. Equitable Life or
your financial professional can provide you with samples of such contracts on
request.
-------------------------------------------------------------------------------
You can choose to have the proceeds from the policy's life insurance benefit
paid under one of our payment options, rather than as a single sum.
-------------------------------------------------------------------------------
If you have not elected a payment option, we will pay any death benefit in a
single sum. If the beneficiary is a natural person (i.e., not an entity such
as a corporation or trust) we will pay any such single sum death benefit
through an interest-bearing checking account (the "Equitable Access
Account(TM)") that we will automatically open for the beneficiary. The
beneficiary will have immediate access to the proceeds by writing a check on
the account. We pay interest on the proceeds from the date of death to the
date the beneficiary closes the Equitable Access Account.
If a financial professional has assisted the beneficiary in preparing the
documents that are required for payment of the death benefit, we will send the
Equitable Access Account checkbook or check to the financial professional
within the periods specified for death benefit payments under "When we pay
policy proceeds," below. Your financial professional will take reasonable
steps to arrange for prompt delivery to the beneficiary.
PAYMENT OPTIONS FOR SURRENDER AND PARTIAL WITHDRAWAL PROCEEDS. You can also
choose to receive all or part of any proceeds from a surrender or partial
withdrawal from your policy under one of the above referenced payment options,
rather than as a single sum.
YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS
If for any reason you are not satisfied with your policy, you may return it to
us for a full refund of the initial premium you paid, less the amount of any
outstanding policy loan and loan interest. In some states, we will adjust this
amount for any investment performance (whether positive or negative).
To exercise this cancellation right, you must mail the policy directly to our
Administrative Office with a written request to cancel. Your cancellation
request must be postmarked within 10 days after you receive the policy and
your coverage will terminate as of the date of the postmark. In some states,
this "free look" period is longer than 10 days. Your policy will indicate the
length of your "free look" period.
<PAGE>
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16 POLICY FEATURES AND BENEFITS
--------------------------------------------------------------------------------
VARIATIONS AMONG ACCUMULATOR LIFE POLICIES
Time periods and other terms and conditions described in this prospectus may
vary due to legal requirements in your state. These variations will be
reflected in your policy.
Equitable Life also may vary the charges and other terms of Accumulator Life
where special circumstances result in sales or administrative expenses or
mortality risks that are different from those normally associated with
Accumulator Life. We will make such variations only in accordance with uniform
rules that we establish.
Equitable Life or your financial professional can advise you about any
variations that may apply to your policy.
OTHER EQUITABLE LIFE POLICIES
We offer a variety of fixed and variable life insurance policies which offer
policy features, including investment options, that are different from those
offered by this prospectus. Not every policy is offered through your financial
professional. You can contact us to find out more about any other Equitable
Life insurance policy.
<PAGE>
2
Determining your policy's value
------
17 DETERMINING YOUR POLICY'S VALUE
--------------------------------------------------------------------------------
YOUR ACCOUNT VALUE
We credit your initial premium payment (and any permitted additional premium)
to your policy's "account value." We use your instructions to allocate your
unloaned account value to one or more of the policy's variable investment
options indicated on the front cover of this prospectus.
Your account value is the total of (i) your amounts in our variable investment
options, and (ii) any amounts that we are holding to secure policy loans that
you have taken (including any interest on those amounts which has not yet been
allocated to the variable investment options). See "Borrowing from your
policy" below. (Your policy and other supplemental material may refer to (ii)
above as your "Loaned Policy Account.") These amounts are subject to certain
charges discussed in "Charges and expenses you will pay" above.
-------------------------------------------------------------------------------
Your value in the variable investment options reflects the returns that are
achieved by the Portfolios that you select, as well as any charges we deduct
under the policy.
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YOUR POLICY'S VALUE IN OUR VARIABLE INVESTMENT OPTIONS. We invest the account
value that you have allocated to any variable investment option in shares of
the corresponding Portfolio. Your value in each variable investment option is
measured by "units."
The number of your units in any variable investment option does not change,
absent an event or transaction under your policy that involves moving assets
into or out of that option. Whenever any amount is withdrawn or otherwise
deducted from one of your policy's variable investment options, we "redeem"
(cancel) the number of units that has a value equal to that amount. This can
happen, for example, when all or a portion of monthly deductions and
transaction-based charges are allocated to that option, or when loans,
transfers, and partial withdrawals or full surrenders are made from that
option. Similarly, you "purchase" additional units having the same value as
the amount of your premium, any loan repayment, or a transfer that you
allocate to that option.
The value of each unit will increase or decrease each day, by the same amount
as if you had invested in the corresponding Portfolio's shares directly (and
reinvested all dividends and distributions from the Portfolio in additional
Portfolio shares). The units' values will be reduced, however, by the amount
of the mortality and expense risk charge for that period. (See "Table of
policy charges" under "Charges and expenses you will pay" above.) On any day,
your value in any variable investment option equals the number of units
credited to your policy under that option, multiplied by that day's value for
one such unit.
<PAGE>
3
Transferring your money among our variable
investment options
------
18 TRANSFERRING YOUR MONEY AMONG OUR VARIABLE INVESTMENT OPTIONS
--------------------------------------------------------------------------------
TRANSFERS YOU CAN MAKE
-------------------------------------------------------------------------------
You can transfer among our variable investment options.
-------------------------------------------------------------------------------
After your policy's Allocation Date, you can transfer amounts from one
variable investment option to another. You may submit a written request for a
transfer to our Administrative Office, you can make a telephone request or you
can make a request over the Internet (see below).
TRANSFER CHARGE. We do not currently make any charge for transfers. We reserve
the right, however, to impose up to a $25 charge for each transfer you make.
This charge does not apply to any transfer pursuant to our dollar cost
averaging service or our asset rebalancing service, both discussed below.
TELEPHONE AND EQACCESS TRANSFERS
TELEPHONE TRANSFERS. You can make telephone transfers by following one of two
procedures:
o if you are both the policy's insured person and its owner, by calling
1-888-855-5100 (toll free) from a touch tone phone; or
o if you are not both the insured person and owner, by sending us a signed
telephone transfer authorization form. Once we have the form on file, we
will provide you with a toll-free telephone number to make transfers.
For more information see "Telephone and EQAccess requests" later in this
prospectus. We allow only one request for telephone transfers each day
(although that request can cover multiple transfers), and we will not allow
you to revoke a telephone transfer. If you are unable to reach us by
telephone, you should send a written transfer request to our Administrative
Office.
EQACCESS TRANSFERS. By the end of 2000, we anticipate that you will be able to
make transfers over the Internet. You may do this by visiting our Web site and
enrolling in EQAccess. This service may not always be available. Generally,
the restrictions relating to telephone transfers apply to EQAccess transfers.
MARKET TIMING. We reserve the right to limit your access to telephone or
EQAccess transfers if we determine that you are engaged in a market timing
strategy. See "Transfers of your account value - Market timing" later in this
prospectus.
OUR DOLLAR COST AVERAGING SERVICE
We offer a dollar cost averaging service. This service allows you to gradually
allocate amounts to the variable investment options by periodically
transferring approximately the same dollar amount to the variable investment
options you select. This will cause you to purchase more units if the unit's
value is low, and fewer units if the unit's value is high. Therefore, you may
get a lower average cost per unit over the long term.
-------------------------------------------------------------------------------
Using the dollar cost averaging service does not guarantee that you will earn
a profit or be protected against losses.
-------------------------------------------------------------------------------
Our dollar cost averaging service (also referred to as our "automatic transfer
service") enables you to make automatic monthly transfers from the Alliance
Money Market option to our other variable investment options. You may elect
the dollar cost averaging service with your policy application or at any later
time (provided you are not using the asset rebalancing service described
below). At least $5,000 must be allocated to the Alliance Money Market option
to begin using the dollar cost averaging service. You can choose up to eight
other variable investment options to receive the automatic transfers, but each
transfer to each option must be at least $50.
The service terminates when the Alliance Money Market option is depleted. You
can also cancel the dollar cost averaging service at any time. You may not
simultaneously participate in the asset rebalancing service and the dollar
cost averaging service.
<PAGE>
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19 TRANSFERRING YOUR MONEY AMONG OUR VARIABLE INVESTMENT OPTIONS
--------------------------------------------------------------------------------
OUR ASSET REBALANCING SERVICE
You may wish us to periodically redistribute the amounts you have in our
variable investment options so that the relative amount of your account value
in each variable option is restored to an asset allocation that you select.
You can accomplish this automatically through our asset rebalancing service.
The rebalancing may be at quarterly, semiannual or annual intervals.
You may specify asset allocation percentages for up to eight variable
investment options. The allocation percentage you specify for each variable
investment option selected must be at least 5% (whole percentage only) of the
total value you hold under the variable investment options, and the sum of the
percentages must equal 100%. You may not simultaneously participate in the
asset rebalancing service and the dollar cost averaging service (discussed
above).
You may request the asset rebalancing service in your policy application or at
any later time. You may change your allocation instructions or discontinue
participation in the asset rebalancing service at any time.
<PAGE>
4
Accessing your money
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20 ACCESSING YOUR MONEY
--------------------------------------------------------------------------------
BORROWING FROM YOUR POLICY
You may borrow up to 90% of the difference between your policy's account value
and any surrender charges that are in effect under your policy. (In your
policy, this "difference" is referred to as your "cash surrender value".)
However, the amount you can borrow will be reduced by any other loans (and
loan interest) you have outstanding. There is a $500 minimum for the initial
loan and for each new policy loan you request. (This minimum loan amount may
vary by state.)
When you take a policy loan, we remove an amount equal to the loan from one or
more of your variable investment options and hold it as collateral for the
loan's repayment. (Your policy may sometimes refer to the collateral as the
"loaned policy account.") We hold this loan collateral as part of our general
assets.
-------------------------------------------------------------------------------
You can use policy loans to obtain funds from your policy without surrender
charges. However, you may be subject to tax consequences and the borrowed
amount is no longer credited with the investment results of any of our
variable investment options under the policy. Instead, you are charged loan
interest on your loan balance while the collateral we hold for the borrowed
amount is credited with interest at rates we determine.
-------------------------------------------------------------------------------
YOU MAY BE REQUIRED TO CURRENTLY INCLUDE ALL OR A PORTION OF THE AMOUNT YOU
BORROW IN YOUR INCOME FOR TAX PURPOSES AND YOU MAY ALSO BE SUBJECT TO A TAX
PENALTY IF YOU ARE UNDER 59 1/2 YEARS OF AGE IF YOUR POLICY IS CONSIDERED A
"MODIFIED ENDOWMENT CONTRACT" ("MEC"). Even if your policy is not a MEC, and
a loan is not taxable when made, it may later become taxable, for example,
upon termination or surrender. See "Tax information" below for a discussion of
the tax consequences of policy loans.
Note that you cannot make transfers or partial withdrawals of the collateral
and the collateral is not available to pay policy charges.
When you request your loan, you should tell us how much of the loan collateral
you wish to have taken from any amounts you have in each of our variable
investment options. If you do not give us directions (or if we are making the
loan automatically to cover unpaid loan interest), we will take the loan from
your variable investment options in the same proportion as we are then taking
monthly deductions for charges. If that is not possible, we will take the loan
from your variable investment options in proportion to your value in each.
In some cases, your policy may be issued with a loan if your policy was issued
as a result of the exchange of another life insurance policy under Section
1035 of the Internal Revenue Code. If your old policy had an existing loan, we
may permit that loan to be transferred (or carried over) to your new
Accumulator Life policy, subject to our procedures in effect at such time. Any
value representing your transferred loan will be immediately set aside as
collateral for your loan's repayment, and will not be allocated to the
variable investment options.
LOAN INTEREST WE CHARGE. The interest we charge on a policy loan accrues daily
at a fixed loan interest rate of 6%. Loan interest payments are due on each
policy anniversary. If not paid when due, we automatically add the interest as
a new policy loan, as described above. This new policy loan will generally
have tax and other consequences as described for policy loans you request,
even though no actual disbursement of loan proceeds occurs. If we add unpaid
loan interest to your loan, and your policy is a modified endowment contract,
there may be adverse tax consequences. See "Tax information" below.
INTEREST THAT WE CREDIT ON LOAN COLLATERAL. The annual interest rate we credit
on your loan collateral will be at least 4%. We guarantee that this rate will
never be less than that unless tax law changes increase the taxes we pay on
policy loans or loan interest.
Currently, after the first policy year, we credit a "preferred" interest rate
on a portion of your loan collateral. This preferred rate is equal to the
interest rate we charge on your loans, 6%. This 6% preferred rate is not
guaranteed and we may at any time reduce or discontinue crediting interest at
any rate above 4%. The maximum amount of loan collateral
<PAGE>
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21 ACCESSING YOUR MONEY
--------------------------------------------------------------------------------
that can qualify for preferred status is determined at the end of each policy
year for the following year (or as of the effective date of any restoration,
if later). It is the excess (if any) of your account value on that date over
the sum of your initial and any additional premium payment. The maximum amount
at any other time during the policy year is determined as the maximum amount
at the beginning of the policy year, accumulated at the preferred rate.
We credit interest on your loan collateral daily. On each anniversary of your
policy (or when your policy loan is fully repaid) we allocate that interest to
your policy's variable investment options in the same proportions as if it
were a premium payment.
POSSIBILITY OF POLICY TERMINATION. In addition to the tax and other effects
described above, a loan can reduce the length of time that your insurance
remains in force, because your policy could terminate in certain circumstances
if you fail to repay your loan or to pay loan interest. See "Policy `lapse'
and termination" above. The amount we set aside as loan collateral cannot be
used to pay policy charges as they become due. See "Failure to repay a loan or
loan interest" below. A loan will also cause your guaranteed minimum death
benefit to become unavailable if the net cash surrender value of your policy
is not sufficient to pay monthly charges as they become due. We will deduct
any outstanding policy loan plus loan interest from any policy's proceeds if
you do not pay it back.
PAYING OFF YOUR LOAN. You can repay all or part of your loan at any time. If
you send us more than all of the loan principal and accrued interest you owe,
we will refund the excess portion of the payment. When you send us a loan
repayment, we will transfer an amount equal to such repayment from your loan
collateral back to the variable investment options under your policy. We will
allocate any repayments among variable investment options as you instruct; or,
if you don't instruct us, in the same proportion as your premium allocation
percentages then in effect.
FAILURE TO REPAY A LOAN OR LOAN INTEREST. In addition to the effects discussed
above, if you fail to repay a loan and the accrued loan interest, and, at the
beginning of a policy month, the policy's net cash surrender value is less
than the monthly charges then due, (i) your policy could terminate (see
"Policy termination" above) and (ii) you are not permitted to make transfers
or to change allocation instructions for loan repayments or monthly
deductions.
MAKING WITHDRAWALS FROM YOUR POLICY
You may make a partial withdrawal of your net cash surrender value at any time
after the first year of your policy. The request must be for at least $500,
and the policy's account value after the partial withdrawal, and after the
deduction of any applicable surrender charge, must be at least $25,000, or we
will decline your request. If your withdrawal is subject to a surrender
charge, we deduct the amount of that charge from your account value in
addition to the amount you requested. If you do not tell us from which
variable investment options you wish us to take the partial withdrawal (as
well as any surrender charge), we will use the same allocation that then
applies for the monthly deductions we make for charges; and, if that is not
possible, we will take the partial withdrawal (and any surrender charge) from
all of your variable investment options in proportion to your value in each.
-------------------------------------------------------------------------------
You can withdraw all or part of your policy's net cash surrender value,
although you may incur charges and tax consequences by doing so.
-------------------------------------------------------------------------------
We charge any applicable surrender charge on the portion of any partial
withdrawal that is not treated as a "free withdrawal." The surrender charge we
impose is the applicable surrender charge percentage multiplied by the lesser
of: (i) the amount of the withdrawal that does not qualify as a free
withdrawal (as discussed below), and (ii) the initial premium less the amount
of any previous partial withdrawals that incurred a surrender charge. The
applicable surrender charge percentages are shown under "Charges and expenses
you will pay" above.
FREE WITHDRAWAL. Beginning in the second policy year you can take as a free
withdrawal 15% of your policy's account value (less outstanding loans and loan
interest) as
<PAGE>
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22 ACCESSING YOUR MONEY
--------------------------------------------------------------------------------
determined as of the end of the previous policy year (or as of the effective
date of any restoration, if later). Multiple withdrawals taken in any one
policy year are aggregated for this purpose. Each year your "free withdrawal"
amount is redetermined, but amounts that were not withdrawn in a policy year
cannot be carried over to the next policy year. A free withdrawal is "free"
from surrender charges. It is not free from any income tax consequences
resulting from the withdrawal.
EFFECT OF PARTIAL WITHDRAWAL ON INSURANCE COVERAGE. A partial withdrawal
automatically reduces your net cash surrender value on a dollar-for-dollar
basis by the amount of the withdrawal. A partial withdrawal also automatically
reduces your policy's account value on a dollar-for-dollar basis by the amount
of the withdrawal plus any applicable surrender charge. A partial withdrawal
also results in a reduction in your policy's guaranteed minimum death benefit
by the proportion that the partial withdrawal bears to the policy account value
just prior to the partial withdrawal. For example, if the requested partial
withdrawal equals 10% of your policy's account value prior to the withdrawal,
your guaranteed minimum death benefit would be reduced by 10%.
Thus, if you take a partial withdrawal, your policy's death benefit will be
the greater of (i) a multiple of the now-reduced account value or (ii) its
now-reduced guaranteed minimum death benefit.
You should refer to "Tax information" below, for information about possible
tax consequences of partial withdrawals and any associated reduction in policy
benefits. If you have an unpaid policy loan, a partial withdrawal may also
increase the chance that your policy could lapse because of insufficient value
to pay policy charges as they fall due.
SURRENDERING YOUR POLICY FOR ITS NET CASH SURRENDER VALUE
You can fully surrender (give us back) your policy for its "net cash surrender
value" at any time. The net cash surrender value equals your account value,
minus any outstanding loans and unpaid loan interest, and minus any surrender
charge that then remains applicable.
The surrender charge we impose on a full surrender is the applicable surrender
charge percentage multiplied by the amount of the initial premium, as adjusted
for any prior partial withdrawals. For purposes of this calculation, the
amount of the initial premium would be reduced by the amounts of any prior
partial withdrawals that incurred a surrender charge. The surrender charge
percentages are shown in "Charges and expenses you will pay" above.
A full surrender causes your policy and all insurance benefits to terminate.
Please refer to "Tax information" below for the possible tax consequences of
surrendering your policy.
<PAGE>
5
Tax information
------
23 TAX INFORMATION
--------------------------------------------------------------------------------
This discussion is based on current federal income tax law and
interpretations. It assumes that the policyowner is a natural person who is a
U.S. citizen and resident. The tax effects on corporate taxpayers, non-U.S.
residents or 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
a qualified tax advisor.
BASIC TAX TREATMENT FOR YOU AND YOUR BENEFICIARY
An Accumulator Life policy will be treated as "life insurance" for federal
income tax purposes (a) if it meets the definition of life insurance under
Section 7702 of the Internal Revenue Code (the "Code") and (b) as long as the
investments made by the underlying Portfolios satisfy certain investment
diversification requirements under Section 817(h) of the Code. We believe that
the policies will meet these requirements and, therefore, that
o the death benefit received by the beneficiary under your policy will
generally not be subject to federal income tax; and
o increases in your policy's 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 surrender, a
partial withdrawal, loan or a payment to you.
There may be different tax consequences if you assign your policy or designate
a new owner. See "Assigning your policy" below.
TAX TREATMENT OF DISTRIBUTIONS TO YOU
The federal income tax consequences of a distribution from your policy depend
on whether your policy is a "modified endowment contract" (sometimes also
referred to as a "MEC"). In all cases, however, the character of any income
described below as being taxable to the recipient will be ordinary income (as
opposed to capital gain).
TESTING FOR MODIFIED ENDOWMENT CONTRACT ("MEC") STATUS. In all cases where you
have purchased your policy with a single premium, your policy will be a
"modified endowment contract." Additionally, a life insurance policy that you
receive in exchange for another life insurance policy that was a modified
endowment contract will also be considered a modified endowment contract.
If you acquire your policy through the exchange of an existing life insurance
policy that is not itself a modified endowment contract, your new policy will
generally not be a modified endowment contract. There are two exceptions:
(1) if there is a reduction in benefits below the level that would have caused
your existing policy to become a modified endowment. This will not be the
case if the existing policy was not subject to (or was grandfathered from)
modified endowment contract testing or beyond any seven-year testing
period. We will request the issuer of any existing contract being
exchanged to provide us with information necessary to determine the new
contract's status.
(2) if you decide to make an additional premium payment at such later time as
the policy may permit.
TAXATION OF PRE-DEATH DISTRIBUTIONS IF YOUR POLICY IS A MODIFIED ENDOWMENT
CONTRACT. Any distribution from your policy will be taxed on an "income-first"
basis if your policy is a modified endowment contract. Distributions for tax
purposes 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 account value exceeds your basis in the policy. (For
modified endowment contracts, your basis in the policy is equal to your
initial single premium, increased by any permitted additional premium and
reduced by the amount of any previous distributions from your policy that were
not taxable. If your policy was acquired through a tax free exchange, however,
your basis will generally equal the basis carried over from the policy you
exchanged, increased by any additional premium and reduced by any previous
distributions that
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were not taxable. Your basis also 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
endowment contracts issued by Equitable Life (or its affiliate) to the same
owner during any calendar year are treated as if they were a single contract.
A 10% penalty tax also will apply to the taxable portion of most distributions
from a policy that is a modified endowment contract. The penalty tax will not,
however, apply to (i) taxpayers whose actual age is at least 59 1/2, (ii)
distributions in the case of a disability (as defined in the Code) or (iii)
distributions 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 or her
beneficiary.
Interest charged on the loan will generally not be tax deductible, although
interest credited on loan collateral may become taxable if distributed under
the policy. IF YOUR POLICY TERMINATES AFTER A GRACE PERIOD, THE EXTINGUISHMENT
OF ANY THEN-OUTSTANDING POLICY LOAN AND UNPAID LOAN INTEREST WILL BE TREATED
AS A DISTRIBUTION (to the extent the loan was not previously treated as a
distribution) and could be subject to tax, including the 10% penalty tax, as
described above. In addition, upon a full surrender, any excess of the
proceeds we pay (including any amounts we use to discharge any loan) over your
basis in the policy, will be subject to federal income tax and, unless an
exception applies, the 10% penalty tax.
TAXATION OF PRE-DEATH DISTRIBUTIONS IF YOUR POLICY IS NOT A MODIFIED ENDOWMENT
CONTRACT. As long as your policy remains in force as a non-modified endowment
contract, policy loans will be treated as indebtedness, and no part of the
loan proceeds will be subject to current federal income tax. Interest charged
on the loan will generally not be tax deductible, although interest credited
on loan collateral may become taxable under the rules below if distributed.
If you make a partial withdrawal after the first 15 years of your policy, the
proceeds will not be subject to federal income tax except to the extent such
proceeds exceed your "basis" in your policy. (Your basis generally will equal
the basis carried over from the old life policy you exchanged, if the exchange
was a tax free exchange, less the amount of any distributions from your policy
that were not taxable. We need to receive this basis information from the
issuer of the old life policy.) During the first 15 years, however, the
proceeds from a partial withdrawal are likely to be subject to federal income
tax, under a complex formula, to the extent that your account value exceeds
your basis.
Upon full surrender, any amount by which the proceeds we pay (including
amounts we use to discharge any policy loan and unpaid loan interest) exceed
your basis in the policy will be subject to federal income tax. IN ADDITION,
IF A POLICY TERMINATES AFTER A GRACE PERIOD, THE EXTINGUISHMENT OF ANY
THEN-OUTSTANDING POLICY LOAN AND UNPAID LOAN INTEREST WILL BE TREATED AS A
DISTRIBUTION AND COULD BE SUBJECT TO TAX UNDER THE FOREGOING RULES. Finally,
if you make an assignment of rights or benefits under your policy, you may be
deemed to have received a distribution from your policy, all or part of which
may be taxable.
Distributions that occur during a year of your policy in which it becomes a
modified endowment contract, and during any subsequent years, will be taxed as
described above for a policy which is a modified endowment contract. In
addition, distributions from a policy within two years before it becomes a
modified endowment contract also will be subject to tax in this manner. This
means that a distribution made from a policy that is not a modified endowment
contract could later become taxable as a distribution from a modified
endowment contract.
RESTORATION OF A TERMINATED POLICY. For tax purposes, some restorations of a
policy that terminated after a grace period may be treated as the purchase of
a new policy.
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EFFECT OF POLICY ON INTEREST DEDUCTIONS TAKEN BY BUSINESS ENTITIES
OWNERSHIP OF A POLICY BY A TRADE OR BUSINESS ENTITY CAN LIMIT THE AMOUNT OF
ANY INTEREST ON BUSINESS BORROWINGS THAT ENTITY OTHERWISE COULD DEDUCT for
federal income tax purposes, even though such business borrowings may be
unrelated to the policy. To avoid the limit, the insured person must be an
officer, director, employee or 20% owner of the trade or business entity when
coverage on that person commences.
The limit does not generally apply for policies owned by natural persons (even
if those persons are conducting a trade or business as sole proprietorships),
unless a trade or business entity that is not a sole proprietorship is a
direct or indirect beneficiary under the policy. ENTITIES COMMONLY HAVE SUCH A
BENEFICIAL INTEREST, FOR EXAMPLE, IN SO-CALLED "SPLIT DOLLAR" ARRANGEMENTS. If
the trade or business entity has such an interest in a policy, it will be
treated the same as if it owned the policy for purposes of the limit on
deducting interest on unrelated business income.
The limit generally applies only to policies issued after June 8, 1997 in
taxable years ending after such date. However, for this purpose, any material
increase in death benefit as a result of any additional premium payment, or
other material change in a policy, will be treated as the issuance of a new
policy.
In cases where the above-discussed limit on deductibility applies, the
non-deductible portion of unrelated interest on business loans is determined
by multiplying the total amount of such interest by a fraction. The numerator
of the fraction is the policy's average account value (excluding amounts we
are holding to secure any policy loans) for the year in question, and the
denominator is the average for the year of the aggregate tax bases of all the
entity's other assets.
Any corporate, trade, or business use of a policy should be carefully reviewed
by your tax advisor with attention to these rules, as well as the other rules
and possible pending legislative proposals which might further restrict
available exceptions to this limit on interest deductions or make other tax
law changes with respect to such coverage.
REQUIREMENT THAT WE DIVERSIFY INVESTMENTS
Under Section 817(h) of the Code, the Treasury Department has issued
regulations that implement investment diversification requirements. Failure to
comply with these regulations would disqualify your policy as a life insurance
policy under Section 7702 of the Code. If this were to occur, you would be
subject to federal income tax on any income and gains under the policy and the
death benefit proceeds would lose their income tax-free status. These
consequences would continue for the period of the disqualification and for
subsequent periods. Through the Portfolios, we intend to comply with the
applicable diversification requirements.
ESTATE, GIFT, AND GENERATION-SKIPPING TAXES
If the policy's owner is the insured person, the death benefit will generally
be includable in the owner's estate for purposes of federal estate tax. If the
owner is not the insured person, and the owner dies before the insured person,
the value of the policy would be includable in the owner's estate. If the
owner is neither the insured person nor the beneficiary, the owner will be
considered to have made a gift to the beneficiary of the death benefit
proceeds when they become payable.
In general, a person will not owe estate or gift taxes until gifts made by
such person, plus that person's taxable estate, total at least $675,000 (a
figure that is scheduled to rise at periodic intervals to $1 million by the
year 2006). For this purpose, however, certain amounts may be deductible or
excludable, such as gifts and bequests to the person's spouse or charitable
institutions and certain gifts of $10,000 or less per year for each recipient.
As a general rule, if you make a "transfer" to a person two or more generations
younger than you, a generation-skipping tax may be payable. Generation-skipping
transactions would include, for example, a case where a grandparent "skips" his
or her
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children and names grandchildren as a policy's beneficiaries. In that case,
the generation-skipping "transfer" would be deemed to occur when the insurance
proceeds are paid. The generation-skipping tax rates are similar to the
maximum estate tax rate in effect at the time. Individuals, however, are
generally allowed an aggregate generation-skipping tax exemption of $1 million
(indexed annually for inflation, $1,030,000 for 2000).
The particular situation of each policyowner, insured person or beneficiary
will determine how ownership or receipt of policy proceeds will be treated for
purposes of federal estate, gift and generation-skipping taxes, as well as
state and local estate, inheritance and other taxes. Because these rules are
complex, you should consult with a qualified tax adviser for specific
information, especially where benefits are passing to younger generations.
EMPLOYEE BENEFIT PROGRAMS
This Accumulator Life policy is not designed, nor intended, to be sold into
employee benefit programs. Special rules apply to sales of life insurance
policies to the following programs:
PENSION AND PROFIT-SHARING PLANS. There are special limits on the amount of
insurance that may be purchased by a trust or other entity that forms part of
a pension or profit-sharing plan qualified under Section 401(a) or 403 of the
Code. In addition, the federal income tax consequences will be different from
those described in this prospectus. These rules are complex, and you should
consult a qualified tax advisor.
OTHER EMPLOYEE BENEFIT PROGRAMS. Complex rules may also apply when a policy is
held by an employer or a trust, or acquired by an employee, in connection with
the provision of other employee benefits. Among other issues, these
policyowners must consider whether the policy was applied for by or issued to
a person having an insurable interest under applicable state law and with the
insured person's consent. The lack of an insurable interest or consent 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 receive a
death benefit.
ERISA. Employers and employer-created trusts may be subject to reporting,
disclosure and fiduciary obligations under the Employee Retirement Income
Security Act of 1974. You should consult a qualified legal advisor.
OUR TAXES
The operations of our Separate Account FP are reported in our federal income
tax return. The separate account's investment income and capital gains,
however, are, for tax purposes, reflected in our variable life insurance
policy reserves. Therefore, we currently pay no taxes on such income and gains
and impose no charge for such taxes. We reserve the right to impose a charge
in the future for taxes incurred; for example, a charge to the separate
account for income taxes incurred by us that are allocable to the policies.
If our state, local or other tax expenses increase, we may add or increase our
charges for such taxes when they are attributable to Separate Account FP,
based on premiums, or otherwise allocable to the policies.
WHEN WE WITHHOLD TAXES FROM DISTRIBUTIONS
Generally, unless you provide us with a satisfactory written election to the
contrary prior to the distribution, we are required to withhold income tax
from any proceeds we distribute as part of a taxable transaction under your
policy. If you do not wish us to withhold tax from the payment, or if we do
not withhold enough, you may have to pay later, and you may incur penalties
under the estimated income tax rules. In some cases, where generation-skipping
taxes may apply, we may also be required to withhold for such taxes unless we
are provided satisfactory notification that no such taxes are due. States may
also require us to withhold tax on distributions to you. Special withholding
rules apply if you are not a U.S. resident or U.S. citizen.
POSSIBILITY OF FUTURE TAX CHANGES
The U.S. Congress frequently considers legislation that, if enacted, could
change the tax treatment of life insurance policies or increase the taxes we
pay in connection with such
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policies. In addition, the Treasury Department may amend existing regulations,
issue regulations on the qualification of life insurance and modified
endowment contracts, or adopt new or clarifying interpretations of existing
law. State and local tax law or, if you are not a U.S. citizen and resident,
foreign tax law, may also affect the tax consequences to you, the insured
person or your beneficiary, and are subject to change or changes of
interpretation. Any changes in federal, state, local or foreign tax law or
interpretations could have a retroactive effect, both on our taxes and the way
your policy is taxed.
The Treasury Department has the authority to issue guidelines prescribing the
circumstances in which your ability to direct your investment to particular
Portfolios within an insurance policy may cause you, rather than the insurance
company, to be treated as the owner of the Portfolio shares attributable to
your policy. In that case, income and gains attributable to such Portfolio
shares would be included in your gross income for federal income tax purposes.
Under current law, however, we believe that Equitable Life, and not the owner
of a policy, would be considered the owner of the Portfolio shares.
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This section provides further detail about certain subjects that are addressed
in the previous pages. The following discussion generally does not repeat the
information already contained in those pages.
WAYS TO MAKE PREMIUM AND LOAN PAYMENTS
CHECKS AND MONEY ORDERS. Your initial single premium, any permitted additional
premium or any loan repayment generally must be paid by check or money order
drawn on a U.S. bank in U.S. dollars and made payable to "Equitable Life."
We prefer that you make each payment to us with a single check drawn on your
business or personal bank account. We also will accept a single money order,
bank draft or cashier's check payable directly to Equitable Life, although we
must report such "cash equivalent" payments to the Internal Revenue Service
under certain circumstances. Cash and travelers' checks, or any payments in
foreign currency, are not acceptable. We will not accept third-party checks
payable to someone other than Equitable Life.
EXCHANGES OF EXISTING LIFE INSURANCE POLICIES. We may, under certain
circumstances, permit you to exchange an existing life insurance policy for an
Accumulator Life policy. In this regard, we will follow our established
administrative procedures in effect at that time. We will apply these
procedures uniformly and will not unfairly discriminate. We will generally
require the use of special forms for this purpose.
REQUIREMENTS FOR SURRENDER REQUESTS
Your surrender request must include the policy number, your name, your tax
identification number, the name of the insured person, and the address where
proceeds should be mailed. The request must be signed by you, as the owner,
and by any joint owner, collateral assignee or irrevocable beneficiary. We may
also require you to complete specific tax forms.
Finally, in order for your surrender request to be complete, you must return
your policy to us. Your request will not be deemed complete until we receive
all required items. See "Dates and prices at which policy events occur" below
for information regarding the pricing of your request.
WAYS WE PAY POLICY PROCEEDS
The payee for death benefit or other policy proceeds (e.g. upon surrenders)
may name a successor to receive any amounts that we still owe following the
payee's death. Otherwise, we will pay any such amounts to the payee's estate.
We must approve any payment 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 payment 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, withdrawals or commutation
rights (your rights to receive payments over time, for which we may offer a
lump sum payment), the naming of payees, and the methods for proving the
payee's age and continued survival.
ASSIGNING YOUR POLICY
You may assign (transfer) your rights in a policy to someone else as
collateral for a loan, to effect a change of ownership or for some other
reason, if we agree. A copy of the assignment must be forwarded to our
Administrative Office. We are not responsible for any payment we make or any
action we take before we receive notice of the assignment or for the validity
of the assignment. An absolute assignment is a change of ownership.
Certain transfers for value may subject you to income tax and penalties and
cause the death benefit to lose its income-tax free treatment. A gift of a
policy that has a loan outstanding may be treated as part gift and part
transfer for value, which could result in both gift tax and income tax
consequences. An assignment of a life insurance policy that is a modified
endowment contract as collateral for a loan
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will generally be treated as a distribution under the policy for income tax
purposes. You should consult your tax advisor prior to making a transfer or
other assignment.
DATES AND PRICES AT WHICH POLICY EVENTS OCCUR
We describe below the general rules for when, and at what prices, events under
your policy will occur. Other portions of this prospectus describe
circumstances that may cause exceptions. We generally do not repeat those
exceptions below.
DATE OF RECEIPT. Where this prospectus refers to the day when we receive a
payment, request, election, or notice from you, we usually mean the day on
which that item (or the last thing necessary for us to process that item)
arrives in complete and proper form at our Administrative Office or via the
appropriate telephone or fax number if the item is a type we accept by those
means. There are two main exceptions: if the item arrives (1) on a day that is
not a business day or (2) after the close of a business day, then, in each
case, we are deemed to have received that item on the next business day.
BUSINESS DAYS. Every day that the New York Stock Exchange is open for regular
trading is a business day for us. Each business day ends at the time regular
trading on the exchange closes (or is suspended) for the day. We compute unit
values for our variable investment options as of the end of each business day.
This usually is 4:00 p.m., Eastern Time.
PAYMENTS AND REQUESTS YOU MAKE. Loan repayments, any permitted additional
premium payment, and interest payments are reflected in your policy as of the
date we receive them.
The following transactions occur (and receive the prices) as
of the date we receive your request:
o partial withdrawals
o account value and guaranteed minimum death benefit decreases that result
from partial withdrawals
o tax withholding elections
o changes of allocation percentages
o surrenders
o changes of beneficiary
o changes in form of death benefit payment
o loans
o transfers among variable investment options
o assignments
Restoration of terminated policies occurs on your policy's next monthly
anniversary that coincides with or follows the date we approve your request.
DOLLAR COST AVERAGING SERVICE. Transfers pursuant to our dollar cost averaging
service (automatic transfer service) occur as of the first day of each policy
month. If you request the dollar cost averaging service in your original
policy application, the first transfer will occur as of the first day of the
second policy month after your policy's initial Allocation Date. If you
request this service at any later time, we make the first such transfer as of
your policy's first monthly anniversary that coincides with or follows the
date we receive your request.
ASSET REBALANCING SERVICE. If you request the asset rebalancing service, the
first redistribution will be on the date you specify or the date we receive
your request, if later. However, no rebalancing will occur prior to your
policy's Allocation Date. Subsequent periodic rebalancings occur quarterly,
semiannually or annually, as you have requested.
DELAY IN CERTAIN CASES. We may delay allocating any payment you make to our
variable investment options, or any transfer, for the same reasons stated in
"Delay of variable investment option proceeds" below. We may also delay such
transactions for any other legally permitted purpose.
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PRICES APPLICABLE TO POLICY TRANSACTIONS. If a transaction will increase or
decrease the amount you have in a variable investment option as of a certain
date, we process the transaction using the unit values for that option
computed as of that day's close of business, unless that day is not a business
day. In that case, we use unit values computed as of the next business day's
close.
EFFECT OF DEATH OR SURRENDER. You may not make any policy transactions or
changes after the insured person has died. Also, all insurance coverage ends
on the date as of which we process any request for a full surrender.
POLICY ISSUANCE
REGISTER DATE. When we issue a policy, we assign it a "register date," which
will be shown in the policy. We measure the months, years, and anniversaries
of your policy from your policy's register date. The register date will
generally be the same as the date we actually issue the policy (the "issue
date"). Policies that would otherwise receive a register date of the 29th,
30th or 31st of any month will receive a register date of the 28th of that
month.
INVESTMENT START DATE. This is the date your investment first begins to earn a
return for you in our Alliance Money Market option (prior to the Allocation
Date). The investment start date is the issue date.
COMMENCEMENT OF INSURANCE COVERAGE. You must give the entire premium for this
policy to your financial professional before the policy is delivered to you.
No insurance under your policy will take effect unless (1) the insured person
is still living at the time such delivery is completed and (2) unless the
information in the application continues to be true and complete, without
material change, as of the time of such payment. If you submit your entire
premium with your application, we may, subject to certain conditions, provide
a limited amount of temporary insurance on the proposed insured person. You
may request and review a copy of our temporary insurance agreement for more
information about the terms and conditions of that coverage.
NON-ISSUANCE. If, after considering your application, we decide not to issue a
policy, we will refund any premium you have paid (less the amount of any loan)
without interest.
AGE; AGE AT ISSUE. Unless the context in this prospectus requires otherwise,
we consider the insured person's "age" during any policy year be his or her
age on his or her birthday nearest to the beginning of that policy year. For
example, the insured person's age for the first policy year ("age at issue")
is that person's age on whichever birthday is closer to (i.e., before or
after) the policy's register date.
GENDER-NEUTRAL POLICIES
Congress and various states have from time to time considered legislation that
would require insurance rates and the "factors" we use to compute the
policies' death benefits to be the same for males and females.
There will be no distinctions based on sex in the death benefit factors or
cost of insurance rates for Accumulator Life policies sold in Montana because
of Montana insurance department regulations. Guaranteed maximum cost of
insurance rates applicable to a gender-neutral policy will not be greater than
the comparable male rates under a gender specific Accumulator Life policy.
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YOUR VOTING PRIVILEGES
VOTING OF PORTFOLIO SHARES. As the legal owner of any Portfolio shares that
support a variable investment option, we will attend (and have the right to
vote at) any meeting of shareholders of the Portfolio (or the Trust). To
satisfy currently-applicable legal requirements, however, we will give you the
opportunity to tell us how to vote the number of each Portfolio's shares that
are attributable to your policy. We will vote shares attributable to policies
for which we receive no instructions in the same proportion as the
instructions we do receive from all policies that participate in our Separate
Account FP (discussed below). With respect to any Portfolio shares that we are
entitled to vote directly (because we do not hold them in a separate account
or because they are not attributable to policies), we will vote in proportion
to the instructions we have received from all holders of variable annuity and
variable life insurance policies who are using that Portfolio.
Under current legal requirements, we may disregard the voting instructions we
receive from policyowners only in certain narrow circumstances prescribed by
SEC regulations. If we do, we will advise you of the reasons in the next
annual or semiannual report we send to you.
VOTING AS POLICYOWNER. In addition to being able to instruct voting of
Portfolio shares as discussed above, policyowners that use our variable
investment options may in a few instances be called upon to vote on matters
that are not the subject of a shareholder vote being taken by any Portfolio.
If so, you will have one vote for each $100 of account value in any such
option; and we will vote our interest in Separate Account FP in the same
proportion as the instructions we receive from holders of Accumulator Life and
other policies that Separate Account FP supports.
ABOUT OUR SEPARATE ACCOUNT FP
Each variable investment option is a part (or "subaccount") of our Separate
Account FP. We established Separate Account FP under special provisions of the
New York Insurance Law. These provisions prevent creditors from any other
business we conduct from reaching the assets we hold in our variable
investment options for owners of our variable life insurance policies. We are
the legal owner of all of the assets in Separate Account FP and may withdraw
any amounts that exceed our reserves and other liabilities with respect to
variable investment options under our policies. The results of Separate
Account FP's operations are accounted for without regard to Equitable Life's
other operations.
Separate Account FP's predecessor was established on April 19, 1985 by our
then wholly owned subsidiary, Equitable Variable Life Insurance Company. We
established our Separate Account FP under New York Law on September 21, 1995.
When Equitable Variable Life Insurance Company merged into Equitable Life, as
of January 1, 1997, our Separate Account FP succeeded to all the assets,
liabilities and operations of its predecessor.
Separate Account FP is registered with the SEC under the Investment Company
Act of 1940 and is classified by that act as a "unit investment trust." The
SEC, however, does not manage or supervise Equitable Life or Separate Account
FP.
Each subaccount (variable investment option) of Separate Account FP available
under Accumulator Life invests solely in class IB shares issued by the
corresponding Portfolio of EQ Advisors Trust. Separate Account FP immediately
reinvests all dividends and other distributions it receives from a Portfolio
in additional shares of that Portfolio.
The EQ Advisors Trust sells its shares to Equitable Life separate accounts in
connection with Equitable Life's variable life insurance and annuity products,
to the trustee of a qualified benefit plan for Equitable Life and to separate
accounts of insurance companies, both affiliated and unaffiliated with
Equitable Life. We currently do not foresee any disadvantages to our
policyowners arising out of this. However, the Board of Trustees of EQ
Advisors Trust intends to monitor events to identify any material
irreconcilable conflicts that may arise and to determine what action, if any,
should be taken in response. If we believe that the Board's response
insufficiently protects our policyowners, we will see to it that appropriate
action is taken to do so. Also, if we ever believe that any of the Trust's
Portfolios is so large as to
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materially impair the investment performance of the Portfolio involved, we
will examine other investment alternatives.
ABOUT OUR GENERAL ACCOUNT
Our general account assets support all of our obligations (including those
under the Accumulator Life policies). Our general assets consist of all of our
assets as to which no class or classes of our annuity or life insurance
policies have any preferential claim. You will not share in the investment
experience of our general account assets, however; and we have full discretion
about how we invest those assets (subject only to any requirements of law).
TRANSFERS OF YOUR ACCOUNT VALUE
TRANSFERS NOT IMPLEMENTED. When we cannot process part of a transfer request,
we will not process any other part of the request. This could occur, for
example, where you request transfer of an amount greater than that currently
allocated to a variable investment option. In this circumstance, we will
notify you and explain why we could not process the request.
The dollar cost averaging service will terminate immediately if: (1) your
amount in the Alliance Money Market option is insufficient to cover the
automatic transfer amount; (2) your policy is in a grace period; or (3) we
receive notice of the insured person's death. Similarly, the asset rebalancing
program will terminate immediately if either (2) or (3) occurs.
MARKET TIMING. You should note that the product is not designed for
professional "market timing" organizations, or other organizations or
individuals engaging in a market timing strategy, making programmed transfers,
frequent transfers or transfers that are large in relation to the total assets
of the underlying mutual fund portfolio. Market timing strategies are
disruptive to the underlying mutual fund portfolios in which the variable
investment options invest. If we determine that your transfer patterns among
the variable investment options reflect a market timing strategy, we reserve
the right to take action including, but not limited to: restricting the
availability of transfers through telephone requests, facsimile transmissions,
automated telephone services, Internet services or any electronic transfer
services. We may also refuse to act on transfer instructions of an agent
acting under a power of attorney who is acting on behalf of more than one
owner.
TELEPHONE AND EQACCESS REQUESTS
If you are a properly authorized person, you may make transfers by telephone
or over the Internet as described above under "Telephone and EQAccess
transfers."
Also, if you are both the owner and the insured person under your policy, you
may call 1-888-855-5100 (toll free) from a touch tone phone to make the
following additional types of requests:
o policy loans
o changes of allocation percentages (anticipated to be available through
EQAccess by the end of 2000)
o changes of address
For security purposes, all telephone requests are automatically tape-recorded
and are invalid if the information given is incomplete or any portion of the
request is inaudible. We have established procedures reasonably designed to
confirm that telephone instructions are genuine. These include requiring
personal identification information from the caller and providing subsequent
written confirmation of the instructions.
If you wish to participate in EQAccess, you must first agree to the terms and
conditions set forth in our EQAccess Online Services Agreement, which you can
find at our Web site. For security purposes, you may not initiate any
transactions relating to your policy for five (5) days after you have elected
to use EQAccess. We will send you a letter by first class mail confirming your
enrollment in EQAccess. Additionally, you will be required to use a password
and protect it from unauthorized use. We will provide subsequent written
confirmation of any EQAccess transactions. We will assume that all
instructions received through EQAccess from anyone using your password are
given by you; however, we reserve the right to refuse to process any
transaction and/or block
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access to EQAccess if we have reason to believe the instructions given are
unauthorized.
If we do not employ reasonable procedures to confirm the genuineness of
telephone or Internet instructions, we may be liable for any losses arising
out of any act or omission that constitutes negligence, lack of good faith, or
willful misconduct. In light of our procedures, we will not be liable for
following telephone or Internet instructions that we reasonably believe to be
genuine.
We reserve the right to refuse to process any telephone or Internet
transactions if we have reason to believe that the request compromises the
general security and/or integrity of our automated systems (see discussion of
"Market timing" above).
Any telephone or Internet transaction request that we receive after the close
of a business day (which is usually 4:00 p.m. Eastern Time) will be processed
as of the next business day. During times of extreme market activity, or for
other reasons, you may be unable to contact us to make a telephone or Internet
request. If this occurs, you should submit a written transaction request to
our Administrative Office. We reserve the right to discontinue telephone or
Internet transactions, or modify the procedures and conditions for such
transactions, without notifying you at any time.
DEDUCTING POLICY CHARGES
MONTHLY COST OF INSURANCE CHARGE. The monthly cost of insurance charge is
determined by multiplying the cost of insurance rate by your policy's account
value. A greater policy account value, or a higher cost of insurance rate,
will generally result in a higher current monthly charge. The currently
applicable cost of insurance rate is 1.15%, subject to the maximum charges
specified in your policy.
We reserve the right to change this rate, but we will never charge more than
the guaranteed maximum charge specified in your policy. These maximum charges
are determined by multiplying the maximum cost of insurance rate that is then
applicable to your policy by the amount we have at risk under your policy. The
maximum cost of insurance rates are based on the 1980 Commissioners' Standard
Ordinary Male and Female Mortality Tables. Our amount at risk (also described
in your policy as "net amount at risk") on any date is the difference between
(a) the death benefit that would be payable if the insured person died on that
date and (b) the then total account value under the policy.
Our maximum cost of insurance rates will generally be lower (except in
Montana) if the insured person is a female than if a male.
DATE OF MONTHLY DEDUCTIONS. We make the regular monthly deductions as of the
first day of each policy month.
PURPOSES 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 we expect, 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., charge for administration and taxes,
cost of insurance charge, guaranteed minimum death benefit charge, and
mortality and expense risk charge. However, the fact that any charge bears the
name of, or is designed primarily to defray, 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. Nor does it mean 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. The surrender charge, for example, is
designed primarily to defray sales expenses, but may also be used to defray
other expenses associated with your policy that we have not recovered by the
time of any surrender.
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34 MORE INFORMATION ABOUT OTHER MATTERS
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SUICIDE AND CERTAIN MISSTATEMENTS
If an insured person commits suicide within certain time periods, the amount
of death benefit we pay will be limited as described in the policy. Also, if
an application misstated the age or gender of an insured person, we will
adjust the amount of any death benefit as described in the policy.
WHEN WE PAY POLICY PROCEEDS
GENERAL. We will generally pay any death benefit, surrender, partial
withdrawal, or loan within seven days after we receive the request and any
other required items.
CLEARANCE OF CHECKS. We reserve the right to defer payment of that portion of
your account value that is attributable to a premium payment or loan repayment
made by check for a reasonable period of time (not to exceed 15 days) to allow
the check to clear the banking system.
DELAY OF VARIABLE INVESTMENT OPTION PROCEEDS. We reserve the right to defer
payment of any death benefit, transfer, loan or other distribution that is
derived from a variable investment option if (a) the New York Stock Exchange
is closed (other than customary weekend and holiday closings) or trading on
that exchange is restricted; (b) the SEC has declared that an emergency
exists, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to fairly determine the
account value; or (c) the law permits the delay for the protection of owners.
If we need to defer calculation of values for any of the foregoing reasons,
all delayed transactions will be processed at the next available unit values.
DELAY TO CHALLENGE COVERAGE. We may challenge the validity of your insurance
policy based on any material misstatements in an application you have made to
us. We cannot make such challenges, however, beyond certain time limits set
forth in the policy. If the insured person dies within one of these limits, we
may delay payment of any proceeds until we decide whether to challenge the
policy.
CHANGES WE CAN MAKE
In addition to any of the other changes described in this prospectus, we have
the right to modify how we or Separate Account FP 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 combine two or more variable investment options or withdraw assets relating
to Accumulator Life from one variable investment option and put them into
another;
o end the registration of, or re-register, Separate Account FP under the
Investment Company Act of 1940;
o operate Separate Account FP under the direction of a "committee" or
discharge such a committee at any time;
o restrict or eliminate any voting rights or privileges of policyowners (or
other persons) that affect Separate Account FP;
o operate Separate Account FP, or one or more of the variable investment
options, in any other form the law allows. This includes any form that
allows us to make direct investments, in which case we may charge Separate
Account FP an advisory fee.
We may make any legal investments we wish for Separate Account FP. In
addition, we may disapprove any change in investment advisers or in investment
policy unless a law or regulation provides differently.
If we take any action that results in a material change in the underlying
investments of a variable investment option, we will notify you to the extent
required by law. We may, for example, cause the variable investment option to
invest in a mutual fund other than, or in addition to, EQ Advisors Trust. If
you then wish to transfer the amount you have in that option to another
variable investment option, you may do so.
We may make any changes in the policy or make distributions from the policy to
the extent we deem necessary to ensure that your policy qualifies or continues
to
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35 MORE INFORMATION ABOUT OTHER MATTERS
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qualify as life insurance for tax purposes. Any such change will apply
uniformly to all policies that are affected. We will give you written notice
of such changes. Subject to all applicable legal requirements, we also may
make other changes in the policies that do not reduce any net cash surrender
value, death benefit, account value, or other accrued rights or benefits.
REPORTS WE WILL SEND YOU
Shortly after the end of each year of your policy, we will send you a report
that includes information about your policy's current death benefit, account
value, cash surrender value (i.e., account value minus any current surrender
charge), policy loans, policy transactions and amounts of charges deducted. We
will send you individual notices to confirm your premium payments, loan
repayments, transfers and certain other policy transactions.
LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings would be considered material with respect
to a policyowner's interest in Separate Account FP, nor would any of these
proceedings be likely to have a material adverse effect upon the Separate
Account, our ability to meet our obligations under the policies, or the
distribution of the policies.
ILLUSTRATIONS OF POLICY BENEFITS
In order to help you understand how your policy values would vary over time
under different sets of assumptions, we will provide you with certain
illustrations when you purchase your policy and upon request thereafter. These
will be based on the age and gender of the insured person under your policy,
and such factors as the premium payment amount and assumed rates of return
(within limits) that you request. We have filed an example of such an
illustration as an exhibit to the registration statement referred to below.
SEC REGISTRATION STATEMENT
We have on file with the SEC a registration statement under the Securities Act
of 1933 that relates to the Accumulator Life policies. The registration
statement contains additional information that is not required to be included
in this prospectus. You may obtain this information, for a fee, from the SEC's
Public Reference Section at 450 5th Street, N.W., Washington, D.C. 20549 or,
without charge, from the SEC's web site (www.sec.gov).
HOW WE MARKET THE POLICIES
We offer variable life insurance policies (including Accumulator Life) and
variable annuity contracts through Equitable Distributors Inc. ("EDI"). The
Investment Company Act of 1940, therefore, classifies EDI as a "principal
underwriter" of those policies and contracts. EDI also serves as a principal
underwriter of EQ Advisors Trust. EDI is a wholly owned subsidiary of
Equitable Life, with its address at 1290 Avenue of the Americas, New York, NY
10104. EDI is registered with the SEC as a broker-dealer and is a member of
the National Association of Securities Dealers, Inc. ("NASD"). In 1998 and
1999, we paid EDI fees of $35,582,313 and $46,957,345, respectively, for its
services under a Distribution Agreement with Equitable Life and its separate
accounts.
We sell Accumulator Life through licensed insurance agencies (both affiliated
and unaffiliated with Equitable Life) and their affiliated broker-dealers (who
are registered with the SEC and are members of the NASD). Such agencies and
their affiliated broker-dealers have entered into selling agreements with EDI.
The licensed insurance agents who sell our policies are appointed as agents of
Equitable Life, and are financial professionals of the agencies' affiliated
broker-dealer. Sales commissions will be paid by Equitable Life to the agency
which sells you this policy. The commissions don't cost you anything above the
charges and expenses already discussed elsewhere in this prospectus.
Generally, the agencies will receive maximum commissions of 4.50% of the
amount of the initial premium you pay. Alternatively, the agencies could
receive a lower initial
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36 MORE INFORMATION ABOUT OTHER MATTERS
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commission, but receive additional commissions in later years based on the
policy's unloaned account value in the variable investment options. The agency
may be required to return to us any commissions on premiums that we have
refunded to a policyowner.
INSURANCE REGULATION THAT APPLIES TO EQUITABLE LIFE
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 state
where we sell policies. We submit annual reports on our operations and
finances to insurance officials in all of these states. The officials are
responsible for reviewing our reports to see that we are financially sound.
Such regulation, however, does not guarantee or provide absolute assurance of
our soundness.
<PAGE>
Directors and principal officers
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37 DIRECTORS AND PRINCIPAL OFFICERS
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Set forth below is information about our directors and, to the extent they are
responsible for variable life insurance operations, our principal officers.
Unless otherwise noted, their address is 1290 Avenue of the Americas, New
York, New York 10104.
DIRECTORS
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
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<S> <C>
FRANCOISE COLLOC'H
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AXA Director of Equitable Life (since July 1992). Member of the AXA Management Board
23 Avenue Matignon and Group Executive President, Human Resources, Communication and Synergies of
75008 Paris, France AXA (since January 2000). Prior thereto, Senior Executive Vice President, AXA
(1993-2000). Director or officer of various subsidiaries and affiliates of the AXA
Group.
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HENRI DE CASTRIES
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AXA Director of Equitable Life (since September 1993). Chairman of the Board of AXA
23 Avenue Matignon Financial (since April 1998); Vice Chairman (February 1996 to April 1998). Vice
75008 Paris, France Chairman of AXA's Management Board (since January 2000). Prior thereto, Senior
Executive Vice President, Financial Services and Life Insurance Activities in the United
States, Germany, the United Kingdom and Benelux (1996 to 2000); Executive Vice
President, Financial Services and Life Insurance Activities (1993 to 1996) of AXA.
Director or officer of various subsidiaries and affiliates of the AXA Group. Director of
DLJ and Alliance Capital Management Corporation, the general partner of Alliance
Holding and Alliance.
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JOSEPH L. DIONNE
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The McGraw-Hill Companies Director of Equitable Life (since May 1982). Retired Chairman of The McGraw-Hill
1221 Avenue of the Americas Companies (since January 2000); prior thereto, Chairman (April 1988 to
New York, NY 10020 January 2000) and Chief Executive Officer (April 1983 to April 1998). Director of The
McGraw-Hill Companies, Harris Corporation and Ryder System, Inc. Director of AXA
Financial, Inc. (since May, 1992).
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DENIS DUVERNE
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AXA Director of Equitable Life (since February 1998). Executive Vice President,
23, Avenue Matignon International (US-UK-Benelux) AXA and member of AXA Executive Board (since
75008 Paris, France January, 2000). Director, Alliance (since February 1996) and Donaldson Lufkin &
Jenrette ("DLJ") (since February 1997).
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JEAN-RENE FOURTOU
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Rhone-Poulenc S.A. Director of Equitable Life (since July 1992). Vice Chairman of the Management Board
25, Quai Paul Doumer of Aventis (since December 1999). Prior thereto, Chairman and Chief Executive
92408 Courbevoie Cedex Officer of Rhone-Poulenc, S.A. (1986 to December 1999). Member of the Supervisory
France Board of AXA. Director of Schneider S.A., Paribas, and Groupe Pernod-Ricard.
Member of the Consulting Council of Banque de France. Director, AXA Financial
(since July, 1992).
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NORMAN C. FRANCIS
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Xavier University of Louisiana Director of Equitable Life (since March 1989). President of Xavier University of
7325 Palmetto Street Louisiana; Director, First National Bank of Commerce, New Orleans, LA, Piccadilly
New Orleans, LA 70125 Cafeterias, Inc., and Entergy Corporation.
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</TABLE>
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38 DIRECTORS AND PRINCIPAL OFFICERS
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DIRECTORS (CONTINUED)
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
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DONALD J. GREENE
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LeBoeuf, Lamb, Greene & MacRae, Director of Equitable Life (since July 1991). Of Counsel, LeBoeuf, Lamb, Greene &
L.L.P. MacRae, L.L.P. (since 1999). Prior thereto, Partner of the firm (1965 to 1999).
125 West 55th Street Director of AXA Financial (since May 1992).
New York, NY 10019-4513
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JOHN T. HARTLEY
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1025 NASA Boulevard Director of Equitable Life (since August 1987). Currently a Director and retired
Melbourne, FL 32919 Chairman and Chief Executive Officer of Harris Corporation (retired July 1995);
previously held other officerships with Harris Corporation. Director of AXA Financial
(since May 1992); Director of the McGraw Hill Companies.
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JOHN H.F. HASKELL JR.
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SBC Warburg Dillon Read LLC Director of Equitable Life (since July 1992); Director of AXA Financial (since
535 Madison Avenue July 1992); Director, Senior Advisor of Warburg Dillon Read LLC (since 1999); Prior
New York, NY 10022 thereto, Managing Director and member of its Board of Directors (1975-1999);
Chairman, Supervisory Board, Dillon Read (France) Gestion (until 1998); Director,
Pall Corporation (since November 1998).
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MARY (NINA) HENDERSON
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BESTFOODS Director of Equitable Life (since December 1996). Corporate Vice President, Core
International Plaza Business Development of Bestfoods (since June 1999). Prior thereto, President,
700 Sylvan Avenue Bestfoods Grocery and Vice President, Bestfoods (formerly CPC International, Inc.)
Englewood Cliffs, NJ 07632-9976 (1997 to 1999). President, Bestfoods Specialty Markets Group (1993 to 1997);
Director, Hunt Corporation and PACTIV Corporation. Director, AXA Financial (since
December 1996).
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W. EDWIN JARMAIN
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Jarmain Group Inc. Director of Equitable Life (since July 1992). President, Jarmain Group Inc. (since
121 King Street West 1979); and officer or director of several affiliated companies. Director, DLJ (since
Suite 2525 October 1992), AXA Insurance (Canada), Anglo Canada General Insurance
Toronto, Ontario M5H 3T9 Company, and AXA Pacific Insurance Company, and Alternate Director, AXA Asia
Canada Pacific Holdings Limited. Chairman (non-executive) and Director, FCA International
Ltd. (January 1994 to May 1998). Director of AXA Financial, Inc. (since July 1992).
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GEORGE T. LOWY
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Cravath, Swaine & Moore Director of Equitable Life (since July 1992). Partner, Cravath, Swaine & Moore.
825 Eighth Avenue Director, Eramet.
New York, NY 10019
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</TABLE>
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39 DIRECTORS AND PRINCIPAL OFFICERS
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DIRECTORS (CONTINUED)
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
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DIDIER PINEAU-VALENCIENNE
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Credit Suisse, First Boston Director of Equitable Life (since February 1996). Vice Chairman Credit Suisse First
64, rue de Miromesnel Boston (since March 1999). Chairman and Chief Executive Officer (1981 to
75008 Paris, France February 1999) (now Honorary Chairman) Schneider Electric. Member of the
Supervisory Board of AXA. Director of CGIP, Aventis (formerly Rhone-Poulenc, S.A.),
Sema Group PLC (UK), Soft Computing and Swiss Helvetic Fund; member of the
Advisory Board of Booz-Allen & Hamilton. Director of AXA Financial, Inc. (since
February 1996).
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GEORGE J. SELLA, JR.
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P.O. Box 397 Director of Equitable Life (since May 1987). Retired Chairman and Chief Executive
Newton, NJ 07860 Officer of American Cyanamid Company (retired April 1993); previously held other
officerships with American Cyanamid. Director of AXA Financial (since May 1992) and
Coulter Pharmaceutical (since May 1987).
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PETER J. TOBIN
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St. John's University Director of Equitable Life (since March 1999); Dean of the Peter J. Tobin College of
8000 Utopia Parkway Business Administration, St. John's University (since August 1998); Chief Financial
Jamaica, NY 11439 Officer, Chase Manhattan Corp. (1985 to 1997).
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DAVE H. WILLIAMS
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Alliance Capital Management Director of Equitable Life (since March 1991). Chairman (since 1977) and former
Corporation Chief Executive Officer (1977 to January 1999), of Alliance, and Chairman or Director
1345 Avenue of the Americas of numerous subsidiaries and affiliated companies of Alliance. Senior Executive Vice
New York, NY 10105 President of AXA (since January 1997). Director of AXA Financial (since May 1992).
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</TABLE>
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40 DIRECTORS AND PRINCIPAL OFFICERS
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OFFICERS - DIRECTORS
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
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<S> <C>
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MICHAEL HEGARTY
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Director of Equitable Life (since January 1998). President (since January 1998) and
Chief Operating Officer (since February 1998), Equitable Life. Senior Vice Chairman
(since November 1999), Vice Chairman (since April 1998), Senior Executive Vice
President (January 1998 to April 1998), and Director and Chief Operating Officer
(both since January 1998), AXA Financial. Director, President and Chief Operating
Officer, Equitable of Colorado (since December 1999); AXA Client Solutions &
Equitable Distribution Holding Corp. (since September 1999). 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. Director,
ACMC, Inc. ("ACMC") (since March 1998). Trustee, EQ Advisors Trust. Director,
Equitable Capital Management Corporation ("ECMC") (since March 1998); Alliance
and DLJ (both since May 1998).
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EDWARD D. MILLER
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Director of Equitable Life (since August 1997). Chairman of the Board (since
January 1998), Chief Executive Officer (since August 1997), President (August 1997
to January 1998), Equitable Life. Director, President and Chief Executive Officer, (all
since August 1997), AXA Financial. Director, Chairman of the Board and Chief
Executive Officer, Equitable of Colorado (since December 1999); AXA Client Solutions
and Equitable Distribution Holding Corp. (since September 1999). Member of the
Management Board of AXA (since January 2000); 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), ACMC, Inc. (since March 1998), and AXA Canada (since
September 1998). Director, KeySpan Energy.
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STANLEY B. TULIN
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Director and Vice Chairman of the Board (since February 1998), and Chief Financial
Officer (since May 1996), Equitable Life. Vice Chairman of the Board (since
November 1999) and Chief Financial Officer (since May 1997) and prior thereto,
Senior Executive Vice President (February 1998 to November 1999), AXA Financial.
Director, Vice Chairman and Chief Financial Officer (since December 1999) Equitable
of Colorado; AXA Client Solutions, LLC and Equitable Distributions Holding Corp.
(since September 1999). Vice President (until 1998), EQ Advisors Trust. Director,
Alliance (since July 1997), and DLJ (since June 1997). Prior thereto, Chairman,
Insurance Consulting and Actuarial Practice, Coopers & Lybrand, L.L.P.
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</TABLE>
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41 DIRECTORS AND PRINCIPAL OFFICERS
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OTHER OFFICERS
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
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<S> <C>
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LEON B. BILLIS
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Executive Vice President (since February 1998) and Chief Information Officer (since
November 1994), Equitable Life. Previously held other officerships with Equitable Life;
Director, J.M.R. Realty Services, Inc.
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DERRY E. BISHOP
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Executive Vice President (since September 1998), Chief Agency Officer, (since
December 1997), and Senior Vice President (January 1995 to September 1998),
Equitable Life; Director and Executive Vice President, AXA Advisors LLC and Executive
Vice President and Chief Agency Officer, AXA Client Solutions, LLC (all since
September 1999). Prior thereto, Director (since 1995) and Executive Vice President
(since 1994) EQF (now AXA Advisors).
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HARVEY BLITZ
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Senior Vice President, Equitable Life. Senior Vice President, AXA Financial. Director
and Chairman, Frontier Trust Company ("Frontier"). Director, EQF (now AXA
Advisors) (until September 1999). Executive Vice President and Director (since
September 1999), AXA Advisors, Director (until May 1996), Equitable Distributors,
Inc. ("EDI"). Director and Senior Vice President, AXA Network, LLC (formerly
EquiSource). Director and Officer of various Equitable Life affiliates. Previously held
other officerships with Equitable Life and its affiliates.
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KEVIN R. BYRNE
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Senior Vice President and Treasurer, Equitable Life and AXA Financial. Senior Vice
President and Treasurer, AXA Client Solutions, LLC and Equitable Distributors (since
September 1999); Equitable of Colorado (since December 1999). Treasurer, Frontier
(since 1990) and AXA Network, LLC (since 1999). President and Chief Executive
Officer (since September 1997), and prior thereto, Vice President and Treasurer,
Equitable Casualty Insurance Company ("Casualty"). Vice President and Treasurer,
EQ Advisors Trust (since March 1997). Director, Chairman, President and Chief
Executive Officer, Equitable JV Holdings (since August 1997). Director (since
July 1997), and Senior Vice President and Chief Financial Officer (since April 1998),
ACMC and ECMC. Previously held other officerships with Equitable Life and its
affiliates.
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JOHN A. CAROSELLI
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Executive Vice President (since September 1998), Equitable Life; Senior Vice
President, Equitable Life (February 1998 to September 1998); Senior Vice President,
Chase Manhattan Corp. (1996 to 1998); Vice President, Chemical Bank (1991 to
1996).
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</TABLE>
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42 DIRECTORS AND PRINCIPAL OFFICERS
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OTHER OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------------------------------
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<S> <C>
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JUDY A. FAUCETT
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Senior Vice President, Equitable Life, (since September 1996) and Actuary (September
1996 to December 1998). Partner and Senior Actuarial Consultant, Coopers &
Lybrand L.L.P. (January 1989 to August 1996).
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ALVIN H. FENICHEL
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Senior Vice President and Controller, Equitable Life and AXA Financial. Senior Vice
President and Controller, The Equitable of Colorado, Inc. (since December 1999).
Previously held other officerships with Equitable Life and its affiliates.
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PAUL J. FLORA
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Senior Vice President and Auditor, Equitable Life. Vice President and Auditor, AXA
Financial.
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ROBERT E. GARBER
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Executive Vice President and Chief Legal Officer (since November 1999), Equitable
Life; prior thereto, Executive Vice President and General Counsel. General Counsel of
AXA Financial. Previously held other officerships with Equitable Life and its affiliates.
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DONALD R. KAPLAN
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Senior Vice President (since September 1999), Chief Compliance Officer and
Associate General Counsel, Equitable Life. Previously held other officerships with
Equitable Life.
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MICHAEL S. MARTIN
-----------------------------------------------------------------------------------------------------------------------------------
Executive Vice President (since September 1998) and Chief Marketing Officer (since
December 1997), Equitable Life; prior thereto, Senior Vice President and Chief
Marketing Officer. Chairman and Chief Executive Officer, AXA Advisors LLC (since
September 1999). Vice President, EQ Advisors Trust (until April 1998). Director,
Equitable Underwriting and Sales Agency (Bahamas), Ltd. and AXA Network, LLC;
President (since February 2000); Executive Vice President (since December 1998),
Colorado; prior thereto, Director and Senior Vice President (since December 1998).
Previously held other officerships with Equitable Life and its affiliates.
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RICHARD J. MATTEIS
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Executive Vice President, Equitable Life (since May 1998); Executive Vice President,
Chase Manhattan Corporation (January 1983 to June 1997); Director, EQF (now AXA
Advisors) (October 1998 to May 1999).
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</TABLE>
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43 DIRECTORS AND PRINCIPAL OFFICERS
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OTHER OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
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PETER D. NORIS
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Executive Vice President and Chief Investment Officer, Equitable Life. Executive Vice
President (since May 1995) and Chief Investment Officer (since July 1995), AXA
Financial. Chairman, President and Trustee (since March 1997), EQ Advisors Trust.
Executive Vice President and Chief Investment Officer, Equitable of Colorado (since
December 1999), Executive Vice President, AXA Client Solutions (since
September 1999). Director, Alliance, and Equitable Real Estate (until June 1997).
Executive Vice President, EQF (now AXA Advisors) (November 1996 to
September 1999). Director, EREIM Managers Corp. (since July 1997), and EREIM LP
Corp. (since October 1997).
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BRIAN S. O'NEIL
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Executive Vice President, Equitable Life (since June 1998). Executive Vice President,
AXA Financial and AXA Client Solutions (since September 1999). Director of
Investment, AXA Investment Management (January 1998 to June 1998); Chief
Investment Officer, AXA Investment Management (July 1995 to January 1998).
Trustee (since September 1999), EQ Advisors Trust.
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ANTHONY C. PASQUALE
-----------------------------------------------------------------------------------------------------------------------------------
Senior Vice President, Equitable Life and AXA Client Solutions (since
September 1999). Director, Chairman and Chief Operating Officer, Casualty, (since
September 1997). Director, Equitable Agri-Business, Inc. (until June 1997). Previously
held other officerships with Equitable Life and its affiliates.
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PAULINE SHERMAN
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Senior Vice President (since February 1999); Vice President, Secretary and Associate
General Counsel, Equitable Life and AXA Financial, (since September 1995). Senior
Vice President, Secretary and Associate General Counsel, AXA Financial and AXA
Client Solutions (since November 1999). Senior Vice President and Secretary,
Equitable of Colorado (since December 1999). Previously held other officerships with
Equitable Life.
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RICHARD V. SILVER
-----------------------------------------------------------------------------------------------------------------------------------
Senior Vice President (since February 1995) and General Counsel (since
November 1999) Equitable Life; prior thereto, Deputy General Counsel (1996-1999).
Senior Vice President and Associate General Counsel, AXA Financial (since
September 1996). Senior Vice President and General Counsel, AXA Client Solutions
(since November 1999). Vice President and General Counsel, Equitable of Colorado
(since December 1999). Director, AXA Advisors. Senior Vice President and General
Counsel, EIC (June 1997 to March 1998). Previously held other officerships with
Equitable Life and its affiliates.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
------
44 DIRECTORS AND PRINCIPAL OFFICERS
--------------------------------------------------------------------------------
OTHER OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
<S> <C>
-----------------------------------------------------------------------------------------------------------------------------------
JOSE S. SUQUET
-----------------------------------------------------------------------------------------------------------------------------------
Senior Executive Vice President (since February 1998), Chief Distribution Officer (since
December 1997) and Chief Agency Officer (August 1994 to December 1997),
Equitable Life. Senior Executive Vice President and Chief Distribution Officer, AXA
Client Solutions (since September 1999). Senior Executive Vice President, Equitable of
Colorado (since December 1999). Executive Vice President (since May 1996), AXA
Financial. Chairman (since December 1997), EDI. Prior thereto, Agency Manager.
-----------------------------------------------------------------------------------------------------------------------------------
GREGORY G. WILCOX
-----------------------------------------------------------------------------------------------------------------------------------
Executive Vice President (since September 1998), Senior Vice President (May 1992 to
September 1998), Equitable Life. Executive Vice President (since November 1999),
AXA Financial; prior thereto, Senior Vice President.
-----------------------------------------------------------------------------------------------------------------------------------
R. LEE WILSON
-----------------------------------------------------------------------------------------------------------------------------------
Executive Vice President (since May 1998) and Deputy Chief Financial Officer
(September 1998 to July 1999), Equitable Life. Executive Vice President, AXA Client
Solutions (since September 1999). Prior thereto, Executive Vice President, Chase
Manhattan Bank.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
8
Financial statements of Separate Account FP and Equitable Life
------
45 FINANCIAL STATEMENTS OF SEPARATE ACCOUNT FP AND EQUITABLE LIFE
--------------------------------------------------------------------------------
The financial statements of Separate Account FP as of December 31, 1999 and for
each of the three years in the period ended December 31, 1999 and the financial
statements of Equitable Life as of December 31, 1999 and 1998 and for each of
the three years in the period ended December 31, 1999 included in this
prospectus have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
such firm as experts in accounting and auditing. The financial statements of
Separate Account FP and Equitable Life as of March 31, 2000 are unaudited. The
financial statements of Equitable Life have relevance for the policies only to
the extent that they bear upon the ability of Equitable Life to meet its
obligations under the policies.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
<TABLE>
<S> <C>
Report of Independent Accountants.................................................................................. FSA-2
Financial Statements:
Statements of Assets and Liabilities, December 31, 1999......................................................... FSA-3
Statements of Operations for the Years Ended December 31, 1999, 1998 and 1997................................... FSA-6
Statements of Changes in Net Assets for the Years Ended December 31, 1999, 1998 and 1997........................ FSA-11
Notes to Financial Statements................................................................................... FSA-17
Unaudited Financial Statements:
Statements of Assets and Liabilities, March 31, 2000............................................................ FSA-26
Statements of Operations for the Three Months Ended March 31, 2000.............................................. FSA-30
Statements of Changes in Net Assets for the Three Months Ended March 31, 2000................................... FSA-33
Notes to Financial Statements................................................................................... FSA-36
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Report of Independent Accountants.................................................................................. F-1
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 1999 and 1998......................................................... F-2
Consolidated Statements of Earnings, Years Ended December 31, 1999, 1998 and 1997............................... F-3
Consolidated Statements of Shareholder's Equity and Comprehensive Income,
Years Ended December 31, 1999, 1998 and 1997................................................................. F-4
Consolidated Statements of Cash Flows, Years Ended December 31, 1999, 1998 and 1997............................. F-5
Notes to Consolidated Financial Statements...................................................................... F-6
Unaudited Consolidated Financial Statements:
Consolidated Balance Sheets, March 31, 2000 and December 31, 1999............................................... F-42
Consolidated Statements of Earnings for the Three Months Ended March 31, 2000 and 1999.......................... F-43
Consolidated Statements of Shareholder's Equity and Comprehensive Income
for the Three Months Ended March 31, 2000 and 1999........................................................... F-44
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999........................ F-45
Notes to Consolidated Financial Statements...................................................................... F-46
</TABLE>
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 following Variable
Investment Options: Alliance Money Market, Alliance High Yield, Alliance Common
Stock, EQ/Alliance Premier Growth, Capital Guardian Research, Capital Guardian
U.S. Equity, MFS Growth with Income, MFS Research, EQ/Putnam Growth & Income
Value, Morgan Stanley Emerging Markets Equity, Alliance Aggressive Stock,
Alliance Small Cap Growth, MFS Emerging Growth Companies, BT Equity 500 Index,
BT International Equity Index, JPM Core Bond, EQ/Putnam Investors Growth and
EQ/Putnam International Equity ("EQ Advisors Trust Variable Investment
Options"), 18 of the separate Variable Investment Options of The Equitable Life
Assurance Society of the United States ("Equitable Life") Separate Account FP at
December 31, 1999 and the results of each of their operations and changes in
each of their net assets for each of the periods indicated, in conformity with
accounting principles generally accepted in the United States of America. 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 auditing standards generally accepted in the United States of America 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 EQ Advisors Trust at December 31, 1999 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.
PricewaterhouseCoopers LLP
New York, New York
February 1, 2000
FSA-2
<PAGE>
<TABLE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<CAPTION>
--------------------------------------------------------------------------------------------------
EQ/ CAPITAL MFS
ALLIANCE CAPITAL GUARDIAN GROWTH
ALLIANCE ALLIANCE HIGH ALLIANCE PREMIER GUARDIAN U.S. WITH
MONEY MARKET YIELD COMMON STOCK GROWTH RESEARCH EQUITY INCOME
-------------- -------------- -------------- ------------ --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 342,765,909....... $344,082,723
177,773,173.......... $149,030,820
3,081,451,600.......... $3,783,859,850
46,147,852.......... $51,216,559
182,262.......... $193,355
494,512.......... $511,837
391,533.......... $412,169
Receivable for Trust shares sold -- 5,046 -- -- -- -- --
Receivable for policy-related
transactions................ 4,909,455 798,616 15,840,922 283,944 24,204 -- 8,035
------------ ------------ -------------- ----------- -------- -------- --------
Total Assets................... $348,992,178 $149,834,482 $3,799,700,772 $51,500,503 $217,559 $511,837 $420,204
------------ ------------ -------------- ----------- -------- -------- --------
LIABILITIES
Payable for Trust shares
purchased...................... $ 4,563,801 $ -- $ 19,831,580 $ 283,146 $ 24,204 $ -- $ 4,490
Payable for policy-related
transactions................ -- -- -- -- -- -- --
------------ ------------ -------------- ----------- -------- -------- --------
Total Liabilities.............. 4,563,801 -- 19,831,580 283,146 24,204 -- 4,490
------------ ------------ -------------- ----------- -------- -------- --------
NET ASSETS..................... $344,428,377 $149,834,482 $3,779,869,192 $51,217,357 $193,355 $511,837 $415,714
============ ============ ============== =========== ======== ======== ========
Amount retained by Equitable
Life in Separate Account
FP (Note 4) $ 16,198 $ 1,280 $ 80,914 $ 3,545 $ 219 $ 387 $ 3,570
Net Assets Attributable
to Contractowners........... 344,412,179 149,833,202 3,779,788,278 51,213,812 193,136 511,450 412,144
------------ ------------ -------------- ----------- -------- -------- --------
NET ASSETS..................... $344,428,377 $149,834,482 $3,779,869,192 $51,217,357 $193,355 $511,837 $415,714
============ ============ ============== =========== ======== ======== ========
</TABLE>
-------------------
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-3
<PAGE>
<TABLE>
<CAPTION>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1999
-------------------------------------------------------------------------------------------------
MORGAN
EQ/PUTNAM STANLEY MFS
GROWTH & EMERGING ALLIANCE ALLIANCE EMERGING
MFS INCOME MARKETS AGGRESSIVE SMALL CAP GROWTH
RESEARCH VALUE EQUITY STOCK GROWTH COMPANIES
------------ ------------ ------------ -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost:$ 38,563,600........... $48,597,586
23,253,533........... $21,780,737
29,914,338........... $40,958,925
892,630,699........... $1,051,440,590
46,097,819........... $70,174,096
160,950,031........... $238,027,993
Receivable for Trust shares sold 252,705 -- -- 2,154,914 22,666,998 --
Receivable for policy-related
transactions................ -- 82,740 82,278 -- -- 1,271,988
----------- ----------- ----------- -------------- ----------- ------------
Total Assets................... $48,850,291 $21,863,477 $41,041,203 $1,053,595,504 $92,841,094 $239,299,981
----------- ----------- ----------- -------------- ----------- ------------
LIABILITIES
Payable for Trust shares
purchased.................... $ -- $ 69,698 $ 350,654 $ -- $ -- $ 1,116,940
Payable for policy-related
transactions................ 212,939 -- -- 1,550,441 22,460,673 --
----------- ----------- ----------- -------------- ----------- ------------
Total Liabilities.............. 212,939 69,698 350,654 1,550,441 $22,460,673 1,116,940
----------- ----------- ----------- -------------- ----------- ------------
NET ASSETS..................... $48,637,352 $21,793,779 $40,690,549 $1,052,045,063 $70,380,421 $238,183,041
=========== =========== =========== ============== =========== ============
Amount retained by Equitable
Life in Separate Account
FP (Note 4)............... $ 142,291 $ 69,602 $ 1,767,601 $ 3,855 $ 527,774 $ 386,768
Net Assets Attributable
to Policyowners............. 48,495,061 21,724,177 38,922,948 1,052,041,208 69,852,647 237,796,273
----------- ----------- ----------- -------------- ----------- ------------
NET ASSETS..................... $48,637,352 $21,793,779 $40,690,549 $1,052,045,063 $70,380,421 $238,183,041
=========== =========== =========== ============== =========== ============
</TABLE>
-------------------
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-4
<PAGE>
<TABLE>
<CAPTION>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF ASSETS AND LIABILITIES (CONCLUDED)
DECEMBER 31, 1999
---------------------------------------------------------------------------
BT INTER- PM
BT NATIONAL JPM EQ/PUTNAM EQ/PUTNAM
EQUITY 500 EQUITY CORE INVESTORS INTERNATIONAL
INDEX INDEX BOND GROWTH EQUITY
----------- ---------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $17,648.......................... $18,699
1,191.......................... $ 1,260
2,308.......................... $ 2,192
10,674.......................... $11,411
715.......................... $ 716
Receivable for Trust shares sold............ -- -- -- -- --
Receivable for policy-related
transactions............................. -- -- -- -- --
------- --------- ------- ------- ---------
Total Assets................................ $18,699 $ 1,260 $ 2,192 $11,411 $ 716
------- --------- ------- ------- ---------
LIABILITIES
Payable for Trust shares purchased.......... $ -- $ -- $ -- $ -- $ --
Payable for policy-related
transactions............................. -- -- -- -- --
------- --------- ------- ------- --------
Total Liabilities........................... -- -- -- -- --
------- --------- ------- ------- --------
NET ASSETS.................................. $18,699 $ 1,260 $ 2,192 $11,411 $ 716
======= ========= ======= ======= =========
Amount retained by Equitable Life
in Separate Account FP (Note 4).......... $ 11 $ -- -- $ 5 $ 0
Net Assets Attributable
to Contractowners........................ 18,688 1,260 2,192 11,406 716
------- --------- ------- ------- ---------
NET ASSETS.................................. $18,699 $ 1,260 $ 2,192 $11,411 $ 716
======= ========= ======= ======= =========
</TABLE>
-------------------
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-5
<PAGE>
<TABLE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
<CAPTION>
---------------------------------------------------------------------------------
ALLIANCE MONEY MARKET ALLIANCE HIGH YIELD
-------------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust .................. $13,943,193 $10,719,684 $9,754,675 $ 17,378,455 $ 18,449,747 $12,918,934
Expenses (Note 3):
Mortality and expense risk charges ........ 1,613,234 1,204,220 1,101,168 889,065 1,007,106 789,982
----------- ----------- ---------- ------------ ------------ -----------
NET INVESTMENT INCOME .......................... 12,329,959 9,515,464 8,653,507 16,489,390 17,442,641 12,128,952
----------- ----------- ---------- ------------ ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments ....... 517,935 (161,314) (513,800) (15,192,553) (2,344,392) 936,554
Realized gain distribution from the Trust . 10,344 7,750 13,435 161,999 3,396,523 6,365,633
----------- ----------- ---------- ------------ ------------ -----------
NET REALIZED GAIN (LOSS) ....................... 528,279 (153,564) (500,365) (15,030,554) 1,052,131 7,302,187
----------- ----------- ---------- ------------ ------------ -----------
Unrealized appreciation (depreciation)
on investments:
Beginning of period ....................... 1,536,450 804,349 24,023 (20,898,855) 8,622,836 5,664,824
End of period ............................. 1,316,815 1,536,450 804,349 (28,742,353) (20,898,854) 8,622,836
----------- ----------- ---------- ------------ ------------ -----------
Change in unrealized appreciation
(depreciation) during the period .......... (219,635) 732,101 780,326 (7,843,498) (29,521,690) 2,958,012
----------- ----------- ---------- ------------ ------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS .............................. 308,644 578,537 279,961 (22,874,052) (28,469,559) 10,260,199
----------- ----------- ---------- ------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ............................. $12,638,603 $10,094,001 $8,933,468 $ (6,384,662) $(11,026,918) $22,389,151
=========== =========== ========== ============ ============ ===========
</TABLE>
-------------------
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-6
<PAGE>
<TABLE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<CAPTION>
-----------------------------------------------------------------------------------------
CAPITAL MFS
EQ/ALLIANCE CAPITAL GUARDIAN GROWTH
PREMIER GUARDIAN U.S. WITH
ALLIANCE COMMON STOCK GROWTH (C) RESEARCH (D) EQUITY INCOME (C)
----------------------------------------- ----------- ----------- --------- ----------
1999 1998 1997 1999 1999 1999 1999
------------ ------------ ----------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust ........... $ 20,107,533 $ 15,939,680 $ 10,668,337 $ 30,540 $ 280 $ 1,159 $ 1,268
Expenses (Note 3):
Mortality and expense risk charges . 19,069,959 14,600,706 11,435,936 63,730 209 378 431
------------ ------------ ------------ ---------- ------- ------ -------
NET INVESTMENT INCOME ................... 1,037,574 1,338,974 (767,599) (33,190) 71 781 837
------------ ------------ ------------ ---------- ------- ------ -------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments 221,690,581 169,109,310 53,841,049 83,605 2,810 451 (227)
Realized gain distribution from the
Trust ............................ 497,324,765 353,834,250 164,814,473 106,890 27 1,508 --
------------ ------------ ------------ ---------- ------- ------ -------
NET REALIZED GAIN (LOSS) ................ 719,015,346 522,943,560 218,655,522 190,495 2,837 1,959 (227)
------------ ------------ ------------ ---------- ------- ------ -------
Unrealized appreciation (depreciation)
on investments:
Beginning of period .............. 689,309,204 567,231,009 294,432,897 -- -- -- --
End of period .................... 702,408,250 689,309,204 567,231,009 5,068,707 11,093 17,325 20,637
------------ ------------ ------------ ---------- ------- ------ -------
Change in unrealized appreciation
(depreciation) during the period ... 13,099,046 122,078,195 272,798,112 5,068,707 11,093 17,325 20,637
------------ ------------ ------------ ---------- -------- ------- -------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS ................ 732,114,392 645,021,755 491,453,634 5,259,202 13,930 19,284 20,410
------------ ------------ ------------ ---------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............ $733,151,966 $646,360,729 $490,686,035 $5,226,012 $14,001 $20,065 $21,247
============ ============ ============ ========== ======= ======= =======
</TABLE>
-------------------
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-7
<PAGE>
<TABLE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<CAPTION>
------------------------------------
MFS RESEARCH (A)
------------------------------------
1999 1998 1997
----------- ---------- -------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust .......... $ 52,831 $ 71,137 $ 20,442
Expenses (Note 3):
Mortality and expense risk charges 208,639 86,044 13,127
----------- ---------- --------
NET INVESTMENT INCOME .................. (155,808) (14,907) 7,315
----------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on
investments ..................... 995,232 494,412 6,989
Realized gain distribution from
the Trust ....................... 1,086,222 -- 81,156
----------- ---------- --------
NET REALIZED GAIN (LOSS) ............... 2,081,454 494,412 88,145
----------- ---------- --------
Unrealized appreciation
(depreciation) on investments:
Beginning of period ............. 3,313,063 249,382 --
End of period ................... 10,033,987 3,313,063 249,382
----------- ---------- --------
Change in unrealized appreciation
(depreciation) during the period .. 6,720,924 3,063,681 249,382
----------- ---------- --------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS ............... 8,802,378 3,558,093 337,527
----------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........... $ 8,646,570 $3,543,186 $344,842
=========== ========== ========
<CAPTION>
-------------------------------------
EQ/PUTNAM
GROWTH & INCOME VALUE (A)
------------------------------------
1999 1998 1997
----------- ---------- --------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust .......... $ 278,910 $ 143,999 $ 33,273
Expenses (Note 3):
Mortality and expense risk charges 110,374 56,995 9,655
----------- ---------- -------
NET INVESTMENT INCOME .................. 168,536 87,004 23,618
----------- ---------- -------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on
investments ..................... 276,186 209,398 1,078
Realized gain distribution from
the Trust ....................... 1,499,307 130,047 27,226
----------- ---------- -------
NET REALIZED GAIN (LOSS) ............... 1,775,493 339,445 28,304
----------- ---------- -------
Unrealized appreciation
(depreciation) on investments:
Beginning of period ............. 1,160,602 269,561 --
End of period ................... (1,472,796) 1,160,602 269,561
----------- ---------- -------
Change in unrealized appreciation
(depreciation) during the period .. (2,633,398) 891,041 269,561
----------- ---------- -------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS ............... (857,905) 1,230,486 297,865
----------- ---------- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........... $ (689,369) $1,317,490 $321,483
=========== ========== ========
<CAPTION>
---------------------------------------------
MORGAN STANLEY
EMERGING MARKETS EQUITY (B)
---------------------------------------------
1999 1998 1997
------------- ------------ ------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust .......... $ -- $ 37,240 $ 16,623
Expenses (Note 3):
Mortality and expense risk charges 66,405 23,921 2,862
----------- ----------- -----------
NET INVESTMENT INCOME .................. (66,405) 13,319 13,761
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on
investments...................... 363,825 (637,290) (14,566)
Realized gain distribution from
the Trust ....................... 394,053 -- --
----------- ---------- ----------
NET REALIZED GAIN (LOSS) ............... 757,878 (637,290) (14,566)
----------- ----------- ----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period ............. (2,942,633) (1,079,388) --
End of period ................... 11,044,586 (2,942,633) (1,079,338)
----------- ----------- -----------
Change in unrealized appreciation
(depreciation) during the period .. 13,987,219 (1,863,245) (1,079,388)
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS ............... 14,745,097 2,500,535) (1,093,954)
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........... $14,678,692 $(2,487,216) $(1,080,193)
=========== =========== ===========
</TABLE>
-------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-8
<PAGE>
<TABLE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<CAPTION>
--------------------------------------------
ALLIANCE AGGRESSIVE STOCK
--------------------------------------------
1999 1998 1997
------------ ------------ -------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust ........... $ 3,163,286 $ 4,461,389 $ 1,311,613
Expenses (Note 3):
Mortality and expense risk charges.. 5,481,701 5,581,296 5,299,127
------------ ----------- ------------
NET INVESTMENT INCOME ................... (2,318,415) (1,119,907) (3,987,514)
------------ ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments (27,888,194) 39,688,312) 28,217,939
Realized gain distribution from the
Trust ............................ 61,642,419 46,528,461 79,729,154
------------ ----------- ------------
NET REALIZED GAIN (LOSS) ................ 33,754,225 6,840,149 107,947,093
------------ ----------- ------------
Unrealized appreciation (depreciation)
on investments:
Beginning of period .............. 26,715,214 32,695,620 46,617,235
End of period .................... 158,809,890 26,715,214 32,695,620
------------ ----------- ------------
Change in unrealized appreciation
(depreciation) during the period ... 132,094,676 (5,980,406) (13,921,615)
------------ ----------- ------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS ................ 165,848,901 859,743 94,025,478
------------ ----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............ $163,530,486 $ (260,164) $ 90,037,964
============ =========== ============
<CAPTION>
------------------------------------------
ALLIANCE SMALL CAP GROWTH (A)
------------------------------------------
1999 1998 1997
----------- ----------- ------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust ........... $ -- $ 4,062 $ 4,189
Expenses (Note 3):
Mortality and expense risk charges . 284,347 215,285 41,540
----------- ----------- ---------
NET INVESTMENT INCOME ................... (284,347) (211,223) (37,351)
----------- ----------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments 4,345,484 (7,585,521) (609,208)
Realized gain distribution from the
Trust ............................ -- -- 545,833
----------- ----------- ---------
NET REALIZED GAIN (LOSS) ................ 4,345,484 (7,585,521) (63,375)
----------- ----------- ---------
Unrealized appreciation (depreciation)
on investments:
Beginning of period .............. 8,780,955 771,812 --
End of period .................... 24,076,277 8,780,955 771,812
----------- ----------- ---------
Change in unrealized appreciation
(depreciation) during the period ... 15,295,322 8,009,143 771,812
----------- ----------- ---------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS ................ 19,640,806 423,622 708,437
----------- ----------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............ $19,356,459 $ 212,399 $ 671,086
=========== =========== =========
<CAPTION>
---------------------------------------
MFS EMERGING GROWTH COMPANIES (A)
---------------------------------------
1999 1998 1997
------------ ----------- ---------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust ........... $ -- $ 969 $ 24,358
Expenses (Note 3):
Mortality and expense risk charges . 640,976 157,484 18,835
----------- ----------- --------
NET INVESTMENT INCOME ................... (640,976) (156,515) 5,523
----------- ----------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments 13,577,250 4,270,964 161,034
Realized gain distribution from the
Trust ............................ 3,969,879 -- 296,998
----------- ----------- --------
NET REALIZED GAIN (LOSS) ................ 17,547,129 4,270,964 458,032
----------- ----------- --------
Unrealized appreciation (depreciation)
on investments:
Beginning of period .............. 6,996,177 171,320 --
End of period .................... 77,077,961 6,996,177 171,320
----------- ----------- --------
Change in unrealized appreciation
(depreciation) during the period ... 70,081,784 6,824,857 171,320
----------- ----------- --------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS ................ 87,628,913 11,095,821 629,352
----------- ----------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............ $86,987,937 $10,939,306 $634,875
=========== =========== ========
</TABLE>
-------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-9
<PAGE>
<TABLE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<CAPTION>
----------------------------------------------------------------------
BT INTER-
BT NATIONAL EQ/PUTNAM EQ/PUTNAM
EQUITY EQUITY JPM CORE INVESTORS INTERNATIONAL
500 INDEX INDEX BOND GROWTH EQUITY
----------- ---------- ---------- ---------- -------------
1999 1999 1999 1999 1999
----------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust .................... $ 102 $ 9 $ 100 $ -- $ 12
Expenses (Note 3):
Mortality and expense risk charges .......... 31 1 1 5 --
------- ------ ------ ------ ------
NET INVESTMENT INCOME ............................ 71 8 99 (5) 12
------- ------ ------ ------ ------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments ......... 24 -- -- 1 --
Realized gain distribution from the Trust ... 29 9 -- 223 37
------- ------ ------ ------ ------
NET REALIZED GAIN (LOSS) ......................... 53 9 -- 224 37
------- ------ ------ ------ ------
Unrealized appreciation (depreciation)
on investments:
Beginning of period ....................... -- -- -- -- --
End of period ............................. 1,051 69 (116) 736 1
------- ------ ------ ------ ------
Change in unrealized appreciation
(depreciation) during the period ............ 1,051 69 (116) 736 1
------- ------ ------ ------ ------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS ......................... 1,104 78 (116) 960 38
------- ------ ------ ------ ------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ..................... $ 1,175 $ 86 $ (17) $ 955 $ 50
======= ====== ====== ====== ======
</TABLE>
-------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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>
---------------------------------------------
ALLIANCE MONEY MARKET
---------------------------------------------
1999 1998 1997
------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ............... $ 12,329,959 $ 9,515,464 $ 8,653,507
Net realized gain (loss) ............ 528,279 (153,564) (500,365)
Change in unrealized appreciation
(depreciation) on investments ..... (219,635) 732,101 780,326
------------ ------------ ------------
Net increase (decrease) in net assets
from operations ................... 12,638,603 10,094,001 8,933,468
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............... 231,007,033 229,608,273 234,059,930
Benefits and other policy-related
transactions (Note 3) ............. (63,463,349) (41,370,215) (40,687,124)
Net transfers among funds and
guaranteed interest account ....... (91,919,848) (128,607,686) 259,049,840)
------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions .. 75,623,836 59,630,372 (65,677,034)
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ........ 1,075,796 (387,161) 46,036
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS ...... 89,338,235 69,337,212 (56,697,530)
NET ASSETS
BEGINNING OF PERIOD ................. 255,090,142 185,752,930 242,450,460
------------- ------------ ------------
NET ASSETS
END OF PERIOD ....................... $344,428,377 $255,090,142 $185,752,930
============ ============ ============
<CAPTION>
---------------------------------------------
ALLIANCE HIGH YIELD
---------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ............... $ 16,489,390 $ 17,442,641 $ 12,128,952
Net realized gain (loss) ............ (15,030,554) 1,052,131 7,302,187
Change in unrealized appreciation
(depreciation) on investments ..... (7,843,498) (29,521,690) 2,958,012
------------ ------------ ------------
Net increase (decrease) in net assets
from operations ................... (6,384,662) (11,026,918) 22,389,151
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............... 30,001,760 36,502,728 26,933,221
Benefits and other policy-related
transactions (Note 3) ............. (21,018,230) (20,288,710) (14,530,462)
Net transfers among funds and
guaranteed interest account ....... (25,281,076) 2,677,159 26,385,799
------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions .. (16,297,546) 18,891,177 38,788,558
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ........ 2,143,697 (832,263) 40,026
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS ...... (20,538,511) 7,031,996 61,217,735
NET ASSETS
BEGINNING OF PERIOD ................. 170,372,993 163,340,997 102,123,262
------------ ------------ ------------
NET ASSETS
END OF PERIOD ....................... $149,834,482 $170,372,993 $163,340,997
============ ============ ============
<CAPTION>
--------------------------------------------------
ALLIANCE COMMON STOCK
--------------------------------------------------
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ............... $ 1,037,574 $ 1,338,974 $ (767,599)
Net realized gain (loss) ............ 719,015,346 522,943,560 218,655,522
Change in unrealized appreciation
(depreciation) on investments ..... 13,099,046 122,078,195 272,798,112
-------------- -------------- --------------
Net increase (decrease) in net assets
from operations ................... 733,151,966 646,360,729 490,686,035
-------------- -------------- --------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............... 361,261,385 322,874,015 282,279,826
Benefits and other policy-related
transactions (Note 3) ............. (302,304,428) (250,079,870) (199,662,183)
Net transfers among funds and
guaranteed interest account ....... 49,877,173 24,136,275 56,849,823
-------------- -------------- --------------
Net increase (decrease) in net assets
from policy-related transactions .. 108,834,130 96,930,420 139,467,466
-------------- -------------- --------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ........ (5,343,344) (2,780,348) 516,970
-------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS ...... 836,642,752 740,510,801 630,670,471
NET ASSETS
BEGINNING OF PERIOD ................. 2,943,226,440 2,202,715,639 1,572,045,168
-------------- -------------- --------------
NET ASSETS
END OF PERIOD ....................... $3,779,869,192 $2,943,226,440 $2,202,715,639
============== ============== ==============
</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>
------------------------------------------------------------------
CAPITAL MFS
EQ/ALLIANCE CAPITAL GUARDIAN GROWTH
PREMIER GUARDIAN U.S. AND
GROWTH (C) RESEARCH (D) EQUITY (D) INCOME (C)
-------------- --------------- ------------- --------------
1999 1999 1999 1999
-------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income .......................... $ (33,190) $ 71 $ 781 $ 837
Net realized gain (loss) ....................... 190,495 2,837 1,959 (227)
Change in unrealized appreciation
(depreciation) on investments .............. 5,068,707 11,093 17,325 20,637
----------- -------- -------- --------
Net increase (decrease) in net assets
from operations ............................ 5,226,012 14,001 20,065 21,247
----------- -------- -------- --------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) .......................... 6,362,938 63,883 115,934 44,806
Benefits and other policy-related
transactions (Note 3) ...................... (1,028,342) (503) (15,128) (6,607)
Net transfers among funds and
guaranteed interest account ................ 40,652,847 115,765 390,588 326,238
----------- -------- -------- --------
Net increase (decrease) in net assets
from policy-related transactions ........... 45,987,443 179,145 491,394 364,437
----------- -------- -------- --------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ................... 3,902 209 378 30,030
----------- -------- -------- --------
INCREASE (DECREASE) IN NET ASSETS .................. 51,217,357 193,355 511,837 415,714
NET ASSETS
BEGINNING OF PERIOD ............................ -- -- -- --
----------- -------- -------- --------
NET ASSETS
END OF PERIOD .................................. $51,217,357 $193,355 $511,837 $415,714
=========== ======== ======== ========
<CAPTION>
--------------------------------------------------
MFS RESEARCH (A)
--------------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income........................ $ (155,808) $ (14,907) $ 7,315
Net realized gain (loss)..................... 2,081,454 494,412 88,145
Change in unrealized appreciation
(depreciation) on investments............ 6,720,924 3,063,681 249,382
----------- ------------ ----------
Net increase (decrease) in net assets
from operations.......................... 8,646,570 3,543,186 344,842
----------- ------------ ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)........................ 12,506,780 6,795,257 1,177,137
Benefits and other policy-related
transactions (Note 3).................... (4,808,292) (1,705,211) (162,042)
Net transfers among funds and
guaranteed interest account.............. 4,280,012 12,108,388 6,389,251
----------- ------------ ----------
Net increase (decrease) in net assets
from policy-related transactions......... 11,978,500 17,198,434 7,404,346
----------- ------------ ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)................. (9,698) (2,472,499) 2,003,671
----------- ------------ ----------
INCREASE (DECREASE) IN NET ASSETS................ 20,615,372 18,269,121 9,752,859
NET ASSETS
BEGINNING OF PERIOD.......................... 28,021,980 9,752,859 --
----------- ------------ ----------
NET ASSETS
END OF PERIOD................................ $48,637,352 $28,021,980 $9,752,859
=========== ============ ==========
</TABLE>
-------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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>
------------------------------------------
EQ/PUTNAM
GROWTH & INCOME VALUE (A)
------------------------------------------
1999 1998 1997
------------ ----------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ............... $ 168,536 $ 87,004 $ 23,618
Net realized gain (loss) ............ 1,775,493 339,445 28,304
Change in unrealized appreciation
(depreciation) on investments ... (2,633,398) 891,041 269,561
----------- ----------- ----------
Net increase (decrease) in net assets
from operations ................. (689,369) 1,317,490 321,483
----------- ----------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............... 7,146,178 5,099,897 1,149,748
Benefits and other policy-related
transactions (Note 3) ........... (2,808,209) (1,485,166) (154,351)
Net transfers among funds and
guaranteed interest account ..... 1,469,187 6,086,532 4,539,465
----------- ----------- ----------
Net increase (decrease) in net assets
from policy-related transactions 5,807,156 9,701,263 5,534,862
----------- ----------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ........ (67,263) (1,334,566) 1,202,723
----------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS ....... 5,050,524 9,684,187 7,059,068
NET ASSETS
BEGINNING OF PERIOD ................. 16,743,255 7,059,068 --
----------- ----------- ----------
NET ASSETS
END OF PERIOD ....................... $21,793,779 $16,743,255 $7,059,068
=========== =========== ==========
<CAPTION>
-----------------------------------------
MORGAN STANLEY
EMERGING MARKETS EQUITY (B)
-----------------------------------------
1999 1998 1997
------------ ----------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ............... $ (66,405) $ 13,319 $ 13,761
Net realized gain (loss) ............ 757,878 (637,290) (14,566)
Change in unrealized appreciation
(depreciation) on investments ... 13,987,219 (1,863,245) (1,079,388)
----------- ---------- ----------
Net increase (decrease) in net assets
from operations ................. 14,678,692 (2,487,216) (1,080,193)
----------- ---------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............... 4,138,455 2,442,975 323,739
Benefits and other policy-related
transactions (Note 3) ........... (1,720,293) (488,932) (7,501)
Net transfers among funds and
guaranteed interest account ..... 16,198,446 4,158,460 2,483,527
----------- ---------- ----------
Net increase (decrease) in net assets
from policy-related transactions 18,616,608 6,112,503 2,799,765
----------- ---------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ........ (1,953,290) 2,496 4,001,184
----------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS ....... 31,342,010 3,627,783 5,720,756
NET ASSETS
BEGINNING OF PERIOD ................. 9,348,539 5,720,756 --
----------- ---------- ----------
NET ASSETS
END OF PERIOD ....................... $40,690,549 $9,348,539 $5,720,756
=========== ========== ==========
<CAPTION>
------------------------------------------------
ALLIANCE AGGRESSIVE STOCK
------------------------------------------------
1999 1998 1997
--------------- ------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ............... $ (2,318,415) $ (1,119,907) $ (3,987,514)
Net realized gain (loss) ............ 33,754,225 6,840,149 107,947,093
Change in unrealized appreciation
(depreciation) on investments ... 132,094,676 (5,980,406) (13,921,615)
-------------- ------------ ------------
Net increase (decrease) in net assets
from operations ................. 163,530,486 (260,164) 90,037,964
-------------- ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............... 145,241,493 172,792,283 179,662,167
Benefits and other policy-related
transactions (Note 3) ........... (117,102,087) 115,442,947) (107,529,554)
Net transfers among funds and
guaranteed interest account ..... (113,016,006) (43,660,488) 1,712,877
-------------- ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions (84,876,600) 13,688,848 73,845,490
-------------- ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ........ 2,197,124 (541,559) 223,792
-------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS ....... 80,851,010 12,887,125 164,107,246
NET ASSETS
BEGINNING OF PERIOD ................. 971,194,053 958,306,928 794,199,683
-------------- ------------ ------------
NET ASSETS
END OF PERIOD ....................... $1,052,045,063 $971,194,053 $958,306,929
============== ============ ============
</TABLE>
-------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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>
--------------------------------------------
ALLIANCE SMALL CAP GROWTH (A)
--------------------------------------------
1999 1998 1997
------------ ------------ --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ............... $ (284,347) $ (211,223) $ (37,351)
Net realized gain (loss) ............ 4,345,484 (7,585,521) (63,375)
Change in unrealized appreciation
(depreciation) on investments .... 15,295,322 8,009,143 771,812
----------- ----------- -----------
Net increase (decrease) in net assets
from operations .................. 19,356,459 212,399 671,086
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............... 16,092,219 14,863,783 2,947,848
Benefits and other policy-related
transactions (Note 3) ............ (5,542,747) (3,897,615) (599,875)
Net transfers among funds and
guaranteed interest account ...... (8,085,585) 15,043,596 19,670,856
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions.. 2,463,887 26,009,764 22,018,829
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ........ (99,856) (1,460,161) 1,208,014
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS ...... 21,720,490 24,762,002 23,897,929
NET ASSETS
BEGINNING OF PERIOD ................. 48,659,931 23,897,929 --
----------- ----------- -----------
NET ASSETS
END OF PERIOD ....................... $70,380,421 $48,659,931 $23,897,929
=========== =========== ===========
<CAPTION>
-----------------------------------------------
MFS EMERGING
GROWTH COMPANIES (A)
-----------------------------------------------
1999 1998 1997
-------------- ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ............... $ (640,976) $ (156,515) $ 5,523
Net realized gain (loss) ............ 17,547,129 4,270,964 458,032
Change in unrealized appreciation
(depreciation) on investments .... 70,081,784 6,824,857 171,320
------------ ----------- -----------
Net increase (decrease) in net assets
from operations .................. 86,987,937 10,939,306 634,875
------------ ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............... 32,825,036 11,533,783 1,598,358
Benefits and other policy-related
transactions (Note 3) ............ (13,737,378) (2,705,605) (294,924)
Net transfers among funds and
guaranteed interest account ...... 76,182,753 25,975,152 8,886,415
------------ ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions . 95,270,411 34,803,330 10,189,849
------------ ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ........ (72,131) (2,575,513) 2,004,977
------------ ----------- -----------
INCREASE (DECREASE) IN NET ASSETS ...... 182,186,217 43,167,123 12,829,701
NET ASSETS
BEGINNING OF PERIOD ................. 55,996,824 12,829,701 --
------------ ----------- -----------
NET ASSETS
END OF PERIOD ....................... $238,183,041 $55,996,824 $12,829,701
============ =========== ===========
</TABLE>
-------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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 (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
BT EQ/PUTNAM EQ/PUTNAM
BT EQUITY INTERNATIONAL JPM CORE INVESTORS INTERNATIONAL
500 INDEX EQUITY INDEX BOND GROWTH EQUITY
1999 1999 1999 1999 1999
--------- ------------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ................... $ 71 $ 8 $ 99 $ (5) $ 12
Net realized gain (loss) ................ 53 9 0 224 37
Change in unrealized appreciation
(depreciation) on investments ........ 1,051 69 (116) 736 1
------- ------- ------- ------- ------
Net increase (decrease) in net assets
from operations ...................... 1,175 86 (17) 955 50
------- ------- ------- ------- ------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ................... 9,476 -- -- 10,348 666
Benefits and other policy-related
transactions (Note 3) ................ (1,279) (8) (70) (96) --
Net transfers among funds and
guaranteed interest account .......... 9,316 1,182 2,277 199 --
------- ------- ------- ------- ------
Net increase (decrease) in net assets
from policy related-transactions ..... 17,513 1,174 2,207 10,451 666
------- ------- ------- ------- ------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4) ......... 11 -- 2 5 --
------- ------- ------- ------- ------
INCREASE (DECREASE) IN NET ASSETS .......... 18,699 1,260 2,192 11,411 716
NET ASSETS
BEGINNING OF PERIOD ..................... -- -- -- -- --
------- ------- ------- ------- ------
NET ASSETS
END OF PERIOD ........................... $18,699 $ 1,260 $ 2,192 $11,411 $ 716
======= ======= ======= ======= ======
</TABLE>
-------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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+
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. General
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.
EQ Advisors Trust ("EQAT" or "Trust") commenced operations on May 1, 1997.
EQAT is an open-ended diversified management investment company that sells
shares to separate accounts of insurance companies. Each portfolio has
separate investment objectives.
For periods prior to October 18, 1999, the Alliance portfolios (other than
EQ/Alliance Premier Growth) were part of The Hudson River Trust ("HRT"). On
October 18, 1999, a Substitution of new portfolios of EQAT for the portfolios
of HRT was performed. At that time assets of each of the HRT portfolios were
transferred to the corresponding new portfolios of EQAT. Class IA shares and
Class IB shares of the HRT became Class IA shares and Class IB shares of
EQAT.
Prior to the Substitution, Alliance Capital Management L.P., an indirect,
majority-owned subsidiary of Equitable Life, was investment adviser for all
HRT portfolios. Post substitution, Alliance continues as investment adviser
for the Alliance portfolios (including EQ/Alliance Premier Growth).
Effective September 1999, Equitable Life serves as investment manager of
EQAT. As such, Equitable Life oversees the activities of the investment
advisers with respect to EQAT and is responsible for retaining or
discontinuing the services of those advisers. Prior to September 1999, AXA
Advisors, LLC (formerly EQ Financial Consultants, Inc.), a subsidiary of
Equitable Life, served as investment manager to EQAT.
AXA Advisors, LLC, and Equitable Distributors, Inc., earn fees from EQAT
under distribution agreements held with the Trust. Equitable Life also earns
fees under an investment management agreement with EQAT. Alliance earns fees
under an investment advisory agreement with Equitable Life.
The Account consists of thirty-five variable investment options of which
eighteen are reported herein:
o Alliance Money Market o Morgan Stanley Emerging Markets Equity
o Alliance High Yield o Alliance Aggressive Stock
o Alliance Common Stock o Alliance Small Cap Growth
o EQ/Alliance Premier Growth o MFS Emerging Growth Companies
o Capital Guardian Research o BT Equity 500 Index
o Capital Guardian U.S. Equity o BT International Equity Index
o MFS Growth with Income o JPM Core Bond
o MFS Research o EQ/Putnam Investors Growth
o EQ/Putnam Growth & Income Value o EQ/Putnam International Equity
+ 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 (CONTINUED)
DECEMBER 31, 1999
1. General (Continued)
The assets in each fund are invested in Class IA shares or Class IB shares of
a corresponding mutual fund portfolio ("Portfolio") of EQAT. Class IA and IB
shares are offered by EQAT at net asset value. Both classes of shares are
subject to fees for investment management and advisory services and other
Trust expenses. Class IA shares are not subject to distribution fees imposed
pursuant to a distribution plan. Class IB shares are subject to distribution
fees imposed under a distribution plan (herein the "Rule 12b-1 Plans")
adopted in 1997 pursuant to Rule 12b-1 under the 1940 Act, as amended. The
Rule 12b-1 Plans provide that EQAT, on behalf of each Fund, may charge
annually up to 0.25% of the average daily net assets of a Fund attributable
to its Class IB shares in respect of activities primarily intended to result
in the sale of the Class IB shares. These fees are reflected in the net asset
value of the shares.
The Account supports the operations of various Equitable life insurance
products. These products are sold through both Equitable's Agent Distribution
Channel and Equitable's Independent Broker Dealer Distribution Channel. These
financial statement footnotes discuss the products, charges and investment
return applicable to those life insurance products (Incentive Life, Incentive
Life Plus, Survivorship Incentive Life and Survivorship 2000) which are sold
through Equitable's Independent Broker Dealer Distribution Channel.
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.
Receivable/payable for policy-related transactions represent amount due
to/from General Account predominately related to premiums, surrenders and
death benefits.
Policyowners may allocate amounts in their individual accounts to the
variable investment options 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 $(140,321,294), $56,300,263 and $165,714,430
for the years ended 1999, 1998 and 1997, respectively, are included in Net
Transfers among variable investment options. The net assets of any variable
investment option may not be less than the aggregate of the policyowners'
accounts allocated to that variable investment option. 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 EQAT and are valued at the net asset values
per share of the respective Portfolios. The net asset value is determined by
EQAT using the market or fair value of the underlying assets of the Portfolio
less liabilities.
Investment transactions are recorded on the trade date. Dividend and capital
gains are declared and distributed by the Trust at the end of each year and
are automatically reinvested on the ex-dividend date. Realized gains and
losses include (1) gains and losses on redemptions of EQAT shares (determined
on the identified cost basis) and (2) Trust distributions representing the
net realized gains on Trust investment transactions.
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.
Under the Policies, Equitable Life assumes mortality and expense risks and,
to cover these risks, charges the daily net assets of the Account. These
charges apply to all products supported by the Account. The products sold
through Equitable's Independent Broker Dealer Distribution Channel have
charges currently for Incentive Life, Incentive Life Plus and Survivorship
Incentive Life of .60% , and for Survivorship 2000 of .90%. The products sold
through Equitable Life's Agent Distribution Channel have charges ranging from
0.60% to 1.80% depending on the features of those products.
+ 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, 1999
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:
Morality and
Expense Mortality Administrative Total
------------ --------- -------------- -----
Incentive Life,
Incentive Life 2000,
Incentive Life Plus
Second Series,
Champion 2000 (a) .60% -- -- .60%
IL Plus Original
Series, IL COLI (b) .85% -- -- .85%
Survivorship
Incentive Life (a) .60% -- -- .60%
Survivorship 2000 (a) .90% -- -- .90%
IL Protector (a) .80% -- -- .80%
SP Flex (a) .85% .60% .35% 1.80%
------------------
(a) Charged to daily net assets of the Account.
(b) Charged to Policy Account and is included in Benefits and other
policy-related transactions in the Statement of Changes in Net Assets.
Before amounts are remitted to the Account for Incentive Life, Incentive Life
Plus, IL COLI, Survivorship Incentive Life 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, Survivorship
Incentive Life, Incentive Life Sales 1999 and after, 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.
Included in the Withdrawals and Administrative Charges line of the
Statement of Changes in Net Assets are certain administrative charges which
are deducted from the policyowners account value.
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.
The following table shows the surplus contributions (withdrawals) by
Equitable Life by investment fund:
YEARS ENDED DECEMBER 31,
-----------------------------------------
VARIABLE INVESTMENT OPTIONS 1999 1998 1997
--------------------------- ---- ---- ----
Alliance Money Market $ (531,900) $(1,591,380) --
Alliance High Yield 1,254,634 (1,839,368) --
+ 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, 1999
4. Amounts Retained by Equitable Life in Separate Account FP (Continued)
YEARS ENDED DECEMBER 31,
-----------------------------------------
VARIABLE INVESTMENT OPTIONS 1999 1998 1997
--------------------------- ---- ---- ----
Alliance Common Stock $(24,309,50) $(17,381,05) $ --
EQ/Alliance Premier Growth (60,529) -- --
Capital Guardian Research -- -- --
Capital Guardian US Equity -- -- --
MFS Growth with Income 29,599 -- --
MFS Research (218,336) (2,558,541) 2,000,000
EQ/Putnam Growth & Income
Value (177,637) (1,391,562) 1,200,000
Morgan Stanley Emerging
Markets Equity (2,019,694) (21,425) 4,000,000
Alliance Aggressive Stock (3,284,577) (6,122,856) --
Alliance Small Cap Growth (384,204) (1,675,446) 1,200,000
MFS Emerging Growth Companies (713,109) (2,732,997) 2,000,000
BT Equity 500 Index (21) -- --
BT International Equity Index -- -- --
JPM Core Bond -- -- --
EQ Putnam Investors Growth -- -- --
EQ/Putnam International Equity -- -- --
5. Distribution and Servicing Agreements
Equitable Life has entered into Distribution and Servicing Agreements with
AXA Advisors, LLC, an affiliate of Equitable Life, and EDI, whereby
registered representatives of AXA Advisors, LLC, 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 variable investment options for the periods shown. The
net return for each variable investment option is based upon beginning and
ending net unit value for a policy and is not based on the average net assets
in the variable investment option during such period. Gross return is equal
to the total return earned by the underlying EQAT investment which is after
deduction of EQAT expense.
The Separate Account rates of return attributable to Incentive Life,
Survivorship Incentive Life and Incentive Life Plus policyowners are
different than those attributable to Survivorship 2000 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, 1999
RATES OF RETURN:
INCENTIVE LIFE PLUS, INCENTIVE LIFE,
------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
---------------------------
YEAR ENDED
DECEMBER 31,
------------
ALLIANCE MONEY MARKET 1999
--------------------- ----
Gross return................. 4.71%
Net return................... 4.10%
YEAR ENDED
DECEMBER 31,
------------
ALLIANCE HIGH YIELD 1999
------------------- -----
Gross return................. (3.58)%
Net return................... (4.16)%
YEAR ENDED
DECEMBER 31,
------------
ALLIANCE COMMON STOCK 1999
--------------------- -----
Gross return................. 24.88%
Net return................... 24.13%
JUNE 4 (C) TO
DECEMBER 31,
--------------
EQ/ALLIANCE PREMIER GROWTH 1999
-------------------------- -----
Gross return................. 18.97%
Net return................... 18.52%
AUGUST 30 (C) TO
DECEMBER 31,
----------------
CAPITAL GUARDIAN RESEARCH 1999
------------------------- ----
Gross return................. 7.10%
Net return................... 6.67%
AUGUST 30 (C) TO
DECEMBER 31,
----------------
CAPITAL GUARDIAN U.S. EQUITY 1999
---------------------------- ----
Gross return................. 3.76%
Net return................... 3.32%
----------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* 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
annualized rates of return.
(b) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflect performance on an
annualized basis. The net return reflects performance for the periods
indicated.
(c) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflects performance from
the Portfolio's commencement date of April 30, 1999 and are not annualized
rates of return. The net return reflects performance for the periods
indicated.
FSA-20
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
INCENTIVE LIFE PLUS, INCENTIVE LIFE,
------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
---------------------------
YEAR ENDED
DECEMBER 31,
------------
MFS GROWTH WITH INCOME 1999
---------------------- ----
Gross return................. 8.76%
Net return................... 8.06%
YEAR ENDED
DECEMBER 31,
------------
MFS RESEARCH 1999
------------ ----
Gross return................. 23.12%
Net return................... 22.38%
YEAR ENDED
DECEMBER 31,
------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999
------------------------------- ----
Gross return................. (1.27)%
Net return................... (1.95)%
YEAR ENDED
DECEMBER 31,
------------
MORGAN STANLEY EMERGING
MARKETS EQUITY 1999
-------------- ----
Gross return................. 95.82%
Net return................... 94.57%
YEAR ENDED
DECEMBER 31,
------------
ALLIANCE AGGRESSIVE STOCK 1999
------------------------- ----
Gross return................. 18.55%
Net return................... 17.83%
YEAR ENDED
DECEMBER 31,
------------
ALLIANCE SMALL CAP GROWTH 1999
------------------------- ----
Gross return................. 27.46%
Net return................... 26.86%
----------------
+ Formerly known as Equitable Variable Life Insurance Company Separate
Account FP.
* 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 annualized rates of return.
(b) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflect performance on an
annualized basis. The net return reflects performance for the periods
indicated.
(c) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflects performance from
the Portfolio's commencement date of April 30, 1999 and are not annualized
rates of return. The net return reflects performance for the periods
indicated.
FSA-21
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
INCENTIVE LIFE PLUS, INCENTIVE LIFE,
------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
---------------------------
YEAR ENDED
DECEMBER 31,
------------
MFS EMERGING GROWTH COMPANIES 1999
----------------------------- ----
Gross return...................... 73.62%
Net return........................ 72.63%
YEAR ENDED
DECEMBER 31,
------------
BT EQUITY 500 INDEX 1999
------------------- ----
Gross return...................... 20.30%
Net return........................ 19.58%
YEAR ENDED
DECEMBER 31,
------------
BT INTERNATIONAL EQUITY INDEX 1999
----------------------------- ----
Gross return...................... 27.50%
Net return........................ 26.70%
YEAR ENDED
DECEMBER 31,
------------
JPM CORE BOND 1999
------------- ----
Gross return...................... (1.64)%
Net return........................ (2.19)%
YEAR ENDED
DECEMBER 31,
------------
EQ/PUTNAM INVESTORS GROWTH 1999
-------------------------- ----
Gross return...................... 30.24%
Net return........................ 29.48%
YEAR ENDED
DECEMBER 31,
------------
EQ/PUTNAM INTERNATIONAL EQUITY 1999
------------------------------ ----
Gross return...................... 60.24%
Net return........................ 59.29%
----------------
+ Formerly known as Equitable Variable Life Insurance Company Separate
Account FP.
* 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
annualized rates of return.
(b) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflect performance on an
annualized basis. The net return reflects performance for the periods
indicated.
(c) Date as of which net premiums under the policies were first allocated to the
variable investment option. The gross return reflects performance from the
Portfolio's commencement date of April 30, 1999 and are not annualized rates
of return. The net return reflects performance for the periods indicated.
FSA-22
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
SURVIVORSHIP 2000
-----------------
YEAR ENDED
DECEMBER 31,
------------
ALLIANCE MONEY MARKET 1999
--------------------- ----
Gross return................ 4.71%
Net return.................. 3.78%
YEAR ENDED
DECEMBER 31,
------------
ALLIANCE HIGH YIELD 1999
------------------- ----
Gross return................ (3.35)%
Net return.................. (4.45)%
YEAR ENDED
DECEMBER 31,
------------
ALLIANCE COMMON STOCK 1999
--------------------- ----
Gross return................ 24.88%
Net return.................. 23.76%
JUNE 4 (C) TO
DECEMBER 31,
-------------
EQ/ALLIANCE PREMIER GROWTH 1999
-------------------------- ----
Gross return................ 18.97%
Net return.................. 18.28%
AUGUST 30 (C) TO
DECEMBER 31,
----------------
CAPITAL GUARDIAN RESEARCH 1999
------------------------- ----
Gross return................ 7.10%
Net return.................. 6.46%
AUGUST 30 (C) TO
DECEMBER 31,
----------------
CAPITAL GUARDIAN U.S. EQUITY 1999
---------------------------- ----
Gross return................ 3.76%
Net return.................. 3.11%
----------------
+ Formerly known as Equitable Variable Life Insurance Company Separate
Account FP.
* 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
annualized rates of return.
(b) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflect performance on an
annualized basis. The net return reflects performance for the periods
indicated.
(c) Date as of which net premiums under the policies were first allocated to the
variable investment option. The gross return reflects performance from the
Portfolio's commencement date of April 30, 1999 and are not annualized rates
of return. The net return reflects performance for the periods indicated.
FSA-23
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
SURVIVORSHIP 2000
-----------------
YEAR ENDED
DECEMBER 31,
------------
MFS GROWTH WITH INCOME 1999
---------------------- ----
Gross return................. 8.76%
Net return................... 7.74%
YEAR ENDED
DECEMBER 31,
------------
MFS RESEARCH 1999
------------ ----
Gross return................. 23.12%
Net return................... 22.01%
YEAR ENDED
DECEMBER 31,
------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999
------------------------------- ----
Gross return................. (1.27)%
Net return................... (2.25)%
YEAR ENDED
DECEMBER 31,
------------
MORGAN STANLEY EMERGING
MARKETS EQUITY 1999
-------------- ----
Gross return................. 95.82%
Net return................... 93.98%
YEAR ENDED
DECEMBER 31,
------------
ALLIANCE AGGRESSIVE STOCK 1999
------------------------- ----
Gross return................. 18.55%
Net return................... 17.43%
YEAR ENDED
DECEMBER 31,
------------
ALLIANCE SMALL CAP GROWTH 1999
------------------------- ----
Gross return................. 27.46%
Net return................... 26.47%
----------------
+ Formerly known as Equitable Variable Life Insurance Company Separate
Account FP.
* 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
annualized rates of return.
(b) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflect performance on an
annualized basis. The net return reflects performance for the periods
indicated.
(c) Date as of which net premiums under the policies were first allocated to the
variable investment option. The gross return reflects performance from the
Portfolio's commencement date of April 30, 1999 and are not annualized rates
of return. The net return reflects performance for the periods indicated.
FSA-24
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
DECEMBER 31, 1999
RATES OF RETURN:
SURVIVORSHIP 2000
-----------------
YEAR ENDED
DECEMBER 31,
------------
MFS EMERGING GROWTH COMPANIES 1999
----------------------------- ----
Gross return................ 73.62%
Net return.................. 72.11%.
YEAR ENDED
DECEMBER 31,
------------
BT EQUITY 500 INDEX 1999
------------------- ----
Gross return................ 20.30%
Net return.................. 19.22%
YEAR ENDED
DECEMBER 31,
------------
BT INTERNATIONAL EQUITY INDEX 1999
----------------------------- ----
Gross return................ 27.50%
Net return.................. 26.32%
YEAR ENDED
DECEMBER 31,
------------
JPM CORE BOND 1999
------------- ----
Gross return................ (1.64)%
Net return.................. (2.48)%
YEAR ENDED
DECEMBER 31,
------------
EQ/PUTNAM INVESTORS GROWTH 1999
-------------------------- ----
Gross return................ 30.24%
Net return.................. 29.09%
YEAR ENDED
DECEMBER 31,
------------
EQ/PUTNAM INTERNATIONAL EQUITY 1999
------------------------------ ----
Gross return................ 60.24%
Net return.................. 58.81%
----------------
+ Formerly known as Equitable Variable Life Insurance Company Separate
Account FP.
* 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
annualized rates of return.
(b) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflect performance on an
annualized basis. The net return reflects performance for the periods
indicated.
(c) Date as of which net premiums under the policies were first allocated to the
variable investment option. The gross return reflects performance from the
Portfolio's commencement date of April 30, 1999 and are not annualized rates
of return. The net return reflects performance for the periods indicated.
FSA-25
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
EQ/ MFS
ALLIANCE CAPITAL CAPITAL GROWTH
ALLIANCE ALLIANCE ALLIANCE PREMIER GUARDIAN GUARDIAN WITH
MONEY MARKET HIGH YIELD COMMON STOCK GROWTH RESEARCH U.S. EQUITY INCOME
------------- ------------ -------------- ------------ ---------- ----------- ---------
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
Investments in shares of
the Trust-- at market
value (Notes 2 and 6)
Cost: $ 319,507,813....... $326,960,614
164,137,140....... $137,495,589
2,919,235,892..... $3,597,949,882
429,262,521..... $474,175,098
1,155,412....... $1,199,556
931,869....... $ 990,690
890,464....... $934,945
Receivable for Trust shares sold 7,396,828 194,117 1,260,428 -- 14,091 13,265 --
Receivable for policy-related
transactions............... -- 789,430 -- 246,398 -- -- 118
------------ ------------ -------------- ------------ ---------- ---------- ---------
Total Assets................. $334,357,442 $138,479,136 $3,599,210,310 $474,421,496 $1,213,647 $1,003,955 $935,063
------------ ------------ -------------- ------------ ---------- ---------- ---------
LIABILITIES
Payable for Trust shares
purchased.................... $ -- $ -- $ -- $ 242,596 $ -- $ -- $ 118
Payable for policy-related
transactions.............. 6,969,671 -- 2,000,735 -- 14,091 13,265 --
------------ ------------ -------------- ------------ ---------- ---------- ---------
Total Liabilities............ 6,969,671 -- 2,000,735 242,596 14,091 13,265 118
------------ ------------ -------------- ------------ ---------- ---------- ---------
NET ASSETS................... $327,387,771 $138,479,136 $3,597,209,575 $474,178,900 $1,199,556 $ 990,690 $934,945
============ ============ ============== ============ ========== ========== =========
Amount retained by
Equitable Life
in Separate Account FP
(Note 4) $ 1,053,225 $ 186,074 $ 2,851,101 $ $24,619 $ 787 $ 58,241 $ 62
Net Assets Attributable
to Contractowners.......... 326,334,546 138,293,062 3,594,358,474 474,154,281 1,198,769 932,449 934,883
------------ ------------ ------------- ------------ ---------- ---------- --------
NET ASSETS.................... $327,387,771 $138,479,136 $3,597,209,575 $474,178,900 $1,199,556 $ 990,690 $934,945
============ ============ ============== ============ ========== ========== ========
-------------------
See Notes to Financial Statements.
</TABLE>
FSA-26
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
MARCH 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
MORGAN
EQ/PUTNAM STANLEY MFS
GROWTH & EMERGING ALLIANCE ALLIANCE EMERGING
MFS INCOME MARKETS AGGRESSIVE SMALL CAP GROWTH
RESEARCH VALUE EQUITY STOCK GROWTH COMPANIES
------------ ------------ ------------ -------------- ------------- ------------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Investments in shares of
the Trust-- at market
value (Notes 2 and 6)
Cost:$ 48,531,542........... $59,068,005
23,005,276........... $21,277,505
56,718,571........... $68,119,129
873,780,135........... $1,012,478,065
61,551,417........... $100,939,048
250,269,616........... $339,765,051
Receivable for Trust shares sold -- 8,268 -- -- 26,859,101 --
Receivable for policy-related
transactions................ 929,631 -- 373,348 2,336,237 -- 4,356,452
----------- ----------- ----------- -------------- ------------ ------------
Total Assets................... $59,997,636 $21,285,773 $68,492,477 $1,014,814,302 $127,798,149 $344,121,503
----------- ----------- ----------- -------------- ------------ ------------
LIABILITIES
Payable for Trust shares
purchased.................... $ 962,387 $ -- $ 474,279 $ 1,415,517 $ -- 4,419,711
Payable for policy-related
transactions................ -- 19,017 -- -- 27,063,965 --
----------- ----------- ----------- -------------- ------------ ------------
Total Liabilities.............. 962,387 19,017 474,279 1,415,517 27,063,965 4,419,711
----------- ----------- ----------- -------------- ------------ ------------
NET ASSETS..................... $59,035,249 $21,266,756 $68,018,198 $1,013,398,785 $100,734,184 $339,701,792
=========== =========== =========== ============== ============ ============
Amount retained by Equitable
in Separate Account FP (Note4) $ 68,546 $ 43,854 $ 2,131,032 $ 426,725 $ 238,154 $ 98,357
Net Assets Attributable
to Contractowners........... 58,966,703 21,222,902 65,887,166 1,012,972,060 100,496,030 339,603,435
----------- ----------- ----------- -------------- ------------ ------------
NET ASSETS..................... $59,035,249 $21,266,756 $68,018,198 $1,013,398,785 $100,734,184 $339,701,792
=========== =========== =========== ============== ============ ============
-------------------
See Notes to Financial Statements.
</TABLE>
FSA-27
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
MARCH 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
BT BT INTERNATIONAL JPM EQ/PUTNAM EQ/PUTNAM
EQUITY 500 EQUITY CORE INVESTORS INTERNATIONAL
INDEX INDEX BOND GROWTH EQUITY
----------- ---------------- -------- ------------ -------------
ASSETS
<S> <C> <C> <C> <C> <C>
Investments in shares of
the Trust-- at market
value (Notes 2 and 6)
Cost: $161,629.......................... $171,651
15,359.......................... $15,826
52,487.......................... $52,782
81,409.......................... $87,624
53,440.......................... $55,569
Receivable for Trust shares sold............ -- -- -- -- --
Receivable for policy-related
transactions............................. 127 120 -- -- 120
-------- ------- ------- ------- -------
Total Assets................................ $171,778 $15,946 $52,782 $87,624 $55,689
-------- ------- ------- ------- -------
LIABILITIES
Payable for Trust shares purchased.......... $ 128 $ 120 $ -- $ -- $ 120
Payable for policy-related
transactions............................. -- -- -- -- --
-------- ------- ------- ------- -------
Total Liabilities........................... 128 120 -- -- 120
-------- ------ ------- ------- -------
NET ASSETS.................................. $171,650 $15,826 $52,782 $87,624 $55,569
======== ======= ======= ======= =======
Amount retained by Equitable Life
in Separate Account FP (Note 4).......... $ 17 $ 14 $ 7 $ 19 $ 4
Net Assets Attributable
to Contractowners........................ 171,633 15,812 52,775 87,605 55,565
-------- ------- ------- ------- -------
NET ASSETS.................................. $171,650 $15,826 $52,782 $87,624 $55,569
======== ======= ======= ======= =======
-------------------
See Notes to Financial Statements.
</TABLE>
FSA-28
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF ASSETS AND LIABILITIES (CONCLUDED)
MARCH 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
BT LAZARD
SMALL CAPITAL SMALL LAZARD
COMPANY GUARDIAN CAP LARGE CAP
INDEX INTERNATIONAL VALUE VALUE
----------- ------------- -------- ----------
ASSETS
<S> <C> <C> <C> <C>
Investments in shares of
the Trust-- at market
value (Notes 2 and 6)
Cost: $ 57.......................... $ 57
2,346.......................... $2,385
347.......................... $363
17,812.......................... $18,788
Receivable for Trust shares sold............ -- -- -- --
Receivable for policy-related
transactions............................. 57 121 64 63
---- ------ ---- -------
Total Assets................................ $114 $2,506 $427 $18,851
---- ------ ---- -------
LIABILITIES
Payable for Trust shares purchased.......... $ 57 $ 121 $64 $63
Payable for policy-related
transactions............................. -- -- -- --
---- ------ ---- -------
Total Liabilities........................... 57 121 64 63
---- ------ ---- -------
NET ASSETS.................................. $ 57 $2,385 $363 $18,788
==== ====== ==== =======
Amount retained by Equitable Life
in Separate Account FP (Note 4).......... $ -- $ 1 $ -- $ 11
Net Assets Attributable
to Contractowners........................ 57 2,384 363 18,777
---- ------ ---- -------
NET ASSETS.................................. $ 57 $2,385 $363 $18,788
==== ====== ==== =======
-------------------
See Notes to Financial Statements.
</TABLE>
FSA-29
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
CAPITAL MFS
ALLIANCE ALLIANCE EQ/ALLIANCE CAPITAL GUARDIAN GROWTH
MONEY ALLIANCE COMMON PREMIER GUARDIAN U.S. WITH MFS
MARKET HIGH YIELD STOCK GROWTH RESEARCH EQUITY INCOME RESEARCH
----------- ----------- ------------- ------------ -------- --------- ------- -----------
INCOME AND EXPENSES:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trust......... $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Expenses (Note 3):
Mortality and expense risk
charges.......................... 443,573 198,216 5,088,719 447,637 528 819 773 69,871
----------- ----------- ------------- ------------ -------- -------- -------- -----------
NET INVESTMENT INCOME................. (443,573) (198,216) (5,088,719) (447,637) (528) (819) (773) (69,871)
----------- ----------- ------------- ------------ -------- -------- -------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on
investments.............. (1,046,171) (5,266,865) 147,933,616 164,594 12,101 7,071 299 3,843,173
Realized gain distribution
from the Trust........ -- -- -- -- -- -- -- --
----------- ----------- ------------- ------------ -------- -------- -------- ----------
NET REALIZED GAIN (LOSS).............. (1,046,171) (5,266,865) 147,933,616 164,594 12,101 7,071 299 3,843,173
----------- ----------- ------------- ------------ -------- -------- -------- -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 1,316,815 (28,742,35) 702,408,250 5,068,707 11,093 17,325 20,637 10,033,986
End of period.................. 7,452,801 (26,641,55) 678,713,990 44,912,577 44,144 58,821 44,481 10,536,463
----------- ----------- ------------- ------------ -------- ------- ------- -----------
Change in unrealized appreciation
(depreciation) during the period... 6,135,986 2,100,802 (23,694,260) 39,843,870 33,051 41,496 23,844 502,477
----------- ----------- ------------- ------------ -------- ------- ------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS.............. 5,089,815 (3,166,063) 124,239,356 40,008,464 45,152 48,567 24,143 4,345,650
----------- ----------- ------------- ------------ -------- ------- -------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.......... $4,646,242 $(3,364,27) $119,150,637 $39,560,827 $44,624 $47,748 $23,370 $4,275,779
=========== =========== ============= ============ ======== ======== ======== ==========
---------------------
See Notes to Financial Statements.
</TABLE>
FSA-30
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
MORGAN
EQ/PUTNAM STANLEY MFS BT
GROWTH & EMERGING ALLIANCE ALLIANCE EMERGING EQUITY BT
INCOME MARKETS AGGRESSIVE SMALL CAP GROWTH 500 INTERNATIONAL
VALUE EQUITY STOCK GROWTH COMPANIES INDEX EQUITY INDEX
----------- ---------- ------------ ------------ ----------- ------- -------------
INCOME AND EXPENSES:
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trust...............$ -- $ -- $ -- $ -- $ -- $ -- $ --
Expenses (Note 3):
Mortality and expense risk charges..... 26,526 53,878 1,424,399 129,291 388,334 111 13
----------- ----------- ------------ ------------ ------------ ------- -----
NET INVESTMENT INCOME..................... (26,526) (53,878) (1,424,399) (129,291) (388,334) (111) (13)
----------- ----------- ------------ ------------ ------------ ------- -----
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments.... (320,833) 2,517,607 17,382,253 5,643,896 15,125,358 29 4
Realized gain distribution from the
Trust................................ -- -- -- -- -- -- --
----------- ----------- ------------ ------------ ------------ ------- -----
NET REALIZED GAIN (LOSS).................. (320,833) 2,517,607 17,382,253 5,643,896 15,125,358 29 4
----------- ----------- ------------ ------------ ------------ ------- -----
Unrealized appreciation (depreciation)
on investments:
Beginning of period..................(1,472,797) 11,044,587 158,809,891 24,076,277 77,077,961 1,051 69
End of period........................(1,727,771) 11,400,558 138,697,930 39,387,631 89,495,435 10,022 467
----------- ----------- ------------ ------------ ------------ ------- -----
Change in unrealized appreciation
(depreciation) during the period......... (254,974) 355,971 (20,111,961) 15,311,354 12,417,474 8,971 398
----------- ----------- ------------ ------------ ------------ ------- -----
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS.................... (575,807) 2,873,578 (2,729,708) 20,955,250 27,542,832 9,000 402
----------- ----------- ------------ ------------ ------------ ------- -----
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ $(602,333) $2,819,700 $(4,154,107) $20,825,959 $27,154,498 $8,889 $389
=========== =========== ============ ============ ============ ======= =====
---------------------
See Notes to Financial Statements.
</TABLE>
FSA-31
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS (CONCLUDED)
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
EQ/PUTNAM EQ/PUTNAM BT SMALL CAPITAL LAZARD LAZARD
JPM CORE INVESTORS INTERNATIONAL COMPANY GUARDIAN SMALL CAP LARGE CAP
BOND GROWTH EQUITY INDEX INTERNATIONAL VALUE VALUE
------- --------- ------------- -------- ------------- -------- ---------
INCOME AND EXPENSES:
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income (Note 2):
Dividends from the Trust.................... $ -- $ $ -- $ -- $ -- $ -- $ --
Expenses (Note 3):
Mortality and expense risk charges.......... 5 84 46 -- 1 -- 11
------ ------- --------- ----- ------ ----- -------
NET INVESTMENT INCOME............................ (5) (84) (46) -- (1) -- (11)
------ ------- --------- ----- ------ ----- -------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments......... (11) 1,126 24 -- 1 (1) 6
Realized gain distribution from the Trust... -- -- -- -- -- -- --
------ ------- --------- ----- ------ ----- -------
NET REALIZED GAIN (LOSS)......................... (11) 1,126 24 -- 1 (1) (6)
------ ------- --------- ----- ------ ----- -------
Unrealized appreciation (depreciation) on
investments:
Beginning of period....................... (116) 736 1 -- -- -- --
End of period............................. 295 6,215 2,129 -- 39 16 976
------ ------- --------- ----- ------ ----- -------
Change in unrealized appreciation
(depreciation) during the period.............. 411 5,479 2,128 -- 39 16 976
------ ------- --------- ----- ------ ----- -------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS......................... 400 6,605 2,152 -- 40 15 970
------ ------- --------- ----- ------ ----- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS..................... $395 $6,521 $2,106 $-- $39 $15 $959
====== ======= ========= ===== ====== ===== =======
---------------------
See Notes to Financial Statements.
</TABLE>
FSA-32
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
-----------------------------------------------------------
ALLIANCE EQ/ALLIANCE
MONEY ALLIANCE ALLIANCE PREMIER
MARKET HIGH YIELD COMMON STOCK GROWTH
------------- ------------- --------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income................... $ (443,573) $ (198,216) $(5,088,719) $(447,637)
Net realized gain (loss)................ (1,046,171) (5,266,865) 147,933,616 164,594
Change in unrealized appreciation
(depreciation) on investments......... 6,135,986 2,100,802 (23,694,260) 39,843,870
------------- ------------- ------------- ------------
Net increase (decrease) in net assets
from operations....................... 4,646,242 (3,364,279) 119,150,637 39,560,827
------------- ------------- ------------- ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................... 68,994,297 10,331,859 100,467,507 6,599,186
Benefits and other policy-related
transactions (Note 3)................. (20,770,823) (4,929,566) (88,396,527) (1,441,655)
Net transfers among funds and
guaranteed interest account........... (68,860,276) (11,333,293) (319,641,219) 378,215,603
------------- ------------- ------------- ------------
Net increase (decrease) in net assets
from policy-related transactions...... (20,636,802) (5,931,000) (307,570,239) 383,373,134
------------- ------------- ------------- ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)............ (1,050,046) (2,060,067) 5,759,985 27,582
------------- ------------- ------------- ------------
NCREASE (DECREASE) IN NET ASSETS .......... (17,040,606) (11,355,346) (182,659,617) 422,961,543
NET ASSETS
BEGINNING OF PERIOD..................... 344,428,377 149,834,482 3,779,869,192 51,217,357
------------- ------------- ------------- ------------
NET ASSETS
END OF PERIOD........................... $327,387,771 $138,479,136 $3,597,209,575 $474,178,900
============ ============ ============== ============
-------------------------------------------------
CAPITAL MFS
CAPITAL GUARDIAN GROWTH
GUARDIAN U.S. WITH MFS
RESEARCH EQUITY INCOME RESEARCH
------------ ---------- --------- ------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income................... $ (528) $ (819) $ (773) $ (69,871)
Net realized gain (loss)................ 12,101 7,071 299 3,843,173
Change in unrealized appreciation
(depreciation) on investments......... 33,051 41,496 23,844 502,477
------------ ------- --------- -----------
Net increase (decrease) in net assets
from operations....................... 44,624 47,748 23,370 4,275,779
------------ ------- --------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................... 136,153 200,176 122,157 4,089,711
Benefits and other policy-related
transactions (Note 3)................. (23,136) (29,887) (23,372) (1,329,286)
Net transfers among funds and
guaranteed interest account........... 848,031 259,998 400,576 3,361,037
------------ ------- --------- -----------
Net increase (decrease) in net assets
from policy-related transactions...... 961,048 430,287 499,361 6,121,462
------------ ------- --------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)............ 529 818 (3,500) 656
------------ ------- --------- -----------
NCREASE (DECREASE) IN NET ASSETS .......... 1,006,201 478,853 519,231 10,397,897
NET ASSETS
BEGINNING OF PERIOD..................... 193,355 511,837 415,714 48,637,352
------------ ------- --------- -----------
NET ASSETS
END OF PERIOD........................... $1,199,556 $990,690 $934,945 $59,035,249
========== ========= ========= ============
---------------------
See Notes to Financial Statements.
</TABLE>
FSA-33
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
---------------------------------------------------------------
MORGAN
EQ/PUTNAM STANLEY
GROWTH & EMERGING ALLIANCE ALLIANCE
INCOME MARKETS AGGRESSIVE SMALL CAP
VALUE EQUITY STOCK GROWTH
------------- ------------- -------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income............................. $ (26,526) $(53,878) $ (1,424,399) $ (129,291)
Net realized gain (loss).......................... (320,833) 2,517,607 17,382,253 5,643,896
Change in unrealized appreciation
(depreciation) on investments................... (254,974) 355,971 (20,111,961) 15,311,354
------------- ------------- -------------- -------------
Net increase (decrease) in net assets
from operations................................. (602,333) 2,819,700 (4,154,107) 20,825,959
------------- ------------- -------------- -------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)............................. 1,998,130 3,933,344 41,842,948 5,019,446
Benefits and other policy-related
transactions (Note 3)........................... (747,611) (1,526,731) (30,021,940) (1,999,582)
Net transfers among funds and
guaranteed interest account..................... (1,173,520) 21,809,959 (44,013,208) 6,507,953
------------- ------------- -------------- -------------
Net increase (decrease) in net assets
from policy-related transactions................ 76,999 24,216,572 (32,192,200) 9,527,817
------------- ------------- -------------- -------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)...................... (1,689) 291,377 (2,299,971) (13)
------------- ------------- -------------- -------------
INCREASE (DECREASE) IN NET ASSETS ................... (527,023) 27,327,649 (38,646,278) 30,353,763
NET ASSETS
BEGINNING OF PERIOD............................... 21,793,779 40,690,549 1,052,045,063 70,380,421
------------- ------------- -------------- -------------
NET ASSETS
END OF PERIOD..................................... $21,266,756 $68,018,198 $1,013,398,785 100,734,184
============= ============= ============== =============
-------------------------------------------
MFS BT
EMERGING EQUITY BT
GROWTH 500 INTERNATIONAL
COMPANIES INDEX EQUITY
----------- ---------- -------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
<S> <C> <C> <C>
Net investment income............................. $ (388,334) $ (111) $ (13)
Net realized gain (loss).......................... 15,125,358 29 4
Change in unrealized appreciation
(depreciation) on investments................... 12,417,474 8,971 398
------------- ---------- ---------
Net increase (decrease) in net assets
from operations................................. 27,154,498 8,889 389
------------- ---------- ---------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)............................. 17,249,489 45,712 4,867
Benefits and other policy-related
transactions (Note 3)........................... (6,644,194) (2,807) (423)
Net transfers among funds and
guaranteed interest account..................... 63,751,609 101,148 9,720
------------- ---------- ---------
Net increase (decrease) in net assets
from policy-related transactions................ 74,356,904 144,053 14,164
------------- ---------- ---------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)...................... 7,349 9 13
------------- ---------- ---------
INCREASE (DECREASE) IN NET ASSETS ................... 101,518,751 152,951 14,566
NET ASSETS
BEGINNING OF PERIOD............................... 238,183,041 18,699 1,260
------------- ---------- ---------
NET ASSETS
END OF PERIOD..................................... $339,701,792 $171,650 $15,826
============= ========== =========
---------------------
See Notes to Financial Statements.
</TABLE>
FSA-34
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS (Concluded)
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
LAZARD
JPM EQ/PUTNAM EQ/PUTNAM BT CAPITAL LAZARD LARGE
CORE INVESTORS INTERNATIONAL SMALL GUARDIAN SMALL CAP CAP
BOND GROWTH EQUITY COMPANY INTERNATIONAL VALUE VALUE
--------- --------- ------------- ------- ------------- --------- -------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income..................... $ (5) $ (84) $ (46) $-- $ (1) $-- $ (11)
Net realized gain (loss).................. (11) 1,126 24 -- 1 (1) (6)
Change in unrealized appreciation
(depreciation) on investments........... 411 5,479 2,128 -- 39 16 976
-------- -------- -------- ---- ------- ----- --------
Net increase (decrease) in net assets
from operations......................... 395 6,521 2,106 -- 39 15 959
-------- -------- -------- ---- ------- ----- --------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)..................... -- 13,845 -- -- -- -- 431
Benefits and other policy-related
transactions (Note 3)................... (209) (1,221) (920) (32) (131) (99) (161)
Net transfers among funds and
guaranteed interest account............. 50,399 57,055 53,664 89 2,476 447 17,547
-------- -------- -------- ---- ------- ----- --------
Net increase (decrease) in net assets
from policy-related transactions........ 50,190 69,679 52,744 57 2,345 348 17,817
-------- -------- -------- ---- ------- ----- --------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).............. 5 13 3 -- 1 -- 12
-------- -------- -------- ---- ------- ----- -------
INCREASE (DECREASE) IN NET ASSETS ........... 50,590 76,213 54,853 57 2,385 363 18,788
NET ASSETS
BEGINNING OF PERIOD....................... 2,192 11,411 716 -- -- -- --
-------- -------- -------- ---- ------- ----- --------
NET ASSETS
END OF PERIOD............................. $52,782 $82,624 $55,569 $57 $2,385 $363 $18,788
======== ======== ======== ==== ======= ===== ========
-------------------
See Notes to Financial Statements.
</TABLE>
FSA-35
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000
1. General
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.
EQ Advisors Trust ("EQAT" or "Trust") commenced operations on May 1, 1997.
EQAT is an open-ended diversified management investment company that sells
shares to separate accounts of insurance companies. Each portfolio has
separate investment objectives.
For periods prior to October 18, 1999, the Alliance portfolios (other than
EQ/Alliance Premier Growth) were part of The Hudson River Trust ("HRT"). On
October 18, 1999, a Substitution of new portfolios of EQAT for the
portfolios of HRT was performed. At that time assets of each of the HRT
portfolios were transferred to the corresponding new portfolios of EQAT.
Class IA shares and Class IB shares of the HRT became Class IA shares and
Class IB shares of EQAT.
Prior to the Substitution, Alliance Capital Management L.P., an indirect,
majority-owned subsidiary of Equitable Life, was investment adviser for all
HRT portfolios. Post Substitution, Alliance continues as investment adviser
for the Alliance portfolios (including EQ/Alliance Premier Growth).
Effective September 1999, Equitable Life serves as investment manager of
EQAT. As such, Equitable Life oversees the activities of the investment
advisers with respect to EQAT and is responsible for retaining or
discontinuing the services of those advisers. Prior to September 1999, AXA
Advisors, LLC (formerly EQ Financial Consultants, Inc.), then a subsidiary
of Equitable Life, served as investment manager to EQAT.
AXA Advisors, LLC, and Equitable Distributors, Inc., a subsidiary of
Equitable Life, earn fees from EQAT under distribution agreements held with
the Trust. Equitable Life also earns fees under an investment management
agreement with EQAT. Alliance earns fees under an investment advisory
agreement with Equitable Life.
The Account consists of thirty-five variable investment options of which
twenty-two are reported herein:
o Alliance Money Market
o Alliance High Yield
o Alliance Common Stock
o EQ/Alliance Premier Growth
o Capital Guardian Research
o Capital Guardian U.S. Equity
o MFS Growth with Income
o MFS Research
o EQ/Putnam Growth & Income Value
o Morgan Stanley Emerging Markets Equity
o Alliance Aggressive Stock
o Alliance Small Cap Growth
o MFS Emerging Growth Companies
o BT Equity 500 Index
o BT International Equity Index
o JPM Core Bond
o EQ/Putnam Investors Growth
o EQ/Putnam International Equity
o BT Small Company Index
o Capital Guardian International
o Lazard Small Cap Value
o Lazard Large Cap Value
FSA-36
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
1. General (Continued)
The assets in each fund are invested in Class IA shares or Class IB shares
of a corresponding mutual fund portfolio ("Portfolio") of EQAT. Class IA and
IB shares are offered by EQAT at net asset value. Both classes of shares are
subject to fees for investment management and advisory services and other
Trust expenses. Class IA shares are not subject to distribution fees imposed
pursuant to a distribution plan. Class IB shares are subject to distribution
fees imposed under a distribution plan (herein the "Rule 12b-1 Plans")
adopted in 1997 pursuant to Rule 12b-1 under the 1940 Act, as amended. The
Rule 12b-1 Plans provide that EQAT, on behalf of each Fund, may charge
annually up to 0.25% of the average daily net assets of a Fund attributable
to its Class IB shares in respect of activities primarily intended to result
in the sale of the Class IB shares. These fees are reflected in the net
asset value of the shares.
The Account supports the operations of various Equitable life insurance
products. These products are sold through both Equitable's Agent
Distribution Channel and Equitable's Independent Broker Dealer Distribution
Channel. These financial statement footnotes discuss the products, charges
and investment return applicable to those life insurance products (Incentive
Life, Incentive Life Plus, Survivorship Incentive Life and Survivorship
2000) which are sold through Equitable's Independent Broker Dealer
Distribution Channel.
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.
Receivable/payable for policy-related transactions represent amount due
to/from General Account predominately related to premiums, surrenders and
death benefits.
Policyowners may allocate amounts in their individual accounts to the
variable investment options 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 $72,689,669 for the three months ended March
31, 2000 are included in Net Transfers among variable investment options.
The net assets of any variable investment option may not be less than the
aggregate of the policyowners' accounts allocated to that variable
investment option. 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 EQAT and are valued at the net asset
values per share of the respective Portfolios. The net asset value is
determined by EQAT using the market or fair value of the underlying assets
of the Portfolio less liabilities.
Investment transactions are recorded on the trade date. Dividend and capital
gains are declared and distributed by the Trust at the end of each year and
are automatically reinvested on the ex-dividend date. Realized gains and
losses include (1) gains and losses on redemptions of EQAT shares
(determined on the identified cost basis) and (2) Trust distributions
representing the net realized gains on Trust investment transactions.
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.
Under the Policies, Equitable Life assumes mortality and expense risks and,
to cover these risks, charges the daily net assets of the Account. These
charges apply to all products supported by the Account. The products sold
through Equitable's Independent Broker Dealer Distribution Channel have
charges currently for Incentive Life, Incentive Life Plus and Survivorship
Incentive Life of .60% , and for Survivorship 2000 of .90%. The products sold
through Equitable Life's Agent Distribution Channel have charges ranging from
0.60% to 1.80% depending on the features of those products.
FSA - 37
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
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:
<TABLE>
<CAPTION>
Mortality
and Expense Mortality Administrative Total
-------------- ------------- --------------- ------------
<S> <C> <C> <C> <C>
Incentive Life,
Incentive Life 2000,
Incentive Life Plus
Second Series,
Champion 2000 (a) .60% -- -- .60%
IL Plus Original
Series, IL COLI (b) .85% -- -- .85%
Survivorship
Incentive Life (a) .60% -- -- .60%
Survivorship 2000 (a) .90% -- -- .90%
IL Protector (a) .80% -- -- .80%
SP Flex (a) .85% .60% .35% 1.80%
</TABLE>
----------------------
(a) Charged to daily net assets of the Account.
(b) Charged to Policy Account and is included in Benefits and
other policy-related transactions in the Statement of
Changes in Net Assets.
Before amounts are remitted to the Account for Incentive Life, Incentive
Life Plus, IL COLI, Survivorship Incentive Life 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,
Survivorship Incentive Life, Incentive Life Sales 1999 and after, 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.
Included in the Withdrawals and Administrative Charges line of the Statement
of Changes in Net Assets are certain administrative charges which are
deducted from the policyowners account value.
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.
The following table shows the surplus contributions (withdrawals) by
Equitable Life by investment fund:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
--------------
<S> <C>
VARIABLE INVESTMENT OPTIONS 2000
--------------------------- ------
Alliance Money Market $(1,493,620)
Alliance High Yield (2,258,283)
</TABLE>
FSA - 38
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
4. Amounts Retained by Equitable Life in Separate Account FP (Continued)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
-----------
<S> <C>
VARIABLE INVESTMENT OPTIONS 2000
----------------------------- ------
Alliance Common Stock $ 671,266
EQ/Alliance Premier Growth (420,055)
Capital Guardian Research --
Capital Guardian US Equity --
MFS Growth with Income (30,729)
MFS Research (69,216)
EQ/Putnam Growth & Income Value (28,216)
Morgan Stanley Emerging Markets Equity 237,498
Alliance Aggressive Stock (3,724,371)
Alliance Small Cap Growth (129,304)
MFS Emerging Growth Companies (380,984)
BT Equity 500 Index (102)
BT International Equity Index --
JPM Core Bond --
EQ Putnam Investors Growth (70)
EQ/Putnam International Equity (43)
BT Small Company Index --
Capital Guardian International --
Lazard Small Cap Value --
Lazard Large Cap Value --
</TABLE>
5. Distribution and Servicing Agreements
Equitable Life has entered into Distribution and Servicing Agreements with
AXA Advisors, LLC, an affiliate of Equitable Life, and EDI, whereby
registered representatives of AXA Advisors, LLC, authorized as variable life
insurance agents under applicable state insurance laws, sell the Policies.
6. Investment Returns
The tables on the following pages show the gross and net investment returns
with respect to the variable investment options for the periods shown. The
net return for each variable investment option is based upon beginning and
ending net unit value for a policy and is not based on the average net
assets in the variable investment option during such period. Gross return is
equal to the total return earned by the underlying EQAT investment which is
after deduction of EQAT expense.
The Separate Account rates of return attributable to Incentive Life,
Survivorship Incentive Life and Incentive Life Plus policyowners are
different than those attributable to Survivorship 2000 policyowners because
asset charges are deducted at different rates under each policy (see Note
3).
FSA - 39
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
RATES OF RETURN:
INCENTIVE LIFE PLUS, INCENTIVE LIFE,
SURVIVORSHIP INCENTIVE LIFE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, (A)
---------------------
<S> <C>
ALLIANCE MONEY MARKET 2000
---------------------- ------
Gross return......................... 1.34%
Net return........................... 1.18%
ALLIANCE HIGH YIELD
---------------------
Gross return......................... (2.32)%
Net return........................... (2.47)%
ALLIANCE COMMON STOCK
----------------------
Gross return......................... 3.70%
Net return........................... 3.55%
EQ/ALLIANCE PREMIER GROWTH
--------------------------
Gross return......................... 6.16%
Net return........................... 5.95%
CAPITAL GUARDIAN RESEARCH
---------------------------
Gross return......................... 5.61%
Net return........................... 5.45%
CAPITAL GUARDIAN U.S.EQUITY
----------------------------
Gross return......................... 3.00%
Net return........................... 2.86%
</TABLE>
-------------------
(a) The gross return and the net return for the periods indicated are not
annualized rates of return.
FSA - 40
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
RATES OF RETURN:
INCENTIVE LIFE PLUS, INCENTIVE LIFE,
SURVIVORSHIP INCENTIVE LIFE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, (A)
--------------------
<S> <C>
MFS GROWTH WITH INCOME 2000
------------------------ ------
Gross return.......................... 1.75%
Net return............................ 1.66%
MFS RESEARCH
--------------
Gross return........................... 8.62%
Net return............................. 8.42%
EQ/PUTNAM GROWTH & INCOME VALUE
---------------------------------
Gross return........................... (2.85)%
Net return............................. (2.96)%
MORGAN STANLEY EMERGING MARKETS
EQUITY
--------------------------------------
Gross return............................. 6.60%
Net return............................... 6.61%
ALLIANCE AGGRESSIVE STOCK
---------------------------
Gross return............................. 0.20%
Net return............................... (0.34)%
ALLIANCE SMALL CAP GROWTH
---------------------------
Gross return............................. 21.46%
Net return............................... 21.13%
</TABLE>
-------------------
(a) The gross return and the net return for the periods indicated are not
annualized rates of return.
FSA - 41
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
RATES OF RETURN:
INCENTIVE LIFE PLUS, INCENTIVE LIFE,
SURVIVORSHIP INCENTIVE LIFE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, (A)
---------------------
<S> <C>
MFS EMERGING GROWTH COMPANIES 2000
-------------------------------- ------
Gross return.................... 10.43%
Net return...................... 10.25%
BT EQUITY 500 INDEX
---------------------
Gross return.................... 2.09%
Net return...................... 1.98%
BT INTERNATIONAL EQUITY
INDEX
---------------------------
Gross return..................... (1.28)%
Net return....................... (1.41)%
JPM CORE BOND
---------------
Gross return...................... 2.42%
Net return........................ 2.19%
EQ/PUTNAM INVESTORS GROWTH
---------------------------
Gross return...................... 3.32%
Net return........................ 3.16%
EQ/PUTNAM INTERNATIONAL
EQUITY
-----------------------------
Gross return...................... 4.81%
Net return........................ 4.69%
BT SMALL COMPANY INDEX
-----------------------
Gross return..................... 6.45%
Net return....................... 6.29%
CAPITAL GUARDIAN INTERNATIONAL
--------------------------------
Gross return..................... 2.55%
Net return....................... 2.53%
LAZARD SMALL CAP VALUE
------------------------
Gross return..................... 6.01%
Net return....................... 5.82%
LAZARD LARGE CAP VALUE
------------------------
Gross return..................... 0.00%
Net return....................... (0.15)%
</TABLE>
-------------------
(a) The gross return and the net return for the periods indicated are not
annualized rates of return.
FSA - 42
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
RATES OF RETURN:
SURVIVORSHIP 2000
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, (A)
---------------------
<S> <C>
ALLIANCE MONEY MARKET 2000
----------------------- ------
Gross return.................. 1.34%
Net return.................... 1.11%
ALLIANCE HIGH YIELD
---------------------
Gross return.................. (2.32)%
Net return.................... (2.54)%
ALLIANCE COMMON STOCK
-----------------------
Gross return.................. 3.70%
Net return.................... 3.47%
EQ/ALLIANCE PREMIER GROWTH
----------------------------
Gross return.................. 6.16%
Net return.................... 5.87%
CAPITAL GUARDIAN RESEARCH
---------------------------
Gross return................... 5.61%
Net return..................... 5.37%
CAPITAL GUARDIAN U.S. EQUITY
------------------------------
Gross return................... 3.00%
Net return..................... 2.78%
</TABLE>
-------------------
(a) The gross return and the net return for the periods indicated are not
annualized rates of return.
FSA - 43
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
RATES OF RETURN:
SURVIVORSHIP 2000
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, (A)
--------------------
<S> <C>
MFS GROWTH WITH INCOME 2000
------------------------ ------
Gross return...................... 1.75%
Net return........................ 1.59%
MFS RESEARCH
--------------
Gross return....................... 8.62%
Net return......................... 8.34%
EQ/PUTNAM GROWTH & INCOME VALUE
----------------------------------
Gross return........................ (2.85)%
Net return.......................... (3.03)%
MORGAN STANLEY EMERGING MARKETS
EQUITY
---------------------------------
Gross return......................... 6.60%
Net return........................... 6.53%
ALLIANCE AGGRESSIVE STOCK
---------------------------
Gross return......................... 0.20%
Net return........................... (0.42)%
ALLIANCE SMALL CAP GROWTH
---------------------------
Gross return......................... 21.46%
Net return........................... 21.04%
</TABLE>
-------------------
(a) The gross return and the net return for the periods indicated are not
annualized rates of return.
FSA - 44
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
MARCH 31, 2000
RATES OF RETURN:
SURVIVORSHIP 2000
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, (A)
---------------------
<S> <C>
MFS EMERGING GROWTH COMPANIES 2000
-------------------------------- ------
Gross return.................... 10.43%
Net return...................... 10.17%
BT EQUITY 500 INDEX
----------------------
Gross return..................... 2.09%
Net return....................... 1.90%
BT INTERNATIONAL EQUITY INDEX
-------------------------------
Gross return..................... (1.28)%
Net return....................... (1.48)%
JPM CORE BOND
---------------
Gross return..................... 2.42%
Net return....................... 2.12%
EQ/PUTNAM INVESTORS GROWTH
-----------------------------
Gross return..................... 3.32%
Net return....................... 3.08%
EQ/PUTNAM INTERNATIONAL EQUITY
--------------------------------
Gross return...................... 4.81%
Net return....................... 4.62%
BT SMALL COMPANY INDEX
-------------------------
Gross return..................... 6.45%
Net return....................... 6.21%
CAPITAL GUARDIAN INTERNATIONAL
--------------------------------
Gross return..................... 2.55%
Net return....................... 2.45%
LAZARD SMALL CAP VALUE
------------------------
Gross return..................... 6.01%
Net return....................... 5.74%
LAZARD LARGE CAP VALUE
------------------------
Gross return..................... 0.00%
Net return....................... (0.22)%
</TABLE>
-------------------
(a) The gross return and the net return for the periods indicated are not
annualized rates of return.
FSA - 45
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
The Equitable Life Assurance Society of the United States
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, of shareholder's equity and comprehensive
income and of cash flows present fairly, in all material respects, the financial
position of The Equitable Life Assurance Society of the United States and its
subsidiaries ("Equitable Life") at December 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States of America. 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 auditing standards
generally accepted in the United States of America, 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.
PricewaterhouseCoopers LLP
New York, New York
February 1, 2000
F-1
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------- --------------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value............................. $ 18,599.7 $ 18,993.7
Held to maturity, at amortized cost..................................... 133.2 125.0
Mortgage loans on real estate............................................. 3,270.0 2,809.9
Equity real estate........................................................ 1,160.2 1,676.9
Policy loans.............................................................. 2,257.3 2,086.7
Other equity investments.................................................. 671.2 713.3
Investment in and loans to affiliates..................................... 1,201.8 928.5
Other invested assets..................................................... 911.6 808.2
------------- -------------
Total investments..................................................... 28,205.0 28,142.2
Cash and cash equivalents................................................... 628.0 1,245.5
Deferred policy acquisition costs........................................... 4,033.0 3,563.8
Other assets................................................................ 3,868.3 3,054.6
Closed Block assets......................................................... 8,607.3 8,632.4
Separate Accounts assets.................................................... 54,453.9 43,302.3
------------- -------------
TOTAL ASSETS................................................................ $ 99,795.5 $ 87,940.8
============= =============
LIABILITIES
Policyholders' account balances............................................. $ 21,351.4 $ 20,857.5
Future policy benefits and other policyholders' liabilities................. 4,777.6 4,726.4
Short-term and long-term debt............................................... 1,407.9 1,181.7
Other liabilities........................................................... 3,133.6 3,474.3
Closed Block liabilities.................................................... 9,025.0 9,077.0
Separate Accounts liabilities............................................... 54,332.5 43,211.3
------------- -------------
Total liabilities..................................................... 94,028.0 82,528.2
------------- -------------
Commitments and contingencies (Notes 11, 13, 14, 15 and 16)
SHAREHOLDER'S EQUITY
Common stock, $1.25 par value 2.0 million shares authorized, issued
and outstanding........................................................... 2.5 2.5
Capital in excess of par value.............................................. 3,557.2 3,110.2
Retained earnings........................................................... 2,600.7 1,944.1
Accumulated other comprehensive (loss) income............................... (392.9) 355.8
------------- -------------
Total shareholder's equity............................................ 5,767.5 5,412.6
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY.................................. $ 99,795.5 $ 87,940.8
============= =============
</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, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------- -------------
(IN MILLIONS)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee
income...................................................... $ 1,257.5 $ 1,056.2 $ 950.6
Premiums...................................................... 558.2 588.1 601.5
Net investment income......................................... 2,240.9 2,228.1 2,282.8
Investment (losses) gains, net................................ (96.9) 100.2 (45.2)
Commissions, fees and other income............................ 2,177.9 1,503.0 1,227.2
Contribution from the Closed Block............................ 86.4 87.1 102.5
------------ ------------- -------------
Total revenues.......................................... 6,224.0 5,562.7 5,119.4
------------ ------------- -------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances.......... 1,078.2 1,153.0 1,266.2
Policyholders' benefits....................................... 1,038.6 1,024.7 978.6
Other operating costs and expenses............................ 2,797.3 2,201.2 2,203.9
------------ ------------- -------------
Total benefits and other deductions..................... 4,914.1 4,378.9 4,448.7
------------ ------------- -------------
Earnings from continuing operations before Federal
income taxes and minority interest.......................... 1,309.9 1,183.8 670.7
Federal income taxes.......................................... 332.0 353.1 91.5
Minority interest in net income of consolidated subsidiaries.. 199.4 125.2 54.8
------------ ------------- -------------
Earnings from continuing operations........................... 778.5 705.5 524.4
Discontinued operations, net of Federal income taxes.......... 28.1 2.7 (87.2)
------------ ------------- -------------
Net Earnings.................................................. $ 806.6 $ 708.2 $ 437.2
============ ============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------- -------------
(IN MILLIONS)
<S> <C> <C> <C>
Common stock, at par value, beginning and end of year......... $ 2.5 $ 2.5 $ 2.5
------------ ------------- -------------
Capital in excess of par value, beginning of year............. 3,110.2 3,105.8 3,105.8
Additional capital in excess of par value..................... 447.0 4.4 -
------------ ------------- -------------
Capital in excess of par value, end of year................... 3,557.2 3,110.2 3,105.8
------------ ------------- -------------
Retained earnings, beginning of year.......................... 1,944.1 1,235.9 798.7
Net earnings.................................................. 806.6 708.2 437.2
Dividend paid to the Holding Company.......................... (150.0) - -
------------ ------------- -------------
Retained earnings, end of year................................ 2,600.7 1,944.1 1,235.9
------------ ------------- -------------
Accumulated other comprehensive income,
beginning of year........................................... 355.8 516.3 177.0
Other comprehensive (loss) income............................. (748.7) (160.5) 339.3
------------ ------------- -------------
Accumulated other comprehensive (loss) income, end of year.... (392.9) 355.8 516.3
------------ ------------- -------------
TOTAL SHAREHOLDER'S EQUITY, END OF YEAR....................... $ 5,767.5 $ 5,412.6 $ 4,860.5
============ ============= ============
COMPREHENSIVE INCOME
Net earnings.................................................. $ 806.6 $ 708.2 $ 437.2
------------ ------------- -------------
Change in unrealized (losses) gains, net of reclassification
adjustment.................................................. (776.9) (149.5) 343.7
Minimum pension liability adjustment.......................... 28.2 (11.0) (4.4)
------------ ------------- -------------
Other comprehensive (loss) income............................. (748.7) (160.5) 339.3
------------ ------------- -------------
COMPREHENSIVE INCOME.......................................... $ 57.9 $ 547.7 $ 776.5
============ ============= ============
</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, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------- -------------
(IN MILLIONS)
<S> <C> <C> <C>
Net earnings.................................................. $ 806.6 $ 708.2 $ 437.2
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Interest credited to policyholders' account balances........ 1,078.2 1,153.0 1,266.2
Universal life and investment-type product
policy fee income......................................... (1,257.5) (1,056.2) (950.6)
Investment losses (gains)................................... 96.9 (100.2) 45.2
Change in Federal income tax payable........................ 157.4 123.1 (74.4)
Change in property and equipment............................ (256.3) (81.8) (9.6)
Change in deferred acquisition costs........................ (260.7) (314.0) (220.7)
Other, net.................................................. (168.8) 70.9 399.7
------------ ------------- -------------
Net cash provided by operating activities..................... 195.8 503.0 893.0
------------ ------------- -------------
Cash flows from investing activities:
Maturities and repayments................................... 2,019.0 2,289.0 2,702.9
Sales....................................................... 7,572.9 16,972.1 10,385.9
Purchases................................................... (10,737.3) (18,578.5) (13,205.4)
(Increase) decrease in short-term investments............... (178.3) 102.4 (555.0)
Decrease in loans to discontinued operations................ - 660.0 420.1
Sale of subsidiaries........................................ - - 261.0
Other, net.................................................. (134.8) (341.8) (612.6)
------------ ------------- -------------
Net cash (used) provided by investing activities.............. (1,458.5) 1,103.2 (603.1)
------------ ------------- -------------
Cash flows from financing activities: Policyholders'
account balances:
Deposits.................................................. 2,366.2 1,508.1 1,281.7
Withdrawals............................................... (1,765.8) (1,724.6) (1,886.8)
Net increase (decrease) in short-term financings............ 378.2 (243.5) 419.9
Repayments of long-term debt................................ (41.3) (24.5) (196.4)
Payment of obligation to fund accumulated deficit of
discontinued operations................................... - (87.2) (83.9)
Dividend paid to the Holding Company........................ (150.0) - -
Other, net.................................................. (142.1) (89.5) (62.7)
------------ ------------- -------------
Net cash provided (used) by financing activities.............. 645.2 (661.2) (528.2)
------------ ------------- -------------
Change in cash and cash equivalents........................... (617.5) 945.0 (238.3)
Cash and cash equivalents, beginning of year.................. 1,245.5 300.5 538.8
------------ ------------- -------------
Cash and Cash Equivalents, End of Year........................ $ 628.0 $ 1,245.5 $ 300.5
============ ============= =============
Supplemental cash flow information
Interest Paid............................................... $ 92.2 $ 130.7 $ 217.1
============ ============= =============
Income Taxes Paid........................................... $ 116.5 $ 254.3 $ 170.0
============ ============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) ORGANIZATION
The Equitable Life Assurance Society of the United States ("Equitable
Life") is an indirect, wholly owned subsidiary of AXA Financial, Inc. (the
"Holding Company," and collectively with its consolidated subsidiaries,
"AXA Financial"). Equitable Life's insurance business is conducted
principally by Equitable Life and its wholly owned life insurance
subsidiaries, Equitable of Colorado ("EOC"), and, prior to December 31,
1996, Equitable Variable Life Insurance Company ("EVLICO"). Effective
January 1, 1997, EVLICO was merged into Equitable Life. 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, a French holding company for an
international group of insurance and related financial services companies,
is the Holding Company's largest shareholder, owning approximately 58.0% at
December 31, 1999 (53.0% if all securities convertible into, and options
on, common stock were to be converted or exercised).
On September 20, 1999, as part of AXA Financial's "branding" strategic
initiative, EQ Financial Consultants, Inc., a broker-dealer subsidiary of
Equitable Life, was merged into a new company, AXA Advisors, LLC ("AXA
Advisors"). Also, on September 21, 1999, AXA Advisors was transferred by
Equitable Life to AXA Distribution Holding Corporation ("AXA
Distribution"), a wholly owned indirect subsidiary of the Holding Company,
for $15.3 million. The excess of the sales price over AXA Advisors' book
value has been recorded in Equitable Life's books as a capital
contribution. Equitable Life will continue to develop and market the
"Equitable" brand of life and annuity products, while AXA Distribution and
its subsidiaries begin to assume responsibility for providing financial
advisory services, product distribution and customer relationship
management.
The Insurance segment offers a variety of traditional, variable and
interest-sensitive life insurance products, disability income, annuity
products, mutual fund and other investment products to individuals and
small groups. It also administers traditional participating group annuity
contracts with conversion features, generally for corporate qualified
pension plans, and association plans which provide full service retirement
programs for individuals affiliated with professional and trade
associations. This segment includes Separate Accounts for individual
insurance and annuity products.
The Investment Services segment includes Alliance and the results of DLJ
which are accounted for on an equity basis. In 1999, Alliance reorganized
into Alliance Capital Management Holding L.P. ("Alliance Holding") and
Alliance (the "Reorganization"). Alliance Holding's principal asset is its
interest in Alliance and it functions as a holding entity through which
holders of its publicly traded units own an indirect interest in the
operating partnership. The Company exchanged substantially all of its
Alliance Holding units for units in Alliance ("Alliance Units"). As a
result of the reorganization, the Company was the beneficial owner of
approximately 2% of Alliance Holding and 56% of Alliance. Alliance provides
diversified investment fund management services to a variety of
institutional clients, including pension funds, endowments, and foreign
financial institutions, as well as to individual investors, principally
through a broad line of mutual funds. This segment includes institutional
Separate Accounts which provide various investment options for large group
pension clients, primarily deferred benefit contribution plans, through
pooled or single group accounts. At December 31, 1999, Equitable Life has a
31.7% ownership interest in DLJ. DLJ's businesses include securities
underwriting, sales and trading, merchant banking, financial advisory
services, investment research, venture capital, correspondent brokerage
services, online interactive brokerage services and asset management. DLJ
serves institutional, corporate, governmental and individual clients both
domestically and internationally. Through June 10, 1997, this segment also
includes Equitable Real Estate Investment Management Inc. ("EREIM") which
was sold. EREIM provided real estate investment management services,
property management services, mortgage servicing and loan asset management,
and agricultural investment management.
F-6
<PAGE>
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 certain of its subsidiaries engaged in insurance related
business (collectively, the "Insurance Group"); other subsidiaries,
principally Alliance and through June 10, 1997, EREIM (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, liabilities and results of operations are presented in the
consolidated financial statements as single line items (see Note 7). Unless
specifically stated, all other footnote disclosures contained herein
exclude the Closed Block related amounts.
All significant intercompany transactions and balances except those with
the Closed Block, DLJ and discontinued operations (see Note 8) have been
eliminated in consolidation. The years "1999," "1998" and "1997" refer to
the years ended December 31, 1999, 1998 and 1997, respectively. Certain
reclassifications have been made in the amounts presented for prior periods
to conform these periods with the 1999 presentation.
Closed Block
------------
On July 22, 1992, Equitable Life established the Closed Block for the
benefit of certain individual participating policies which were in force on
that date. The assets allocated to the Closed Block, together with
anticipated revenues from policies included in the Closed Block, were
reasonably expected to be sufficient to support such business, including
provision for payment of claims, certain expenses and taxes, and for
continuation of dividend scales payable in 1991, assuming the experience
underlying such scales continues.
Assets allocated to the Closed Block inure solely to the benefit of the
Closed Block policyholders and will not revert to the benefit of the
Holding Company. No reallocation, transfer, borrowing or lending of assets
can be made between the Closed Block and other portions of Equitable Life's
General Account, any of its Separate Accounts or any affiliate of Equitable
Life without the approval of the New York Superintendent of Insurance (the
"Superintendent"). Closed Block assets and liabilities are carried on the
same basis as similar assets and liabilities held in the General Account.
The excess of Closed Block liabilities over Closed Block assets represents
the expected future post-tax contribution from the Closed Block which would
be recognized in income over the period the policies and contracts in the
Closed Block remain in force.
Discontinued Operations
-----------------------
Discontinued operations at December 31, 1999, principally consists of the
Group Non-Participating Wind-Up Annuities ("Wind-Up Annuities"), for which
a premium deficiency reserve has been established. Management reviews the
adequacy of the allowance each quarter and believes the allowance for
future losses at December 31, 1999 is adequate to provide for all future
losses; however, the quarterly allowance review continues to involve
numerous estimates and subjective judgments regarding the expected
performance of Discontinued Operations Investment Assets. There can be no
assurance the losses provided for will not differ from the losses
ultimately realized. To the extent actual results or future projections of
the discontinued operations differ from management's current best estimates
and assumptions underlying the allowance for future losses, the difference
would be reflected in the consolidated statements of earnings in
discontinued operations. In particular, to the extent income, sales
proceeds and holding periods for equity real estate differ from
management's previous assumptions, periodic adjustments to the allowance
are likely to result (see Note 8).
F-7
<PAGE>
Accounting Changes
------------------
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use," which
requires capitalization of external and certain internal costs incurred to
obtain or develop internal-use computer software during the application
development stage. The Company applied the provisions of SOP 98-1
prospectively effective January 1, 1998. The adoption of SOP 98-1 did not
have a material impact on the Company's consolidated financial statements.
Capitalized internal-use software is amortized on a straight-line basis
over the estimated useful life of the software.
New Accounting Pronouncements
-----------------------------
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," which establishes
accounting and reporting standards for derivative instruments, including
certain derivatives embedded in other contracts, and for hedging
activities. It requires all derivatives to be recognized on the balance
sheet at fair value. The accounting for changes in the fair value of a
derivative depends on its intended use. Derivatives not used in hedging
activities must be adjusted to fair value through earnings. Changes in the
fair value of derivatives used in hedging activities will, depending on the
nature of the hedge, either be offset in earnings against the change in
fair value of the hedged item attributable to the risk being hedged or
recognized in other comprehensive income until the hedged item affects
earnings. For all hedging activities, the ineffective portion of a
derivative's change in fair value will be immediately recognized in
earnings. In June 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133," which defers the effective date of SFAS
No. 133 to all fiscal quarters of all fiscal years beginning after June 15,
2000. The Company expects to adopt SFAS No. 133 effective January 1, 2001.
Adjustments resulting from initial adoption of the new requirements will be
reported in a manner similar to the cumulative effect of a change in
accounting principle and will be reflected in net income or accumulated
other comprehensive income based upon existing hedging relationships, if
any. Management currently is assessing the impact of adoption. However,
Alliance's adoption of the new requirements is not expected to have a
significant impact on the Company's consolidated balance sheet or statement
of earnings. Also, since most of DLJ's derivatives are carried at fair
values, the Company's consolidated earnings and financial position are not
expected to be significantly affected by DLJ's adoption of the new
requirements.
Valuation of Investments
------------------------
Fixed maturities identified as available for sale are reported at estimated
fair value. Fixed maturities, which the Company has both the ability and
the intent to hold to maturity, are stated principally at amortized cost.
The amortized cost of fixed maturities is adjusted for impairments in value
deemed to be other than temporary.
Valuation allowances are netted against the asset categories to which they
apply.
Mortgage loans on real estate are stated at unpaid principal balances, net
of unamortized discounts and valuation allowances. Valuation allowances are
based on the present value of expected future cash flows discounted at the
loan's original effective interest rate or the collateral value if the loan
is collateral dependent. However, if foreclosure is or becomes probable,
the measurement method used is collateral value.
Real estate, including real estate acquired in satisfaction of debt, is
stated at depreciated cost less valuation allowances. At the date of
foreclosure (including in-substance foreclosure), real estate acquired in
satisfaction of debt is valued at estimated fair value. Impaired real
estate is written down to fair value with the impairment loss being
included in investment gains (losses), net. Valuation allowances on real
estate held for sale are computed using the lower of depreciated cost or
current estimated fair value, net of disposition costs. Depreciation is
discontinued on real estate held for sale.
F-8
<PAGE>
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.
Equity securities, comprised of common stock classified as both trading and
available for sale securities, 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 (losses).
Unrealized gains (losses) on publicly-traded common equity securities
classified as trading securities are reflected in net investment income.
Unrealized investment gains (losses) on fixed maturities and equity
securities available for sale held by the Company are accounted for as a
separate component of accumulated comprehensive income, net of related
deferred Federal income taxes, amounts attributable to discontinued
operations, participating group annuity contracts and deferred policy
acquisition costs ("DAC") related to universal life and investment-type
products and participating traditional life contracts.
Recognition of Insurance Income and Related Expenses
----------------------------------------------------
Premiums from universal life and investment-type contracts are reported as
deposits to policyholders' account balances. Revenues from these contracts
consist of amounts assessed during the period against policyholders'
account balances for mortality charges, policy administration charges and
surrender charges. Policy benefits and claims that are charged to expense
include benefit claims incurred in the period in excess of related
policyholders' account balances.
Premiums from participating and non-participating traditional life and
annuity policies with life contingencies generally are recognized as income
when due. Benefits and expenses are matched with such income so as to
result in the recognition of profits over the life of the contracts. This
match is accomplished by means of the provision for liabilities for future
policy benefits and the deferral and subsequent amortization of policy
acquisition costs.
For contracts with a single premium or a limited number of premium payments
due over a significantly shorter period than the total period over which
benefits are provided, premiums are recorded as income when due with any
excess profit deferred and recognized in income in a constant relationship
to insurance in force or, for annuities, the amount of expected future
benefit payments.
Premiums from individual health contracts are recognized as income over the
period to which the premiums relate in proportion to the amount of
insurance protection provided.
F-9
<PAGE>
Deferred Policy Acquisition Costs
---------------------------------
The costs of acquiring new business, principally commissions, underwriting,
agency and policy issue expenses, all of which vary with and are primarily
related to the production of new business, are deferred. DAC is subject to
recoverability testing at the time of policy issue and loss recognition
testing at the end of each accounting period.
For universal life products and investment-type products, DAC is amortized
over the expected total life of the contract group (periods ranging from 25
to 35 years and 5 to 17 years, respectively) as a constant percentage of
estimated gross profits arising principally from investment results,
mortality and expense margins and surrender charges based on historical and
anticipated future experience, updated at the end of each accounting
period. The effect on the amortization of DAC of revisions to estimated
gross profits is reflected in earnings in the period such estimated gross
profits are revised. The effect on the DAC asset that would result from
realization of unrealized gains (losses) is recognized with an offset to
accumulated other comprehensive income in consolidated shareholder's equity
as of the balance sheet date.
As part of its asset/liability management process, in second quarter 1999,
management initiated a review of the matching of invested assets to
Insurance product lines given their different liability characteristics and
liquidity requirements. As a result of this review, management reallocated
the current and prospective interests of the various product lines in the
invested assets. These asset reallocations and the related changes in
investment yields by product line, in turn, triggered a review of and
revisions to the estimated future gross profits used to determine the
amortization of DAC for universal life and investment-type products. The
revisions to estimated future gross profits resulted in an after-tax
writedown of DAC of $85.6 million (net of a Federal income tax benefit of
$46.1 million).
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, 1999, the expected investment yield, excluding policy loans, generally
ranged from 7.75% grading to 7.5% over a 20 year period. Estimated gross
margin includes anticipated premiums and investment results less claims and
administrative expenses, changes in the net level premium reserve and
expected annual policyholder dividends. The effect on the amortization of
DAC of revisions to estimated gross margins is reflected in earnings in the
period such estimated gross margins are revised. The effect on the DAC
asset that would result from realization of unrealized gains (losses) is
recognized with an offset to accumulated comprehensive income in
consolidated shareholder's equity as of the balance sheet date.
For non-participating traditional life 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.
Policyholders' Account Balances and Future Policy Benefits
----------------------------------------------------------
Policyholders' account balances for universal life and investment-type
contracts are equal to the policy account values. The policy account values
represents an accumulation of gross premium payments plus credited interest
less expense and mortality charges and withdrawals.
For participating traditional life policies, future policy benefit
liabilities are calculated using a net level premium method on the basis of
actuarial assumptions equal to guaranteed mortality and dividend fund
interest rates. The liability for annual dividends represents the accrual
of annual dividends earned. Terminal dividends are accrued in proportion to
gross margins over the life of the contract.
For non-participating traditional life insurance policies, future policy
benefit liabilities are estimated using a net level premium method on the
basis of actuarial assumptions as to mortality, persistency and interest
established at policy issue. Assumptions established at policy issue as to
mortality and persistency are based on the Insurance Group's experience
which, together with interest and expense assumptions, includes a margin
for adverse deviation. When the liabilities for future policy benefits plus
the present value of expected future gross premiums for a product are
insufficient to provide for expected future policy benefits
F-10
<PAGE>
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 8.35% for
annuity liabilities.
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. While
management believes its disability income ("DI") reserves have been
calculated on a reasonable basis and are adequate, there can be no
assurance reserves will be sufficient to provide for future liabilities.
Claim reserves and associated liabilities for individual DI and major
medical policies were $948.4 million and $951.7 million at December 31,
1999 and 1998, respectively. Incurred benefits (benefits paid plus changes
in claim reserves) and benefits paid for individual DI and major medical
are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Incurred benefits related to current year.......... $ 150.7 $ 140.1 $ 132.3
Incurred benefits related to prior years........... 64.7 84.2 60.0
------------- ------------ ------------
Total Incurred Benefits............................ $ 215.4 $ 224.3 $ 192.3
============= ============ ============
Benefits paid related to current year.............. $ 28.9 $ 17.0 $ 28.8
Benefits paid related to prior years............... 189.8 155.4 146.2
------------- ------------ ------------
Total Benefits Paid................................ $ 218.7 $ 172.4 $ 175.0
============= ============ ============
</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, 1999, participating policies, including those in the Closed
Block, represent approximately 23.0% ($47.0 billion) of directly written
life insurance in force, net of amounts ceded.
Federal Income Taxes
--------------------
The Company files a consolidated Federal income tax return with the Holding
Company and its consolidated subsidiaries. Current Federal income taxes are
charged or credited to operations based upon amounts estimated to be
payable or recoverable as a result of taxable operations for the current
year. Deferred income tax assets and liabilities are recognized based on
the difference between financial statement carrying amounts and income tax
bases of assets and liabilities using enacted income tax rates and laws.
Separate Accounts
-----------------
Separate Accounts are established in conformity with the New York State
Insurance Law and generally are not chargeable with liabilities that arise
from any other business of the Insurance Group. Separate Accounts assets
are subject to General Account claims only to the extent the value of such
assets exceeds Separate Accounts liabilities.
F-11
<PAGE>
Assets and liabilities of the Separate Accounts, representing net deposits
and accumulated net investment earnings less fees, held primarily for the
benefit of contractholders, and for which the Insurance Group does not bear
the investment risk, are shown as separate captions in the consolidated
balance sheets. The Insurance Group bears the investment risk on assets
held in one Separate Account; therefore, such assets are carried on the
same basis as similar assets held in the General Account portfolio. Assets
held in the other Separate Accounts are carried at quoted market values or,
where quoted values are not available, at estimated fair values as
determined by the Insurance Group.
The investment results of Separate Accounts on which the Insurance Group
does not bear the investment risk are reflected directly in Separate
Accounts liabilities. For 1999, 1998 and 1997, investment results of such
Separate Accounts were $6,045.5 million, $4,591.0 million and $3,411.1
million, respectively.
Deposits to Separate Accounts are reported as increases in Separate
Accounts liabilities and are not reported in revenues. Mortality, policy
administration and surrender charges on all Separate Accounts are included
in revenues.
Employee Stock Option Plan
--------------------------
The Company accounts for stock option plans sponsored by the Holding
Company, DLJ and Alliance in accordance with the provisions of Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees," and related interpretations. In accordance with the opinion,
compensation expense is recorded on the date of grant only if the current
market price of the underlying stock exceeds the option strike price at the
grant date. See Note 22 for the pro forma disclosures for the Holding
Company, DLJ and Alliance required by SFAS No. 123, "Accounting for
Stock-Based Compensation".
F-12
<PAGE>
3) INVESTMENTS
The following tables provide additional information relating to fixed
maturities and equity securities:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------------- ------------- ------------ -------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1999
-----------------
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 14,866.8 $ 139.5 $ 787.0 $ 14,219.3
Mortgage-backed.................... 2,554.5 2.3 87.8 2,469.0
U.S. Treasury, government and
agency securities................ 1,194.1 18.9 23.4 1,189.6
States and political subdivisions.. 110.0 1.4 4.9 106.5
Foreign governments................ 361.8 16.2 14.8 363.2
Redeemable preferred stock......... 286.4 1.7 36.0 252.1
------------- ------------- ------------ -------------
Total Available for Sale............... $ 19,373.6 $ 180.0 $ 953.9 $ 18,599.7
============= ============= ============ =============
Held to Maturity: Corporate......... $ 133.2 $ - $ - $ 133.2
============= ============= ============ =============
Equity Securities:
Common stock available for sale...... 25.5 1.5 17.8 9.2
Common stock trading securities...... 7.2 9.1 2.2 14.1
------------- ------------- ------------ -------------
Total Equity Securities................ $ 32.7 $ 10.6 $ 20.0 $ 23.3
============= ============= ============ =============
December 31, 1998
-----------------
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 14,520.8 $ 793.6 $ 379.6 $ 14,934.8
Mortgage-backed.................... 1,807.9 23.3 .9 1,830.3
U.S. Treasury, government and
agency securities................ 1,464.1 107.6 .7 1,571.0
States and political subdivisions.. 55.0 9.9 - 64.9
Foreign governments................ 363.3 20.9 30.0 354.2
Redeemable preferred stock......... 242.7 7.0 11.2 238.5
------------- ------------- ------------ -------------
Total Available for Sale............... $ 18,453.8 $ 962.3 $ 422.4 $ 18,993.7
============= ============= ============ =============
Held to Maturity: Corporate......... $ 125.0 $ - $ - $ 125.0
============= ============= ============ =============
Equity Securities:
Common stock available for sale...... $ 58.3 $ 114.9 $ 22.5 $ 150.7
============= ============= ============ =============
</TABLE>
For publicly traded fixed maturities and equity securities, estimated fair
value is determined using quoted market prices. For fixed maturities
without a readily ascertainable market value, the Company determines an
estimated fair value using a discounted cash flow approach, including
provisions for credit risk, generally based on the assumption such
securities will be held to maturity. Estimated fair values for equity
securities, substantially all of which do not have a readily ascertainable
market value, have been determined by the Company. Such estimated fair
values do not necessarily represent the values for which these securities
could have been sold at the dates of the consolidated balance sheets. At
December 31, 1999 and 1998, securities without a readily ascertainable
market value having an amortized cost of $3,322.2 million and $3,539.9
million, respectively, had estimated fair values of $3,177.7 million and
$3,748.5 million, respectively.
F-13
<PAGE>
The contractual maturity of bonds at December 31, 1999 is shown below:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
-------------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less................................................ $ 479.1 $ 477.8
Due in years two through five.......................................... 2,991.8 2,921.2
Due in years six through ten........................................... 7,197.9 6,813.0
Due after ten years.................................................... 5,864.0 5,666.5
Mortgage-backed securities............................................. 2,554.4 2,469.1
------------ ------------
Total.................................................................. $ 19,087.2 $ 18,347.6
============ ============
</TABLE>
Corporate bonds held to maturity with an amortized cost and estimated fair
value of $133.2 million are due in one year or less.
Bonds not due at a single maturity date have been included in the above
table in the year of final maturity. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
The Insurance Group's fixed maturity investment portfolio includes
corporate high yield securities consisting of public high yield bonds,
redeemable preferred stocks and directly negotiated debt in leveraged
buyout transactions. The Insurance Group seeks to minimize the higher than
normal credit risks associated with such securities by monitoring
concentrations in any single issuer or a particular industry group. Certain
of these corporate high yield securities are classified as other than
investment grade by the various rating agencies, i.e., a rating below Baa
or National Association of Insurance Commissioners ("NAIC") designation of
3 (medium grade), 4 or 5 (below investment grade) or 6 (in or near
default). At December 31, 1999, approximately 14.9% of the $18,344.3
million aggregate amortized cost of bonds held by the Company was
considered to be other than investment grade.
In addition, the Insurance Group is an equity investor in limited
partnership interests which primarily invest in securities considered to be
other than investment grade. The carrying values at December 31, 1999 and
1998 were $647.9 million and $562.6 million, respectively.
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Balances, beginning of year........................ $ 230.6 $ 384.5 $ 137.1
Additions charged to income........................ 68.2 86.2 334.6
Deductions for writedowns and
asset dispositions............................... (150.2) (240.1) (87.2)
------------- ------------ ------------
Balances, End of Year.............................. $ 148.6 $ 230.6 $ 384.5
============= ============ ============
Balances, end of year comprise:
Mortgage loans on real estate.................... $ 27.5 $ 34.3 $ 55.8
Equity real estate............................... 121.1 196.3 328.7
------------- ------------ ------------
Total.............................................. $ 148.6 $ 230.6 $ 384.5
============= ============ ============
</TABLE>
F-14
<PAGE>
At December 31, 1999, the carrying value of fixed maturities which are
non-income producing for the twelve months preceding the consolidated
balance sheet date was $152.1 million.
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 $106.0 million and $115.1
million at December 31, 1999 and 1998, 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 $9.5
million, $10.3 million and $17.2 million in 1999, 1998 and 1997,
respectively. Gross interest income on these loans included in net
investment income aggregated $8.2 million, $8.3 million and $12.7 million
in 1999, 1998 and 1997, respectively.
Impaired mortgage loans along with the related provision for losses were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1999 1998
-------------- --------------
(IN MILLIONS)
<S> <C> <C>
Impaired mortgage loans with provision for losses.................. $ 142.4 $ 125.4
Impaired mortgage loans without provision for losses............... 2.2 8.6
-------------- --------------
Recorded investment in impaired mortgage loans..................... 144.6 134.0
Provision for losses............................................... (23.0) (29.0)
-------------- --------------
Net Impaired Mortgage Loans........................................ $ 121.6 $ 105.0
============== ==============
</TABLE>
Impaired mortgage loans without provision for losses are loans where the
fair value of the collateral or the net present value of the expected
future cash flows related to the loan equals or exceeds the recorded
investment. Interest income earned on loans where the collateral value is
used to measure impairment is recorded on a cash basis. Interest income on
loans where the present value method is used to measure impairment is
accrued on the net carrying value amount of the loan at the interest rate
used to discount the cash flows. Changes in the present value attributable
to changes in the amount or timing of expected cash flows are reported as
investment gains or losses.
During 1999, 1998 and 1997, respectively, the Company's average recorded
investment in impaired mortgage loans was $141.7 million, $161.3 million
and $246.9 million. Interest income recognized on these impaired mortgage
loans totaled $12.0 million, $12.3 million and $15.2 million ($0.0 million,
$.9 million and $2.3 million recognized on a cash basis) for 1999, 1998 and
1997, 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, 1999 and 1998, the carrying value of equity real estate held
for sale amounted to $382.2 million and $836.2 million, respectively. For
1999, 1998 and 1997, respectively, real estate of $20.5 million, $7.1
million and $152.0 million was acquired in satisfaction of debt. At
December 31, 1999 and 1998, the Company owned $443.9 million and $552.3
million, respectively, of real estate acquired in satisfaction of debt.
Depreciation of real estate held for production of income is computed using
the straight-line method over the estimated useful lives of the properties,
which generally range from 40 to 50 years. Accumulated depreciation on real
estate was $251.6 million and $374.8 million at December 31, 1999 and 1998,
respectively. Depreciation expense on real estate totaled $21.8 million,
$30.5 million and $74.9 million for 1999, 1998 and 1997, respectively.
F-15
<PAGE>
4) JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information for real estate joint ventures
(25 individual ventures at both December 31, 1999 and 1998) 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, follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1999 1998
------------- -------------
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEETS
Investments in real estate, at depreciated cost........................ $ 861.1 $ 913.7
Investments in securities, generally at estimated fair value........... 678.4 636.9
Cash and cash equivalents.............................................. 68.4 85.9
Other assets........................................................... 239.3 279.8
------------- -------------
Total Assets........................................................... $ 1,847.2 $ 1,916.3
============= =============
Borrowed funds - third party........................................... $ 354.2 $ 367.1
Borrowed funds - AXA Financial......................................... 28.9 30.1
Other liabilities...................................................... 313.9 197.2
------------- -------------
Total liabilities...................................................... 697.0 594.4
------------- -------------
Partners' capital...................................................... 1,150.2 1,321.9
------------- -------------
Total Liabilities and Partners' Capital................................ $ 1,847.2 $ 1,916.3
============= =============
Equity in partners' capital included above............................. $ 316.5 $ 365.6
Equity in limited partnership interests not included above and other... 524.1 390.1
------------- -------------
Carrying Value......................................................... $ 840.6 $ 755.7
============= =============
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures............. $ 180.5 $ 246.1 $ 310.5
Revenues of other limited partnership interests.... 455.1 128.9 506.3
Interest expense - third party..................... (39.8) (33.3) (91.8)
Interest expense - AXA Financial................... (2.5) (2.6) (7.2)
Other expenses..................................... (139.0) (197.0) (263.6)
------------- ------------ ------------
Net Earnings....................................... $ 454.3 $ 142.1 $ 454.2
============= ============ ============
Equity in net earnings included above.............. $ 10.5 $ 44.4 $ 76.7
Equity in net earnings of limited partnership
interests not included above..................... 76.0 37.9 69.5
Other.............................................. - - (.9)
------------- ------------ ------------
Total Equity in Net Earnings....................... $ 86.5 $ 82.3 $ 145.3
============= ============ ============
</TABLE>
F-16
<PAGE>
5) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities................................... $ 1,499.8 $ 1,489.0 $ 1,459.4
Mortgage loans on real estate...................... 253.4 235.4 260.8
Equity real estate................................. 250.2 356.1 390.4
Other equity investments........................... 165.1 83.8 156.9
Policy loans....................................... 143.8 144.9 177.0
Other investment income............................ 161.3 185.7 181.7
------------- ------------ ------------
Gross investment income.......................... 2,473.6 2,494.9 2,626.2
Investment expenses.............................. (232.7) (266.8) (343.4)
------------- ------------ ------------
Net Investment Income.............................. $ 2,240.9 $ 2,228.1 $ 2,282.8
============= ============ ============
</TABLE>
Investment (losses) gains, net, including changes in the valuation
allowances, follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities................................... $ (290.9) $ (24.3) $ 88.1
Mortgage loans on real estate...................... (3.3) (10.9) (11.2)
Equity real estate................................. (2.4) 74.5 (391.3)
Other equity investments........................... 88.1 29.9 14.1
Sale of subsidiaries............................... - (2.6) 252.1
Issuance and sales of Alliance Units............... 5.5 19.8 -
Issuance and sales of DLJ common stock............. 106.0 18.2 3.0
Other.............................................. .1 (4.4) -
------------- ------------ ------------
Investment (Losses) Gains, Net..................... $ (96.9) $ 100.2 $ (45.2)
============= ============ ============
</TABLE>
Writedowns of fixed maturities amounted to $223.2 million, $101.6 million
and $11.7 million for 1999, 1998 and 1997, respectively, and writedowns of
equity real estate amounted to $136.4 million for 1997. In fourth quarter
1997, the Company reclassified $1,095.4 million depreciated cost of equity
real estate from real estate held for the production of income to real
estate held for sale. Additions to valuation allowances of $227.6 million
were recorded upon these transfers. Additionally, in fourth quarter 1997,
$132.3 million of writedowns on real estate held for production of income
were recorded.
For 1999, 1998 and 1997, respectively, proceeds received on sales of fixed
maturities classified as available for sale amounted to $7,138.6 million,
$15,961.0 million and $9,789.7 million. Gross gains of $74.7 million,
$149.3 million and $166.0 million and gross losses of $214.3 million, $95.1
million and $108.8 million, respectively, were realized on these sales. The
change in unrealized investment (losses) gains related to fixed maturities
classified as available for sale for 1999, 1998 and 1997 amounted to
$(1,313.8) million, $(331.7) million and $513.4 million, respectively.
On January 1, 1999, investments in publicly-traded common equity securities
in the General Account portfolio within other equity investments amounting
to $102.3 million were transferred from available for sale securities to
trading securities. As a result of this transfer, unrealized investment
gains of $83.3 million ($43.2 million net of related DAC and Federal income
taxes) were recognized as realized investment gains in the consolidated
statements of earnings. Net unrealized holding gains of $7.0 million were
included in net investment income in the consolidated statements of
earnings for 1999. These trading securities had a carrying value of $14.1
million and costs of $7.2 million at December 31, 1999.
F-17
<PAGE>
During 1999, DLJ completed its offering of a new class of its Common Stock
to track the financial performance of DLJdirect, its online brokerage
business. As a result of this offering, the Company recorded a non-cash
pre-tax realized gain of $95.8 million.
For 1999, 1998 and 1997, investment results passed through to certain
participating group annuity contracts as interest credited to
policyholders' account balances amounted to $131.5 million, $136.9 million
and $137.5 million, respectively.
In 1997, Equitable Life sold EREIM (other than its interest in Column
Financial, Inc.) ("ERE") to Lend Lease Corporation Limited ("Lend Lease"),
for $400.0 million and recognized an investment gain of $162.4 million, net
of Federal income tax of $87.4 million. Equitable Life entered into
long-term advisory agreements whereby ERE continues to provide
substantially the same services to Equitable Life's General Account and
Separate Accounts, for substantially the same fees, as provided prior to
the sale. Through June 10, 1997, the businesses sold reported combined
revenues of $91.6 million and combined net earnings of $10.7 million.
On June 30, 1997, Alliance reduced the recorded value of goodwill and
contracts associated with Alliance's 1996 acquisition of Cursitor Holdings
L.P. and Cursitor Holdings Limited (collectively, "Cursitor") by $120.9
million since Cursitor's business fundamentals no longer supported the
carrying value of its investment. The Company's earnings from continuing
operations 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.
Net unrealized investment gains (losses), included in the consolidated
balance sheets as a component of accumulated comprehensive income and the
changes for the corresponding years, follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year......................... $ 384.1 $ 533.6 $ 189.9
Changes in unrealized investment (losses) gains.... (1,486.6) (242.4) 543.3
Changes in unrealized investment losses
(gains) attributable to:
Participating group annuity contracts.......... 24.7 (5.7) 53.2
DAC............................................ 208.6 13.2 (89.0)
Deferred Federal income taxes.................. 476.4 85.4 (163.8)
------------- ------------ ------------
Balance, End of Year............................... $ (392.8) $ 384.1 $ 533.6
============= ============ ============
Balance, end of year comprises:
Unrealized investment (losses) gains on:
Fixed maturities............................... $ (773.9) $ 539.9 $ 871.2
Other equity investments....................... (16.3) 92.4 33.7
Other, principally Closed Block................ 46.8 111.1 80.9
------------- ------------ ------------
Total........................................ (743.4) 743.4 985.8
Amounts of unrealized investment gains
attributable to:
Participating group annuity contracts........ - (24.7) (19.0)
DAC.......................................... 80.8 (127.8) (141.0)
Deferred Federal income taxes................ 269.8 (206.8) (292.2)
------------- ------------ ------------
Total.............................................. $ (392.8) $ 384.1 $ 533.6
============= ============ ============
</TABLE>
Changes in unrealized gains (losses) reflect changes in fair value of only
those fixed maturities and equity securities classified as available for
sale and do not reflect any changes in fair value of policyholders' account
balances and future policy benefits.
F-18
<PAGE>
6) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated other comprehensive income (loss) represents cumulative gains
and losses on items that are not reflected in earnings. The balances for
the past three years follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Unrealized (losses) gains on investments........... $ (392.8) $ 384.1 $ 533.6
Minimum pension liability.......................... (.1) (28.3) (17.3)
------------- ------------ ------------
Total Accumulated Other
Comprehensive (Loss) Income...................... $ (392.9) $ 355.8 $ 516.3
============= ============ ============
</TABLE>
The components of other comprehensive income (loss) for the past three
years follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Net unrealized (losses) gains on investment
securities:
Net unrealized (losses) gains arising during
the period..................................... $ (1,682.3) $ (186.1) $ 564.0
Adjustment to reclassify losses (gains)
included in net earnings during the period..... 195.7 (56.3) (20.7)
------------- ------------ ------------
Net unrealized (losses) gains on investment
securities..................................... (1,486.6) (242.4) 543.3
Adjustments for policyholder liabilities,
DAC and deferred Federal income taxes.......... 709.7 92.9 (199.6)
------------- ------------ ------------
Change in unrealized losses (gains), net of
adjustments.................................... (776.9) (149.5) 343.7
Change in minimum pension liability................ 28.2 (11.0) (4.4)
------------- ------------ ------------
Total Other Comprehensive (Loss) Income............ $ (748.7) $ (160.5) $ 339.3
============= ============ ============
</TABLE>
F-19
<PAGE>
7) CLOSED BLOCK
Summarized financial information for the Closed Block follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C
BALANCE SHEETS
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost,
$4,144.8 and $4,149.0)........................................... $ 4,014.0 $ 4,373.2
Mortgage loans on real estate........................................ 1,704.2 1,633.4
Policy loans......................................................... 1,593.9 1,641.2
Cash and other invested assets....................................... 194.4 86.5
DAC.................................................................. 895.5 676.5
Other assets......................................................... 205.3 221.6
------------ ------------
Total Assets......................................................... $ 8,607.3 $ 8,632.4
============ ============
Future policy benefits and policyholders' account balances........... $ 9,011.7 $ 9,013.1
Other liabilities.................................................... 13.3 63.9
------------ ------------
Total Liabilities.................................................... $ 9,025.0 $ 9,077.0
============ ============
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Premiums and other revenue......................... $ 619.1 $ 661.7 $ 687.1
Investment income (net of investment
expenses of $15.8, $15.5 and $27.0).............. 574.2 569.7 574.9
Investment (losses) gains, net..................... (11.3) .5 (42.4)
------------- ------------ ------------
Total revenues............................... 1,182.0 1,231.9 1,219.6
------------- ------------ ------------
Policyholders' benefits and dividends.............. 1,024.7 1,082.0 1,066.7
Other operating costs and expenses................. 70.9 62.8 50.4
------------- ------------ ------------
Total benefits and other deductions.......... 1,095.6 1,144.8 1,117.1
------------- ------------ ------------
Contribution from the Closed Block................. $ 86.4 $ 87.1 $ 102.5
============= ============ ============
</TABLE>
Impaired mortgage loans along with the related provision for losses
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1999 1998
------------- -------------
(IN MILLIONS)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 26.8 $ 55.5
Impaired mortgage loans without provision for losses................... 4.5 7.6
------------- -------------
Recorded investment in impaired mortgages.............................. 31.3 63.1
Provision for losses................................................... (4.1) (10.1)
------------- -------------
Net Impaired Mortgage Loans............................................ $ 27.2 $ 53.0
============= =============
</TABLE>
During 1999, 1998 and 1997, the Closed Block's average recorded investment
in impaired mortgage loans was $37.0 million, $85.5 million and $110.2
million, respectively. Interest income recognized on these impaired
mortgage loans totaled $3.3 million, $4.7 million and $9.4 million ($.3
million, $1.5 million and $4.1 million recognized on a cash basis) for
1999, 1998 and 1997, respectively.
F-20
<PAGE>
Valuation allowances amounted to $4.6 million and $11.1 million on mortgage
loans on real estate and $24.7 million and $15.4 million on equity real
estate at December 31, 1999 and 1998, respectively. Writedowns of fixed
maturities amounted to $3.5 million for 1997. Writedowns of equity real
estate amounted to $28.8 million for 1997.
In fourth quarter 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. Also in fourth quarter 1997, $28.8 million
of writedowns on real estate held for production of income were recorded.
Many expenses related to Closed Block operations are charged to operations
outside of the Closed Block; accordingly, the contribution from the Closed
Block does not represent the actual profitability of the Closed Block
operations. Operating costs and expenses outside of the Closed Block are,
therefore, disproportionate to the business outside of the Closed Block.
F-21
<PAGE>
8) DISCONTINUED OPERATIONS
Summarized financial information for discontinued operations follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEETS
Mortgage loans on real estate........................................ $ 454.6 $ 553.9
Equity real estate................................................... 426.6 611.0
Other equity investments............................................. 55.8 115.1
Other invested assets................................................ 87.1 24.9
------------ ------------
Total investments.................................................. 1,024.1 1,304.9
Cash and cash equivalents............................................ 164.5 34.7
Other assets......................................................... 213.0 219.0
------------ ------------
Total Assets......................................................... $ 1,401.6 $ 1,558.6
============ ============
Policyholders' liabilities........................................... $ 993.3 $ 1,021.7
Allowance for future losses.......................................... 242.2 305.1
Other liabilities.................................................... 166.1 231.8
------------ ------------
Total Liabilities.................................................... $ 1,401.6 $ 1,558.6
============ ============
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Investment income (net of investment
expenses of $49.3, $63.3 and $97.3).............. $ 98.7 $ 160.4 $ 188.6
Investment (losses) gains, net..................... (13.4) 35.7 (173.7)
Policy fees, premiums and other income............. .2 (4.3) .2
------------- ------------ ------------
Total revenues..................................... 85.5 191.8 15.1
Benefits and other deductions...................... 104.8 141.5 169.5
(Losses charged) earnings credited to allowance
for future losses................................ (19.3) 50.3 (154.4)
------------- ------------ ------------
Pre-tax loss from operations....................... - - -
Pre-tax earnings from releasing (loss from
strengthening) the allowance for future
losses........................................... 43.3 4.2 (134.1)
Federal income tax (expense) benefit............... (15.2) (1.5) 46.9
------------- ------------ ------------
Earnings (Loss) from Discontinued Operations....... $ 28.1 $ 2.7 $ (87.2)
============= ============ ============
</TABLE>
The Company's quarterly process for evaluating the allowance for future
losses applies the current period's results of the discontinued operations
against the allowance, re-estimates future losses and adjusts the
allowance, if appropriate. Additionally, as part of the Company's annual
planning process which takes place in the fourth quarter of each year,
investment and benefit cash flow projections are prepared. These updated
assumptions and estimates resulted in a release of allowance in 1999 and
1998 and strengthening of allowance in 1997.
In fourth quarter 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. Also in fourth quarter
1997, $92.5 million of writedowns on real estate held for production of
income were recognized.
F-22
<PAGE>
Benefits and other deductions includes $26.6 million and $53.3 million of
interest expense related to amounts borrowed from continuing operations in
1998 and 1997, respectively.
Valuation allowances of $1.9 million and $3.0 million on mortgage loans on
real estate and $54.8 million and $34.8 million on equity real estate were
held at December 31, 1999 and 1998, respectively. Writedowns of equity real
estate were $95.7 million in 1997.
During 1999, 1998 and 1997, discontinued operations' average recorded
investment in impaired mortgage loans was $13.8 million, $73.3 million and
$89.2 million, respectively. Interest income recognized on these impaired
mortgage loans totaled $1.7 million, $4.7 million and $6.6 million ($.0
million, $3.4 million and $5.3 million recognized on a cash basis) for
1999, 1998 and 1997, respectively.
At December 31, 1999 and 1998, discontinued operations had real estate
acquired in satisfaction of debt with carrying values of $24.1 million and
$50.0 million, respectively.
9) SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Short-term debt...................................................... $ 557.0 $ 179.3
------------ ------------
Long-term debt:
Equitable Life:
Surplus notes, 6.95% due 2005...................................... 399.5 399.4
Surplus notes, 7.70% due 2015...................................... 199.7 199.7
Other.............................................................. .4 .3
------------ ------------
Total Equitable Life........................................... 599.6 599.4
------------ ------------
Wholly Owned and Joint Venture Real Estate:
Mortgage notes, 5.43% - 9.5%, due through 2017..................... 251.3 392.2
------------ ------------
Alliance:
Other.............................................................. - 10.8
------------ ------------
Total long-term debt................................................. 850.9 1,002.4
------------ ------------
Total Short-term and Long-term Debt.................................. $ 1,407.9 $ 1,181.7
============ ============
</TABLE>
Short-term Debt
---------------
Equitable Life has a $700.0 million bank credit facility available to fund
short-term working capital needs and to facilitate the securities
settlement process. The credit facility consists of two types of borrowing
options with varying interest rates and expires in September 2000. The
interest rates are based on external indices dependent on the type of
borrowing and at December 31, 1999 range from 5.76% to 8.5%. There were no
borrowings outstanding under this bank credit facility at December 31,
1999.
Equitable Life has a commercial paper program with an issue limit of $1.0
billion. This program is available for general corporate purposes used to
support Equitable Life's liquidity needs and is supported by Equitable
Life's existing $700.0 million bank credit facility. At December 31, 1999,
there were $166.9 million outstanding under this program.
Alliance has a $425.0 million five-year revolving credit facility with a
group of commercial 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. During
July 1999, Alliance increased the size of its commercial paper program by
$200.0 million from $425.0 million for a total available limit of $625.0
million. Borrowings from the revolving credit facility and the original
commercial paper program may not exceed $425.0 million in the aggregate.
The revolving credit facility provides backup liquidity for commercial
paper issued under
F-23
<PAGE>
Alliance's commercial paper program and can be used as a direct source of
borrowing. The revolving credit facility contains covenants that require
Alliance to, among other things, meet certain financial ratios. At December
31, 1999, Alliance had commercial paper outstanding totaling $384.7 million
at an effective interest rate of 5.9%; there were no borrowings outstanding
under Alliance's revolving credit facility.
In December 1999, Alliance established a $100.0 million extendible
commercial notes ("ECN") program to supplement its commercial paper
program. ECN's are short-term debt instruments that do not require any
back-up liquidity support.
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. At
December 31, 1999, the Company is in compliance with all debt covenants.
The Company has pledged real estate, mortgage loans, cash and securities
amounting to $323.6 million and $640.2 million at December 31, 1999 and
1998, respectively, as collateral for certain short-term and long-term
debt.
At December 31, 1999, aggregate maturities of the long-term debt based on
required principal payments at maturity was $3.0 million for 2000 and
$848.7 million for 2005 and thereafter.
10) FEDERAL INCOME TAXES
A summary of the Federal income tax expense in the consolidated statements
of earnings follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current.......................................... $ 174.0 $ 283.3 $ 186.5
Deferred......................................... 158.0 69.8 (95.0)
------------- ------------ ------------
Total.............................................. $ 332.0 $ 353.1 $ 91.5
============= ============ ============
</TABLE>
F-24
<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 their tax effects
follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Expected Federal income tax expense................ $ 458.4 $ 414.3 $ 234.7
Non-taxable minority interest...................... (47.8) (33.2) (38.0)
Non-taxable subsidiary gains....................... (37.1) (6.4) -
Adjustment of tax audit reserves................... 27.8 16.0 (81.7)
Equity in unconsolidated subsidiaries.............. (64.0) (39.3) (45.1)
Other.............................................. (5.3) 1.7 21.6
------------- ------------ ------------
Federal Income Tax Expense......................... $ 332.0 $ 353.1 $ 91.5
============= ============ ============
</TABLE>
The components of the net deferred Federal income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999 December 31, 1998
----------------------------- -----------------------------
ASSETS LIABILITIES Assets Liabilities
----------- ------------ ------------ -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Compensation and related benefits...... $ - $ 37.7 $ 235.3 $ -
Other.................................. - 20.6 27.8 -
DAC, reserves and reinsurance.......... - 329.7 - 231.4
Investments............................ 115.1 - - 364.4
----------- ------------ ------------ -----------
Total.................................. $ 115.1 $ 388.0 $ 263.1 $ 595.8
=========== ============ ============ ===========
</TABLE>
At December 31, 1999, in conjunction with the non-qualified employee
benefit plans, $236.8 million in deferred tax asset was transferred to the
Holding Company. See Note 12 for discussion of the benefit plans
transferred.
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 their
tax effects follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
DAC, reserves and reinsurance...................... $ 83.2 $ (7.7) $ 46.2
Investments........................................ 3.2 46.8 (113.8)
Compensation and related benefits.................. 21.0 28.6 3.7
Other.............................................. 50.6 2.1 (31.1)
------------- ------------ ------------
Deferred Federal Income Tax
Expense (Benefit)................................ $ 158.0 $ 69.8 $ (95.0)
============= ============ ============
</TABLE>
The Internal Revenue Service (the "IRS") is in the process of examining the
Holding Company's consolidated Federal income tax returns for the years
1992 through 1996. Management believes these audits will have no material
adverse effect on the Company's results of operations.
F-25
<PAGE>
11) REINSURANCE AGREEMENTS
The Insurance Group assumes and cedes reinsurance with other insurance
companies. The Insurance Group evaluates the financial condition of its
reinsurers to minimize its exposure to significant losses from reinsurer
insolvencies. Ceded reinsurance does not relieve the originating insurer of
liability. The effect of reinsurance (excluding group life and health) is
summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Direct premiums.................................... $ 420.6 $ 438.8 $ 448.6
Reinsurance assumed................................ 206.7 203.6 198.3
Reinsurance ceded.................................. (69.1) (54.3) (45.4)
------------- ------------ ------------
Premiums........................................... $ 558.2 $ 588.1 $ 601.5
============= ============ ============
Universal Life and Investment-type Product
Policy Fee Income Ceded.......................... $ 69.7 $ 75.7 $ 61.0
============= ============ ============
Policyholders' Benefits Ceded...................... $ 99.6 $ 85.9 $ 70.6
============= ============ ============
Interest Credited to Policyholders' Account
Balances Ceded................................... $ 38.5 $ 39.5 $ 36.4
============= ============ ============
</TABLE>
Since 1997, the Company reinsures on a yearly renewal term basis 90% of the
mortality risk on new issues of certain term, universal and variable life
products. The Company's retention limit on joint survivorship policies is
$15.0 million. All in force business above $5.0 million is reinsured. The
Insurance Group also reinsures the entire risk on certain substandard
underwriting risks and in certain other cases.
The Insurance Group cedes 100% of its group life and health business to a
third party insurer. Premiums ceded totaled $.1 million, $1.3 million and
$1.6 million for 1999, 1998 and 1997, respectively. Ceded death and
disability benefits totaled $44.7 million, $15.6 million and $4.3 million
for 1999, 1998 and 1997, respectively. Insurance liabilities ceded totaled
$510.5 million and $560.3 million at December 31, 1999 and 1998,
respectively.
F-26
<PAGE>
12) EMPLOYEE BENEFIT PLANS
The Company sponsors qualified and non-qualified defined benefit plans
covering substantially all employees (including certain qualified part-time
employees), managers and certain agents. The pension plans are
non-contributory. Equitable Life's benefits are based on a cash balance
formula or years of service and final average earnings, if greater, under
certain grandfathering rules in the plans. Alliance's benefits are based on
years of credited service, average final base salary and primary social
security benefits. The Company's funding policy is to make the minimum
contribution required by the Employee Retirement Income Security Act of
1974 ("ERISA").
Effective December 31, 1999, the Holding Company legally assumed primary
liability from Equitable Life for all current and future obligations of its
Excess Retirement Plan, Supplemental Executive Retirement Plan and certain
other employee benefit plans that provide participants with medical, life
insurance, and deferred compensation benefits; Equitable Life remains
secondarily liable. The amount of the liability associated with employee
benefits transferred was $676.5 million, including $183.0 million of
non-qualified pension benefit obligations and $394.1 million of
postretirement benefits obligations at December 31, 1999. This transfer was
recorded as a non-cash capital contribution to Equitable Life.
Components of net periodic pension (credit) cost for the qualified and
non-qualified plans follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost....................................... $ 36.7 $ 33.2 $ 32.5
Interest cost on projected benefit obligations..... 131.6 129.2 128.2
Actual return on assets............................ (189.8) (175.6) (307.6)
Net amortization and deferrals..................... 7.5 6.1 166.6
------------- ------------ ------------
Net Periodic Pension Cost (Credit)................. $ (14.0) $ (7.1) $ 19.7
============= ============ ============
</TABLE>
The projected benefit obligations under the qualified and non-qualified
pension plans were comprised of:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Benefit obligations, beginning of year................................. $ 1,933.4 $ 1,801.3
Service cost........................................................... 36.7 33.2
Interest cost.......................................................... 131.6 129.2
Actuarial (gains) losses............................................... (53.3) 108.4
Benefits paid.......................................................... (123.1) (138.7)
------------ ------------
Subtotal before transfer............................................... 1,925.3 1,933.4
Transfer of Non-qualified Pension Benefit Obligation
to the Holding Company............................................... (262.5) -
------------ ------------
Benefit Obligation, End of Year........................................ $ 1,662.8 $ 1,933.4
============ ============
</TABLE>
F-27
<PAGE>
The funded status of the qualified and non-qualified pension plans was as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Plan assets at fair value, beginning of year........................... $ 2,083.1 $ 1,867.4
Actual return on plan assets........................................... 369.0 338.9
Contributions.......................................................... .1 -
Benefits paid and fees................................................. (108.5) (123.2)
------------ ------------
Plan assets at fair value, end of year................................. 2,343.7 2,083.1
Projected benefit obligations.......................................... 1,925.3 1,933.4
------------ ------------
Excess of plan assets over projected benefit obligations............... 418.4 149.7
Unrecognized prior service cost........................................ (5.2) (7.5)
Unrecognized net (gain) loss from past experience different
from that assumed.................................................... (197.3) 38.7
Unrecognized net asset at transition................................... (.1) 1.5
------------ ------------
Subtotal before transfer............................................... 215.8 182.4
Transfer of Accrued Non-qualified Pension Benefit Obligation
to the Holding Company............................................... 183.0 -
------------ ------------
Prepaid Pension Cost, Net.............................................. $ 398.8 $ 182.4
============ ============
</TABLE>
The prepaid pension cost for pension plans with assets in excess of
projected benefit obligations was $412.2 million and $363.9 million and the
accrued liability for pension plans with projected benefit obligations in
excess of plan assets was $13.5 million and $181.5 million at December 31,
1999 and 1998, respectively.
The pension plan assets include corporate and government debt securities,
equity securities, equity real estate and shares of group trusts managed by
Alliance. The discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of projected benefit
obligations were 8.0% and 6.38%, respectively, at December 31, 1999 and
7.0% and 3.83%, respectively, at December 31, 1998. As of January 1, 1999
and 1998, the expected long-term rate of return on assets for the
retirement plan was 10.0% and 10.25%, respectively.
The Company recorded, as a reduction of shareholder's equity, an additional
minimum pension liability of $.1 million, $28.3 million and $17.3 million,
net of Federal income taxes, at December 31, 1999, 1998 and 1997,
respectively, primarily representing the excess of the accumulated benefit
obligation of the non-qualified pension plan over the accrued liability.
The aggregate accumulated benefit obligation and fair value of plan assets
for pension plans with accumulated benefit obligations in excess of plan
assets were $325.7 million and $36.3 million, respectively, at December 31,
1999 and $309.7 million and $34.5 million, respectively, at December 31,
1998.
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 $30.2 million,
$31.8 million and $33.2 million for 1999, 1998 and 1997, 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 1999, 1998 and 1997, the Company made estimated postretirement
benefits payments of $29.5 million, $28.4 million and $18.7 million,
respectively.
F-28
<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>
1999 1998 1997
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost....................................... $ 4.7 $ 4.6 $ 4.5
Interest cost on accumulated postretirement
benefits obligation.............................. 34.4 33.6 34.7
Unrecognized prior service costs................... (7.0) - -
Net amortization and deferrals..................... 8.4 .5 1.9
----------------- ---------------- -----------------
Net Periodic Postretirement Benefits Costs......... $ 40.5 $ 38.7 $ 41.1
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Accumulated postretirement benefits obligation, beginning
of year.............................................................. $ 490.4 $ 490.8
Service cost........................................................... 4.7 4.6
Interest cost.......................................................... 34.4 33.6
Contributions and benefits paid........................................ (29.5) (28.4)
Actuarial gains........................................................ (29.0) (10.2)
------------ ------------
Accumulated postretirement benefits obligation, end of year............ 471.0 490.4
Unrecognized prior service cost........................................ 26.9 31.8
Unrecognized net loss from past experience different
from that assumed and from changes in assumptions.................... (86.0) (121.2)
------------ ------------
Subtotal before transfer............................................... 411.9 401.0
Transfer to the Holding Company........................................ (394.1) -
------------ ------------
Accrued Postretirement Benefits Cost................................... $ 17.8 $ 401.0
============ ============
</TABLE>
Since January 1, 1994, costs to the Company for providing these medical
benefits available to retirees under age 65 are the same as those offered
to active employees and medical benefits will be limited to 200% of 1993
costs for all participants.
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefits obligation was 7.5% in 1999, gradually declining to
4.75% in the year 2010, and in 1998 was 8.0%, gradually declining to 2.5%
in the year 2009. The discount rate used in determining the accumulated
postretirement benefits obligation was 8.0% and 7.0% at December 31, 1999
and 1998, respectively.
If the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefits obligation as of December 31, 1999
would be increased 3.55%. The effect of this change on the sum of the
service cost and interest cost would be an increase of 3.91%. If the health
care cost trend rate assumptions were decreased by 1% the accumulated
postretirement benefits obligation as of December 31, 1999 would be
decreased by 4.38%. The effect of this change on the sum of the service
cost and interest cost would be a decrease of 4.96%.
F-29
<PAGE>
13) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivatives
-----------
The Insurance Group primarily uses derivatives for asset/liability risk
management and for hedging individual securities. Derivatives mainly are
utilized to reduce the Insurance Group's exposure to interest rate
fluctuations. Accounting for interest rate swap transactions is on an
accrual basis. Gains and losses related to interest rate swap transactions
are amortized as yield adjustments over the remaining life of the
underlying hedged security. Income and expense resulting from interest rate
swap activities are reflected in net investment income. The notional amount
of matched interest rate swaps outstanding at December 31, 1999 and 1998,
respectively, was $797.3 million and $880.9 million. The average unexpired
terms at December 31, 1999 ranged from two months to 5.0 years. At December
31, 1999, the cost of terminating swaps in a loss position was $1.8
million. Equitable Life maintains an interest rate cap program designed to
hedge crediting rates on interest-sensitive individual annuities contracts.
The outstanding notional amounts at December 31, 1999 of contracts
purchased and sold were $7,575.0 million and $875.0 million, respectively.
The net premium paid by Equitable Life on these contracts was $51.6 million
and is being amortized ratably over the contract periods ranging from 1 to
4 years. Income and expense resulting from this program are reflected as an
adjustment to interest credited to policyholders' account balances.
DLJ enters into certain contractual agreements referred to as derivatives
or off-balance-sheet financial instruments primarily for trading purposes
and to provide products for its clients. DLJ performs the following
activities: writing over-the-counter ("OTC") options to accommodate
customer needs; trading in forward contracts in U.S. government and agency
issued or guaranteed securities; trading 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 also enters into swap agreements, primarily equity, interest
rate and foreign currency swaps. DLJ is not significantly involved in
commodity derivative instruments.
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, 1999 and 1998.
F-30
<PAGE>
Fair values for mortgage loans on real estate are estimated by discounting
future contractual cash flows using interest rates at which loans with
similar characteristics and credit quality would be made. Fair values for
foreclosed mortgage loans and problem mortgage loans are limited to the
estimated fair value of the underlying collateral if lower.
Fair values of policy loans are estimated by discounting the face value of
the loans from the time of the next interest rate review to the present, at
a rate equal to the excess of the current estimated market rates over the
current interest rate charged on the loan.
The estimated fair values for the Company's association plan contracts,
supplementary contracts not involving life contingencies ("SCNILC") and
annuities certain, which are included in policyholders' account balances,
and guaranteed interest contracts are estimated using projected cash flows
discounted at rates reflecting expected current offering rates.
The estimated fair values for variable deferred annuities and single
premium deferred annuities ("SPDA"), which are included in policyholders'
account balances, are estimated by discounting the account value back from
the time of the next crediting rate review to the present, at a rate equal
to the excess of current estimated market rates offered on new policies
over the current crediting rates.
Fair values for long-term debt are determined using published market
values, where available, or contractual cash flows discounted at market
interest rates. The estimated fair values for non-recourse mortgage debt
are determined by discounting contractual cash flows at a rate which takes
into account the level of current market interest rates and collateral
risk. The estimated fair values for recourse mortgage debt are determined
by discounting contractual cash flows at a rate based upon current interest
rates of other companies with credit ratings similar to the Company. The
Company's carrying value of short-term borrowings approximates their
estimated fair value.
The following table discloses carrying value and estimated fair value for
financial instruments not otherwise disclosed in Notes 3, 7 and 8:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------------
1999 1998
--------------------------------- ---------------------------------
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.......... $ 3,270.0 $ 3,239.3 $ 2,809.9 $ 2,961.8
Other limited partnership interests.... 647.9 647.9 562.6 562.6
Policy loans........................... 2,257.3 2,359.5 2,086.7 2,370.7
Policyholders' account balances -
investment contracts................. 12,740.4 12,800.5 12,892.0 13,396.0
Long-term debt......................... 850.9 834.9 1,002.4 1,025.2
Closed Block Financial Instruments:
-----------------------------------
Mortgage loans on real estate.......... $ 1,704.2 $ 1,650.3 $ 1,633.4 $ 1,703.5
Other equity investments............... 36.3 36.3 56.4 56.4
Policy loans........................... 1,593.9 1,712.0 1,641.2 1,929.7
SCNILC liability....................... 22.8 22.5 25.0 25.0
Discontinued Operations Financial
---------------------------------
Instruments:
------------
Mortgage loans on real estate.......... $ 454.6 $ 467.0 $ 553.9 $ 599.9
Fixed maturities....................... 85.5 85.5 24.9 24.9
Other equity investments............... 55.8 55.8 115.1 115.1
Guaranteed interest contracts.......... 33.2 27.5 37.0 34.0
Long-term debt......................... 101.9 101.9 147.1 139.8
</TABLE>
F-31
<PAGE>
14) COMMITMENTS AND CONTINGENT LIABILITIES
The Company has provided, from time to time, certain guarantees or
commitments to affiliates, investors and others. These arrangements include
commitments by the Company, under certain conditions: to make capital
contributions of up to $59.4 million to affiliated real estate joint
ventures; and to provide equity financing to certain limited partnerships
of $373.8 million at December 31, 1999, under existing loan or loan
commitment agreements.
Equitable Life is the obligor under certain structured settlement
agreements which it had entered into with unaffiliated insurance companies
and beneficiaries. To satisfy its obligations under these agreements,
Equitable Life owns single premium annuities issued by previously wholly
owned life insurance subsidiaries. Equitable Life has directed payment
under these annuities to be made directly to the beneficiaries under the
structured settlement agreements. A contingent liability exists with
respect to these agreements should the previously wholly owned subsidiaries
be unable to meet their obligations. Management believes the satisfaction
of those obligations by Equitable Life is remote.
The Insurance Group had $24.9 million of letters of credit outstanding at
December 31, 1999.
15) LITIGATION
The Company
-----------
Life Insurance and Annuity Sales Cases
A number of lawsuits are pending as individual claims and purported class
actions against Equitable Life, its subsidiary insurance company and a
former insurance subsidiary. These actions involve, among other things,
sales of life and annuity products for varying periods from 1980 to the
present, and allege, among other things, sales practice misrepresentation
primarily involving: the number of premium payments required; the propriety
of a product as an investment vehicle; the propriety of a product as a
replacement of an existing policy; and failure to disclose a product as
life insurance. Some actions are in state courts and others are in U.S.
District Courts in different jurisdictions, and are in varying stages of
discovery and motions for class certification.
In general, the plaintiffs request an unspecified amount of damages,
punitive damages, enjoinment from the described practices, prohibition
against cancellation of policies for non-payment of premium or other
remedies, as well as attorneys' fees and expenses. Similar actions have
been filed against other life and health insurers and have resulted in the
award of substantial judgments, including material amounts of punitive
damages, or in substantial settlements. Although the outcome of litigation
cannot be predicted with certainty, particularly in the early stages of an
action, the Company's management believes that the ultimate resolution of
these cases 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.
Discrimination Case
Equitable Life is a defendant in an action, certified as a class action in
September 1997, in the United States District Court for the Northern
District of Alabama, Southern Division, involving alleged discrimination on
the basis of race against African-American applicants and potential
applicants in hiring individuals as sales agents. Plaintiffs seek a
declaratory judgment and affirmative and negative injunctive relief,
including the payment of back-pay, pension and other compensation. Although
the outcome of litigation cannot be predicted with certainty, the 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.
Agent Health Benefits Case
Equitable Life is a defendant in an action, certified as a class action in
March 1999, in the United States District Court for the Northern District
of California, alleging, among other things, that Equitable Life violated
ERISA by eliminating certain alternatives pursuant to which agents of
Equitable Life could qualify for health care coverage. The class consists
of "[a]ll current, former and retired Equitable agents, who while
F-32
<PAGE>
associated with Equitable satisfied [certain alternatives] to qualify for
health coverage or contributions thereto under applicable plans."
Plaintiffs allege various causes of action under ERISA, including claims
for enforcement of alleged promises contained in plan documents and for
enforcement of agent bulletins, breach of unilateral contract, breach of
fiduciary duty and promissory estoppel. The parties are currently engaged
in discovery. 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.
Prime Property Fund Case
In January 2000, the California Supreme Court denied the Company's petition
for review of an October 1999 decision by the California Superior Court of
Appeal. Such decision reversed the dismissal by the Supreme Court of Orange
County, California of an action which was commenced in 1995 by a real
estate developer in connection with a limited partnership formed in 1991
with the Company on behalf of Prime Property Fund ("PPF"). The Company
serves as investment manager for PPF, an open-end, commingled real estate
separate account of the Company for pension clients. Plaintiff alleges
breach of fiduciary duty and other claims principally in connection with
PPF's 1995 purchase and subsequent foreclosure of the loan which financed
the partnership's property. Plaintiff seeks compensatory and punitive
damages. The case has been remanded to the Superior Court for further
proceedings. Although the outcome of 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 this matter will have a material
adverse effect on the Company's results of operations in any particular
period.
Alliance Capital
----------------
In July 1995, a class action complaint was filed against Alliance North
American Government Income Trust, Inc. (the "Fund"), Alliance Holding and
certain other defendants affiliated with Alliance, including the Holding
Company, alleging violations of Federal securities laws, fraud and breach
of fiduciary duty in connection with the Fund's investments in Mexican and
Argentine securities. The original complaint was dismissed in 1996; on
appeal, the dismissal was affirmed. In October 1996, plaintiffs filed a
motion for leave to file an amended complaint, alleging the Fund failed to
hedge against currency risk despite representations that it would do so,
the Fund did not properly disclose that it planned to invest in
mortgage-backed derivative securities and two Fund advertisements
misrepresented the risks of investing in the Fund. In October 1998, the
U.S. Court of Appeals for the Second Circuit issued an order granting
plaintiffs' motion to file an amended complaint alleging that the Fund
misrepresented its ability to hedge against currency risk and denying
plaintiffs' motion to file an amended complaint containing the other
allegations. In December 1999, the United States District Court for the
Southern District of New York granted the defendants' motion for summary
judgment on all claims against all defendants. Later in December 1999, the
plaintiffs filed motions for reconsideration of the Court's ruling. These
motions are currently pending with the Court.
In connection with the Reorganization; Alliance assumed any liabilities
which Alliance Holding may have with respect to this action. Alliance and
Alliance Holding believe that the allegations in the amended complaint are
without merit and intend to vigorously defend against these claims. While
the ultimate outcome of this matter cannot be determined at this time,
management of Alliance Holding and Alliance do not expect that it will have
a material adverse effect on Alliance Holding's or Alliance's results of
operations or financial condition.
DLJSC
-----
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC") is a
defendant along with certain other parties in a class action complaint
involving the underwriting of units, consisting of notes and warrants to
purchase common shares, of Rickel Home Centers, Inc. ("Rickel"), which
filed a voluntary petition for reorganization pursuant to Chapter 11 of the
Bankruptcy Code. The complaint seeks unspecified compensatory and punitive
damages from DLJSC, as an underwriter and as an owner of 7.3% of the common
stock, for alleged violation of Federal securities laws and common law
fraud for alleged misstatements and omissions contained in the prospectus
and registration statement used in the offering of the units. In April
1999, the complaint against DLJSC and the other defendants was dismissed.
The plaintiffs have appealed. DLJSC intends to defend itself vigorously
against all the allegations contained in the complaint.
DLJSC is a defendant in a purported class action filed in a Texas State
Court on behalf of the holders of $550 million principal amount of
subordinated redeemable discount debentures of National Gypsum Corporation
("NGC"). The debentures were canceled in connection with a Chapter 11 plan
of reorganization for NGC consummated in July 1993. The litigation seeks
compensatory and punitive damages for DLJSC's activities as financial
advisor to NGC in the course of NGC's Chapter 11 proceedings. In March
1999, the Court granted motions for summary judgment filed by DLJSC and the
other defendants. The plaintiffs have appealed. DLJSC intends to defend
itself vigorously against all the allegations contained in the complaint.
In November 1998, three purported class actions were filed in the U.S.
District Court for the Southern District of New York against more than 25
underwriters of initial public offering securities, including DLJSC. The
complaints allege that defendants conspired to fix the "fee" paid for
underwriting initial public offering securities by setting the
underwriters' discount or "spread" at 7%, in violation of the Federal
antitrust laws. The complaints seek treble damages in an unspecified amount
and injunctive relief as well as attorneys' fees and costs. In March 1999,
the plaintiffs filed a consolidated amended complaint. A motion by all
defendants
F-33
<PAGE>
to dismiss the complaints on several grounds is pending. Separately, the
U.S. Department of Justice has issued a Civil Investigative Demand to
several investment banking firms, including DLJSC, seeking documents and
information relating to "alleged" price-fixing with respect to underwriting
spreads in initial public offerings. The Justice Department has not made
any charges against DLJSC or the other investment banking firms. DLJSC is
cooperating with the Justice Department in providing the requested
information and believes that no violation of law by DLJSC has occurred.
Although there can be no assurance, DLJ's management does not believe that
the ultimate resolution of the litigations described above to which DLJSC
is a party will have a material adverse effect on DLJ's consolidated
financial condition. Based upon the information currently available to it,
DLJ's management cannot predict whether or not such litigations will have a
material adverse effect on DLJ's results of operations in any particular
period.
Other Matters
In addition to the matters described above, the Holding Company and its
subsidiaries are involved in various legal actions and proceedings in
connection with their businesses. Some of the actions and proceedings have
been brought on behalf of various alleged classes of claimants and certain
of these claimants seek damages of unspecified amounts. While the ultimate
outcome of such matters cannot be predicted with certainty, in the opinion
of management no such matter is likely to have a material adverse effect on
the Company's consolidated financial position or results of operations.
16) LEASES
The Company has entered into operating leases for office space and certain
other assets, principally information technology equipment and office
furniture and equipment. Future minimum payments under noncancelable leases
for 2000 and the four successive years are $111.2 million, $93.3 million,
$78.3 million, $71.9 million, $66.5 million and $523.7 million thereafter.
Minimum future sublease rental income on these noncancelable leases for
2000 and the four successive years is $5.2 million, $4.1 million, $2.8
million, $2.8 million, $2.8 million and $23.8 million thereafter.
At December 31, 1999, the minimum future rental income on noncancelable
operating leases for wholly owned investments in real estate for 2000 and
the four successive years is $120.7 million, $113.5 million, $96.0 million,
$79.7 million, $74.1 million and $354.6 million thereafter.
17) OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Compensation costs................................. $ 1,010.6 $ 772.0 $ 721.5
Commissions........................................ 549.5 478.1 409.6
Short-term debt interest expense................... 16.7 26.1 31.7
Long-term debt interest expense.................... 76.3 84.6 121.2
Amortization of policy acquisition costs........... 314.5 292.7 287.3
Capitalization of policy acquisition costs......... (709.9) (609.1) (508.0)
Writedown of policy acquisition costs.............. 131.7 - -
Rent expense, net of sublease income............... 113.9 100.0 101.8
Cursitor intangible assets writedown............... - - 120.9
Other.............................................. 1,294.0 1,056.8 917.9
------------- ------------ ------------
Total.............................................. $ 2,797.3 $ 2,201.2 $ 2,203.9
================= ================ =================
</TABLE>
F-34
<PAGE>
During 1997, the Company restructured certain operations in connection with
cost reduction programs and recorded a pre-tax provision of $42.4 million.
The amount paid during 1999 associated with cost reduction programs totaled
$15.6 million. At December 31, 1999, the remaining liabilities associated
with cost reduction programs was $8.8 million. The 1997 cost reduction
program included costs related to employee termination and exit costs.
18) INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
Equitable Life is restricted as to the amounts it may pay as shareholder
dividends. 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 1999, 1998 and 1997, statutory net income (loss) totaled
$547.0 million, $384.4 million and ($351.7) million, respectively.
Statutory surplus, capital stock and Asset Valuation Reserve ("AVR")
totaled $5,570.6 million and $4,728.0 million at December 31, 1999 and
1998, respectively. In September 1999, $150.0 million in dividends were
paid to the Holding Company by Equitable Life, the first such payment since
Equitable Life's demutualization in 1992.
At December 31, 1999, the Insurance Group, in accordance with various
government and state regulations, had $26.8 million of securities deposited
with such government or state agencies.
The differences between statutory surplus and capital stock determined in
accordance with Statutory Accounting Principles ("SAP") and total
shareholder's equity under GAAP are primarily: (a) the inclusion in SAP of
an AVR intended to stabilize surplus from fluctuations in the value of the
investment portfolio; (b) future policy benefits and policyholders' account
balances under SAP differ from GAAP due to differences between actuarial
assumptions and reserving methodologies; (c) certain policy acquisition
costs are expensed under SAP but deferred under GAAP and amortized over
future periods to achieve a matching of revenues and expenses; (d) external
and certain internal costs incurred to obtain or develop internal use
computer software during the application development stage is capitalized
under GAAP but expensed under SAP; (e) Federal income taxes are generally
accrued under SAP based upon revenues and expenses in the Federal income
tax return while under GAAP deferred taxes provide for timing differences
between recognition of revenues and expenses for financial reporting and
income tax purposes; (f) the valuation of assets under SAP and GAAP differ
due to different investment valuation and depreciation methodologies, as
well as the deferral of interest-related realized capital gains and losses
on fixed income investments; and (g) differences in the accrual
methodologies for post-employment and retirement benefit plans.
F-35
<PAGE>
19) BUSINESS SEGMENT INFORMATION
The Company's operations consist of Insurance and Investment Services. The
Company's management evaluates the performance of each of these segments
independently and allocates resources based on current and future
requirements of each segment. Management evaluates the performance of each
segment based upon operating results adjusted to exclude the effect of
unusual or non-recurring events and transactions and certain revenue and
expense categories not related to the base operations of the particular
business net of minority interest. Information for all periods is presented
on a comparable basis.
Intersegment investment advisory and other fees of approximately $75.6
million, $61.8 million and $84.1 million for 1999, 1998 and 1997,
respectively, are included in total revenues of the Investment Services
segment. These fees, excluding amounts related to discontinued operations
of $.5 million, $.5 million and $4.2 million for 1999, 1998 and 1997,
respectively, are eliminated in consolidation.
The following tables reconcile each segment's revenues and operating
earnings to total revenues and earnings from continuing operations before
Federal income taxes and cumulative effect of accounting change as reported
on the consolidated statements of earnings and the segments' assets to
total assets on the consolidated balance sheets, respectively.
<TABLE>
<CAPTION>
INVESTMENT
INSURANCE SERVICES ELIMINATION TOTAL
------------- ------------ ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1999
----
Segment revenues..................... $ 4,283.0 $ 2,052.7 $ (23.8) $ 6,311.9
Investment (losses) gains............ (199.4) 111.5 - (87.9)
------------- ------------ ------------ ------------
Total Revenues....................... $ 4,083.6 $ 2,164.2 $ (23.8) $ 6,224.0
============= ============ ============ ============
Pre-tax operating earnings........... $ 895.7 $ 427.0 $ - $ 1,322.7
Investment (losses) gains , net of
DAC and other charges.............. (208.4) 110.5 - (97.9)
Non-recurring DAC adjustments........ (131.7) - - (131.7)
Pre-tax minority interest............ - 216.8 - 216.8
------------- ------------ ------------ ------------
Earnings from Continuing
Operations......................... $ 555.6 $ 754.3 $ - $ 1,309.9
============= ============ ============ ============
Total Assets......................... $ 86,842.7 $ 12,961.7 $ (8.9) $ 99,795.5
============= ============ ============ ============
1998
----
Segment revenues..................... $ 4,029.8 $ 1,438.4 $ (5.7) $ 5,462.5
Investment gains..................... 64.8 35.4 - 100.2
------------- ------------ ------------ ------------
Total Revenues....................... $ 4,094.6 $ 1,473.8 $ (5.7) $ 5,562.7
============= ============ ============ ============
Pre-tax operating earnings........... $ 688.6 $ 284.3 $ - $ 972.9
Investment gains, net of
DAC and other charges.............. 41.7 27.7 - 69.4
Pre-tax minority interest............ - 141.5 - 141.5
------------- ------------ ------------ ------------
Earnings from Continuing
Operations......................... 730.3 453.5 - 1,183.8
============= ============ ============ ============
Total Assets......................... $ 75,626.0 $ 12,379.2 $ (64.4) $ 87,940.8
============= ============ ============ ============
</TABLE>
F-36
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT
INSURANCE SERVICES ELIMINATION TOTAL
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
1997
----
Segment revenues..................... $ 3,990.8 $ 1,200.0 $ (7.7) $ 5,183.1
Investment (losses) gains............ (318.8) 255.1 - (63.7)
------------- ------------ ------------ ------------
Total Revenues....................... $ 3,672.0 $ 1,455.1 $ (7.7) $ 5,119.4
============= ============ ============ ============
Pre-tax operating earnings........... $ 507.0 $ 258.3 $ - $ 765.3
Investment (losses) gains, net of
DAC and other charges.............. (292.5) 252.7 - (39.8)
Non-recurring costs and expenses..... (41.7) (121.6) - (163.3)
Pre-tax minority interest............ - 108.5 - 108.5
------------- ------------ ------------ ------------
Earnings from Continuing
Operations......................... $ 172.8 $ 497.9 $ - $ 670.7
============= ============ ============ ============
Total Assets......................... $ 67,762.4 $ 13,691.4 $ (96.1) $ 81,357.7
============= ============ ============ ============
</TABLE>
20) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations for 1999 and 1998 are summarized below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
------------- ------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1999
----
Total Revenues................ $ 1,484.3 $ 1,620.3 $ 1,512.1 $ 1,607.3
============= ============= ============ ============
Earnings from Continuing
Operations.................. $ 187.3 $ 222.6 $ 186.5 $ 182.1
============= ============= ============ ============
Net Earnings.................. $ 182.0 $ 221.3 $ 183.1 $ 220.2
============= ============= ============ ============
1998
----
Total Revenues................ $ 1,470.2 $ 1,422.9 $ 1,297.6 $ 1,372.0
============= ============= ============ ============
Earnings from Continuing
Operations.................. $ 212.8 $ 197.0 $ 136.8 $ 158.9
============= ============= ============ ============
Net Earnings.................. $ 213.3 $ 198.3 $ 137.5 $ 159.1
============= ============= ============ ============
</TABLE>
F-37
<PAGE>
21) INVESTMENT IN DLJ
At December 31, 1999, the Company's ownership of DLJ interest was
approximately 31.71%. The Company's ownership interest in DLJ will continue
to be reduced upon the exercise of options granted to certain DLJ employees
and the vesting of forfeitable restricted stock units acquired by DLJ
employees. DLJ restricted stock units represent forfeitable rights to
receive approximately 5.2 million shares of DLJ common stock through
February 2000.
The results of operations of DLJ are accounted for on the equity basis and
are included in commissions, fees and other income in the consolidated
statements of earnings. The Company's carrying value of DLJ is included in
investment in and loans to affiliates in the consolidated balance sheets.
Summarized balance sheets information for DLJ, reconciled to the Company's
carrying value of DLJ, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Assets:
Trading account securities, at market value............................ $ 27,982.4 $ 13,195.1
Securities purchased under resale agreements........................... 29,538.1 20,063.3
Broker-dealer related receivables...................................... 44,998.1 34,264.5
Other assets........................................................... 6,493.5 4,759.3
------------ ------------
Total Assets........................................................... $ 109,012.1 $ 72,282.2
============ ============
Liabilities:
Securities sold under repurchase agreements............................ $ 56,474.4 $ 35,775.6
Broker-dealer related payables......................................... 37,207.4 26,161.5
Short-term and long-term debt.......................................... 6,518.6 3,997.6
Other liabilities...................................................... 4,704.5 3,219.8
------------ ------------
Total liabilities...................................................... 104,904.9 69,154.5
DLJ's company-obligated mandatorily redeemed preferred
securities of subsidiary trust holding solely debentures of DLJ...... 200.0 200.0
Total shareholders' equity............................................. 3,907.2 2,927.7
------------ ------------
Total Liabilities, Cumulative Exchangeable Preferred Stock and
Shareholders' Equity................................................. $ 109,012.1 $ 72,282.2
============ ============
DLJ's equity as reported............................................... $ 3,907.2 $ 2,927.7
Unamortized cost in excess of net assets acquired in 1985
and other adjustments................................................ 22.9 23.7
The Holding Company's equity ownership in DLJ.......................... (1,341.4) (1,002.4)
Minority interest in DLJ............................................... (1,479.3) (1,118.2)
------------ ------------
The Company's Carrying Value of DLJ.................................... $ 1,109.4 $ 830.8
============ ============
</TABLE>
F-38
<PAGE>
Summarized statements of earnings information for DLJ reconciled to the
Company's equity in earnings of DLJ is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ -------------
(IN MILLIONS)
<S> <C> <C> <C>
Commission, fees and other income..................... $ 4,145.1 $ 3,150.5 $ 2,430.7
Net investment income................................. 2,175.3 2,189.1 1,652.1
Principal Transactions, net........................... 825.9 67.4 557.7
------------ ------------ -------------
Total revenues........................................ 7,146.3 5,407.0 4,640.5
Total expenses including income taxes................. 6,545.6 5,036.2 4,232.2
------------ ------------ -------------
Net earnings.......................................... 600.7 370.8 408.3
Dividends on preferred stock.......................... 21.2 21.3 12.2
------------ ------------ -------------
Earnings Applicable to Common Shares.................. $ 579.5 $ 349.5 $ 396.1
============ ============ =============
DLJ's earnings applicable to common shares as
reported............................................ $ 579.5 $ 349.5 $ 396.1
Amortization of cost in excess of net assets
acquired in 1985.................................... (.9) (.8) (1.3)
The Holding Company's equity in DLJ's earnings........ (222.7) (136.8) (156.8)
Minority interest in DLJ.............................. (172.9) (99.5) (109.1)
------------ ------------ -------------
The Company's Equity in DLJ's Earnings................ $ 183.0 $ 112.4 $ 128.9
============ ============ =============
</TABLE>
22) ACCOUNTING FOR STOCK-BASED COMPENSATION
The Holding Company sponsors a stock incentive 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 1999,
1998 and 1997 would have been $757.1 million, $678.4 million and $426.3
million, respectively.
The fair values of options granted after December 31, 1994, used as a basis
for the pro forma disclosures above, were estimated as of the grant dates
using the Black-Scholes option pricing model. The option pricing
assumptions for 1999, 1998 and 1997 follow:
<TABLE>
<CAPTION>
HOLDING COMPANY DLJ ALLIANCE
------------------------------ ------------------------------- ----------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
--------- ---------- --------- ---------- --------- ---------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividend yield...... 0.31% 0.32% 0.48% 0.56% 0.69% 0.86% 8.70% 6.50% 8.00%
Expected volatility. 28% 28% 20% 36% 40% 33% 29% 29% 26%
Risk-free interest
rate.............. 5.46% 5.48% 5.99% 5.06% 5.53% 5.96% 5.70% 4.40% 5.70%
Expected life
in years.......... 5 5 5 5 5 5 7 7.2 7.2
Weighted average
fair value per
option at
grant-date........ $10.78 $11.32 $6.13 $17.19 $16.27 $10.81 $3.88 $3.86 $2.18
</TABLE>
F-39
<PAGE>
A summary of the Holding Company, DLJ and Alliance's option plans follows:
<TABLE>
<CAPTION>
HOLDING COMPANY DLJ ALLIANCE
----------------------------- ----------------------------- -----------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Price of Price of Price of
Shares Options Shares Options Units Options
(In Millions) Outstanding (In Millions) Outstanding (In Millions) Outstanding
--------------- ------------- --------------- ------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of
January 1, 1997........ 13.4 $10.40 22.2 $14.03 10.0 $ 9.54
Granted................ 6.4 $20.93 6.4 $30.54 2.2 $18.28
Exercised.............. (3.2) $10.13 (.2) $16.01 (1.2) $ 8.06
Forfeited.............. (.8) $11.72 (.2) $13.79 (.4) $10.64
--------------- ------------- ---------------
Balance as of
December 31, 1997...... 15.8 $14.53 28.2 $17.78 10.6 $11.41
Granted................ 8.6 $33.13 1.5 $38.59 2.8 $26.28
Exercised.............. (2.2) $10.59 (1.4) $14.91 (.9) $ 8.91
Forfeited.............. (.8) $23.51 (.1) $17.31 (.2) $13.14
--------------- ------------- ---------------
Balance as of
December 31, 1998...... 21.4 $22.00 28.2 $19.04 12.3 $14.92
Granted................ 4.3 $31.70 4.8 $45.23 2.0 $30.18
Exercised.............. (2.4) $13.26 (2.2) $34.61 (1.5) $ 9.51
Forfeited.............. (.6) $24.29 (.1) $15.85 (.3) $17.79
--------------- ------------- ---------------
Balance as of
December 31, 1999...... 22.7 $24.60 30.7 $23.30 12.5 $17.95
=============== ============= ===============
</TABLE>
F-40
<PAGE>
Information about options outstanding and exercisable at December 31, 1999
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> <C>
$ 9.06 -$13.88 5.6 4.2 $10.50 10.9 $18.98
$14.25 -$22.63 5.2 7.7 $20.95 - -
$25.32 -$34.59 8.2 8.7 $29.08 - -
$40.97 -$41.28 3.7 8.6 $41.28 - -
----------------- ------------------
$ 9.06 -$41.28 22.7 7.3 $24.60 10.9 $18.98
================= ================ =============== ================== ================
DLJ
--------------------
$13.50 -$25.99 20.2 8.4 $14.61 20.6 $16.62
$26.00 -$38.99 4.9 7.8 $33.99 - -
$39.00 -$52.875 4.8 9.0 $43.28 - -
$53.00 -$76.875 .8 9.7 $57.09 - -
----------------- ------------------
$13.50 -$76.875 30.7 8.4 $23.30 20.6 $16.62
================= ================ =============== ================== ================
Alliance
--------------------
$ 3.66 -$ 9.81 2.6 3.8 $ 8.31 2.2 $ 8.12
$ 9.88 -$12.56 3.3 5.6 $11.16 2.6 $10.92
$13.75 -$18.47 1.8 7.9 $18.34 .7 $18.34
$18.78 -$26.31 2.8 8.9 $26.16 .6 $26.06
$27.31 -$30.94 2.0 9.9 $30.24 - -
----------------- ------------------
$ 3.66 -$30.94 12.5 7.0 $17.95 6.1 $12.12
================= ================ =============== ================== ================
</TABLE>
F-41
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------------- -----------------
(In Millions)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value............................. $ 18,385.0 $ 18,599.7
Held to maturity, at amortized cost..................................... 135.4 133.2
Mortgage loans on real estate............................................. 3,196.8 3,270.0
Equity real estate........................................................ 1,149.4 1,160.2
Policy loans.............................................................. 2,302.4 2,257.3
Other equity investments.................................................. 738.5 671.2
Investment in and loans to affiliates..................................... 1,274.3 1,201.8
Other invested assets..................................................... 983.1 911.6
----------------- -----------------
Total investments..................................................... 28,164.9 28,205.0
Cash and cash equivalents................................................... 187.3 628.0
Deferred policy acquisition costs........................................... 4,147.7 4,033.0
Other assets................................................................ 4,109.3 3,868.3
Closed Block assets......................................................... 8,629.3 8,607.3
Separate Accounts assets.................................................... 57,446.8 54,453.9
----------------- -----------------
Total Assets................................................................ $ 102,685.3 $ 99,795.5
================= =================
LIABILITIES
Policyholders' account balances............................................. $ 20,674.2 $ 21,351.4
Future policy benefits and other policyholders liabilities... .............. 4,840.4 4,777.6
Short-term and long-term debt............................................... 1,383.5 1,407.9
Other liabilities........................................................... 3,436.4 3,133.6
Closed Block liabilities.................................................... 9,036.1 9,025.0
Separate Accounts liabilities............................................... 57,319.8 54,332.5
----------------- -----------------
Total liabilities..................................................... 96,690.4 94,028.0
----------------- -----------------
Commitments and contingencies (Note 8)
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.............................................. 3,558.7 3,557.2
Retained earnings........................................................... 2,822.4 2,600.7
Accumulated other comprehensive loss........................................ (388.7) (392.9)
----------------- -----------------
Total shareholder's equity............................................ 5,994.9 5,767.5
----------------- -----------------
Total Liabilities and Shareholder's Equity.................................. $ 102,685.3 $ 99,795.5
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-42
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
----------------- -----------------
(In Millions)
<S> <C> <C>
REVENUES
Universal life and investment-type product policy fee income................ $ 340.4 $ 296.7
Premiums.................................................................... 133.0 134.9
Net investment income....................................................... 606.2 568.5
Investment losses, net...................................................... (124.1) (19.3)
Commissions, fees and other income.......................................... 650.3 489.3
Contribution from the Closed Block.......................................... 16.7 18.9
----------------- -----------------
Total revenues........................................................ 1,622.5 1,489.0
----------------- -----------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances........................ 262.1 270.2
Policyholders' benefits..................................................... 282.0 240.8
Other operating costs and expenses.......................................... 686.4 648.2
----------------- -----------------
Total benefits and other deductions................................... 1,230.5 1,159.2
----------------- -----------------
Earnings from continuing operations before Federal income taxes
and minority interest..................................................... 392.0 329.8
Federal income taxes........................................................ 91.2 100.4
Minority interest in net income of consolidated subsidiaries................ 74.2 42.1
----------------- -----------------
Earnings from continuing operations......................................... 226.6 187.3
Discontinued operations, net of Federal income taxes........................ (4.9) (5.3)
----------------- -----------------
Net Earnings................................................................ $ 221.7 $ 182.0
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-43
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
AND COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
----------------- -----------------
(In Millions)
<S> <C> <C>
SHAREHOLDER'S EQUITY
Common stock, at par value, beginning of year and end of period............. $ 2.5 $ 2.5
----------------- -----------------
Capital in excess of par value, beginning of year........................... 3,557.2 3,110.2
Capital contribution........................................................ 1.5 -
----------------- -----------------
Capital in excess of par value, end of period............................... 3,558.7 3,110.2
----------------- -----------------
Retained earnings, beginning of year........................................ 2,600.7 1,944.1
Net earnings................................................................ 221.7 182.0
----------------- -----------------
Retained earnings, end of period............................................ 2,822.4 2,126.1
----------------- -----------------
Accumulated other comprehensive (loss) income, beginning of year............ (392.9) 355.8
Other comprehensive income (loss)........................................... 4.2 (243.0)
----------------- -----------------
Accumulated other comprehensive (loss) income, end of period................ (388.7) 112.8
----------------- -----------------
Total Shareholder's Equity, End of Period................................... 5,994.9 $ 5,351.6
================= =================
COMPREHENSIVE INCOME (LOSS)
Net earnings................................................................ $ 221.7 $ 182.0
----------------- -----------------
Change in unrealized gains (losses), net of reclassification adjustment..... 4.2 (243.0)
----------------- -----------------
Other comprehensive income (loss)........................................... 4.2 (243.0)
----------------- -----------------
Comprehensive Income (Loss)................................................. $ 225.9 $ (61.0)
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-44
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
----------------- -----------------
(In Millions)
<S> <C> <C>
Net earnings................................................................ $ 221.7 $ 182.0
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Interest credited to policyholders' account balances.................... 262.1 270.2
Universal life and investment-type product policy fee income............ (340.4) (296.7)
Investment losses, net.................................................. 124.1 19.3
Change in Federal income tax payable.................................... 98.9 101.6
Change in property and equipment........................................ (52.9) (35.6)
Change in deferred policy acquisition costs............................. (113.3) (46.4)
Other, net.............................................................. (50.2) (69.8)
----------------- -----------------
Net cash provided by operating activities................................... 150.0 124.6
----------------- -----------------
Cash flows from investing activities:
Maturities and repayments................................................. 456.9 541.0
Sales..................................................................... 1,181.0 1,719.2
Purchases................................................................. (1,491.4) (3,118.6)
Other, net................................................................ (69.5) (138.7)
----------------- -----------------
Net cash provided (used) by investing activities............................ 77.0 (997.1)
----------------- -----------------
Cash flows from financing activities:
Policyholders' account balances:
Deposits................................................................ 632.6 616.1
Withdrawals and transfers to Separate Accounts.......................... (1,256.9) (453.9)
Net (decrease) increase in short-term financings.......................... (11.1) 357.0
Repayments of long-term debt.............................................. - (5.8)
Other, net................................................................ (32.3) (29.5)
----------------- -----------------
Net cash (used) provided by financing activities............................ (667.7) 483.9
----------------- -----------------
Change in cash and cash equivalents......................................... (440.7) (388.6)
Cash and cash equivalents, beginning of year................................ 628.0 1,245.5
----------------- -----------------
Cash and Cash Equivalents, End of Period.................................... $ 187.3 $ 856.9
================= =================
Supplemental cash flow information
Interest Paid............................................................. $ 12.2 $ 6.9
================= =================
Income Taxes Paid......................................................... $ - $ -
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-45
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1) BASIS OF PRESENTATION
The accompanying consolidated financial statements are prepared in
conformity with GAAP which 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. These statements should be read in
conjunction with the consolidated financial statements of the Company for
the year ended December 31, 1999. The results of operations for the three
months ended March 31, 2000 are not necessarily indicative of the results
to be expected for the full year.
The terms "first quarter 2000" and "first quarter 1999" refer to the three
months ended March 31, 2000 and 1999, respectively.
Certain reclassifications have been made in the amounts presented for
prior periods to conform these periods with the current presentation.
2) INVESTMENTS
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
2000 1999
--------------- ---------------
(In Millions)
<S> <C> <C>
Balances, beginning of year............................................... $ 148.6 $ 230.6
Additions charged to income............................................... 8.4 9.1
Deductions for writedowns and asset dispositions.......................... (2.1) (26.0)
--------------- ---------------
Balances, End of Period................................................... $ 154.9 $ 213.7
=============== ===============
Balances, end of period:
Mortgage loans on real estate........................................... $ 29.1 $ 34.1
Equity real estate...................................................... 125.8 179.6
--------------- ---------------
Total..................................................................... $ 154.9 $ 213.7
=============== ===============
</TABLE>
For the first quarters of 2000 and 1999, investment income is shown net of
investment expenses of $56.7 million and $60.2 million, respectively.
As of March 31, 2000 and December 31, 1999, fixed maturities classified as
available for sale had amortized costs of $19,152.2 million and $19,373.6
million and fixed maturities in the held to maturity portfolio had
estimated fair values of $135.4 million and $133.2 million, respectively.
Other equity investments include equity securities with carrying values of
$27.5 million and $23.3 million and costs of $29.7 million and $32.7
million as of March 31, 2000 and December 31, 1999, respectively.
F-46
<PAGE>
On January 1, 1999, investments in publicly-traded common equity
securities in the General Account portfolio within other equity
investments amounting to $102.3 million were transferred from available
for sale securities to trading securities. As a result of this transfer,
unrealized investment gains of $83.3 million ($43.2 million net of related
DAC and Federal income taxes) were recognized as realized investment gains
in the consolidated statement of earnings. In first quarter 2000 and 1999,
net unrealized holding gains of $3.9 million and $71.4 million were
included in net investment income in the consolidated statements of
earnings. These trading securities had a carrying value of $13.5 million
and costs of $11.1 million at March 31, 2000.
For the first quarters of 2000 and 1999, proceeds received on sales of
fixed maturities classified as available for sale amounted to $1,125.2
million and $1,592.6 million, respectively. Gross gains of $24.5 million
and $17.3 million and gross losses of $87.9 million and $56.7 million were
realized on these sales for the first quarters of 2000 and 1999,
respectively. Unrealized investment gains (losses) related to fixed
maturities classified as available for sale increased by $6.4 million
during the first three months of 2000, resulting in a balance of $(767.5)
million at March 31, 2000.
Impaired mortgage loans along with the related provision for losses were
as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses....................... $ 141.7 $ 142.4
Impaired mortgage loans without provision for losses.................... 1.9 2.2
--------------- -----------------
Recorded investment in impaired mortgage loans.......................... 143.6 144.6
Provision for losses.................................................... (24.7) (23.0)
--------------- -----------------
Net Impaired Mortgage Loans............................................. $ 118.9 $ 121.6
=============== =================
</TABLE>
During the first quarters of 2000 and 1999, respectively, the Company's
average recorded investment in impaired mortgage loans was $144.1 million
and $133.8 million. Interest income recognized on these impaired mortgage
loans totaled $2.9 million and $1.9 million for the first quarters of 2000
and 1999, respectively.
F-47
<PAGE>
3) CLOSED BLOCK
Summarized financial information for the Closed Block follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------------- -----------------
(In Millions)
<S> <C> <C>
BALANCE SHEETS
Fixed maturities:
Available for sale, at estimated fair value (amortized cost of
$4,150.7 and $4,144.8)............................................. $ 4,027.9 $ 4,014.0
Mortgage loans on real estate.......................................... 1,672.9 1,704.2
Policy loans........................................................... 1,588.2 1,593.9
Cash and other invested assets......................................... 237.9 194.4
DAC.................................................................... 877.7 895.5
Other assets........................................................... 224.7 205.3
----------------- -----------------
Total Assets........................................................... $ 8,629.3 $ 8,607.3
================= =================
Future policy benefits and other policyholders' account balances....... $ 9,006.9 $ 9,011.7
Other liabilities...................................................... 29.2 13.3
----------------- -----------------
Total Liabilities...................................................... $ 9,036.1 $ 9,025.0
================= =================
Three Months Ended
March 31,
-----------------------------------
2000 1999
---------------- ---------------
(In Millions)
STATEMENTS OF EARNINGS
Premiums and other income................................................. $ 153.0 $ 156.0
Investment income (net of investment expenses of $3.4 and $5.2)........... 143.0 142.0
Investment losses, net.................................................... (3.0) (1.9)
--------------- ---------------
Total revenues.......................................................... 293.0 296.1
--------------- ---------------
Policyholders' benefits and dividends..................................... 260.7 266.4
Other operating costs and expenses........................................ 15.6 10.8
--------------- ---------------
Total benefits and other deductions..................................... 276.3 277.2
--------------- ---------------
Contribution from the Closed Block........................................ $ 16.7 $ 18.9
=============== ===============
</TABLE>
Investment valuation allowances amounted to $5.2 million and $4.6 million
on mortgage loans and $26.2 million and $24.7 million on equity real
estate at March 31, 2000 and December 31, 1999, respectively.
F-48
<PAGE>
Impaired mortgage loans along with the related provision for losses were
as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------------- -------------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 27.0 $ 26.8
Impaired mortgage loans without provision for losses................... 4.2 4.5
----------------- -------------------
Recorded investment in impaired mortgages.............................. 31.2 31.3
Provision for losses................................................... (4.7) (4.1)
----------------- -------------------
Net Impaired Mortgage Loans............................................ $ 26.5 $ 27.2
================= ===================
During the first quarters of 2000 and 1999, respectively, the Closed
Block's average recorded investment in impaired mortgage loans was $31.3
million and $49.8 million.
4) DISCONTINUED OPERATIONS
Summarized financial information for discontinued operations follows:
March 31, December 31,
2000 1999
----------------- -------------------
(In Millions)
BALANCE SHEETS
Mortgage loans on real estate.......................................... $ 444.7 $ 454.6
Equity real estate..................................................... 419.9 426.6
Other equity investments............................................... 54.5 55.8
Other invested assets.................................................. 188.2 87.1
----------------- -------------------
Total investments.................................................... 1,107.3 1,024.1
Cash and cash equivalents.............................................. 50.2 164.5
Other assets........................................................... 209.7 213.0
----------------- -------------------
Total Assets........................................................... $ 1,367.2 $ 1,401.6
================= ===================
Policyholders' liabilities............................................. $ 987.2 $ 993.3
Allowance for future losses............................................ 252.9 242.2
Other liabilities...................................................... 127.1 166.1
----------------- -------------------
Total Liabilities...................................................... $ 1,367.2 $ 1,401.6
================= ===================
</TABLE>
F-49
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------------
2000 1999
----------------- -----------------
(In Millions)
<S> <C> <C>
STATEMENTS OF EARNINGS
Investment income (net of investment expenses of $10.4 and $13.1)......... $ 29.0 $ 19.6
Investment losses, net.................................................... (2.3) (7.0)
Policy fees, premiums and other income.................................... - -
----------------- -----------------
Total revenues............................................................ 26.7 12.6
Benefits and other deductions............................................. 26.7 25.4
Losses charged to allowance for future losses............................. - (12.8)
----------------- -----------------
Pre-tax results from operations........................................... - -
Pre-tax loss from strengthening the allowance for future losses........... (7.6) (8.2)
Federal income tax benefit................................................ 2.7 2.9
----------------- -----------------
Loss from Discontinued Operations......................................... $ (4.9) $ (5.3)
================= =================
</TABLE>
The Company's quarterly process for evaluating the allowance for future
losses applies the current period's results of discontinued operations
against the allowance, re-estimates future losses, and adjusts the
allowance, if appropriate. The evaluations performed in the first quarters
of 2000 and 1999 resulted in management's decision to strengthen the
allowance by $7.6 million for the first quarter of 2000 and by $8.2
million for the first quarter of 1999. This resulted in after-tax losses
of $4.9 million for first quarter 2000 and after-tax losses of $5.3
million for first quarter 1999.
Management believes the allowance for future losses at March 31, 2000 is
adequate to provide for all future losses; however, the determination of
the allowance involves 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 discontinued operations differ from management's
current 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 loss
allowance are likely to result.
Investment valuation allowances amounted to $1.7 million and $1.9 million
on mortgage loans and $54.5 million and $54.8 million on equity real
estate at March 31, 2000 and December 31, 1999, respectively.
5) FEDERAL INCOME TAXES
Federal income taxes for interim periods have been computed using an
estimated annual effective tax rate. This rate is revised, if necessary,
at the end of each successive interim period to reflect the current
estimate of the annual effective tax rate.
6) RESTRUCTURING COSTS
At March 31, 2000, the restructuring liabilities included costs related to
employee termination and exit costs, the termination of operating leases
and the consolidation of insurance operations' service centers and
amounted to $7.7 million. The amounts paid during first quarter 2000
totaled $2.5 million.
F-50
<PAGE>
7) RELATED PARTIES TRANSACTIONS
Effective January 1, 2000, the Company reimburses the Holding Company for
expenses relating to the Excess Retirement Plan, Supplemental Executive
Retirement Plan and certain other employee benefit plans that provide
participants with medical, life insurance, and deferred compensation
benefits. Such reimbursement is made on the basis of the cost to the
Holding Company of the benefits provided which totaled $3.8 million for
first quarter 2000. The Company paid $181.2 million of commission fees to
AXA Distribution and its subsidiaries for first quarter 2000. Effective
January 1, 2000, the Company charged AXA Distribution's subsidiaries for
their applicable share of operating expenses pursuant to the Agreements
for Services. Such charges totaled $41.9 million for first quarter 2000.
8) LITIGATION
There have been no new material legal proceedings and no material
developments in specific litigations previously described in the Company's
Notes to Consolidated Financial Statements for the year ended December 31,
1999, except as follows:
Equitable Life is a defendant in a purported class action commenced in
March 2000 on behalf of persons who purchased variable annuities from
Equitable Life from January 1989 to the present. The complaint alleges
various improper sales practices including misrepresentations in
connection with the use of variable annuities in a qualified retirement
plan or similar arrangement, charging inflated or hidden fees, and failure
to disclose unnecessary tax deferral fees. The plaintiff seeks damages
including punitive damages. In May 2000, Equitable Life filed a motion to
dismiss the complaint. 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 this
litigation 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.
In September 1999, an action was brought on behalf of a purported class of
owners of limited partnership units of Alliance Holding challenging the
then-proposed reorganization of Alliance Holding. Named defendants include
Alliance Holding, Alliance, four Alliance Holding executives and the
general partner of Alliance Holding and Alliance. Equitable Life is
obligated to indemnify the defendants for losses and expenses arising out
of the litigation. Plaintiffs allege inadequate and misleading
disclosures, breaches of fiduciary duties, and the improper adoption of an
amended partnership agreement by Alliance Holding and seek payment of
unspecified money damages and an accounting of all benefits alleged to
have been improperly obtained by the defendants. 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.
In the Alliance North American Government Income Trust action, a
Stipulation and Agreement of Settlement has been signed with the lawyers
for the plaintiffs settling this action. Under the Stipulation and
Agreement of Settlement, the Operating Partnership will permit Fund
shareholders to invest up to $250 million in Alliance mutual funds free of
initial sales charges. The Stipulation and Agreement of Settlement is
subject to court approval.
In addition to the matters previously reported and those described above,
the Holding Company and its subsidiaries are involved in various legal
actions and proceedings in connection with their businesses. Some of the
actions and proceedings have been brought on behalf of various alleged
classes of claimants and certain of these claimants seek damages of
unspecified amounts. While the ultimate outcome of such matters cannot be
predicted with certainty, in the opinion of management no such matter is
likely to have a material adverse effect on the Company's consolidated
financial position or results of operations.
F-51
<PAGE>
9) BUSINESS SEGMENT INFORMATION
<TABLE>
<CAPTION>
Investment
Insurance Services Elimination Total
--------------- ----------------- --------------- -----------------
(In Millions)
<S> <C> <C> <C> <C>
Three Months Ended
March 31, 2000
---------------------------------------
Segment revenues..................... $ 1,151.3 $ 624.6 $ (29.3) $ 1,746.6
Investment (losses) gains............ (130.5) 6.4 - (124.1)
--------------- ----------------- --------------- -----------------
Total Revenues....................... $ 1,020.8 $ 631.0 $ (29.3) $ 1,622.5
=============== ================= =============== =================
Pre-tax operating earnings........... $ 270.7 $ 163.1 $ - $ 433.8
Investment (losses) gains , net of
related DAC and other charges...... (123.3) 6.1 - (117.2)
Pre-tax minority interest............ - 75.4 - 75.4
--------------- ----------------- --------------- -----------------
Pre-tax earnings from
Continuing Operations.............. $ 147.4 $ 244.6 $ - $ 392.0
=============== ================= =============== =================
Three Months Ended
March 31, 1999
---------------------------------------
Segment revenues..................... $ 1,047.3 $ 456.2 $ (1.4) $ 1,502.1
Investment (losses) gains............ (23.5) 10.4 - (13.1)
--------------- ----------------- --------------- -----------------
Total Revenues....................... $ 1,023.8 $ 466.6 $ (1.4) $ 1,489.0
=============== ================= =============== =================
Pre-tax operating earnings........... $ 221.2 $ 86.1 $ - $ 307.3
Investment (losses) gains, net of
related DAC and other charges...... (35.0) 10.2 - (24.8)
Pre-tax minority interest............ - 47.3 - 47.3
--------------- ----------------- --------------- -----------------
Pre-tax earnings from Continuing
Operations......................... $ 186.2 $ 143.6 $ - $ 329.8
=============== ================= =============== =================
Total Assets:
March 31, 2000....................... $ 89,592.5 $ 13,135.9 $ (43.1) $ 102,685.3
=============== ================= =============== =================
December 31, 1999.................... $ 86,842.7 $ 12,961.7 $ (8.9) $ 99,795.5
=============== ================= =============== =================
F-52
</TABLE>
<PAGE>
Appendix I: Our data on market performance
------
A-1 APPENDIX I: OUR DATA ON MARKET PERFORMANCE
--------------------------------------------------------------------------------
In reports or other communications to policyowners or in advertising material,
we may describe general economic and market conditions affecting our variable
investment options and the Portfolios and may compare the performance or
ranking of those options and the Portfolios with:
o those of other insurance company separate accounts or mutual funds included
in the rankings prepared by Lipper Analytical Services, Inc., Morningstar,
Inc. or similar investment services that monitor the performance of
insurance company separate accounts or mutual funds;
o other appropriate indices of investment securities and averages for peer
universes of mutual funds; or
o data developed by us derived from such indices or averages.
We also may furnish to present or prospective policyowners advertisements or
other communications that include evaluations of a variable investment option
or Portfolio by nationally recognized financial publications. Examples of such
publications are:
<TABLE>
----------------------------------------------------------------
<S> <C>
Barron's Investment Management Weekly
Morningstar's Variable Money Management Letter
Annuities/Life Investment Dealers Digest
Business Week National Underwriter
Forbes Pension & Investments
Fortune USA Today
Institutional Investor Investor's Daily
Money The New York Times
Kiplinger's Personal Finance The Wall Street Journal
Financial Planning The Los Angeles Times
Investment Adviser The Chicago Tribune
----------------------------------------------------------------
</TABLE>
Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer
universes of Portfolios with similar investment objectives in its Lipper
Variable Insurance Products Performance Analysis Service (Lipper Survey).
Morningstar, Inc. compiles similar data in the Morningstar Variable
Annuity/Life Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800
mutual funds underlying variable annuity and life insurance products. It
divides these actively managed portfolios into 25 categories by portfolio
objectives. The Lipper Survey contains two different universes, which reflect
different types of fees in performance data:
o The "Separate Account" universe reports performance data net of investment
management fees, direct operating expenses and asset-based charges
applicable under variable insurance and annuity contracts; and
o The "Mutual Fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects only
charges that relate to the underlying mutual fund.
The Morningstar Report consists of nearly 700 variable life and annuity
portfolios, all of which report their data net of investment management fees,
direct operating expenses and separate account level charges.
LONG-TERM MARKET TRENDS
The following chart presents historical return trends for various types of
securities. The information presented does not directly relate to the
performance of our variable investment options or the Trust. Nevertheless, it
may help you gain 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 Accumulator Life premium(s).
Historically, the investment performance of common stocks over the long term
has generally been superior to that of long- or short-term debt securities.
However, common stocks have also experienced dramatic changes in value over
short periods of time. One of our variable investment options that invests
primarily in common stocks may, therefore, be a desirable selection for owners
who are willing to accept such risks. If, on the other hand, you wish to limit
your short-term risk, you may find it preferable to allocate a smaller
percentage of net premiums to those options that invest primarily in common
stock. All investments in securities, whether equity or debt, involve varying
degrees of risk. They also offer varying degrees of potential reward.
<PAGE>
------
A-2 APPENDIX I: OUR DATA ON MARKET PERFORMANCE
--------------------------------------------------------------------------------
The chart below illustrates the average annual compound rates of return over
selected time periods between December 31, 1926 and December 31, 1999 for the
types of securities indicated in the chart. These rates of return assume the
reinvestment of dividends, capital gains and interest. The Consumer Price
Index is also shown as a measure of inflation for comparison purposes. The
investment return information presented is an historical record of unmanaged
categories of securities. In addition, the rates of return shown do not
reflect either (1) investment management fees and expenses, or (2) costs and
charges associated with ownership of a variable life insurance policy.
The rates of return illustrated do not represent returns of our variable
investment options or the Portfolios and do not constitute a representation
that the performance of those options or the Portfolios will correspond to
rates of return such as those illustrated in the chart.
AVERAGE ANNUAL RATES OF RETURN
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
LONG-TERM LONG-TERM INTERMEDIATE-
FOR THE FOLLOWING PERIODS ENDING COMMON GOVERNMENT CORPORATE TERM GOV'T U.S. TREASURY CONSUMER
DECEMBER 31, 1999 STOCKS BONDS BONDS BONDS BILLS PRICE INDEX
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Year 21.04% (8.96)% (7.45)% (1.77)% 4.68% 2.81%
3 Years 27.56% 6.04% 5.01% 5.47% 4.93% 2.04%
5 years 28.55% 9.24% 8.35% 6.95% 5.12% 2.39%
10 years 18.20% 8.79% 8.36% 7.20% 4.92% 2.94%
20 years 17.87% 10.69% 10.66% 9.53% 6.89% 4.01%
30 years 13.72% 8.94% 9.17% 8.68% 6.69% 5.12%
40 years 12.22% 7.01% 7.24% 7.35% 5.98% 4.46%
50 years 13.61% 5.56% 5.97% 6.12% 5.15% 4.01%
60 years 12.86% 5.17% 5.42% 5.39% 4.34% 4.24%
Since 1926 11.35% 5.12% 5.61% 5.22% 3.79% 3.07%
Inflation Adjusted Since 1926 8.03% 1.98% 2.46% 2.08% 0.69% 0.00%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: Ibbotson, Roger G. and Rex A. Sinquefield, STOCKS, BONDS, BILLS, AND
INFLATION (SBBI), 1982, updated in STOCKS, BONDS, BILLS, AND INFLATION 2000
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 1969-1999, 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
1969-1999; 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.
Consumer Price Index - Measured by the Consumer Price Index for all Urban
Consumers (CPI-U), not seasonally adjusted.
<PAGE>
Appendix II: An index of key words and phrases
------
B-1 APPENDIX II: AN INDEX OF KEY WORDS AND PHRASES
--------------------------------------------------------------------------------
This index should help you locate more information on the terms used in this
prospectus.
<TABLE>
<CAPTION>
PAGE
<S> <C>
account value 17
Accumulator Life cover
Administrative Office 5
age 30
Allocation Date 14
amount at risk 33
anniversary 30
assign; assignment 28
automatic transfer service 18
AXA Financial, Inc. 4
basis 24
beneficiary 15
business day 29
cash surrender value 22
Code 23
collateral 24
cost of insurance charge 33
cost of insurance rates 33
day 29
default 13
dollar cost averaging service 18
EQ Advisors Trust 14
Equitable Distributors 14
Equitable Life 4
Equitable Access Account 15
grace period 13
guaranteed minimum death benefit 14
insured person 13
Investment Funds 14
issue date 30
lapse 13
loan, loan interest 21
modified endowment contract 20
month, year 30
monthly deduction 7
net cash surrender value 22
our 2
owner 2
partial withdrawal 22
payment option 15
policy cover
Portfolio cover
premium payment 12
prospectus cover
rebalancing 19
receive 29
restore, restoration 13
SEC cover
Separate Account FP 31
state 2
subaccount 31
surrender 22
surrender charge 7
telephone transfer 18
transfers 18
Trust 14
units 17
unit values 17
us 2
variable investment option 14
we 2
you, your 2
</TABLE>
<PAGE>
Cover Page 497(d)
333-36696
<PAGE>
ACCUMULATOR LIFE(SM)
A MODIFIED SINGLE PREMIUM VARIABLE
LIFE INSURANCE POLICY
Please read this prospectus and keep it for future reference. It contains
important information that you should know before purchasing, or taking any
other action, under a policy. Also, at the end of this prospectus you will
find attached the prospectus for EQ Advisors Trust, which contains important
information about its Portfolios.
PROSPECTUS DATED JUNE 22, 2000
--------------------------------------------------------------------------------
This prospectus describes many aspects of an Accumulator Life policy, but is
not itself a policy. The policy is the actual contract that determines your
benefits and obligations under Accumulator Life. To make this prospectus
easier to read, we sometimes use different words than the policy. Equitable
Life or your financial professional can provide any further explanation about
your policy.
WHAT IS ACCUMULATOR LIFE?
Accumulator Life is issued by Equitable Life. It provides life insurance
coverage, plus the opportunity for you to earn a return in one or more of the
following variable investment options:
<TABLE>
<S> <C>
-----------------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS:
-----------------------------------------------------------------------
o EQ/Aggressive Stock(1) o Lazard Large Cap Value
o Alliance Money Market o Lazard Small Cap Value
o Alliance High Yield o Mercury Basic Value Equity(4)
o Alliance Common Stock o Mercury World Strategy(5)
o Alliance Small Cap Growth o MFS Growth with Income
o EQ/Alliance Premier Growth o MFS Research
o EQ/Alliance Technology(2) o MFS Emerging Growth
o BT Equity 500 Index Companies
o BT Small Company Index o Morgan Stanley Emerging
o BT International Equity Index Markets Equity
o Capital Guardian U.S. Equity o EQ/Putnam Growth & Income
o Capital Guardian Research Value
o Capital Guardian International o EQ/Putnam Investors Growth
o EQ/Evergreen o EQ/Putnam International
o EQ/Evergreen Foundation Equity
o J. P. Morgan Core Bond(3)
-----------------------------------------------------------------------
</TABLE>
(1) Formerly named "Alliance Aggressive Stock."
(2) This option may not be available in California.
(3) Formerly named "JPM Core Bond."
(4) Formerly named "Merrill Lynch Basic Value Equity."
(5) Formerly named "Merrill Lynch World Strategy."
Amounts that you allocate under your policy to any of the variable investment
options are invested in a corresponding "Portfolio" that is part of EQ
Advisors Trust, a mutual fund. Your investment results in a variable
investment option will depend on those of the related Portfolio. Any gains
will generally be tax deferred, and the life insurance benefits we pay if the
policy's insured person dies will generally be income tax free.
Your Accumulator Life policy likely will be a "modified endowment contract,"
which may subject you to special tax rules and penalties on any taxable
distributions, including loans. See "Tax information" later in this prospectus.
OTHER CHOICES YOU HAVE. You can tailor the policy to your needs. For example,
subject to our rules, you decide (1) how much you contribute to your policy,
which determines how much insurance coverage you initially have, (2) whether
to borrow or withdraw amounts you have accumulated and (3) whether to take
advantage of "free withdrawals," which do not incur surrender charges.
Additionally, if this policy is issued as the result of an exchange of another
policy under Section 1035 of the Internal Revenue Code, you have the option of
carrying over any loan from the exchanged policy to this Accumulator Life
policy, subject to our approval. The amount of loan you may carry over is
limited to 50% of your initial premium.
Your financial professional can provide you with information about all forms
of life insurance available from us and help you decide which may best meet
your needs. Replacing existing insurance with Accumulator Life or another
policy may not be to your advantage.
THE SECURITIES AND EXCHANGE COMMISSION ("SEC") HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE POLICIES ARE NOT
INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO
INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL.
72484MLF
<PAGE>
Contents of this prospectus
------
2 CONTENTS OF THIS PROSPECTUS
--------------------------------------------------------------------------------
ACCUMULATOR LIFE
<TABLE>
------------------------------------------------------------
<S> <C>
What is Accumulator Life? Cover
Who is Equitable Life? 4
How to reach us 5
Charges and expenses you will pay 7
Risks you should consider 11
------------------------------------------------------------
1
POLICY FEATURES AND BENEFITS 12
------------------------------------------------------------
How you pay for your policy 12
Your death benefit guarantee 12
Policy "lapse" and termination 13
About your death benefit 13
Variable investment options within your policy 14
Your options for receiving policy proceeds 15
Your right to cancel within a certain number of days 16
Variations among Accumulator Life policies 16
Other Equitable Life Policies 16
------------------------------------------------------------
2
DETERMINING YOUR POLICY'S VALUE 17
------------------------------------------------------------
Your account value 17
------------------------------------------------------------
3
TRANSFERRING YOUR MONEY AMONG OUR
VARIABLE INVESTMENT OPTIONS 18
------------------------------------------------------------
Transfers you can make 18
Telephone and EQAccess transfers 18
Our dollar cost averaging service 18
Our asset rebalancing service 19
------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
"We," "our" and "us" refer to Equitable Life. "Financial professional" means
the registered representative who is offering you this policy.
When we address the reader of this prospectus with words such as "you" and
"your," we mean the person or persons having the right or responsibility that
the prospectus is discussing at that point. This usually is the policy's owner.
If a policy has more than one owner, all owners must join in the exercise of any
rights an owner has under the policy, and the word "owner" therefore refers
to all owners.
When we use the word "state," we also mean any other local jurisdiction
whose laws or regulations affect a policy.
We do not offer Accumulator Life in all states. This prospectus does not offer
Accumulator Life anywhere such offers are not lawful. Equitable Life does not
authorize any information or representation about the offering other than that
contained or incorporated in this prospectus, in any current supplements
thereto, or in any related sales materials authorized by Equitable Life.
<PAGE>
------
3 CONTENTS OF THIS PROSPECTUS
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
------------------------------------------------------------------------
4
ACCESSING YOUR MONEY 20
------------------------------------------------------------------------
Borrowing from your policy 20
Making withdrawals from your policy 21
Surrendering your policy for its net cash surrender
value 22
------------------------------------------------------------------------
5
TAX INFORMATION 23
------------------------------------------------------------------------
Basic tax treatment for you and your beneficiary 23
Tax treatment of distributions to you 23
Effect of policy on interest deductions taken by
business entities 25
Requirement that we diversify investments 25
Estate, gift, and generation-skipping taxes 25
Employee benefit programs 26
Our taxes 26
When we withhold taxes from distributions 26
Possibility of future tax changes 26
------------------------------------------------------------------------
6
MORE INFORMATION ABOUT PROCEDURES
THAT APPLY TO YOUR POLICY 28
------------------------------------------------------------------------
Ways to make premium and loan payments 28
Requirements for surrender requests 28
Ways we pay policy proceeds 28
Assigning your policy 28
Dates and prices at which policy events occur 29
Policy issuance 30
Gender-neutral policies 30
------------------------------------------------------------------------
7
MORE INFORMATION ABOUT OTHER MATTERS 31
------------------------------------------------------------------------
Your voting privileges 31
About our Separate Account FP 31
About our general account 32
Transfers of your account value 32
Telephone and EQAccess requests 32
Deducting policy charges 33
Suicide and certain misstatements 34
When we pay policy proceeds 34
Changes we can make 34
Reports we will send you 35
Legal proceedings 35
Illustrations of policy benefits 35
SEC registration statement 35
How we market the policies 35
Insurance regulation that applies to Equitable Life 36
Directors and principal officers 37
------------------------------------------------------------------------
8
FINANCIAL STATEMENTS OF SEPARATE
ACCOUNT FP AND EQUITABLE LIFE 45
------------------------------------------------------------------------
Separate Account FP financial statements FSA-1
Equitable Life financial statements F-1
------------------------------------------------------------------------
APPENDICES
------------------------------------------------------------------------
I - Our data on market performance A-1
II - An index of key words and phrases B-1
------------------------------------------------------------------------
EQ ADVISORS TRUST PROSPECTUS (follows
after page B-1 of this prospectus, but is not a part of
this prospectus)
------------------------------------------------------------------------
</TABLE>
<PAGE>
Who is Equitable Life?
------
4 WHO IS EQUITABLE LIFE?
--------------------------------------------------------------------------------
We are The Equitable Life Assurance Society of the United States ("Equitable
Life"), a New York stock life insurance corporation. We have been doing
business since 1859. Equitable Life is a subsidiary of AXA Financial, Inc.
(previously The Equitable Companies Incorporated). The majority shareholder of
AXA Financial, Inc. is AXA, a French holding company for an international
group of insurance and related financial services companies. As a majority
shareholder, and under its other arrangements with Equitable Life and
Equitable Life's parent, AXA exercises significant influence over the
operations and capital structure of Equitable Life and its parent. No company
other than Equitable Life, however, has any legal responsibility to pay
amounts that Equitable Life owes under the policies.
AXA Financial, Inc. and its consolidated subsidiaries managed approximately
$497.5 billion in assets as of March 31, 2000. For more than 100 years
Equitable Life has been among the largest insurance companies in the United
States. We are licensed to sell life insurance and annuities in all fifty
states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
Our home office is located at 1290 Avenue of the Americas, New York, N.Y.
10104.
<PAGE>
------
5 WHO IS EQUITABLE LIFE?
--------------------------------------------------------------------------------
HOW TO REACH US
To obtain (1) any forms you need for communicating with us, (2) unit values
and other values under your policy, and (3) any other information or materials
that we provide in connection with your policy or the Portfolios, you can
contact us
-------------------------------------------------------------
BY MAIL:
-------------------------------------------------------------
at the Post Office Box for our Administrative Office:
Equitable Life - EDI Service Center
P.O. Box 1047
Charlotte, North Carolina 28210-1047
-------------------------------------------------------------
BY EXPRESS DELIVERY ONLY:
-------------------------------------------------------------
at the Street Address for our Administrative Office:
Equitable Life - EDI Service Center
10840 Ballantyne Commons Parkway
Charlotte, North Carolina 28277
1-704-341-7000 (for express delivery purposes only)
-------------------------------------------------------------
BY TOLL-FREE PHONE:
-------------------------------------------------------------
1-888-228-6690
(automated system available 22 hours a day, from 6 AM to 4
AM, Eastern Time; customer service representative available
weekdays 8 AM to 9 PM, Eastern Time)
-------------------------------------------------------------
BY FAX:
-------------------------------------------------------------
1-704-551-2310
-------------------------------------------------------------
BY INTERNET:
-------------------------------------------------------------
Our Web site (www.equitable.com) can also provide you
information. You can access your policy information through
our Web site by enrolling in EQAccess.
-------------------------------------------------------------
We require that the following types of communications be
on specific forms we provide for that purpose:
(1) request for dollar cost averaging (our automatic transfer service);
(2) authorization for telephone transfers by a person who is not both the
insured person and the owner;
(3) request for asset rebalancing; and
(4) designation of new policy owner(s).
We also have specific forms that we recommend you use for the following:
(a) policy surrenders;
(b) address changes;
(c) beneficiary changes;
(d) transfers between variable investment options; and
(e) changes in allocation percentages for loan repayments, deductions and any
additional premium payment.
You can change your allocation percentages and/or transfer among investment
options (1) by toll-free phone or (2) over the Internet, through EQAccess.
This feature is anticipated to be available in EQAccess by the end of 2000.
For more information about transaction requests you can make by phone or over
the Internet, see "Telephone and EQAccess transfers" and "Telephone and
EQAccess requests" later in this prospectus.
Except for properly authorized telephone or Internet transactions, any notice
or request that does not use our standard form must be in writing. It must be
dated and signed by you and should also specify your name, the insured
person's name (if different), your policy number, and adequate details about
the notice you wish to give or other action you wish us to take. We may
require you to return your policy to us before we make certain policy changes
that you may request.
The proper person to sign forms, notices and requests would normally be the
owner or any other person that our procedures permit to exercise the right or
privilege in question. If there are joint owners all must sign. Any
irrevocable beneficiary or assignee that we have on our records also must sign
certain types of requests.
<PAGE>
------
6 WHO IS EQUITABLE LIFE?
--------------------------------------------------------------------------------
You should send all requests and notices to our Administrative Office at the
addresses specified above. We will also accept requests and notices by fax at
the above number, if we believe them to be genuine. We reserve the right,
however, to require an original signature before acting on any faxed item. You
must send all payments to our Administrative Office at the above addresses;
except that you should send any payments for which we have billed you to the
address on the billing notice.
We reserve the right to limit access to telephone, Internet or fax services if
we determine that you are engaged in a market timing strategy. See "Transfers
of your account value - Market timing" later in this prospectus.
<PAGE>
Charges and expenses you will pay
--------
7 CHARGES AND EXPENSES YOU WILL PAY
--------------------------------------------------------------------------------
TABLE OF POLICY CHARGES
This table shows the charges that we deduct under the terms of your policy.
For more information about some of these charges, see "Deducting policy
charges" later in this prospectus.
<TABLE>
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CHARGES WE DEDUCT FROM None
AMOUNTS YOU CONTRIBUTE
TO YOUR POLICY:
---------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM Cost of insurance charges The maximum charges are specified in
YOUR POLICY'S VALUE EACH your policy. We currently limit this
MONTH charge to 1.15% (effective annual rate)
of your policy's account value(1), unless
the maximum charge specified by your
policy is less. However, we may increase
this 1.15% rate up to the maximum
charges specified in your policy.(2), (3)
------------------------------------------------------------------------------
Charge for administration .50% (effective annual rate) of your
and taxes policy's account value.(3)
------------------------------------------------------------------------------
Guaranteed minimum death .20% (effective annual rate) of your
benefit charge policy's account value. (We may increase
this rate up to .50%.)(3)
---------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM Mortality and expense risk 1.35% (effective annual rate) of the
YOUR POLICY'S UNIT VALUES charge value you have in our variable investment
EACH DAY: options.
---------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM Surrender (turning in) of your A surrender charge based on the policy's
YOUR ACCOUNT VALUE AT THE policy during its first 9 years age and a percentage of the initial
TIME OF THE TRANSACTION: premium(4), as follows:
Policy Year Percentage Charge
----------- -----------------
1 10 %
2 9.5
3 9
4 8.5
5 8
6 7
7 5
8 3
9 1
10 and later 0
------------------------------------------------------------------------------
Partial withdrawal during the A surrender charge equal to the applicable
first 9 years percentage specified above, applied to
amounts of partial withdrawals in any
policy year that cumulatively exceed 15%
of: your policy account value less
outstanding loans and loan interest, as of
the end of the previous policy year.(5)
---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
------
8 CHARGES AND EXPENSES YOU WILL PAY
--------------------------------------------------------------------------------
<TABLE>
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
CHARGES WE DEDUCT FROM Transfers among investment No charge for any transfer. (We may,
YOUR ACCOUNT VALUE AT THE options however, increase this charge up to $25
TIME OF THE TRANSACTION: per transfer.)(6)
(CONTINUED)
------------------------------------------------------------------------------
Requesting a policy illustration No charge. (We may, however, increase this
charge up to $25 per illustration request,
if you request more than one in any policy
year.)
------------------------------------------------------------------------------
</TABLE>
----------
1 "Account value" is defined below in "Determining your policy's value." The
account value used to determine the amount of each monthly charge is the
account value on the date the charge is due.
2 See "Monthly cost of insurance charge" later in this prospectus.
3 Not applicable after the insured person reaches age 100.
4 For purposes of this calculation, the amount of the initial premium would be
reduced by the amounts of any prior partial withdrawals that were subject
to a surrender charge.
5 Over the life of your policy, the cumulative amount of your partial
withdrawals on which we impose any surrender charge will not exceed the
amount of your initial premium.
6 No charge, however, would ever apply to a transfer made through our dollar
cost averaging or asset rebalancing services.
<PAGE>
------
9 CHARGES AND EXPENSES YOU WILL PAY
--------------------------------------------------------------------------------
YOU ALSO BEAR YOUR PROPORTIONATE SHARE OF ALL FEES AND EXPENSES PAID BY A
"PORTFOLIO" THAT CORRESPONDS TO ANY VARIABLE INVESTMENT OPTION YOU ARE USING:
This table shows the fees and expenses paid by each Portfolio for the year
ended December 31, 1999. These fees and expenses are reflected in the
Portfolio's net asset value each day. Therefore, they reduce the investment
return of the Portfolio and of the related variable investment option. Actual
fees and expenses are likely to fluctuate from year to year. All figures are
expressed as an annual percentage of each Portfolio's daily average net
assets.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
1999 FEES AND EXPENSES
-----------------------------------------------------------------------------------------------------------------------------
TOTAL FEE WAIVERS NET TOTAL
MANAGEMENT OTHER ANNUAL AND/OR EXPENSE ANNUAL
FEE(1) 12B-1 FEE EXPENSES(2) EXPENSES REIMBURSEMENTS(3) EXPENSES
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EQ/Aggressive Stock 0.60% 0.25% 0.04% 0.89% - 0.89%
-----------------------------------------------------------------------------------------------------------------------------
Alliance Common Stock 0.46% 0.25% 0.04% 0.75% - 0.75%
-----------------------------------------------------------------------------------------------------------------------------
Alliance High Yield 0.60% 0.25% 0.05% 0.90% - 0.90%
-----------------------------------------------------------------------------------------------------------------------------
Alliance Money Market 0.34% 0.25% 0.05% 0.64% - 0.64%
-----------------------------------------------------------------------------------------------------------------------------
EQ/Alliance Premier Growth(4) 0.90% 0.25% 0.23% 1.38% 0.23% 1.15%
-----------------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth(5) 0.75% 0.25% 0.07% 1.07% - 1.07%
-----------------------------------------------------------------------------------------------------------------------------
EQ/Alliance Technology(6) 0.90% 0.25% 0.10% 1.25% 0.10% 1.15%
-----------------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index 0.25% 0.25% 0.18% 0.68% 0.08% 0.60%
-----------------------------------------------------------------------------------------------------------------------------
BT Small Company Index 0.25% 0.25% 0.71% 1.21% 0.46% 0.75%
-----------------------------------------------------------------------------------------------------------------------------
BT International Equity Index 0.35% 0.25% 0.49% 1.09% 0.09% 1.00%
-----------------------------------------------------------------------------------------------------------------------------
Capital Guardian International(4) 0.85% 0.25% 0.66% 1.76% 0.56% 1.20%
-----------------------------------------------------------------------------------------------------------------------------
Capital Guardian Research(4) 0.65% 0.25% 0.47% 1.37% 0.42% 0.95%
-----------------------------------------------------------------------------------------------------------------------------
Capital Guardian U.S. Equity(4) 0.65% 0.25% 0.34% 1.24% 0.29% 0.95%
-----------------------------------------------------------------------------------------------------------------------------
EQ/Evergreen 0.65% 0.25% 1.87% 2.77% 1.82% 0.95%
-----------------------------------------------------------------------------------------------------------------------------
EQ/Evergreen Foundation 0.60% 0.25% 1.07% 1.92% 0.97% 0.95%
-----------------------------------------------------------------------------------------------------------------------------
J.P. Morgan Core Bond 0.45% 0.25% 0.20% 0.90% 0.10% 0.80%
-----------------------------------------------------------------------------------------------------------------------------
Lazard Large Cap Value 0.65% 0.25% 0.21% 1.11% 0.16% 0.95%
-----------------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Value 0.75% 0.25% 0.26% 1.26% 0.16% 1.10%
-----------------------------------------------------------------------------------------------------------------------------
Mercury Basic Value Equity 0.60% 0.25% 0.17% 1.02% 0.07% 0.95%
-----------------------------------------------------------------------------------------------------------------------------
Mercury World Strategy 0.70% 0.25% 0.46% 1.41% 0.21% 1.20%
-----------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies 0.65% 0.25% 0.17% 1.07% 0.07% 1.00%
-----------------------------------------------------------------------------------------------------------------------------
MFS Growth with Income 0.60% 0.25% 0.37% 1.22% 0.27% 0.95%
-----------------------------------------------------------------------------------------------------------------------------
MFS Research 0.65% 0.25% 0.17% 1.07% 0.12% 0.95%
-----------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity 1.15% 0.25% 1.00% 2.40% 0.65% 1.75%
-----------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value 0.60% 0.25% 0.16% 1.01% 0.06% 0.95%
-----------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth 0.65% 0.25% 0.19% 1.09% 0.14% 0.95%
-----------------------------------------------------------------------------------------------------------------------------
EQ/Putnam International Equity 0.85% 0.25% 0.32% 1.42% 0.17% 1.25%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
------
10 CHARGES AND EXPENSES YOU WILL PAY
--------------------------------------------------------------------------------
(1) The management fees shown reflect revised management fees, effective on
or about May 1, 2000, which were approved by shareholders. The management
fees shown for EQ/Putnam Growth & Income Value and Lazard Large Cap Value
do not reflect the waiver of a portion of each Portfolio's investment
management fees that is currently in effect. The management fee for each
Portfolio cannot be increased without a vote of each Portfolio's
shareholders.
(2) On October 18, 1999, the Alliance Portfolios (other than EQ/Alliance
Premier Growth and EQ/Alliance Technology) became part of EQ Advisors
Trust. Other Expenses for these Portfolios have been restated to reflect
the estimated expenses that would have been incurred, had these
Portfolios been portfolios of EQ Advisors Trust for the full year ended
December 31, 1999. The restated expenses reflect an increase of 0.01% for
each of these Portfolios.
(3) Equitable Life, EQ Advisors Trust's manager, has entered into an Expense
Limitation Agreement with respect to certain Portfolios, which is
effective from May 1, 2000 through April 30, 2001. Under this Agreement,
Equitable Life has agreed to waive or limit its fees and assume other
expenses of each of these Portfolios, if necessary, in an amount that
limits each Portfolio's Total Annual Expenses (exclusive of interest,
taxes, brokerage commissions, capitalized expenditures and extraordinary
expenses) to not more than the amounts specified above as Net Total
Annual Expenses. Portfolios that show "-" in this column have no expense
limitation arrangement in effect. See the EQ Advisors Trust prospectus
for more information about the Expense Limitation Agreement. The expense
limitations for the BT Equity 500 Index, MFS Emerging Growth Companies,
MFS Growth with Income, MFS Research, Mercury Basic Value Equity,
EQ/Putnam International Equity and EQ/Putnam Growth & Income Value
Portfolios reflect an increase effective on May 1, 2000. The expense
limitation for the EQ/Evergreen and Lazard Small Cap Value Portfolios
reflects a decrease effective on May 1, 2000.
(4) Initial seed capital was invested in the EQ/Alliance Premier Growth,
Capital Guardian U.S. Equity, Capital Guardian Research and Capital
Guardian International Portfolios on April 30, 1999; thus, Other Expenses
for these Portfolios have been estimated.
(5) Prior to October 18, 1999, Total Annual Expenses for the Alliance Small
Cap Growth Portfolio were limited to 1.20% under an expense limitation
arrangement which is no longer in effect. The amounts shown have been
restated to reflect the expenses that would have been incurred in 1999,
absent the expense limitation arrangement.
(6) Expenses shown are based on estimates for 2000. Initial seed capital was
invested in the EQ/Alliance Technology Portfolio on May 2, 2000.
<PAGE>
Risks you should consider
------
11 RISKS YOU SHOULD CONSIDER
--------------------------------------------------------------------------------
HOW WE ALLOCATE CHARGES AMONG YOUR
VARIABLE INVESTMENT OPTIONS
Generally, all monthly charges will be deducted in the same proportion as the
allocation that you provide in your policy application, unless you instruct us
otherwise. If we cannot deduct the charge as your most current instructions
direct, we will allocate the deduction among your variable investment options
proportionately to your value in each.
CHANGES IN CHARGES
We reserve the right in the future to (1) make a charge for certain taxes or
reserves set aside for taxes (see "Our taxes" below), (2) make a charge for
the operating expenses of our variable investment options (including, without
limitation, SEC registration fees and related legal counsel fees and auditing
fees), (3) make a charge of up to $25 for each transfer among variable
investment options that you make, (4) make a charge of up to $25 each time you
request a policy illustration, if you request more than one in any policy year
or (5) modify your monthly cost of insurance charge or your guaranteed minimum
death benefit charge, but not above the maximum rates stated in your policy.
Any changes that we make in our current charges or charge rates will be by
class of insured person and will be based on changes in future expectations
about such factors as investment earnings, mortality experience, the length of
time policies will remain in effect, expenses and taxes. Any changes in
charges may apply to then outstanding policies, as well as to new policies,
but we will not raise any charges above any maximums discussed in this
prospectus and shown in your policy.
Some of the principal risks of investing in a policy are as follows:
o Your policy's account value and death benefit will increase or decrease
based, in part, on the performance of your variable investment options.
o You may have to pay a surrender charge, taxes or tax penalties if you make
a surrender or partial withdrawal under a policy or take a policy loan.
o We can increase certain charges without your consent, within limits stated
in your policy. See the "Changes in charges" above, which specifies which
charges can be increased.
Your policy permits other transactions that also have risks. These and other
risks and benefits of investing in a policy are discussed in detail throughout
this prospectus.
<PAGE>
1
Policy features and benefits
------
12 POLICY FEATURES AND BENEFITS
--------------------------------------------------------------------------------
HOW YOU PAY FOR YOUR POLICY
INITIAL PREMIUM. We call the amount you contribute to your policy a "premium."
The minimum premium we require is $25,000. This includes any amount of loans
that are being "carried over" from a previous policy. See "Loans transferred
from an old policy" below. The amount of insurance initially provided by your
policy is based on the amount of your premium. Once you make your initial
premium payment under your policy, you may only make one additional premium
payment, subject to the conditions below.
ADDITIONAL PREMIUM. On your 10th policy anniversary, if your death benefit is
below the initial death benefit, subject to our approval as specified below,
you may make one additional premium payment. The amount of the additional
premium is limited to an amount that will restore your initial death benefit.
(See "About your death benefit" below for a discussion of how your death
benefit can vary over time.)
This premium must be received by us within 60 days after your 10th policy
anniversary. Any premium payment received before or after this period, or any
premium payment in excess of the permitted amount, will be returned to you.
You must provide us with satisfactory evidence of insurability for us to
approve this additional payment. We also may refuse to accept any additional
premium payment if this would cause the policy to fail to qualify as life
insurance under federal tax law. See "Tax Information" for a discussion of the
tax consequences of making this additional payment.
SIMPLIFIED QUALIFICATION FOR COVERAGE. We will use a simplified process to
qualify many insured persons for coverage (the "underwriting process") under
the Accumulator Life policies. This process reduces underwriting questions and
requirements. The underwriting procedures we use in any particular case,
however, will depend on the age of the insured person, the amount of the
premium payment and the other risk characteristics of the insured person, and
may involve our full underwriting process.
If we accept your application to purchase Accumulator Life, the cost of your
insurance coverage will be the same regardless of the extent to which we use a
simplified underwriting process in your case. The cost of insurance rate will
be the same for all insured persons of the same gender and age, regardless of
whether they are tobacco users and regardless of their other insurance risk
characteristics. Therefore, you may be able to obtain more economical coverage
by purchasing a policy that uses more traditional underwriting procedures than
Accumulator Life, if the insured person is willing to undergo such procedures
and has relatively favorable insurance risk characteristics. You may consult
your financial professional for further information.
LOANS TRANSFERRED FROM AN OLD POLICY. Subject to our discretion and
administrative procedures, we may permit you to pay for your Accumulator Life
policy by an exchange of an existing life insurance policy. We may also permit
you to transfer (or carry over) any existing loan from your old policy to your
new Accumulator Life policy. See "Borrowing from your policy" below for more
information regarding these types of loans.
YOUR DEATH BENEFIT GUARANTEE
Provided that your policy does not have an outstanding loan, we guarantee that
your policy will not terminate, even if your policy's "net cash surrender
value" is not sufficient to pay a monthly deduction that has become due. ("Net
cash surrender value" is explained under "Surrendering your policy for its net
cash surrender value" below.) In this circumstance, we will waive any monthly
deductions (for cost of insurance charges, the charge for administration and
taxes and the guaranteed minimum death benefit charge) in excess of your
policy's account value. We guarantee that your death benefit will not be less
than the guaranteed minimum death benefit, regardless of investment
performance, provided you have no outstanding loans. (See the discussions of
death benefit and guaranteed minimum death benefit below.)
<PAGE>
------
13 POLICY FEATURES AND BENEFITS
--------------------------------------------------------------------------------
POLICY "LAPSE" AND TERMINATION
If you have an outstanding loan, your policy will lapse (also referred to in
your policy as "default") if it does not have enough "net cash surrender
value" to pay your policy's monthly charges when due. If this occurs, you will
have a 61-day grace period during which you will have to pay a minimum
specified amount to keep your policy from terminating. This amount equals the
lesser of (1) the amount we estimate is needed to increase your net cash
surrender value enough to pay three months of charges (without regard to loan
interest or investment performance) or (2) the amount needed to repay your
loan and loan interest. We will decline any payment less than the minimum
specified amount and treat amounts in excess of this amount as an additional
loan repayment. Amounts in excess of your outstanding loan and accrued
interest will be returned to you.
We will mail a notice to you at your last known address if your policy lapses
and enters a grace period. The grace period will start on the date the notice
is mailed. You may not make any transfers or request any other policy changes
during a grace period. If we receive the amount requested before the end of
the grace period, but due to poor investment performance your net cash
surrender value is still insufficient to pay your policy's monthly deductions,
and there is still a loan outstanding, we will send you a written notice that
a new 61-day grace period has begun (starting on the date that the second
notice is mailed) and request an additional payment. If we do not receive your
required payment by the end of a grace period, your policy will terminate
without value and all coverage under your policy will cease. We will mail an
additional notice to you if your policy terminates.
You may owe taxes (and tax penalties) if your policy terminates while you have
a loan outstanding, even though you receive no additional money from your
policy at that time. See "Tax information," below.
RESTORING A TERMINATED POLICY. To have your policy "restored" (put back in
force), you must apply within six months after the date of termination. In
some states, you may have a longer period of time. You must also present
evidence of insurability satisfactory to us and make the required payment
(which will include paying back your policy loan in full). Your policy
contains additional information about the required payment and about the
values and terms of the policy after it is restored.
ABOUT YOUR DEATH BENEFIT
In your application to buy an Accumulator Life policy, you tell us the amount
of the premium you want to pay. This determines the amount of your initial
death benefit, as well as your initial guaranteed minimum death benefit.
If the insured person dies, we pay a life insurance "death benefit" to the
"beneficiary" you have named. The death benefit under your policy equals the
greater of (i) the policy's guaranteed minimum death benefit (as described
below) on the date of the insured person's death or (ii) the policy's "account
value" on the date of the insured person's death multiplied by a factor
specified in your policy. The factor depends on the insured person's age and
gender. Representative factors are as follows:
<TABLE>
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AGE* 35 40 45 50 55 60 70
Female: 4.646 3.940 3.363 2.886 2.489 2.157 1.647
Male: 3.971 3.370 2.877 2.472 2.140 1.873 1.488
80 90 99-OVER
Female: 1.319 1.140 1.025
Male: 1.256 1.128 1.025
--------------------------------------------------------------------------------------------------------
</TABLE>
* For the policy year of the insured person's death.
Your policy's "account value" is the total of the amounts that you have in the
variable investment options, as well as amounts we are holding to secure any
outstanding policy loans. (Account value is discussed in more detail under
"Determining your policy's value" below.) Because the amount of the death
benefit is generally based on your policy's account value, the amount of death
benefit generally changes from day to day, as many factors (including
investment performance, charges and partial withdrawals) affect your policy's
account value. As set forth above, the death benefit also depends on the death
benefit factor for
<PAGE>
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14 POLICY FEATURES AND BENEFITS
--------------------------------------------------------------------------------
the insured person's age at death. This factor decreases as the insured person
grows older. Therefore, the policy's death benefit will also decrease over
time, unless the policy's account value increases by a sufficient amount to
offset the impact of the decreasing death benefit factor.
Your policy's "GUARANTEED MINIMUM DEATH BENEFIT" is equal to the sum of the
initial premium payment and any permitted additional premium payment, adjusted
for any partial withdrawals. A partial withdrawal will result in a reduction
in the guaranteed minimum death benefit; the benefit is reduced by the
proportion that the partial withdrawal amount bears to your policy's account
value prior to the withdrawal.
ADJUSTMENTS TO DEATH BENEFIT PROCEEDS. We will reduce the death benefit
proceeds by the amount of any outstanding policy loan and loan interest and by
any amount of monthly charges under the policy that remain unpaid because the
insured person died during a grace period.
VARIABLE INVESTMENT OPTIONS WITHIN YOUR POLICY
We will initially put all of your account value that is not attributable to
policy loans into our Alliance Money Market variable investment option. On the
first business day following the twentieth day after your policy is issued
(the "Allocation Date"), we will re-allocate that investment in accordance
with the allocation instructions you give in your application to purchase a
policy. These allocation instructions also serve as instructions for
allocating monthly deductions, loan repayments and credited loan interest,
unless you instruct us otherwise. You can change any allocation percentages at
any time, but this will not affect any prior allocations. Changes requested
prior to the Allocation Date are effective on the Allocation Date. The
allocation percentages that you specify must always be in whole numbers and
total exactly 100%.
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You can choose among variable investment options.
-------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS. The available variable investment options are
listed on the front cover of this prospectus. (Your policy and other
supplemental materials may refer to these as "Investment Funds.") The
investment results you will achieve in any one of these options will depend on
the investment performance of the corresponding Portfolio that shares the same
name as that option. That Portfolio follows investment practices, policies and
objectives that are appropriate to the variable investment option you have
chosen. The advisors who make the investment decisions for each Portfolio are
as follows:
o Alliance Capital Management L.P. (for each "Alliance" or "EQ/Alliance"
option; also, jointly advises EQ/Aggressive Stock)
o Bankers Trust Company (for the "BT" options)
o Capital Guardian Trust Company (for the "Capital Guardian" options)
o Evergreen Asset Management Corp. (for the "EQ/Evergreen" options)
o J.P. Morgan Investment Management Inc. (for the "J. P. Morgan" option)
o Lazard Asset Management (for both "Lazard" options)
o Massachusetts Financial Services Company (for the "MFS" options; also,
jointly advises EQ/Aggressive Stock)
o Mercury Asset Management US (for both "Mercury" options)
o Morgan Stanley Asset Management Inc. (for the "Morgan Stanley" option)
o Putnam Investment Management, Inc. (for the "EQ/Putnam" options)
Each Portfolio is a part of EQ Advisors Trust. Equitable Life
serves as investment manager of EQ Advisors Trust. As such,
<PAGE>
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15 POLICY FEATURES AND BENEFITS
--------------------------------------------------------------------------------
Equitable Life oversees the activities of the above-listed advisors with
respect to EQ Advisors Trust and is responsible for retaining or discontinuing
the services of those advisors. (Prior to September 1999, EQ Financial
Consultants, Inc., the predecessor to AXA Advisors, LLC and an affiliate of
Equitable Life, served as investment manager to EQ Advisors Trust.) You will
find other important information about each Portfolio in the separate
prospectus for EQ Advisors Trust attached at the end of this prospectus. We
may add or delete variable investment options or Portfolios at any time.
YOUR OPTIONS FOR RECEIVING POLICY PROCEEDS
BENEFICIARY OF DEATH BENEFIT. You designate your policy's beneficiary in your
policy application. You can change the beneficiary at any other time during
the insured person's life. If no beneficiary is living when the insured person
dies, we will pay the death benefit proceeds in equal shares to the insured
person's surviving children. If there are no surviving children, we will
instead pay the insured person's estate.
PAYMENT OPTIONS FOR DEATH BENEFIT. In your policy application, or at any other
time during the insured person's life, you may choose among several payment
options for all or part of any death benefit proceeds that subsequently become
payable. These payment options are described in the policy and may result in
varying tax consequences. A payment option selected by the policy's owner
cannot be changed by the beneficiary after the insured person dies. The terms
and conditions of each option are set out in a separate contract that we will
send to the payee when a payment option goes into effect. Equitable Life or
your financial professional can provide you with samples of such contracts on
request.
-------------------------------------------------------------------------------
You can choose to have the proceeds from the policy's life insurance benefit
paid under one of our payment options, rather than as a single sum.
-------------------------------------------------------------------------------
If you have not elected a payment option, we will pay any death benefit in a
single sum. If the beneficiary is a natural person (i.e., not an entity such
as a corporation or trust) we will pay any such single sum death benefit
through an interest-bearing checking account (the "Equitable Access
Account(TM)") that we will automatically open for the beneficiary. The
beneficiary will have immediate access to the proceeds by writing a check on
the account. We pay interest on the proceeds from the date of death to the
date the beneficiary closes the Equitable Access Account.
If a financial professional has assisted the beneficiary in preparing the
documents that are required for payment of the death benefit, we will send the
Equitable Access Account checkbook or check to the financial professional
within the periods specified for death benefit payments under "When we pay
policy proceeds," below. Your financial professional will take reasonable
steps to arrange for prompt delivery to the beneficiary.
PAYMENT OPTIONS FOR SURRENDER AND PARTIAL WITHDRAWAL PROCEEDS. You can also
choose to receive all or part of any proceeds from a surrender or partial
withdrawal from your policy under one of the above referenced payment options,
rather than as a single sum.
YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS
If for any reason you are not satisfied with your policy, you may return it to
us for a full refund of the initial premium you paid, less the amount of any
outstanding policy loan and loan interest. In some states, we will adjust this
amount for any investment performance (whether positive or negative).
To exercise this cancellation right, you must mail the policy directly to our
Administrative Office with a written request to cancel. Your cancellation
request must be postmarked within 10 days after you receive the policy and
your coverage will terminate as of the date of the postmark. In some states,
this "free look" period is longer than 10 days. Your policy will indicate the
length of your "free look" period.
<PAGE>
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16 POLICY FEATURES AND BENEFITS
--------------------------------------------------------------------------------
VARIATIONS AMONG ACCUMULATOR LIFE POLICIES
Time periods and other terms and conditions described in this prospectus may
vary due to legal requirements in your state. These variations will be
reflected in your policy.
Equitable Life also may vary the charges and other terms of Accumulator Life
where special circumstances result in sales or administrative expenses or
mortality risks that are different from those normally associated with
Accumulator Life. We will make such variations only in accordance with uniform
rules that we establish.
Equitable Life or your financial professional can advise you about any
variations that may apply to your policy.
OTHER EQUITABLE LIFE POLICIES
We offer a variety of fixed and variable life insurance policies which offer
policy features, including investment options, that are different from those
offered by this prospectus. Not every policy is offered through your financial
professional. You can contact us to find out more about any other Equitable
Life insurance policy.
<PAGE>
2
Determining your policy's value
------
17 DETERMINING YOUR POLICY'S VALUE
--------------------------------------------------------------------------------
YOUR ACCOUNT VALUE
We credit your initial premium payment (and any permitted additional premium)
to your policy's "account value." We use your instructions to allocate your
unloaned account value to one or more of the policy's variable investment
options indicated on the front cover of this prospectus.
Your account value is the total of (i) your amounts in our variable investment
options, and (ii) any amounts that we are holding to secure policy loans that
you have taken (including any interest on those amounts which has not yet been
allocated to the variable investment options). See "Borrowing from your
policy" below. (Your policy and other supplemental material may refer to (ii)
above as your "Loaned Policy Account.") These amounts are subject to certain
charges discussed in "Charges and expenses you will pay" above.
-------------------------------------------------------------------------------
Your value in the variable investment options reflects the returns that are
achieved by the Portfolios that you select, as well as any charges we deduct
under the policy.
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YOUR POLICY'S VALUE IN OUR VARIABLE INVESTMENT OPTIONS. We invest the account
value that you have allocated to any variable investment option in shares of
the corresponding Portfolio. Your value in each variable investment option is
measured by "units."
The number of your units in any variable investment option does not change,
absent an event or transaction under your policy that involves moving assets
into or out of that option. Whenever any amount is withdrawn or otherwise
deducted from one of your policy's variable investment options, we "redeem"
(cancel) the number of units that has a value equal to that amount. This can
happen, for example, when all or a portion of monthly deductions and
transaction-based charges are allocated to that option, or when loans,
transfers, and partial withdrawals or full surrenders are made from that
option. Similarly, you "purchase" additional units having the same value as
the amount of your premium, any loan repayment, or a transfer that you
allocate to that option.
The value of each unit will increase or decrease each day, by the same amount
as if you had invested in the corresponding Portfolio's shares directly (and
reinvested all dividends and distributions from the Portfolio in additional
Portfolio shares). The units' values will be reduced, however, by the amount
of the mortality and expense risk charge for that period. (See "Table of
policy charges" under "Charges and expenses you will pay" above.) On any day,
your value in any variable investment option equals the number of units
credited to your policy under that option, multiplied by that day's value for
one such unit.
<PAGE>
3
Transferring your money among our variable
investment options
------
18 TRANSFERRING YOUR MONEY AMONG OUR VARIABLE INVESTMENT OPTIONS
--------------------------------------------------------------------------------
TRANSFERS YOU CAN MAKE
-------------------------------------------------------------------------------
You can transfer among our variable investment options.
-------------------------------------------------------------------------------
After your policy's Allocation Date, you can transfer amounts from one
variable investment option to another. You may submit a written request for a
transfer to our Administrative Office, you can make a telephone request or you
can make a request over the Internet (see below).
TRANSFER CHARGE. We do not currently make any charge for transfers. We reserve
the right, however, to impose up to a $25 charge for each transfer you make.
This charge does not apply to any transfer pursuant to our dollar cost
averaging service or our asset rebalancing service, both discussed below.
TELEPHONE AND EQACCESS TRANSFERS
TELEPHONE TRANSFERS. You can make telephone transfers by following one of two
procedures:
o if you are both the policy's insured person and its owner, by calling
1-888-855-5100 (toll free) from a touch tone phone; or
o if you are not both the insured person and owner, by sending us a signed
telephone transfer authorization form. Once we have the form on file, we
will provide you with a toll-free telephone number to make transfers.
For more information see "Telephone and EQAccess requests" later in this
prospectus. We allow only one request for telephone transfers each day
(although that request can cover multiple transfers), and we will not allow
you to revoke a telephone transfer. If you are unable to reach us by
telephone, you should send a written transfer request to our Administrative
Office.
EQACCESS TRANSFERS. By the end of 2000, we anticipate that you will be able to
make transfers over the Internet. You may do this by visiting our Web site and
enrolling in EQAccess. This service may not always be available. Generally,
the restrictions relating to telephone transfers apply to EQAccess transfers.
MARKET TIMING. We reserve the right to limit your access to telephone or
EQAccess transfers if we determine that you are engaged in a market timing
strategy. See "Transfers of your account value - Market timing" later in this
prospectus.
OUR DOLLAR COST AVERAGING SERVICE
We offer a dollar cost averaging service. This service allows you to gradually
allocate amounts to the variable investment options by periodically
transferring approximately the same dollar amount to the variable investment
options you select. This will cause you to purchase more units if the unit's
value is low, and fewer units if the unit's value is high. Therefore, you may
get a lower average cost per unit over the long term.
-------------------------------------------------------------------------------
Using the dollar cost averaging service does not guarantee that you will earn
a profit or be protected against losses.
-------------------------------------------------------------------------------
Our dollar cost averaging service (also referred to as our "automatic transfer
service") enables you to make automatic monthly transfers from the Alliance
Money Market option to our other variable investment options. You may elect
the dollar cost averaging service with your policy application or at any later
time (provided you are not using the asset rebalancing service described
below). At least $5,000 must be allocated to the Alliance Money Market option
to begin using the dollar cost averaging service. You can choose up to eight
other variable investment options to receive the automatic transfers, but each
transfer to each option must be at least $50.
The service terminates when the Alliance Money Market option is depleted. You
can also cancel the dollar cost averaging service at any time. You may not
simultaneously participate in the asset rebalancing service and the dollar
cost averaging service.
<PAGE>
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19 TRANSFERRING YOUR MONEY AMONG OUR VARIABLE INVESTMENT OPTIONS
--------------------------------------------------------------------------------
OUR ASSET REBALANCING SERVICE
You may wish us to periodically redistribute the amounts you have in our
variable investment options so that the relative amount of your account value
in each variable option is restored to an asset allocation that you select.
You can accomplish this automatically through our asset rebalancing service.
The rebalancing may be at quarterly, semiannual or annual intervals.
You may specify asset allocation percentages for up to eight variable
investment options. The allocation percentage you specify for each variable
investment option selected must be at least 5% (whole percentage only) of the
total value you hold under the variable investment options, and the sum of the
percentages must equal 100%. You may not simultaneously participate in the
asset rebalancing service and the dollar cost averaging service (discussed
above).
You may request the asset rebalancing service in your policy application or at
any later time. You may change your allocation instructions or discontinue
participation in the asset rebalancing service at any time.
<PAGE>
4
Accessing your money
------
20 ACCESSING YOUR MONEY
--------------------------------------------------------------------------------
BORROWING FROM YOUR POLICY
You may borrow up to 90% of the difference between your policy's account value
and any surrender charges that are in effect under your policy. (In your
policy, this "difference" is referred to as your "cash surrender value".)
However, the amount you can borrow will be reduced by any other loans (and
loan interest) you have outstanding. There is a $500 minimum for the initial
loan and for each new policy loan you request. (This minimum loan amount may
vary by state.)
When you take a policy loan, we remove an amount equal to the loan from one or
more of your variable investment options and hold it as collateral for the
loan's repayment. (Your policy may sometimes refer to the collateral as the
"loaned policy account.") We hold this loan collateral as part of our general
assets.
-------------------------------------------------------------------------------
You can use policy loans to obtain funds from your policy without surrender
charges. However, you may be subject to tax consequences and the borrowed
amount is no longer credited with the investment results of any of our
variable investment options under the policy. Instead, you are charged loan
interest on your loan balance while the collateral we hold for the borrowed
amount is credited with interest at rates we determine.
-------------------------------------------------------------------------------
YOU MAY BE REQUIRED TO CURRENTLY INCLUDE ALL OR A PORTION OF THE AMOUNT YOU
BORROW IN YOUR INCOME FOR TAX PURPOSES AND YOU MAY ALSO BE SUBJECT TO A TAX
PENALTY IF YOU ARE UNDER 59 1/2 YEARS OF AGE IF YOUR POLICY IS CONSIDERED A
"MODIFIED ENDOWMENT CONTRACT" ("MEC"). Even if your policy is not a MEC, and
a loan is not taxable when made, it may later become taxable, for example,
upon termination or surrender. See "Tax information" below for a discussion of
the tax consequences of policy loans.
Note that you cannot make transfers or partial withdrawals of the collateral
and the collateral is not available to pay policy charges.
When you request your loan, you should tell us how much of the loan collateral
you wish to have taken from any amounts you have in each of our variable
investment options. If you do not give us directions (or if we are making the
loan automatically to cover unpaid loan interest), we will take the loan from
your variable investment options in the same proportion as we are then taking
monthly deductions for charges. If that is not possible, we will take the loan
from your variable investment options in proportion to your value in each.
In some cases, your policy may be issued with a loan if your policy was issued
as a result of the exchange of another life insurance policy under Section
1035 of the Internal Revenue Code. If your old policy had an existing loan, we
may permit that loan to be transferred (or carried over) to your new
Accumulator Life policy, subject to our procedures in effect at such time. Any
value representing your transferred loan will be immediately set aside as
collateral for your loan's repayment, and will not be allocated to the
variable investment options.
LOAN INTEREST WE CHARGE. The interest we charge on a policy loan accrues daily
at a fixed loan interest rate of 6%. Loan interest payments are due on each
policy anniversary. If not paid when due, we automatically add the interest as
a new policy loan, as described above. This new policy loan will generally
have tax and other consequences as described for policy loans you request,
even though no actual disbursement of loan proceeds occurs. If we add unpaid
loan interest to your loan, and your policy is a modified endowment contract,
there may be adverse tax consequences. See "Tax information" below.
INTEREST THAT WE CREDIT ON LOAN COLLATERAL. The annual interest rate we credit
on your loan collateral will be at least 4%. We guarantee that this rate will
never be less than that unless tax law changes increase the taxes we pay on
policy loans or loan interest.
Currently, after the first policy year, we credit a "preferred" interest rate
on a portion of your loan collateral. This preferred rate is equal to the
interest rate we charge on your loans, 6%. This 6% preferred rate is not
guaranteed and we may at any time reduce or discontinue crediting interest at
any rate above 4%. The maximum amount of loan collateral
<PAGE>
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21 ACCESSING YOUR MONEY
--------------------------------------------------------------------------------
that can qualify for preferred status is determined at the end of each policy
year for the following year (or as of the effective date of any restoration,
if later). It is the excess (if any) of your account value on that date over
the sum of your initial and any additional premium payment. The maximum amount
at any other time during the policy year is determined as the maximum amount
at the beginning of the policy year, accumulated at the preferred rate.
We credit interest on your loan collateral daily. On each anniversary of your
policy (or when your policy loan is fully repaid) we allocate that interest to
your policy's variable investment options in the same proportions as if it
were a premium payment.
POSSIBILITY OF POLICY TERMINATION. In addition to the tax and other effects
described above, a loan can reduce the length of time that your insurance
remains in force, because your policy could terminate in certain circumstances
if you fail to repay your loan or to pay loan interest. See "Policy `lapse'
and termination" above. The amount we set aside as loan collateral cannot be
used to pay policy charges as they become due. See "Failure to repay a loan or
loan interest" below. A loan will also cause your guaranteed minimum death
benefit to become unavailable if the net cash surrender value of your policy
is not sufficient to pay monthly charges as they become due. We will deduct
any outstanding policy loan plus loan interest from any policy's proceeds if
you do not pay it back.
PAYING OFF YOUR LOAN. You can repay all or part of your loan at any time. If
you send us more than all of the loan principal and accrued interest you owe,
we will refund the excess portion of the payment. When you send us a loan
repayment, we will transfer an amount equal to such repayment from your loan
collateral back to the variable investment options under your policy. We will
allocate any repayments among variable investment options as you instruct; or,
if you don't instruct us, in the same proportion as your premium allocation
percentages then in effect.
FAILURE TO REPAY A LOAN OR LOAN INTEREST. In addition to the effects discussed
above, if you fail to repay a loan and the accrued loan interest, and, at the
beginning of a policy month, the policy's net cash surrender value is less
than the monthly charges then due, (i) your policy could terminate (see
"Policy termination" above) and (ii) you are not permitted to make transfers
or to change allocation instructions for loan repayments or monthly
deductions.
MAKING WITHDRAWALS FROM YOUR POLICY
You may make a partial withdrawal of your net cash surrender value at any time
after the first year of your policy. The request must be for at least $500,
and the policy's account value after the partial withdrawal, and after the
deduction of any applicable surrender charge, must be at least $25,000, or we
will decline your request. If your withdrawal is subject to a surrender
charge, we deduct the amount of that charge from your account value in
addition to the amount you requested. If you do not tell us from which
variable investment options you wish us to take the partial withdrawal (as
well as any surrender charge), we will use the same allocation that then
applies for the monthly deductions we make for charges; and, if that is not
possible, we will take the partial withdrawal (and any surrender charge) from
all of your variable investment options in proportion to your value in each.
-------------------------------------------------------------------------------
You can withdraw all or part of your policy's net cash surrender value,
although you may incur charges and tax consequences by doing so.
-------------------------------------------------------------------------------
We charge any applicable surrender charge on the portion of any partial
withdrawal that is not treated as a "free withdrawal." The surrender charge we
impose is the applicable surrender charge percentage multiplied by the lesser
of: (i) the amount of the withdrawal that does not qualify as a free
withdrawal (as discussed below), and (ii) the initial premium less the amount
of any previous partial withdrawals that incurred a surrender charge. The
applicable surrender charge percentages are shown under "Charges and expenses
you will pay" above.
FREE WITHDRAWAL. Beginning in the second policy year you can take as a free
withdrawal 15% of your policy's account value (less outstanding loans and loan
interest) as
<PAGE>
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22 ACCESSING YOUR MONEY
--------------------------------------------------------------------------------
determined as of the end of the previous policy year (or as of the effective
date of any restoration, if later). Multiple withdrawals taken in any one
policy year are aggregated for this purpose. Each year your "free withdrawal"
amount is redetermined, but amounts that were not withdrawn in a policy year
cannot be carried over to the next policy year. A free withdrawal is "free"
from surrender charges. It is not free from any income tax consequences
resulting from the withdrawal.
EFFECT OF PARTIAL WITHDRAWAL ON INSURANCE COVERAGE. A partial withdrawal
automatically reduces your net cash surrender value on a dollar-for-dollar
basis by the amount of the withdrawal. A partial withdrawal also automatically
reduces your policy's account value on a dollar-for-dollar basis by the amount
of the withdrawal plus any applicable surrender charge. A partial withdrawal
also results in a reduction in your policy's guaranteed minimum death benefit
by the proportion that the partial withdrawal bears to the policy account value
just prior to the partial withdrawal. For example, if the requested partial
withdrawal equals 10% of your policy's account value prior to the withdrawal,
your guaranteed minimum death benefit would be reduced by 10%.
Thus, if you take a partial withdrawal, your policy's death benefit will be
the greater of (i) a multiple of the now-reduced account value or (ii) its
now-reduced guaranteed minimum death benefit.
You should refer to "Tax information" below, for information about possible
tax consequences of partial withdrawals and any associated reduction in policy
benefits. If you have an unpaid policy loan, a partial withdrawal may also
increase the chance that your policy could lapse because of insufficient value
to pay policy charges as they fall due.
SURRENDERING YOUR POLICY FOR ITS NET CASH SURRENDER VALUE
You can fully surrender (give us back) your policy for its "net cash surrender
value" at any time. The net cash surrender value equals your account value,
minus any outstanding loans and unpaid loan interest, and minus any surrender
charge that then remains applicable.
The surrender charge we impose on a full surrender is the applicable surrender
charge percentage multiplied by the amount of the initial premium, as adjusted
for any prior partial withdrawals. For purposes of this calculation, the
amount of the initial premium would be reduced by the amounts of any prior
partial withdrawals that incurred a surrender charge. The surrender charge
percentages are shown in "Charges and expenses you will pay" above.
A full surrender causes your policy and all insurance benefits to terminate.
Please refer to "Tax information" below for the possible tax consequences of
surrendering your policy.
<PAGE>
5
Tax information
------
23 TAX INFORMATION
--------------------------------------------------------------------------------
This discussion is based on current federal income tax law and
interpretations. It assumes that the policyowner is a natural person who is a
U.S. citizen and resident. The tax effects on corporate taxpayers, non-U.S.
residents or 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
a qualified tax advisor.
BASIC TAX TREATMENT FOR YOU AND YOUR BENEFICIARY
An Accumulator Life policy will be treated as "life insurance" for federal
income tax purposes (a) if it meets the definition of life insurance under
Section 7702 of the Internal Revenue Code (the "Code") and (b) as long as the
investments made by the underlying Portfolios satisfy certain investment
diversification requirements under Section 817(h) of the Code. We believe that
the policies will meet these requirements and, therefore, that
o the death benefit received by the beneficiary under your policy will
generally not be subject to federal income tax; and
o increases in your policy's 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 surrender, a
partial withdrawal, loan or a payment to you.
There may be different tax consequences if you assign your policy or designate
a new owner. See "Assigning your policy" below.
TAX TREATMENT OF DISTRIBUTIONS TO YOU
The federal income tax consequences of a distribution from your policy depend
on whether your policy is a "modified endowment contract" (sometimes also
referred to as a "MEC"). In all cases, however, the character of any income
described below as being taxable to the recipient will be ordinary income (as
opposed to capital gain).
TESTING FOR MODIFIED ENDOWMENT CONTRACT ("MEC") STATUS. In all cases where you
have purchased your policy with a single premium, your policy will be a
"modified endowment contract." Additionally, a life insurance policy that you
receive in exchange for another life insurance policy that was a modified
endowment contract will also be considered a modified endowment contract.
If you acquire your policy through the exchange of an existing life insurance
policy that is not itself a modified endowment contract, your new policy will
generally not be a modified endowment contract. There are two exceptions:
(1) if there is a reduction in benefits below the level that would have caused
your existing policy to become a modified endowment. This will not be the
case if the existing policy was not subject to (or was grandfathered from)
modified endowment contract testing or beyond any seven-year testing
period. We will request the issuer of any existing contract being
exchanged to provide us with information necessary to determine the new
contract's status.
(2) if you decide to make an additional premium payment at such later time as
the policy may permit.
TAXATION OF PRE-DEATH DISTRIBUTIONS IF YOUR POLICY IS A MODIFIED ENDOWMENT
CONTRACT. Any distribution from your policy will be taxed on an "income-first"
basis if your policy is a modified endowment contract. Distributions for tax
purposes 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 account value exceeds your basis in the policy. (For
modified endowment contracts, your basis in the policy is equal to your
initial single premium, increased by any permitted additional premium and
reduced by the amount of any previous distributions from your policy that were
not taxable. If your policy was acquired through a tax free exchange, however,
your basis will generally equal the basis carried over from the policy you
exchanged, increased by any additional premium and reduced by any previous
distributions that
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were not taxable. Your basis also 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
endowment contracts issued by Equitable Life (or its affiliate) to the same
owner during any calendar year are treated as if they were a single contract.
A 10% penalty tax also will apply to the taxable portion of most distributions
from a policy that is a modified endowment contract. The penalty tax will not,
however, apply to (i) taxpayers whose actual age is at least 59 1/2, (ii)
distributions in the case of a disability (as defined in the Code) or (iii)
distributions 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 or her
beneficiary.
Interest charged on the loan will generally not be tax deductible, although
interest credited on loan collateral may become taxable if distributed under
the policy. IF YOUR POLICY TERMINATES AFTER A GRACE PERIOD, THE EXTINGUISHMENT
OF ANY THEN-OUTSTANDING POLICY LOAN AND UNPAID LOAN INTEREST WILL BE TREATED
AS A DISTRIBUTION (to the extent the loan was not previously treated as a
distribution) and could be subject to tax, including the 10% penalty tax, as
described above. In addition, upon a full surrender, any excess of the
proceeds we pay (including any amounts we use to discharge any loan) over your
basis in the policy, will be subject to federal income tax and, unless an
exception applies, the 10% penalty tax.
TAXATION OF PRE-DEATH DISTRIBUTIONS IF YOUR POLICY IS NOT A MODIFIED ENDOWMENT
CONTRACT. As long as your policy remains in force as a non-modified endowment
contract, policy loans will be treated as indebtedness, and no part of the
loan proceeds will be subject to current federal income tax. Interest charged
on the loan will generally not be tax deductible, although interest credited
on loan collateral may become taxable under the rules below if distributed.
If you make a partial withdrawal after the first 15 years of your policy, the
proceeds will not be subject to federal income tax except to the extent such
proceeds exceed your "basis" in your policy. (Your basis generally will equal
the basis carried over from the old life policy you exchanged, if the exchange
was a tax free exchange, less the amount of any distributions from your policy
that were not taxable. We need to receive this basis information from the
issuer of the old life policy.) During the first 15 years, however, the
proceeds from a partial withdrawal are likely to be subject to federal income
tax, under a complex formula, to the extent that your account value exceeds
your basis.
Upon full surrender, any amount by which the proceeds we pay (including
amounts we use to discharge any policy loan and unpaid loan interest) exceed
your basis in the policy will be subject to federal income tax. IN ADDITION,
IF A POLICY TERMINATES AFTER A GRACE PERIOD, THE EXTINGUISHMENT OF ANY
THEN-OUTSTANDING POLICY LOAN AND UNPAID LOAN INTEREST WILL BE TREATED AS A
DISTRIBUTION AND COULD BE SUBJECT TO TAX UNDER THE FOREGOING RULES. Finally,
if you make an assignment of rights or benefits under your policy, you may be
deemed to have received a distribution from your policy, all or part of which
may be taxable.
Distributions that occur during a year of your policy in which it becomes a
modified endowment contract, and during any subsequent years, will be taxed as
described above for a policy which is a modified endowment contract. In
addition, distributions from a policy within two years before it becomes a
modified endowment contract also will be subject to tax in this manner. This
means that a distribution made from a policy that is not a modified endowment
contract could later become taxable as a distribution from a modified
endowment contract.
RESTORATION OF A TERMINATED POLICY. For tax purposes, some restorations of a
policy that terminated after a grace period may be treated as the purchase of
a new policy.
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EFFECT OF POLICY ON INTEREST DEDUCTIONS TAKEN BY BUSINESS ENTITIES
OWNERSHIP OF A POLICY BY A TRADE OR BUSINESS ENTITY CAN LIMIT THE AMOUNT OF
ANY INTEREST ON BUSINESS BORROWINGS THAT ENTITY OTHERWISE COULD DEDUCT for
federal income tax purposes, even though such business borrowings may be
unrelated to the policy. To avoid the limit, the insured person must be an
officer, director, employee or 20% owner of the trade or business entity when
coverage on that person commences.
The limit does not generally apply for policies owned by natural persons (even
if those persons are conducting a trade or business as sole proprietorships),
unless a trade or business entity that is not a sole proprietorship is a
direct or indirect beneficiary under the policy. ENTITIES COMMONLY HAVE SUCH A
BENEFICIAL INTEREST, FOR EXAMPLE, IN SO-CALLED "SPLIT DOLLAR" ARRANGEMENTS. If
the trade or business entity has such an interest in a policy, it will be
treated the same as if it owned the policy for purposes of the limit on
deducting interest on unrelated business income.
The limit generally applies only to policies issued after June 8, 1997 in
taxable years ending after such date. However, for this purpose, any material
increase in death benefit as a result of any additional premium payment, or
other material change in a policy, will be treated as the issuance of a new
policy.
In cases where the above-discussed limit on deductibility applies, the
non-deductible portion of unrelated interest on business loans is determined
by multiplying the total amount of such interest by a fraction. The numerator
of the fraction is the policy's average account value (excluding amounts we
are holding to secure any policy loans) for the year in question, and the
denominator is the average for the year of the aggregate tax bases of all the
entity's other assets.
Any corporate, trade, or business use of a policy should be carefully reviewed
by your tax advisor with attention to these rules, as well as the other rules
and possible pending legislative proposals which might further restrict
available exceptions to this limit on interest deductions or make other tax
law changes with respect to such coverage.
REQUIREMENT THAT WE DIVERSIFY INVESTMENTS
Under Section 817(h) of the Code, the Treasury Department has issued
regulations that implement investment diversification requirements. Failure to
comply with these regulations would disqualify your policy as a life insurance
policy under Section 7702 of the Code. If this were to occur, you would be
subject to federal income tax on any income and gains under the policy and the
death benefit proceeds would lose their income tax-free status. These
consequences would continue for the period of the disqualification and for
subsequent periods. Through the Portfolios, we intend to comply with the
applicable diversification requirements.
ESTATE, GIFT, AND GENERATION-SKIPPING TAXES
If the policy's owner is the insured person, the death benefit will generally
be includable in the owner's estate for purposes of federal estate tax. If the
owner is not the insured person, and the owner dies before the insured person,
the value of the policy would be includable in the owner's estate. If the
owner is neither the insured person nor the beneficiary, the owner will be
considered to have made a gift to the beneficiary of the death benefit
proceeds when they become payable.
In general, a person will not owe estate or gift taxes until gifts made by
such person, plus that person's taxable estate, total at least $675,000 (a
figure that is scheduled to rise at periodic intervals to $1 million by the
year 2006). For this purpose, however, certain amounts may be deductible or
excludable, such as gifts and bequests to the person's spouse or charitable
institutions and certain gifts of $10,000 or less per year for each recipient.
As a general rule, if you make a "transfer" to a person two or more generations
younger than you, a generation-skipping tax may be payable. Generation-skipping
transactions would include, for example, a case where a grandparent "skips" his
or her
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children and names grandchildren as a policy's beneficiaries. In that case,
the generation-skipping "transfer" would be deemed to occur when the insurance
proceeds are paid. The generation-skipping tax rates are similar to the
maximum estate tax rate in effect at the time. Individuals, however, are
generally allowed an aggregate generation-skipping tax exemption of $1 million
(indexed annually for inflation, $1,030,000 for 2000).
The particular situation of each policyowner, insured person or beneficiary
will determine how ownership or receipt of policy proceeds will be treated for
purposes of federal estate, gift and generation-skipping taxes, as well as
state and local estate, inheritance and other taxes. Because these rules are
complex, you should consult with a qualified tax adviser for specific
information, especially where benefits are passing to younger generations.
EMPLOYEE BENEFIT PROGRAMS
This Accumulator Life policy is not designed, nor intended, to be sold into
employee benefit programs. Special rules apply to sales of life insurance
policies to the following programs:
PENSION AND PROFIT-SHARING PLANS. There are special limits on the amount of
insurance that may be purchased by a trust or other entity that forms part of
a pension or profit-sharing plan qualified under Section 401(a) or 403 of the
Code. In addition, the federal income tax consequences will be different from
those described in this prospectus. These rules are complex, and you should
consult a qualified tax advisor.
OTHER EMPLOYEE BENEFIT PROGRAMS. Complex rules may also apply when a policy is
held by an employer or a trust, or acquired by an employee, in connection with
the provision of other employee benefits. Among other issues, these
policyowners must consider whether the policy was applied for by or issued to
a person having an insurable interest under applicable state law and with the
insured person's consent. The lack of an insurable interest or consent 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 receive a
death benefit.
ERISA. Employers and employer-created trusts may be subject to reporting,
disclosure and fiduciary obligations under the Employee Retirement Income
Security Act of 1974. You should consult a qualified legal advisor.
OUR TAXES
The operations of our Separate Account FP are reported in our federal income
tax return. The separate account's investment income and capital gains,
however, are, for tax purposes, reflected in our variable life insurance
policy reserves. Therefore, we currently pay no taxes on such income and gains
and impose no charge for such taxes. We reserve the right to impose a charge
in the future for taxes incurred; for example, a charge to the separate
account for income taxes incurred by us that are allocable to the policies.
If our state, local or other tax expenses increase, we may add or increase our
charges for such taxes when they are attributable to Separate Account FP,
based on premiums, or otherwise allocable to the policies.
WHEN WE WITHHOLD TAXES FROM DISTRIBUTIONS
Generally, unless you provide us with a satisfactory written election to the
contrary prior to the distribution, we are required to withhold income tax
from any proceeds we distribute as part of a taxable transaction under your
policy. If you do not wish us to withhold tax from the payment, or if we do
not withhold enough, you may have to pay later, and you may incur penalties
under the estimated income tax rules. In some cases, where generation-skipping
taxes may apply, we may also be required to withhold for such taxes unless we
are provided satisfactory notification that no such taxes are due. States may
also require us to withhold tax on distributions to you. Special withholding
rules apply if you are not a U.S. resident or U.S. citizen.
POSSIBILITY OF FUTURE TAX CHANGES
The U.S. Congress frequently considers legislation that, if enacted, could
change the tax treatment of life insurance policies or increase the taxes we
pay in connection with such
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policies. In addition, the Treasury Department may amend existing regulations,
issue regulations on the qualification of life insurance and modified
endowment contracts, or adopt new or clarifying interpretations of existing
law. State and local tax law or, if you are not a U.S. citizen and resident,
foreign tax law, may also affect the tax consequences to you, the insured
person or your beneficiary, and are subject to change or changes of
interpretation. Any changes in federal, state, local or foreign tax law or
interpretations could have a retroactive effect, both on our taxes and the way
your policy is taxed.
The Treasury Department has the authority to issue guidelines prescribing the
circumstances in which your ability to direct your investment to particular
Portfolios within an insurance policy may cause you, rather than the insurance
company, to be treated as the owner of the Portfolio shares attributable to
your policy. In that case, income and gains attributable to such Portfolio
shares would be included in your gross income for federal income tax purposes.
Under current law, however, we believe that Equitable Life, and not the owner
of a policy, would be considered the owner of the Portfolio shares.
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This section provides further detail about certain subjects that are addressed
in the previous pages. The following discussion generally does not repeat the
information already contained in those pages.
WAYS TO MAKE PREMIUM AND LOAN PAYMENTS
CHECKS AND MONEY ORDERS. Your initial single premium, any permitted additional
premium or any loan repayment generally must be paid by check or money order
drawn on a U.S. bank in U.S. dollars and made payable to "Equitable Life."
We prefer that you make each payment to us with a single check drawn on your
business or personal bank account. We also will accept a single money order,
bank draft or cashier's check payable directly to Equitable Life, although we
must report such "cash equivalent" payments to the Internal Revenue Service
under certain circumstances. Cash and travelers' checks, or any payments in
foreign currency, are not acceptable. We will not accept third-party checks
payable to someone other than Equitable Life.
EXCHANGES OF EXISTING LIFE INSURANCE POLICIES. We may, under certain
circumstances, permit you to exchange an existing life insurance policy for an
Accumulator Life policy. In this regard, we will follow our established
administrative procedures in effect at that time. We will apply these
procedures uniformly and will not unfairly discriminate. We will generally
require the use of special forms for this purpose.
REQUIREMENTS FOR SURRENDER REQUESTS
Your surrender request must include the policy number, your name, your tax
identification number, the name of the insured person, and the address where
proceeds should be mailed. The request must be signed by you, as the owner,
and by any joint owner, collateral assignee or irrevocable beneficiary. We may
also require you to complete specific tax forms.
Finally, in order for your surrender request to be complete, you must return
your policy to us. Your request will not be deemed complete until we receive
all required items. See "Dates and prices at which policy events occur" below
for information regarding the pricing of your request.
WAYS WE PAY POLICY PROCEEDS
The payee for death benefit or other policy proceeds (e.g. upon surrenders)
may name a successor to receive any amounts that we still owe following the
payee's death. Otherwise, we will pay any such amounts to the payee's estate.
We must approve any payment 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 payment 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, withdrawals or commutation
rights (your rights to receive payments over time, for which we may offer a
lump sum payment), the naming of payees, and the methods for proving the
payee's age and continued survival.
ASSIGNING YOUR POLICY
You may assign (transfer) your rights in a policy to someone else as
collateral for a loan, to effect a change of ownership or for some other
reason, if we agree. A copy of the assignment must be forwarded to our
Administrative Office. We are not responsible for any payment we make or any
action we take before we receive notice of the assignment or for the validity
of the assignment. An absolute assignment is a change of ownership.
Certain transfers for value may subject you to income tax and penalties and
cause the death benefit to lose its income-tax free treatment. A gift of a
policy that has a loan outstanding may be treated as part gift and part
transfer for value, which could result in both gift tax and income tax
consequences. An assignment of a life insurance policy that is a modified
endowment contract as collateral for a loan
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will generally be treated as a distribution under the policy for income tax
purposes. You should consult your tax advisor prior to making a transfer or
other assignment.
DATES AND PRICES AT WHICH POLICY EVENTS OCCUR
We describe below the general rules for when, and at what prices, events under
your policy will occur. Other portions of this prospectus describe
circumstances that may cause exceptions. We generally do not repeat those
exceptions below.
DATE OF RECEIPT. Where this prospectus refers to the day when we receive a
payment, request, election, or notice from you, we usually mean the day on
which that item (or the last thing necessary for us to process that item)
arrives in complete and proper form at our Administrative Office or via the
appropriate telephone or fax number if the item is a type we accept by those
means. There are two main exceptions: if the item arrives (1) on a day that is
not a business day or (2) after the close of a business day, then, in each
case, we are deemed to have received that item on the next business day.
BUSINESS DAYS. Every day that the New York Stock Exchange is open for regular
trading is a business day for us. Each business day ends at the time regular
trading on the exchange closes (or is suspended) for the day. We compute unit
values for our variable investment options as of the end of each business day.
This usually is 4:00 p.m., Eastern Time.
PAYMENTS AND REQUESTS YOU MAKE. Loan repayments, any permitted additional
premium payment, and interest payments are reflected in your policy as of the
date we receive them.
The following transactions occur (and receive the prices) as
of the date we receive your request:
o partial withdrawals
o account value and guaranteed minimum death benefit decreases that result
from partial withdrawals
o tax withholding elections
o changes of allocation percentages
o surrenders
o changes of beneficiary
o changes in form of death benefit payment
o loans
o transfers among variable investment options
o assignments
Restoration of terminated policies occurs on your policy's next monthly
anniversary that coincides with or follows the date we approve your request.
DOLLAR COST AVERAGING SERVICE. Transfers pursuant to our dollar cost averaging
service (automatic transfer service) occur as of the first day of each policy
month. If you request the dollar cost averaging service in your original
policy application, the first transfer will occur as of the first day of the
second policy month after your policy's initial Allocation Date. If you
request this service at any later time, we make the first such transfer as of
your policy's first monthly anniversary that coincides with or follows the
date we receive your request.
ASSET REBALANCING SERVICE. If you request the asset rebalancing service, the
first redistribution will be on the date you specify or the date we receive
your request, if later. However, no rebalancing will occur prior to your
policy's Allocation Date. Subsequent periodic rebalancings occur quarterly,
semiannually or annually, as you have requested.
DELAY IN CERTAIN CASES. We may delay allocating any payment you make to our
variable investment options, or any transfer, for the same reasons stated in
"Delay of variable investment option proceeds" below. We may also delay such
transactions for any other legally permitted purpose.
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PRICES APPLICABLE TO POLICY TRANSACTIONS. If a transaction will increase or
decrease the amount you have in a variable investment option as of a certain
date, we process the transaction using the unit values for that option
computed as of that day's close of business, unless that day is not a business
day. In that case, we use unit values computed as of the next business day's
close.
EFFECT OF DEATH OR SURRENDER. You may not make any policy transactions or
changes after the insured person has died. Also, all insurance coverage ends
on the date as of which we process any request for a full surrender.
POLICY ISSUANCE
REGISTER DATE. When we issue a policy, we assign it a "register date," which
will be shown in the policy. We measure the months, years, and anniversaries
of your policy from your policy's register date. The register date will
generally be the same as the date we actually issue the policy (the "issue
date"). Policies that would otherwise receive a register date of the 29th,
30th or 31st of any month will receive a register date of the 28th of that
month.
INVESTMENT START DATE. This is the date your investment first begins to earn a
return for you in our Alliance Money Market option (prior to the Allocation
Date). The investment start date is the issue date.
COMMENCEMENT OF INSURANCE COVERAGE. You must give the entire premium for this
policy to your financial professional before the policy is delivered to you.
No insurance under your policy will take effect unless (1) the insured person
is still living at the time such delivery is completed and (2) unless the
information in the application continues to be true and complete, without
material change, as of the time of such payment. If you submit your entire
premium with your application, we may, subject to certain conditions, provide
a limited amount of temporary insurance on the proposed insured person. You
may request and review a copy of our temporary insurance agreement for more
information about the terms and conditions of that coverage.
NON-ISSUANCE. If, after considering your application, we decide not to issue a
policy, we will refund any premium you have paid (less the amount of any loan)
without interest.
AGE; AGE AT ISSUE. Unless the context in this prospectus requires otherwise,
we consider the insured person's "age" during any policy year be his or her
age on his or her birthday nearest to the beginning of that policy year. For
example, the insured person's age for the first policy year ("age at issue")
is that person's age on whichever birthday is closer to (i.e., before or
after) the policy's register date.
GENDER-NEUTRAL POLICIES
Congress and various states have from time to time considered legislation that
would require insurance rates and the "factors" we use to compute the
policies' death benefits to be the same for males and females.
There will be no distinctions based on sex in the death benefit factors or
cost of insurance rates for Accumulator Life policies sold in Montana because
of Montana insurance department regulations. Guaranteed maximum cost of
insurance rates applicable to a gender-neutral policy will not be greater than
the comparable male rates under a gender specific Accumulator Life policy.
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YOUR VOTING PRIVILEGES
VOTING OF PORTFOLIO SHARES. As the legal owner of any Portfolio shares that
support a variable investment option, we will attend (and have the right to
vote at) any meeting of shareholders of the Portfolio (or the Trust). To
satisfy currently-applicable legal requirements, however, we will give you the
opportunity to tell us how to vote the number of each Portfolio's shares that
are attributable to your policy. We will vote shares attributable to policies
for which we receive no instructions in the same proportion as the
instructions we do receive from all policies that participate in our Separate
Account FP (discussed below). With respect to any Portfolio shares that we are
entitled to vote directly (because we do not hold them in a separate account
or because they are not attributable to policies), we will vote in proportion
to the instructions we have received from all holders of variable annuity and
variable life insurance policies who are using that Portfolio.
Under current legal requirements, we may disregard the voting instructions we
receive from policyowners only in certain narrow circumstances prescribed by
SEC regulations. If we do, we will advise you of the reasons in the next
annual or semiannual report we send to you.
VOTING AS POLICYOWNER. In addition to being able to instruct voting of
Portfolio shares as discussed above, policyowners that use our variable
investment options may in a few instances be called upon to vote on matters
that are not the subject of a shareholder vote being taken by any Portfolio.
If so, you will have one vote for each $100 of account value in any such
option; and we will vote our interest in Separate Account FP in the same
proportion as the instructions we receive from holders of Accumulator Life and
other policies that Separate Account FP supports.
ABOUT OUR SEPARATE ACCOUNT FP
Each variable investment option is a part (or "subaccount") of our Separate
Account FP. We established Separate Account FP under special provisions of the
New York Insurance Law. These provisions prevent creditors from any other
business we conduct from reaching the assets we hold in our variable
investment options for owners of our variable life insurance policies. We are
the legal owner of all of the assets in Separate Account FP and may withdraw
any amounts that exceed our reserves and other liabilities with respect to
variable investment options under our policies. The results of Separate
Account FP's operations are accounted for without regard to Equitable Life's
other operations.
Separate Account FP's predecessor was established on April 19, 1985 by our
then wholly owned subsidiary, Equitable Variable Life Insurance Company. We
established our Separate Account FP under New York Law on September 21, 1995.
When Equitable Variable Life Insurance Company merged into Equitable Life, as
of January 1, 1997, our Separate Account FP succeeded to all the assets,
liabilities and operations of its predecessor.
Separate Account FP is registered with the SEC under the Investment Company
Act of 1940 and is classified by that act as a "unit investment trust." The
SEC, however, does not manage or supervise Equitable Life or Separate Account
FP.
Each subaccount (variable investment option) of Separate Account FP available
under Accumulator Life invests solely in class IB shares issued by the
corresponding Portfolio of EQ Advisors Trust. Separate Account FP immediately
reinvests all dividends and other distributions it receives from a Portfolio
in additional shares of that Portfolio.
The EQ Advisors Trust sells its shares to Equitable Life separate accounts in
connection with Equitable Life's variable life insurance and annuity products,
to the trustee of a qualified benefit plan for Equitable Life and to separate
accounts of insurance companies, both affiliated and unaffiliated with
Equitable Life. We currently do not foresee any disadvantages to our
policyowners arising out of this. However, the Board of Trustees of EQ
Advisors Trust intends to monitor events to identify any material
irreconcilable conflicts that may arise and to determine what action, if any,
should be taken in response. If we believe that the Board's response
insufficiently protects our policyowners, we will see to it that appropriate
action is taken to do so. Also, if we ever believe that any of the Trust's
Portfolios is so large as to
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materially impair the investment performance of the Portfolio involved, we
will examine other investment alternatives.
ABOUT OUR GENERAL ACCOUNT
Our general account assets support all of our obligations (including those
under the Accumulator Life policies). Our general assets consist of all of our
assets as to which no class or classes of our annuity or life insurance
policies have any preferential claim. You will not share in the investment
experience of our general account assets, however; and we have full discretion
about how we invest those assets (subject only to any requirements of law).
TRANSFERS OF YOUR ACCOUNT VALUE
TRANSFERS NOT IMPLEMENTED. When we cannot process part of a transfer request,
we will not process any other part of the request. This could occur, for
example, where you request transfer of an amount greater than that currently
allocated to a variable investment option. In this circumstance, we will
notify you and explain why we could not process the request.
The dollar cost averaging service will terminate immediately if: (1) your
amount in the Alliance Money Market option is insufficient to cover the
automatic transfer amount; (2) your policy is in a grace period; or (3) we
receive notice of the insured person's death. Similarly, the asset rebalancing
program will terminate immediately if either (2) or (3) occurs.
MARKET TIMING. You should note that the product is not designed for
professional "market timing" organizations, or other organizations or
individuals engaging in a market timing strategy, making programmed transfers,
frequent transfers or transfers that are large in relation to the total assets
of the underlying mutual fund portfolio. Market timing strategies are
disruptive to the underlying mutual fund portfolios in which the variable
investment options invest. If we determine that your transfer patterns among
the variable investment options reflect a market timing strategy, we reserve
the right to take action including, but not limited to: restricting the
availability of transfers through telephone requests, facsimile transmissions,
automated telephone services, Internet services or any electronic transfer
services. We may also refuse to act on transfer instructions of an agent
acting under a power of attorney who is acting on behalf of more than one
owner.
TELEPHONE AND EQACCESS REQUESTS
If you are a properly authorized person, you may make transfers by telephone
or over the Internet as described above under "Telephone and EQAccess
transfers."
Also, if you are both the owner and the insured person under your policy, you
may call 1-888-855-5100 (toll free) from a touch tone phone to make the
following additional types of requests:
o policy loans
o changes of allocation percentages (anticipated to be available through
EQAccess by the end of 2000)
o changes of address
For security purposes, all telephone requests are automatically tape-recorded
and are invalid if the information given is incomplete or any portion of the
request is inaudible. We have established procedures reasonably designed to
confirm that telephone instructions are genuine. These include requiring
personal identification information from the caller and providing subsequent
written confirmation of the instructions.
If you wish to participate in EQAccess, you must first agree to the terms and
conditions set forth in our EQAccess Online Services Agreement, which you can
find at our Web site. For security purposes, you may not initiate any
transactions relating to your policy for five (5) days after you have elected
to use EQAccess. We will send you a letter by first class mail confirming your
enrollment in EQAccess. Additionally, you will be required to use a password
and protect it from unauthorized use. We will provide subsequent written
confirmation of any EQAccess transactions. We will assume that all
instructions received through EQAccess from anyone using your password are
given by you; however, we reserve the right to refuse to process any
transaction and/or block
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access to EQAccess if we have reason to believe the instructions given are
unauthorized.
If we do not employ reasonable procedures to confirm the genuineness of
telephone or Internet instructions, we may be liable for any losses arising
out of any act or omission that constitutes negligence, lack of good faith, or
willful misconduct. In light of our procedures, we will not be liable for
following telephone or Internet instructions that we reasonably believe to be
genuine.
We reserve the right to refuse to process any telephone or Internet
transactions if we have reason to believe that the request compromises the
general security and/or integrity of our automated systems (see discussion of
"Market timing" above).
Any telephone or Internet transaction request that we receive after the close
of a business day (which is usually 4:00 p.m. Eastern Time) will be processed
as of the next business day. During times of extreme market activity, or for
other reasons, you may be unable to contact us to make a telephone or Internet
request. If this occurs, you should submit a written transaction request to
our Administrative Office. We reserve the right to discontinue telephone or
Internet transactions, or modify the procedures and conditions for such
transactions, without notifying you at any time.
DEDUCTING POLICY CHARGES
MONTHLY COST OF INSURANCE CHARGE. The monthly cost of insurance charge is
determined by multiplying the cost of insurance rate by your policy's account
value. A greater policy account value, or a higher cost of insurance rate,
will generally result in a higher current monthly charge. The currently
applicable cost of insurance rate is 1.15%, subject to the maximum charges
specified in your policy.
We reserve the right to change this rate, but we will never charge more than
the guaranteed maximum charge specified in your policy. These maximum charges
are determined by multiplying the maximum cost of insurance rate that is then
applicable to your policy by the amount we have at risk under your policy. The
maximum cost of insurance rates are based on the 1980 Commissioners' Standard
Ordinary Male and Female Mortality Tables. Our amount at risk (also described
in your policy as "net amount at risk") on any date is the difference between
(a) the death benefit that would be payable if the insured person died on that
date and (b) the then total account value under the policy.
Our maximum cost of insurance rates will generally be lower (except in
Montana) if the insured person is a female than if a male.
DATE OF MONTHLY DEDUCTIONS. We make the regular monthly deductions as of the
first day of each policy month.
PURPOSES 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 we expect, 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., charge for administration and taxes,
cost of insurance charge, guaranteed minimum death benefit charge, and
mortality and expense risk charge. However, the fact that any charge bears the
name of, or is designed primarily to defray, 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. Nor does it mean 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. The surrender charge, for example, is
designed primarily to defray sales expenses, but may also be used to defray
other expenses associated with your policy that we have not recovered by the
time of any surrender.
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34 MORE INFORMATION ABOUT OTHER MATTERS
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SUICIDE AND CERTAIN MISSTATEMENTS
If an insured person commits suicide within certain time periods, the amount
of death benefit we pay will be limited as described in the policy. Also, if
an application misstated the age or gender of an insured person, we will
adjust the amount of any death benefit as described in the policy.
WHEN WE PAY POLICY PROCEEDS
GENERAL. We will generally pay any death benefit, surrender, partial
withdrawal, or loan within seven days after we receive the request and any
other required items.
CLEARANCE OF CHECKS. We reserve the right to defer payment of that portion of
your account value that is attributable to a premium payment or loan repayment
made by check for a reasonable period of time (not to exceed 15 days) to allow
the check to clear the banking system.
DELAY OF VARIABLE INVESTMENT OPTION PROCEEDS. We reserve the right to defer
payment of any death benefit, transfer, loan or other distribution that is
derived from a variable investment option if (a) the New York Stock Exchange
is closed (other than customary weekend and holiday closings) or trading on
that exchange is restricted; (b) the SEC has declared that an emergency
exists, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to fairly determine the
account value; or (c) the law permits the delay for the protection of owners.
If we need to defer calculation of values for any of the foregoing reasons,
all delayed transactions will be processed at the next available unit values.
DELAY TO CHALLENGE COVERAGE. We may challenge the validity of your insurance
policy based on any material misstatements in an application you have made to
us. We cannot make such challenges, however, beyond certain time limits set
forth in the policy. If the insured person dies within one of these limits, we
may delay payment of any proceeds until we decide whether to challenge the
policy.
CHANGES WE CAN MAKE
In addition to any of the other changes described in this prospectus, we have
the right to modify how we or Separate Account FP 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 combine two or more variable investment options or withdraw assets relating
to Accumulator Life from one variable investment option and put them into
another;
o end the registration of, or re-register, Separate Account FP under the
Investment Company Act of 1940;
o operate Separate Account FP under the direction of a "committee" or
discharge such a committee at any time;
o restrict or eliminate any voting rights or privileges of policyowners (or
other persons) that affect Separate Account FP;
o operate Separate Account FP, or one or more of the variable investment
options, in any other form the law allows. This includes any form that
allows us to make direct investments, in which case we may charge Separate
Account FP an advisory fee.
We may make any legal investments we wish for Separate Account FP. In
addition, we may disapprove any change in investment advisers or in investment
policy unless a law or regulation provides differently.
If we take any action that results in a material change in the underlying
investments of a variable investment option, we will notify you to the extent
required by law. We may, for example, cause the variable investment option to
invest in a mutual fund other than, or in addition to, EQ Advisors Trust. If
you then wish to transfer the amount you have in that option to another
variable investment option, you may do so.
We may make any changes in the policy or make distributions from the policy to
the extent we deem necessary to ensure that your policy qualifies or continues
to
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35 MORE INFORMATION ABOUT OTHER MATTERS
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qualify as life insurance for tax purposes. Any such change will apply
uniformly to all policies that are affected. We will give you written notice
of such changes. Subject to all applicable legal requirements, we also may
make other changes in the policies that do not reduce any net cash surrender
value, death benefit, account value, or other accrued rights or benefits.
REPORTS WE WILL SEND YOU
Shortly after the end of each year of your policy, we will send you a report
that includes information about your policy's current death benefit, account
value, cash surrender value (i.e., account value minus any current surrender
charge), policy loans, policy transactions and amounts of charges deducted. We
will send you individual notices to confirm your premium payments, loan
repayments, transfers and certain other policy transactions.
LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings would be considered material with respect
to a policyowner's interest in Separate Account FP, nor would any of these
proceedings be likely to have a material adverse effect upon the Separate
Account, our ability to meet our obligations under the policies, or the
distribution of the policies.
ILLUSTRATIONS OF POLICY BENEFITS
In order to help you understand how your policy values would vary over time
under different sets of assumptions, we will provide you with certain
illustrations when you purchase your policy and upon request thereafter. These
will be based on the age and gender of the insured person under your policy,
and such factors as the premium payment amount and assumed rates of return
(within limits) that you request. We have filed an example of such an
illustration as an exhibit to the registration statement referred to below.
SEC REGISTRATION STATEMENT
We have on file with the SEC a registration statement under the Securities Act
of 1933 that relates to the Accumulator Life policies. The registration
statement contains additional information that is not required to be included
in this prospectus. You may obtain this information, for a fee, from the SEC's
Public Reference Section at 450 5th Street, N.W., Washington, D.C. 20549 or,
without charge, from the SEC's web site (www.sec.gov).
HOW WE MARKET THE POLICIES
We offer variable life insurance policies (including Accumulator Life) and
variable annuity contracts through Equitable Distributors Inc. ("EDI"). The
Investment Company Act of 1940, therefore, classifies EDI as a "principal
underwriter" of those policies and contracts. EDI also serves as a principal
underwriter of EQ Advisors Trust. EDI is a wholly owned subsidiary of
Equitable Life, with its address at 1290 Avenue of the Americas, New York, NY
10104. EDI is registered with the SEC as a broker-dealer and is a member of
the National Association of Securities Dealers, Inc. ("NASD"). In 1998 and
1999, we paid EDI fees of $35,582,313 and $46,957,345, respectively, for its
services under a Distribution Agreement with Equitable Life and its separate
accounts.
We sell Accumulator Life through licensed insurance agencies (both affiliated
and unaffiliated with Equitable Life) and their affiliated broker-dealers (who
are registered with the SEC and are members of the NASD). Such agencies and
their affiliated broker-dealers have entered into selling agreements with EDI.
The licensed insurance agents who sell our policies are appointed as agents of
Equitable Life, and are financial professionals of the agencies' affiliated
broker-dealer. Sales commissions will be paid by Equitable Life to the agency
which sells you this policy. The commissions don't cost you anything above the
charges and expenses already discussed elsewhere in this prospectus.
Generally, the agencies will receive maximum commissions of 4.50% of the
amount of the initial premium you pay. Alternatively, the agencies could
receive a lower initial
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36 MORE INFORMATION ABOUT OTHER MATTERS
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commission, but receive additional commissions in later years based on the
policy's unloaned account value in the variable investment options. The agency
may be required to return to us any commissions on premiums that we have
refunded to a policyowner.
INSURANCE REGULATION THAT APPLIES TO EQUITABLE LIFE
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 state
where we sell policies. We submit annual reports on our operations and
finances to insurance officials in all of these states. The officials are
responsible for reviewing our reports to see that we are financially sound.
Such regulation, however, does not guarantee or provide absolute assurance of
our soundness.
<PAGE>
Directors and principal officers
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37 DIRECTORS AND PRINCIPAL OFFICERS
--------------------------------------------------------------------------------
Set forth below is information about our directors and, to the extent they are
responsible for variable life insurance operations, our principal officers.
Unless otherwise noted, their address is 1290 Avenue of the Americas, New
York, New York 10104.
DIRECTORS
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
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-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
FRANCOISE COLLOC'H
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AXA Director of Equitable Life (since July 1992). Member of the AXA Management Board
23 Avenue Matignon and Group Executive President, Human Resources, Communication and Synergies of
75008 Paris, France AXA (since January 2000). Prior thereto, Senior Executive Vice President, AXA
(1993-2000). Director or officer of various subsidiaries and affiliates of the AXA
Group.
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HENRI DE CASTRIES
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AXA Director of Equitable Life (since September 1993). Chairman of the Board of AXA
23 Avenue Matignon Financial (since April 1998); Vice Chairman (February 1996 to April 1998). Vice
75008 Paris, France Chairman of AXA's Management Board (since January 2000). Prior thereto, Senior
Executive Vice President, Financial Services and Life Insurance Activities in the United
States, Germany, the United Kingdom and Benelux (1996 to 2000); Executive Vice
President, Financial Services and Life Insurance Activities (1993 to 1996) of AXA.
Director or officer of various subsidiaries and affiliates of the AXA Group. Director of
DLJ and Alliance Capital Management Corporation, the general partner of Alliance
Holding and Alliance.
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JOSEPH L. DIONNE
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The McGraw-Hill Companies Director of Equitable Life (since May 1982). Retired Chairman of The McGraw-Hill
1221 Avenue of the Americas Companies (since January 2000); prior thereto, Chairman (April 1988 to
New York, NY 10020 January 2000) and Chief Executive Officer (April 1983 to April 1998). Director of The
McGraw-Hill Companies, Harris Corporation and Ryder System, Inc. Director of AXA
Financial, Inc. (since May, 1992).
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DENIS DUVERNE
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AXA Director of Equitable Life (since February 1998). Executive Vice President,
23, Avenue Matignon International (US-UK-Benelux) AXA and member of AXA Executive Board (since
75008 Paris, France January, 2000). Director, Alliance (since February 1996) and Donaldson Lufkin &
Jenrette ("DLJ") (since February 1997).
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JEAN-RENE FOURTOU
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Rhone-Poulenc S.A. Director of Equitable Life (since July 1992). Vice Chairman of the Management Board
25, Quai Paul Doumer of Aventis (since December 1999). Prior thereto, Chairman and Chief Executive
92408 Courbevoie Cedex Officer of Rhone-Poulenc, S.A. (1986 to December 1999). Member of the Supervisory
France Board of AXA. Director of Schneider S.A., Paribas, and Groupe Pernod-Ricard.
Member of the Consulting Council of Banque de France. Director, AXA Financial
(since July, 1992).
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NORMAN C. FRANCIS
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Xavier University of Louisiana Director of Equitable Life (since March 1989). President of Xavier University of
7325 Palmetto Street Louisiana; Director, First National Bank of Commerce, New Orleans, LA, Piccadilly
New Orleans, LA 70125 Cafeterias, Inc., and Entergy Corporation.
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</TABLE>
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38 DIRECTORS AND PRINCIPAL OFFICERS
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DIRECTORS (CONTINUED)
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
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DONALD J. GREENE
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LeBoeuf, Lamb, Greene & MacRae, Director of Equitable Life (since July 1991). Of Counsel, LeBoeuf, Lamb, Greene &
L.L.P. MacRae, L.L.P. (since 1999). Prior thereto, Partner of the firm (1965 to 1999).
125 West 55th Street Director of AXA Financial (since May 1992).
New York, NY 10019-4513
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JOHN T. HARTLEY
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1025 NASA Boulevard Director of Equitable Life (since August 1987). Currently a Director and retired
Melbourne, FL 32919 Chairman and Chief Executive Officer of Harris Corporation (retired July 1995);
previously held other officerships with Harris Corporation. Director of AXA Financial
(since May 1992); Director of the McGraw Hill Companies.
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JOHN H.F. HASKELL JR.
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SBC Warburg Dillon Read LLC Director of Equitable Life (since July 1992); Director of AXA Financial (since
535 Madison Avenue July 1992); Director, Senior Advisor of Warburg Dillon Read LLC (since 1999); Prior
New York, NY 10022 thereto, Managing Director and member of its Board of Directors (1975-1999);
Chairman, Supervisory Board, Dillon Read (France) Gestion (until 1998); Director,
Pall Corporation (since November 1998).
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MARY (NINA) HENDERSON
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BESTFOODS Director of Equitable Life (since December 1996). Corporate Vice President, Core
International Plaza Business Development of Bestfoods (since June 1999). Prior thereto, President,
700 Sylvan Avenue Bestfoods Grocery and Vice President, Bestfoods (formerly CPC International, Inc.)
Englewood Cliffs, NJ 07632-9976 (1997 to 1999). President, Bestfoods Specialty Markets Group (1993 to 1997);
Director, Hunt Corporation and PACTIV Corporation. Director, AXA Financial (since
December 1996).
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W. EDWIN JARMAIN
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Jarmain Group Inc. Director of Equitable Life (since July 1992). President, Jarmain Group Inc. (since
121 King Street West 1979); and officer or director of several affiliated companies. Director, DLJ (since
Suite 2525 October 1992), AXA Insurance (Canada), Anglo Canada General Insurance
Toronto, Ontario M5H 3T9 Company, and AXA Pacific Insurance Company, and Alternate Director, AXA Asia
Canada Pacific Holdings Limited. Chairman (non-executive) and Director, FCA International
Ltd. (January 1994 to May 1998). Director of AXA Financial, Inc. (since July 1992).
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GEORGE T. LOWY
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Cravath, Swaine & Moore Director of Equitable Life (since July 1992). Partner, Cravath, Swaine & Moore.
825 Eighth Avenue Director, Eramet.
New York, NY 10019
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</TABLE>
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39 DIRECTORS AND PRINCIPAL OFFICERS
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DIRECTORS (CONTINUED)
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
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DIDIER PINEAU-VALENCIENNE
-----------------------------------------------------------------------------------------------------------------------------------
Credit Suisse, First Boston Director of Equitable Life (since February 1996). Vice Chairman Credit Suisse First
64, rue de Miromesnel Boston (since March 1999). Chairman and Chief Executive Officer (1981 to
75008 Paris, France February 1999) (now Honorary Chairman) Schneider Electric. Member of the
Supervisory Board of AXA. Director of CGIP, Aventis (formerly Rhone-Poulenc, S.A.),
Sema Group PLC (UK), Soft Computing and Swiss Helvetic Fund; member of the
Advisory Board of Booz-Allen & Hamilton. Director of AXA Financial, Inc. (since
February 1996).
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GEORGE J. SELLA, JR.
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P.O. Box 397 Director of Equitable Life (since May 1987). Retired Chairman and Chief Executive
Newton, NJ 07860 Officer of American Cyanamid Company (retired April 1993); previously held other
officerships with American Cyanamid. Director of AXA Financial (since May 1992) and
Coulter Pharmaceutical (since May 1987).
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PETER J. TOBIN
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St. John's University Director of Equitable Life (since March 1999); Dean of the Peter J. Tobin College of
8000 Utopia Parkway Business Administration, St. John's University (since August 1998); Chief Financial
Jamaica, NY 11439 Officer, Chase Manhattan Corp. (1985 to 1997).
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DAVE H. WILLIAMS
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Alliance Capital Management Director of Equitable Life (since March 1991). Chairman (since 1977) and former
Corporation Chief Executive Officer (1977 to January 1999), of Alliance, and Chairman or Director
1345 Avenue of the Americas of numerous subsidiaries and affiliated companies of Alliance. Senior Executive Vice
New York, NY 10105 President of AXA (since January 1997). Director of AXA Financial (since May 1992).
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</TABLE>
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40 DIRECTORS AND PRINCIPAL OFFICERS
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OFFICERS - DIRECTORS
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
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MICHAEL HEGARTY
-----------------------------------------------------------------------------------------------------------------------------------
Director of Equitable Life (since January 1998). President (since January 1998) and
Chief Operating Officer (since February 1998), Equitable Life. Senior Vice Chairman
(since November 1999), Vice Chairman (since April 1998), Senior Executive Vice
President (January 1998 to April 1998), and Director and Chief Operating Officer
(both since January 1998), AXA Financial. Director, President and Chief Operating
Officer, Equitable of Colorado (since December 1999); AXA Client Solutions &
Equitable Distribution Holding Corp. (since September 1999). 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. Director,
ACMC, Inc. ("ACMC") (since March 1998). Trustee, EQ Advisors Trust. Director,
Equitable Capital Management Corporation ("ECMC") (since March 1998); Alliance
and DLJ (both since May 1998).
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EDWARD D. MILLER
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Director of Equitable Life (since August 1997). Chairman of the Board (since
January 1998), Chief Executive Officer (since August 1997), President (August 1997
to January 1998), Equitable Life. Director, President and Chief Executive Officer, (all
since August 1997), AXA Financial. Director, Chairman of the Board and Chief
Executive Officer, Equitable of Colorado (since December 1999); AXA Client Solutions
and Equitable Distribution Holding Corp. (since September 1999). Member of the
Management Board of AXA (since January 2000); 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), ACMC, Inc. (since March 1998), and AXA Canada (since
September 1998). Director, KeySpan Energy.
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STANLEY B. TULIN
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Director and Vice Chairman of the Board (since February 1998), and Chief Financial
Officer (since May 1996), Equitable Life. Vice Chairman of the Board (since
November 1999) and Chief Financial Officer (since May 1997) and prior thereto,
Senior Executive Vice President (February 1998 to November 1999), AXA Financial.
Director, Vice Chairman and Chief Financial Officer (since December 1999) Equitable
of Colorado; AXA Client Solutions, LLC and Equitable Distributions Holding Corp.
(since September 1999). Vice President (until 1998), EQ Advisors Trust. Director,
Alliance (since July 1997), and DLJ (since June 1997). Prior thereto, Chairman,
Insurance Consulting and Actuarial Practice, Coopers & Lybrand, L.L.P.
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</TABLE>
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41 DIRECTORS AND PRINCIPAL OFFICERS
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OTHER OFFICERS
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
-----------------------------------------------------------------------------------------------------------------------------------
LEON B. BILLIS
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Executive Vice President (since February 1998) and Chief Information Officer (since
November 1994), Equitable Life. Previously held other officerships with Equitable Life;
Director, J.M.R. Realty Services, Inc.
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DERRY E. BISHOP
-----------------------------------------------------------------------------------------------------------------------------------
Executive Vice President (since September 1998), Chief Agency Officer, (since
December 1997), and Senior Vice President (January 1995 to September 1998),
Equitable Life; Director and Executive Vice President, AXA Advisors LLC and Executive
Vice President and Chief Agency Officer, AXA Client Solutions, LLC (all since
September 1999). Prior thereto, Director (since 1995) and Executive Vice President
(since 1994) EQF (now AXA Advisors).
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HARVEY BLITZ
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Senior Vice President, Equitable Life. Senior Vice President, AXA Financial. Director
and Chairman, Frontier Trust Company ("Frontier"). Director, EQF (now AXA
Advisors) (until September 1999). Executive Vice President and Director (since
September 1999), AXA Advisors, Director (until May 1996), Equitable Distributors,
Inc. ("EDI"). Director and Senior Vice President, AXA Network, LLC (formerly
EquiSource). Director and Officer of various Equitable Life affiliates. Previously held
other officerships with Equitable Life and its affiliates.
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KEVIN R. BYRNE
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Senior Vice President and Treasurer, Equitable Life and AXA Financial. Senior Vice
President and Treasurer, AXA Client Solutions, LLC and Equitable Distributors (since
September 1999); Equitable of Colorado (since December 1999). Treasurer, Frontier
(since 1990) and AXA Network, LLC (since 1999). President and Chief Executive
Officer (since September 1997), and prior thereto, Vice President and Treasurer,
Equitable Casualty Insurance Company ("Casualty"). Vice President and Treasurer,
EQ Advisors Trust (since March 1997). Director, Chairman, President and Chief
Executive Officer, Equitable JV Holdings (since August 1997). Director (since
July 1997), and Senior Vice President and Chief Financial Officer (since April 1998),
ACMC and ECMC. Previously held other officerships with Equitable Life and its
affiliates.
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JOHN A. CAROSELLI
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Executive Vice President (since September 1998), Equitable Life; Senior Vice
President, Equitable Life (February 1998 to September 1998); Senior Vice President,
Chase Manhattan Corp. (1996 to 1998); Vice President, Chemical Bank (1991 to
1996).
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</TABLE>
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42 DIRECTORS AND PRINCIPAL OFFICERS
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OTHER OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
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JUDY A. FAUCETT
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Senior Vice President, Equitable Life, (since September 1996) and Actuary (September
1996 to December 1998). Partner and Senior Actuarial Consultant, Coopers &
Lybrand L.L.P. (January 1989 to August 1996).
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ALVIN H. FENICHEL
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Senior Vice President and Controller, Equitable Life and AXA Financial. Senior Vice
President and Controller, The Equitable of Colorado, Inc. (since December 1999).
Previously held other officerships with Equitable Life and its affiliates.
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PAUL J. FLORA
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Senior Vice President and Auditor, Equitable Life. Vice President and Auditor, AXA
Financial.
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ROBERT E. GARBER
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Executive Vice President and Chief Legal Officer (since November 1999), Equitable
Life; prior thereto, Executive Vice President and General Counsel. General Counsel of
AXA Financial. Previously held other officerships with Equitable Life and its affiliates.
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DONALD R. KAPLAN
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Senior Vice President (since September 1999), Chief Compliance Officer and
Associate General Counsel, Equitable Life. Previously held other officerships with
Equitable Life.
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MICHAEL S. MARTIN
-----------------------------------------------------------------------------------------------------------------------------------
Executive Vice President (since September 1998) and Chief Marketing Officer (since
December 1997), Equitable Life; prior thereto, Senior Vice President and Chief
Marketing Officer. Chairman and Chief Executive Officer, AXA Advisors LLC (since
September 1999). Vice President, EQ Advisors Trust (until April 1998). Director,
Equitable Underwriting and Sales Agency (Bahamas), Ltd. and AXA Network, LLC;
President (since February 2000); Executive Vice President (since December 1998),
Colorado; prior thereto, Director and Senior Vice President (since December 1998).
Previously held other officerships with Equitable Life and its affiliates.
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RICHARD J. MATTEIS
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Executive Vice President, Equitable Life (since May 1998); Executive Vice President,
Chase Manhattan Corporation (January 1983 to June 1997); Director, EQF (now AXA
Advisors) (October 1998 to May 1999).
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</TABLE>
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43 DIRECTORS AND PRINCIPAL OFFICERS
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OTHER OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
-----------------------------------------------------------------------------------------------------------------------------------
PETER D. NORIS
-----------------------------------------------------------------------------------------------------------------------------------
Executive Vice President and Chief Investment Officer, Equitable Life. Executive Vice
President (since May 1995) and Chief Investment Officer (since July 1995), AXA
Financial. Chairman, President and Trustee (since March 1997), EQ Advisors Trust.
Executive Vice President and Chief Investment Officer, Equitable of Colorado (since
December 1999), Executive Vice President, AXA Client Solutions (since
September 1999). Director, Alliance, and Equitable Real Estate (until June 1997).
Executive Vice President, EQF (now AXA Advisors) (November 1996 to
September 1999). Director, EREIM Managers Corp. (since July 1997), and EREIM LP
Corp. (since October 1997).
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BRIAN S. O'NEIL
-----------------------------------------------------------------------------------------------------------------------------------
Executive Vice President, Equitable Life (since June 1998). Executive Vice President,
AXA Financial and AXA Client Solutions (since September 1999). Director of
Investment, AXA Investment Management (January 1998 to June 1998); Chief
Investment Officer, AXA Investment Management (July 1995 to January 1998).
Trustee (since September 1999), EQ Advisors Trust.
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ANTHONY C. PASQUALE
-----------------------------------------------------------------------------------------------------------------------------------
Senior Vice President, Equitable Life and AXA Client Solutions (since
September 1999). Director, Chairman and Chief Operating Officer, Casualty, (since
September 1997). Director, Equitable Agri-Business, Inc. (until June 1997). Previously
held other officerships with Equitable Life and its affiliates.
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PAULINE SHERMAN
-----------------------------------------------------------------------------------------------------------------------------------
Senior Vice President (since February 1999); Vice President, Secretary and Associate
General Counsel, Equitable Life and AXA Financial, (since September 1995). Senior
Vice President, Secretary and Associate General Counsel, AXA Financial and AXA
Client Solutions (since November 1999). Senior Vice President and Secretary,
Equitable of Colorado (since December 1999). Previously held other officerships with
Equitable Life.
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RICHARD V. SILVER
-----------------------------------------------------------------------------------------------------------------------------------
Senior Vice President (since February 1995) and General Counsel (since
November 1999) Equitable Life; prior thereto, Deputy General Counsel (1996-1999).
Senior Vice President and Associate General Counsel, AXA Financial (since
September 1996). Senior Vice President and General Counsel, AXA Client Solutions
(since November 1999). Vice President and General Counsel, Equitable of Colorado
(since December 1999). Director, AXA Advisors. Senior Vice President and General
Counsel, EIC (June 1997 to March 1998). Previously held other officerships with
Equitable Life and its affiliates.
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</TABLE>
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44 DIRECTORS AND PRINCIPAL OFFICERS
--------------------------------------------------------------------------------
OTHER OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
<S> <C>
-----------------------------------------------------------------------------------------------------------------------------------
JOSE S. SUQUET
-----------------------------------------------------------------------------------------------------------------------------------
Senior Executive Vice President (since February 1998), Chief Distribution Officer (since
December 1997) and Chief Agency Officer (August 1994 to December 1997),
Equitable Life. Senior Executive Vice President and Chief Distribution Officer, AXA
Client Solutions (since September 1999). Senior Executive Vice President, Equitable of
Colorado (since December 1999). Executive Vice President (since May 1996), AXA
Financial. Chairman (since December 1997), EDI. Prior thereto, Agency Manager.
-----------------------------------------------------------------------------------------------------------------------------------
GREGORY G. WILCOX
-----------------------------------------------------------------------------------------------------------------------------------
Executive Vice President (since September 1998), Senior Vice President (May 1992 to
September 1998), Equitable Life. Executive Vice President (since November 1999),
AXA Financial; prior thereto, Senior Vice President.
-----------------------------------------------------------------------------------------------------------------------------------
R. LEE WILSON
-----------------------------------------------------------------------------------------------------------------------------------
Executive Vice President (since May 1998) and Deputy Chief Financial Officer
(September 1998 to July 1999), Equitable Life. Executive Vice President, AXA Client
Solutions (since September 1999). Prior thereto, Executive Vice President, Chase
Manhattan Bank.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
8
Financial statements of Separate Account FP and Equitable Life
------
45 FINANCIAL STATEMENTS OF SEPARATE ACCOUNT FP AND EQUITABLE LIFE
--------------------------------------------------------------------------------
The financial statements of Separate Account FP as of December 31, 1999 and for
each of the three years in the period ended December 31, 1999 and the financial
statements of Equitable Life as of December 31, 1999 and 1998 and for each of
the three years in the period ended December 31, 1999 included in this
prospectus have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
such firm as experts in accounting and auditing. The financial statements of
Separate Account FP and Equitable Life as of March 31, 2000 are unaudited. The
financial statements of Equitable Life have relevance for the policies only to
the extent that they bear upon the ability of Equitable Life to meet its
obligations under the policies.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
Report of Independent Accountants.................................... FSA-2
Financial Statements:
Statements of Assets and Liabilities, December 31, 1999.......... FSA-3
Statements of Operations for the Years Ended December 31,
1999, 1998 and 1997........................ ............... FSA-6
Statements of Changes in Net Assets for the Years Ended
December 31, 1999, 1998 and 1997............. ............. FSA-11
Notes to Financial Statements.................................... FSA-17
Unaudited Financial Statements:
Statements of Assets and Liabilities, March 31, 2000............. FSA-27
Statements of Operations for the Three Months Ended
March 31, 2000............................................. FSA-30
Statements of Changes in Net Assets for the Three Months
Ended March 31, 2000....................................... FSA-33
Notes to Financial Statements.................................... FSA-36
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Report of Independent Accountants.................................... F-1
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 1999 and 1998.......... F-2
Consolidated Statements of Earnings, Years Ended
December 31, 1999, 1998 and 1997........................... F-3
Consolidated Statements of Shareholder's Equity and
Comprehensive Income, Years Ended December 31,
1999, 1998 and 1997........................................ F-4
Consolidated Statements of Cash Flows, Years Ended
December 31, 1999, 1998 and 1997........................... F-5
Notes to Consolidated Financial Statements....................... F-6
Unaudited Consolidated Financial Statements:
Consolidated Balance Sheets, March 31, 2000 and
December 31, 1999.......................................... F-42
Consolidated Statements of Earnings for the Three Months
Ended March 31, 2000 and 1999.............................. F-43
Consolidated Statements of Shareholder's Equity and
Comprehensive Income for the Three Months Ended
March 31, 2000 and 1999.................................... F-44
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2000 and 1999............. ................ F-45
Notes to Consolidated Financial Statements....................... F-46
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 following Variable
Investment Options: Alliance Money Market, Alliance High Yield, Alliance Common
Stock, EQ/Alliance Premier Growth, Capital Guardian Research, Capital Guardian
U.S. Equity, Merrill Lynch Basic Value Equity, MFS Growth with Income, MFS
Research, EQ/Putnam Growth & Income Value, Morgan Stanley Emerging Markets
Equity, Alliance Aggressive Stock, Alliance Small Cap Growth, EQ/Evergreen, MFS
Emerging Growth Companies, EQ/Evergreen Foundation, Merrill Lynch World
Strategy, BT Equity 500 Index, BT International Equity Index, JPM Core Bond,
EQ/Putnam Investors Growth and EQ/Putnam International Equity ("EQ Advisors
Trust Variable Investment Options"), 22 of the separate Variable Investment
Options of The Equitable Life Assurance Society of the United States ("Equitable
Life") Separate Account FP at December 31, 1999 and the results of each of their
operations and changes in each of their net assets for each of the periods
indicated, in conformity with accounting principles generally accepted in the
United States of America. 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 auditing standards generally accepted in
the United States of America 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 EQ Advisors Trust at
December 31, 1999 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.
PricewaterhouseCoopers LLP
New York, New York
February 1, 2000
FSA-2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
EQ/
ALLIANCE CAPITAL
ALLIANCE ALLIANCE ALLIANCE PREMIER GUARDIAN
MONEY MARKET HIGH YIELD COMMON STOCK GROWTH RESEARCH
------------ ------------ -------------- ----------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 342,765,909............................. $344,082,723
177,773,173............................. $149,030,820
3,081,451,600............................. $3,783,859,850
46,147,852............................. $51,216,559
182,262............................. $193,355
494,512.............................
38,508,013.............................
391,533.............................
38,563,600.............................
23,253,533.............................
Receivable for Trust shares sold ................... -- 5,046 -- -- --
Receivable for policy-related
transactions..................................... 4,909,455 798,616 15,840,922 283,944 24,204
------------ ------------ -------------- ----------- --------
Total Assets........................................ $348,992,178 $149,834,482 $3,799,700,772 $51,500,503 $217,559
------------ ------------ -------------- ----------- --------
LIABILITIES
Payable for Trust shares purchased.................. $ 4,563,801 $ -- $ 19,831,580 $ 283,146 $ 24,204
Payable for policy-related transactions............. -- -- -- -- --
------------ ------------ -------------- ----------- --------
Total Liabilities................................... 4,563,801 -- 19,831,580 283,146 24,204
------------ ------------ -------------- ----------- --------
NET ASSETS.......................................... $344,428,377 $149,834,482 $3,779,869,192 $51,217,357 $193,355
============ ============ ============== =========== ========
Amount retained by Equitable
Life in Separate Account FP (Note 4)............... $ 16,198 $ 1,280 $ 80,914 $ 3,545 $ 219
Net Assets Attributable
to Contractowners................................ 344,412,179 149,833,202 3,779,788,278 51,213,812 193,136
------------ ------------ -------------- ----------- --------
NET ASSETS.......................................... $344,428,377 $149,834,482 $3,779,869,192 $51,217,357 $193,355
============ ============ ============== =========== ========
<CAPTION>
---------------------------------------------------------------------------
MFS EQ/PUTNAM
CAPITAL MERRILL LYNCH GROWTH GROWTH &
GUARDIAN BASIC VALUE WITH MFS INCOME
U.S. EQUITY EQUITY INCOME RESEARCH VALUE
----------- ------------ --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 342,765,909.............................
177,773,173.............................
3,081,451,600.............................
46,147,852.............................
182,262.............................
494,512............................. $511,837
38,508,013............................. $39,778,636
391,533............................. $412,169
38,563,600............................. $48,597,586
23,253,533............................. $21,780,737
Receivable for Trust shares sold ................... -- -- -- 252,705 --
Receivable for policy-related
transactions..................................... -- 23,002 8,035 -- 82,740
-------- ----------- -------- ----------- -----------
Total Assets........................................ $511,837 $39,801,638 $420,204 $48,850,291 $21,863,477
-------- ----------- -------- ----------- -----------
LIABILITIES
Payable for Trust shares purchased.................. $ -- $ 11,329 $ 4,490 $ -- $ 69,698
Payable for policy-related transactions............. -- -- -- 212,939 --
-------- ----------- -------- ----------- -----------
Total Liabilities................................... -- 11,329 4,490 212,939 69,698
-------- ----------- -------- ----------- -----------
NET ASSETS.......................................... $511,837 $39,790,309 $415,714 $48,637,352 $21,793,779
======== =========== ======== =========== ===========
Amount retained by Equitable
Life in Separate Account FP (Note 4)............... $ 387 $ 81,800 $ 3,570 $ 142,291 $ 69,602
Net Assets Attributable
to Contractowners................................ 511,450 39,708,509 412,144 48,495,061 21,724,177
-------- ----------- -------- ----------- -----------
NET ASSETS.......................................... $511,837 $39,790,309 $415,714 $48,637,352 $21,793,779
======== =========== ======== =========== ===========
</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 (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
MORGAN
STANLEY MFS
EMERGING ALLIANCE ALLIANCE EMERGING
MARKETS AGGRESSIVE SMALL CAP EQ/ GROWTH
EQUITY STOCK GROWTH EVERGREEN COMPANIES
----------- -------------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 29,914,338.................... $40,958,925
892,630,699.................... $1,051,440,590
46,097,819.................... $70,174,096
27,230.................... $28,680
160,950,031.................... $238,027,993
2,749....................
4,518,718....................
17,648....................
1,191....................
Receivable for Trust shares sold........... -- 2,154,914 22,666,998 -- --
Receivable for policy-related
transactions............................ 82,278 -- -- -- 1,271,988
----------- -------------- ----------- ------- ------------
Total Assets............................... $41,041,203 $1,053,595,504 $92,841,094 $28,680 $239,299,981
----------- -------------- ----------- ------- ------------
LIABILITIES
Payable for Trust shares purchased......... $ 350,654 $ -- $ -- $ -- $ 1,116,940
Payable for policy-related
transactions............................ -- 1,550,441 22,460,673 -- --
----------- -------------- ----------- ------- ------------
Total Liabilities.......................... 350,654 1,550,441 $22,460,673 -- 1,116,940
----------- -------------- ----------- ------- ------------
NET ASSETS.................................. $40,690,549 $1,052,045,063 $70,380,421 $28,680 $238,183,041
=========== =============== =========== ======= ============
Amount retained by Equitable Life
in Separate Account FP (Note 4).......... $ 1,767,601 $ 3,855 $ 527,774 $ 18 $ 386,768
Net Assets Attributable
to Policyowners.......................... 38,922,948 1,052,041,208 69,852,647 28,662 237,796,273
----------- -------------- ----------- ------- ------------
NET ASSETS.................................. $40,690,549 $1,052,045,063 $70,380,421 $28,680 $238,183,041
=========== =============== =========== ======= ============
<CAPTION>
-----------------------------------------------------------------
BT BT INTER-
EQ/ MERRILL EQUITY NATIONAL
EVERGREEN LYNCH 500 EQUITY
FOUNDATION WORLD STRATEGY INDEX INDEX
----------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 29,914,338.....................
892,630,699.....................
46,097,819.....................
27,230.....................
160,950,031.....................
2,749..................... $2,848
4,518,718..................... $5,372,189
17,648..................... $18,699
1,191..................... $1,260
Receivable for Trust shares sold............ -- -- -- --
Receivable for policy-related
transactions............................. -- 1,267 -- --
------ ---------- ------- ------
Total Assets................................ $2,848 $5,373,456 $18,699 $1,260
------ ---------- ------- ------
LIABILITIES
Payable for Trust shares purchased.......... $ -- $ 1,232 $ -- $ --
Payable for policy-related
transactions............................. -- -- -- --
------ ---------- ------- ------
Total Liabilities........................... -- 1,232 -- --
------ ---------- ------- ------
NET ASSETS.................................. $2,848 $5,372,224 $18,699 $1,260
====== ========== ======= ======
Amount retained by Equitable Life
in Separate Account FP (Note 4).......... $ 2 $ 494,770 $ 11 $ --
Net Assets Attributable
to Policyowners.......................... 2,846 4,877,454 18,688 1,260
------ ---------- ------- ------
NET ASSETS.................................. $2,848 $5,372,224 $18,699 $1,260
====== ========== ======= ======
</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 ASSETS AND LIABILITIES (CONCLUDED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
---------------------------------------------------
JPM EQ/PUTNAM EQ/PUTNAM
CORE INVESTORS INTERNATIONAL
BOND GROWTH EQUITY
------- ------- -------------
<S> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 2,308.......................................... $2,192
10,674.......................................... $11,411
715.......................................... $716
Receivable for Trust shares sold............................ -- -- --
Receivable for policy-related
transactions............................................. -- -- --
------ ------- ----
Total Assets................................................ $2,192 $11,411 $716
------ ------- ----
LIABILITIES
Payable for Trust shares purchased.......................... $ -- $ -- $ --
Payable for policy-related
transactions............................................. -- -- --
------ ------- ----
Total Liabilities........................................... -- -- --
------ ------- ----
NET ASSETS.................................................. $2,192 $11,411 $716
====== ======= ====
Amount retained by Equitable Life
in Separate Account FP (Note 4).......................... -- $ 5 $ 0
Net Assets Attributable
to Contractowners........................................ 2,192 11,406 716
------ ------- ----
NET ASSETS.................................................. $2,192 $11,411 $716
====== ======= ====
</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
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET ALLIANCE HIGH YIELD
---------------------------------------- -----------------------------------------
1999 1998 1997 1999 1998 1997
----------- ------------ ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust............... $13,943,193 $ 10,719,684 $ 9,754,675 $ 17,378,455 $ 18,449,747 $12,918,934
Expenses (Note 3):
Mortality and expense risk charges..... 1,613,234 1,204,220 1,101,168 889,065 1,007,106 789,982
----------- ------------ ----------- ------------ ------------ -----------
NET INVESTMENT INCOME........................ 12,329,959 9,515,464 8,653,507 16,489,390 17,442,641 12,128,952
----------- ------------ ----------- ------------ ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments........................ 517,935 (161,314) (513,800) (15,192,553) (2,344,392) 936,554
Realized gain distribution
from the Trust........................ 10,344 7,750 13,435 161,999 3,396,523 6,365,633
----------- ------------ ----------- ------------ ------------ -----------
NET REALIZED GAIN (LOSS)..................... 528,279 (153,564) (500,365) (15,030,554) 1,052,131 7,302,187
----------- ------------ ----------- ------------ ------------ -----------
Unrealized appreciation (depreciation)
on investments:
Beginning of period.................... 1,536,450 (804,349) 24,023 (20,898,855) 8,622,836 5,664,824
----------- ------------ ----------- ------------ ------------ -----------
End of period.......................... 1,316,815 (1,536,450) (804,349) (28,742,353) (20,898,854) 8,622,836
----------- ------------ ----------- ------------ ------------ -----------
Change in unrealized appreciation
(depreciation) during the period......... (219,635) (732,101) (780,326) (7,843,498) (29,521,690) 2,958,012
----------- ------------ ----------- ------------ ------------ -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS.................. 308,644 (578,537) (279,961) (22,874,052) (28,469,559) 10,260,199
----------- ------------ ----------- ------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................... $12,638,603 $(10,094,001) $(8,933,468) $ (6,384,662) $(11,026,918) $22,389,151
=========== ============ =========== ============ ============ ===========
</TABLE>
-------------------------
See Notes to Financial Statements.
+ 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>
------------------------------------------------------------------------
EQ/
ALLIANCE CAPITAL
PREMIER GUARDIAN
ALLIANCE COMMON STOCK GROWTH (C) RESEARCH (D)
----------------------------------------- ----------- -----------
1999 1998 1997 1999 1999
------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust................... $ 20,107,533 $ 15,939,680 $ 10,668,337 $ 30,540 $ 280
Expenses (Note 3):
Mortality and expense risk charges......... 19,069,959 14,600,706 11,435,936 63,730 209
------------ ------------ ------------ ---------- -------
NET INVESTMENT INCOME............................ 1,037,574 1,338,974 (767,599) (33,190) 71
------------ ------------ ------------ ---------- -------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments........ 221,690,581 169,109,310 53,841,049 83,605 2,810
Realized gain distribution from the Trust.. 497,324,765 353,834,250 164,814,473 106,890 27
------------ ------------ ------------ ---------- -------
NET REALIZED GAIN (LOSS)......................... 719,015,346 522,943,560 218,655,522 190,495 2,837
------------ ------------ ------------ ---------- -------
Unrealized appreciation (depreciation)
on investments:
Beginning of period..................... 689,309,204 567,231,009 294,432,897 -- --
End of period........................... 702,408,250 689,309,204 567,231,009 5,068,707 11,093
------------ ------------ ------------ ---------- -------
Change in unrealized appreciation
(depreciation) during the period........... 13,099,046 122,078,195 272,798,112 5,068,707 11,093
------------ ------------ ------------ ---------- -------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS......................... 732,114,392 645,021,755 491,453,634 5,259,202 13,930
------------ ------------ ------------ ---------- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS..................... $733,151,966 $646,360,729 $490,686,035 $5,226,012 $14,001
============ ============ ============ ========== =======
<CAPTION>
----------------------------------------------------
CAPITAL
GUARDIAN
U.S. MERRILL LYNCH
EQUITY (D) BASIC VALUE EQUITY (A)
--------- ---------------------------------------
1999 1999 1998 1997
--------- --------- -------- --------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust................... $ 1,159 $ 468,257 $192,441 $ 35,810
Expenses (Note 3):
Mortality and expense risk charges......... 378 153,456 66,427 9,349
------- ---------- -------- --------
NET INVESTMENT INCOME............................ 781 314,801 126,014 26,461
------- ---------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments........ 451 426,168 207,032 6,656
Realized gain distribution from the Trust.. 1,508 1,963,197 667,083 33,738
------- ---------- -------- --------
NET REALIZED GAIN (LOSS)......................... 1,959 2,389,365 874,115 40,394
------- ---------- -------- --------
Unrealized appreciation (depreciation)
on investments:
Beginning of period..................... -- (91,959) 135,003 --
End of period........................... 17,325 1,270,622 (91,959) 135,003
------- ---------- -------- --------
Change in unrealized appreciation
(depreciation) during the period........... 17,325 1,362,581 (226,962) 135,003
------- ---------- -------- --------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS......................... 19,284 3,751,946 647,153 175,397
------- ---------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS..................... $20,065 $4,066,747 $773,167 $201,858
======= ========== ======== ========
</TABLE>
-------------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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>
------------------------------------------------------
MFS
GROWTH
WITH
INCOME (C) MFS RESEARCH (A)
--------- ---------------------------------------
1999 1999 1998 1997
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.................... $ 1,268 $ 52,831 $ 71,137 $ 20,442
Expenses (Note 3):
Mortality and expense risk charges.......... 431 208,639 86,044 13,127
------- ---------- ---------- --------
NET INVESTMENT INCOME............................. 837 (155,808) (14,907) 7,315
------- ---------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments......... (227) 995,232 494,412 6,989
Realized gain distribution from the Trust... -- 1,086,222 -- 81,156
------- ---------- ---------- --------
NET REALIZED GAIN (LOSS).......................... (227) 2,081,454 494,412 88,145
------- ---------- ---------- --------
Unrealized appreciation (depreciation)
on investments:
Beginning of period...................... -- 3,313,063 249,382 --
End of period............................ 20,637 10,033,987 3,313,063 249,382
------- ---------- ---------- --------
Change in unrealized appreciation
(depreciation) during the period............ 20,637 6,720,924 3,063,681 249,382
------- ---------- ---------- --------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS.......................... 20,410 8,802,378 3,558,093 337,527
------- ---------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS...................... $21,247 $8,646,570 $3,543,186 $344,842
======= ========== ========== ========
<CAPTION>
-----------------------------------------------------------------------------
EQ/PUTNAM MORGAN STANLEY
GROWTH & INCOME VALUE (A) EMERGING MARKETS EQUITY (B)
------------------------------------ --------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- -------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.................... $ 278,910 $ 143,999 $ 33,273 $ -- $ 37,240 $ 16,623
Expenses (Note 3):
Mortality and expense risk charges.......... 110,374 56,995 9,655 66,405 23,921 2,862
----------- ---------- --------- ----------- ----------- -----------
NET INVESTMENT INCOME............................. 168,536 87,004 23,618 (66,405) 13,319 13,761
----------- ---------- --------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments......... 276,186 209,398 1,078 363,825 (637,290) (14,566)
Realized gain distribution from the Trust... 1,499,307 130,047 27,226 394,053 -- --
----------- ---------- --------- ----------- ----------- -----------
NET REALIZED GAIN (LOSS).......................... 1,775,493 339,445 28,304 757,878 (637,290) (14,566)
----------- ---------- --------- ----------- ----------- -----------
Unrealized appreciation (depreciation)
on investments:
Beginning of period...................... 1,160,602 269,561 -- (2,942,633) (1,079,388) --
End of period............................ (1,472,796) 1,160,602 269,561 11,044,586 (2,942,633) (1,079,338)
----------- ---------- --------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation) during the period............ (2,633,398) 891,041 269,561 13,987,219 (1,863,245) (1,079,388)
----------- ---------- --------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS.......................... (857,905) 1,230,486 297,865 14,745,097 (2,500,535) (1,093,954)
----------- ---------- --------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS...................... $ (689,369) $1,317,490 $321,483 $14,678,692 $(2,487,216) $(1,080,193)
=========== ========== ======== =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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>
--------------------------------------------------------------------------------
ALLIANCE
ALLIANCE AGGRESSIVE STOCK SMALL CAP GROWTH (A)
----------------------------------------- ------------------------------------
1999 1998 1997 1999 1998 1997
------------ ------------ ------------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.................... $ 3,163,286 $ 4,461,389 $ 1,311,613 $ -- $ 4,062 $ 4,189
Expenses (Note 3):
Mortality and expense risk charges.......... 5,481,701 5,581,296 5,299,127 284,347 215,285 41,540
------------ ------------ ------------ ----------- ----------- ---------
NET INVESTMENT INCOME............................. (2,318,415) (1,119,907) (3,987,514) (284,347) (211,223) (37,351)
------------ ------------ ------------ ----------- ----------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments......... (27,888,194) (39,688,312) 28,217,939 4,345,484 (7,585,521) (609,208)
Realized gain distribution from the Trust... 61,642,419 46,528,461 79,729,154 -- -- 545,833
------------ ------------ ------------ ----------- ----------- ---------
NET REALIZED GAIN (LOSS).......................... 33,754,225 6,840,149 107,947,093 4,345,484 (7,585,521) (63,375)
------------ ------------ ------------ ----------- ----------- ---------
Unrealized appreciation (depreciation)
on investments:
Beginning of period...................... 26,715,214 32,695,620 46,617,235 8,780,955 771,812 --
End of period............................ 158,809,890 26,715,214 32,695,620 24,076,277 8,780,955 771,812
------------ ------------ ------------ ----------- ----------- ---------
Change in unrealized appreciation
(depreciation) during the period............ 132,094,676 (5,980,406) (13,921,615) 15,295,322 8,009,143 771,812
------------ ------------ ------------ ----------- ----------- ---------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS.......................... 165,848,901 859,743 94,025,478 19,640,806 423,622 708,437
------------ ------------ ------------ ----------- ----------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS...................... $163,530,486 $ (260,164) $ 90,037,964 $19,356,459 $ 212,399 $ 671,086
============ ============ ============ =========== =========== =========
<CAPTION>
-----------------------------------------------------------
EQ/
EVER- MFS EMERGING
GREEN (C) GROWTH COMPANIES(A)
-------- --------------------------------------------
1998 1999 1998 1997
-------- ----------- ----------- --------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.................... $ 99 $ -- $ 969 $ 24,358
Expenses (Note 3):
Mortality and expense risk charges.......... 18 640,976 157,484 18,835
------ ----------- ----------- --------
NET INVESTMENT INCOME............................. 81 (640,976) (156,515) 5,523
------ ----------- ----------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments......... 20 13,577,250 4,270,964 161,034
Realized gain distribution from the Trust... -- 3,969,879 -- 296,998
------ ----------- ----------- --------
NET REALIZED GAIN (LOSS).......................... 20 17,547,129 4,270,964 458,032
------ ----------- ----------- --------
Unrealized appreciation (depreciation)
on investments:
Beginning of period...................... -- 6,996,177 171,320 --
End of period............................ 1,450 77,077,961 6,996,177 171,320
------ ----------- ----------- --------
Change in unrealized appreciation
(depreciation) during the period............ 1,450 70,081,784 6,824,857 171,320
------ ----------- ----------- --------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS.......................... 1,470 87,628,913 11,095,821 629,352
------ ----------- ----------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS...................... $1,551 $86,987,937 $10,939,306 $634,875
====== =========== =========== ========
</TABLE>
-------------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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>
-----------------------------------------------------------------
EQ/
EVERGREEN MERRILL LYNCH BT EQUITY
FOUNDATION (C) WORLD STRATEGY (A) 500 INDEX
-------------- -------------------------------- ----------
1999 1999 1998 1997 1999
----------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.................... $ 31 $ 41,786 $ 36,750 $17,124 $ 102
Expenses (Note 3):
Mortality and expense risk charges.......... 2 18,905 12,469 2,678 31
----------- -------- -------- ------- ----------
NET INVESTMENT INCOME............................. 29 22,881 24,281 14,446 71
----------- -------- -------- ------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments......... 302 197,727 19,432 (3,626) 24
Realized gain distribution from the Trust... -- 67,733 -- 38,995 29
----------- -------- -------- ------- ----------
NET REALIZED GAIN (LOSS).......................... 302 265,460 19,432 35,369 53
----------- -------- -------- ------- ----------
Unrealized appreciation (depreciation)
on investments:
Beginning of period...................... -- 187,734 (37,926) -- --
End of period............................ (1,505) 853,470 187,734 (37,926) 1,051
----------- -------- -------- ------- ----------
Change in unrealized appreciation
(depreciation) during the period............ (1,505) 665,736 225,660 (37,926) 1,051
----------- -------- -------- ------- ----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS.......................... (1,203) 931,196 245,092 (2,557) 1,104
----------- -------- -------- ------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS...................... $ (1,174) $954,077 $269,373 $11,889 $ 1,175
=========== ======== ======== ======= ==========
<CAPTION>
-----------------------------------------------------------------
BT INTER-
NATIONAL EQ/PUTNAM EQ/PUTNAM
EQUITY JPM CORE INVESTORS INTERNATIONAL
INDEX BOND GROWTH EQUITY
-------- --------- -------- --------
1999 1999 1999 1999
-------- --------- -------- --------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.................... $ 9 $ 100 $ -- $ 12
Expenses (Note 3):
Mortality and expense risk charges.......... 1 1 5 --
-------- --------- -------- --------
NET INVESTMENT INCOME............................. 8 99 (5) 12
-------- --------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments......... 0 -- 1 --
Realized gain distribution from the Trust... 9 -- 223 37
-------- --------- -------- --------
NET REALIZED GAIN (LOSS).......................... 9 -- 224 37
Unrealized appreciation (depreciation)
on investments:
Beginning of period...................... -- -- -- --
End of period............................ 69 (116) 736 1
-------- --------- -------- --------
Change in unrealized appreciation
(depreciation) during the period............ 69 (116) 736 1
-------- --------- -------- --------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS.......................... 78 (116) 960 38
-------- --------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS...................... $ 86 $ (17) $ 955 $ 50
======== ========= ======== ========
</TABLE>
------------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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>
-------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET ALLIANCE HIGH YIELD
----------------------------------------- -----------------------------------------
1999 1998 1997 1999 1998 1997
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income..................... $ 12,329,959 $ 9,515,464 $ 8,653,507 $ 16,489,390 $ 17,442,641 $ 12,128,952
Net realized gain (loss).................. 528,279 (153,564) (500,365) (15,030,554) 1,052,131 7,302,187
Change in unrealized appreciation
(depreciation) on investments.......... (219,635) 732,101 780,326 (7,843,498) (29,521,690) 2,958,012
------------ ------------ ------------ ------------ ------------ -----------
Net increase (decrease) in net assets
from operations........................ 12,638,603 10,094,001 8,933,468 (6,384,662) (11,026,918) 22,389,151
------------ ------------ ------------ ------------ ------------ -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)..................... 231,007,033 229,608,273 234,059,930 30,001,760 36,502,728 26,933,221
Benefits and other policy-related
transactions (Note 3).................. (63,463,349) (41,370,215) (40,687,124) (21,018,230) (20,288,710) (14,530,462)
Net transfers among funds and
guaranteed interest account............ (91,919,848) (128,607,686) (259,049,840) (25,281,076) 2,677,159 26,385,799
------------ ------------ ------------ ------------ ------------ -----------
Net increase (decrease) in net assets
from policy-related transactions....... 75,623,836 59,630,372 (65,677,034) (16,297,546) 18,891,177 38,788,558
------------ ------------ ------------ ------------ ------------ -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).............. 1,075,796 (387,161) 46,036 2,143,697 (832,263) 40,026
------------ ------------ ------------ ------------ ------------ -----------
INCREASE (DECREASE) IN NET ASSETS ........... 89,338,235 69,337,212 (56,697,530) (20,538,511) 7,031,996 61,217,735
NET ASSETS
BEGINNING OF PERIOD....................... 255,090,142 185,752,930 242,450,460 170,372,993 163,340,997 102,123,262
------------ ------------ ------------ ------------ ------------ -----------
NET ASSETS
END OF PERIOD............................. $344,428,377 $255,090,142 $185,752,930 $149,834,482 $170,372,993 $163,340,997
============ ============ ============ ============ ============ ============
<CAPTION>
-------------------------------------------------------
ALLIANCE COMMON STOCK
-------------------------------------------------------
1999 1998 1997
-------------- -------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income..................... $ 1,037,574 $ 1,338,974 $ (767,599)
Net realized gain (loss).................. 719,015,346 522,943,560 218,655,522
Change in unrealized appreciation
(depreciation) on investments.......... 13,099,046 122,078,195 272,798,112
-------------- -------------- --------------
Net increase (decrease) in net assets
from operations........................ 733,151,966 646,360,729 490,686,035
-------------- -------------- --------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)..................... 361,261,385 322,874,015 282,279,826
Benefits and other policy-related
transactions (Note 3).................. (302,304,428) (250,079,870) (199,662,183)
Net transfers among funds and
guaranteed interest account............ 49,877,173 24,136,275 56,849,823
-------------- -------------- --------------
Net increase (decrease) in net assets
from policy-related transactions....... 108,834,130 96,930,420 139,467,466
-------------- -------------- --------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).............. (5,343,344) (2,780,348) 516,970
-------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS ........... 836,642,752 740,510,801 630,670,471
NET ASSETS
BEGINNING OF PERIOD....................... 2,943,226,440 2,202,715,639 1,572,045,168
-------------- -------------- --------------
NET ASSETS
END OF PERIOD............................. $3,779,869,192 $2,943,226,440 $2,202,715,639
============== ============== ==============
</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>
----------------------------------------------------------------------------------
CAPITAL
EQ/ALLIANCE CAPITAL GUARDIAN
PREMIER GUARDIAN U.S. MERRILL LYNCH
GROWTH (C) RESEARCH (D) EQUITY (D) BASIC VALUE EQUITY (A)
------------ --------- --------- ------------------------------------
1999 1999 1999 1999 1998 1997
------------ --------- --------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income...................... $ (33,190) $ 71 $ 781 $ 314,801 $ 126,014 $ 26,461
Net realized gain (loss)................... 190,495 2,837 1,959 2,389,365 874,115 40,394
Change in unrealized appreciation
(depreciation) on investments........... 5,068,707 11,093 17,325 1,362,581 (226,962) 135,003
----------- -------- -------- ----------- ----------- ----------
Net increase (decrease) in net assets
from operations......................... 5,226,012 14,001 20,065 4,066,747 773,167 201,858
----------- -------- -------- ----------- ----------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)...................... 6,362,938 63,883 115,934 10,931,366 6,388,355 1,097,822
Benefits and other policy-related
transactions (Note 3)................... (1,028,342) (503) (15,128) (3,171,744) (1,430,414) (135,034)
Net transfers among funds and
guaranteed interest account............. 40,652,847 115,765 390,588 7,845,599 8,794,685 4,661,128
----------- -------- -------- ----------- ----------- ----------
Net increase (decrease) in net assets
from policy-related transactions........ 45,987,443 179,145 491,394 15,605,221 13,752,626 5,623,916
----------- --------- -------- ------------ ------------ -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)............... 3,902 209 378 (43,053) (1,392,853) 1,202,680
----------- --------- -------- ----------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS............. 51,217,357 193,355 511,837 19,628,915 13,132,940 7,028,454
NET ASSETS
BEGINNING OF PERIOD........................ -- -- -- 20,161,394 7,028,454 --
----------- --------- -------- ----------- ----------- ----------
NET ASSETS
END OF PERIOD.............................. $51,217,357 $193,355 $511,837 $39,790,309 $20,161,394 $7,028,454
=========== ======== ======== =========== =========== ==========
<CAPTION>
---------------------------------------------------------
MFS
GROWTH
AND
INCOME (C) MFS RESEARCH (A)
---------- -----------------------------------------
1998 1999 1998 1997
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income...................... $ 837 $ (155,808) $ (14,907) $ 7,315
Net realized gain (loss)................... (227) 2,081,454 494,412 88,145
Change in unrealized appreciation
(depreciation) on investments........... 20,637 6,720,924 3,063,681 249,382
-------- ----------- ----------- ----------
Net increase (decrease) in net assets
from operations......................... 21,247 8,646,570 3,543,186 344,842
-------- ----------- ----------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)...................... 44,806 12,506,780 6,795,257 1,177,137
Benefits and other policy-related
transactions (Note 3)................... (6,607) (4,808,292) (1,705,211) (162,042)
Net transfers among funds and
guaranteed interest account............. 326,238 4,280,012 12,108,388 6,389,251
-------- ----------- ----------- ----------
Net increase (decrease) in net assets
from policy-related transactions........ 364,437 11,978,500 17,198,434 7,404,346
-------- ----------- ----------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)............... 30,030 (9,698) (2,472,499) 2,003,671
-------- ----------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS............. 415,714 20,615,372 18,269,121 9,752,859
NET ASSETS
BEGINNING OF PERIOD........................ -- 28,021,980 9,752,859 --
-------- ----------- ----------- ----------
NET ASSETS
END OF PERIOD.............................. $415,714 $48,637,352 $28,021,980 $9,752,859
======== =========== =========== ==========
</TABLE>
-------------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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>
---------------------------------------------------------------------------------------
EQ/PUTNAM MORGAN STANLEY
GROWTH & INCOME VALUE (A) EMERGING MARKETS EQUITY (B)
---------------------------------------- -----------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ 168,536 $ 87,004 $ 23,618 $ (66,405) $ 13,319 $ 13,761
Net realized gain (loss)............... 1,775,493 339,445 28,304 757,878 (637,290) (14,566)
Change in unrealized appreciation
(depreciation) on investments....... (2,633,398) 891,041 269,561 13,987,219 (1,863,245) (1,079,388)
----------- ----------- ---------- ----------- ----------- -----------
Net increase (decrease) in net assets
from operations..................... (689,369) 1,317,490 321,483 14,678,692 (2,487,216) (1,080,193)
----------- ----------- ---------- ----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 7,146,178 5,099,897 1,149,748 4,138,455 2,442,975 323,739
Benefits and other policy-related
transactions (Note 3)............... (2,808,209) (1,485,166) (154,351) (1,720,293) (488,932) (7,501)
Net transfers among funds and
guaranteed interest account......... 1,469,187 6,086,532 4,539,465 16,198,446 4,158,460 2,483,527
----------- ----------- ---------- ----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions.... 5,807,156 9,701,263 5,534,862 18,616,608 6,112,503 2,799,765
----------- ----------- ---------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... (67,263) (1,334,566) 1,202,723 (1,953,290) 2,496 4,001,184
----------- ----------- ---------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS......... 5,050,524 9,684,187 7,059,068 31,342,010 3,627,783 5,720,756
NET ASSETS
BEGINNING OF PERIOD.................... 16,743,255 7,059,068 -- 9,348,539 5,720,756 --
----------- ----------- ---------- ----------- ----------- -----------
NET ASSETS
END OF PERIOD.......................... $21,793,779 $16,743,255 $7,059,068 $40,690,549 $ 9,348,539 $ 5,720,756
=========== =========== ========== =========== =========== ===========
</TABLE>
-------------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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>
--------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK ALLIANCE SMALL CAP GROWTH (A)
--------------------------------------------- --------------------------------------
1999 1998 1997 1999 1998 1997
-------------- ------------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (2,318,415) $ (1,119,907) $ (3,987,514) $ (284,347) $ (211,223) $ (37,351)
Net realized gain (loss)............... 33,754,225 6,840,149 107,947,093 4,345,484 (7,585,521) (63,375)
Change in unrealized appreciation
(depreciation) on investments....... 132,094,676 (5,980,406) (13,921,615) 15,295,322 8,009,143 771,812
-------------- ------------- ------------- ----------- ----------- -----------
Net increase (decrease) in net assets
from operations..................... 163,530,486 (260,164) 90,037,964 19,356,459 212,399 671,086
-------------- ------------- ------------- ----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 145,241,493 172,792,283 179,662,167 16,092,219 14,863,783 2,947,848
Benefits and other policy-related
transactions (Note 3)............... (117,102,087) (115,442,947) (107,529,554) (5,542,747) (3,897,615) (599,875)
Net transfers among funds and
guaranteed interest account......... (113,016,006) (43,660,488) 1,712,877 (8,085,585) 15,043,596 19,670,856
-------------- ------------- ------------- ----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions.... (84,876,600) 13,688,848 73,845,490 2,463,887 26,009,764 22,018,829
-------------- ------------- ------------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... 2,197,124 (541,559) 223,792 (99,856) (1,460,161) 1,208,014
-------------- ------------- ------------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS......... 80,851,010 12,887,125 164,107,246 21,720,490 24,762,002 23,897,929
NET ASSETS
BEGINNING OF PERIOD.................... 971,194,053 958,306,928 794,199,683 48,659,931 23,897,929 --
-------------- ------------- ------------- ----------- ----------- -----------
NET ASSETS
END OF PERIOD.......................... $1,052,045,063 $ 971,194,053 $ 958,306,929 $70,380,421 $48,659,931 $23,897,929
============== ============= ============= =========== =========== ===========
</TABLE>
-------------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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>
--------------------------------------------------------------
EQ/ MFS EMERGING
EVERGREEN (C) GROWTH COMPANIES (A)
------------- ---------------------------------------------
1999 1999 1998 1997
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.......................... $ 81 $ (640,976) $ (156,515) $ 5,523
Net realized gain (loss)....................... 20 17,547,129 4,270,964 458,032
Change in unrealized appreciation
(depreciation) on investments............... 1,450 70,081,784 6,824,857 171,320
--------- ------------ ----------- -----------
Net increase (decrease) in net assets
from operations............................. 1,551 86,987,937 10,939,306 634,875
--------- ------------ ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).......................... 6,341 32,825,036 11,533,783 1,598,358
Benefits and other policy-related
transactions (Note 3)....................... (434) (13,737,378) (2,705,605) (294,924)
Net transfers among funds and
guaranteed interest account................. 21,204 76,182,753 25,975,152 8,886,415
--------- ------------ ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions............ 27,111 95,270,411 34,803,330 10,189,849
--------- ------------ ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)................... 18 (72,131) (2,575,513) 2,004,977
--------- ------------ ----------- -----------
INCREASE (DECREASE) IN NET ASSETS................. 28,680 182,186,217 43,167,123 12,829,701
NET ASSETS
BEGINNING OF PERIOD............................ -- 55,996,824 12,829,701 --
--------- ------------ ----------- -----------
NET ASSETS
END OF PERIOD.................................. $ 28,680 $238,183,041 $55,996,824 $12,829,701
========= ============ =========== ===========
<CAPTION>
----------------------------------------------------------
EQ/
EVERGREEN MERRILL LYNCH
FOUNDATION(C) WORLD STRATEGY (A)
------------------------- --------------------------
1999 1999 1998 1997
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.......................... $ 29 $ 22,881 $ 24,281 $ 14,446
Net realized gain (loss)....................... 302 265,460 19,432 35,369
Change in unrealized appreciation
(depreciation) on investments............... (1,505) 665,736 225,660 (37,926)
--------- ---------- ---------- ----------
Net increase (decrease) in net assets
from operations............................. (1,174) 954,077 269,373 11,889
--------- ---------- ---------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).......................... 93 1,304,821 1,050,984 334,133
Benefits and other policy-related
transactions (Note 3)....................... (53) (511,416) (294,100) (41,646)
Net transfers among funds and
guaranteed interest account................. 2,377 (504,202) 1,271,852 1,374,499
--------- ---------- ---------- ----------
Net increase (decrease) in net assets
from policy-related transactions............ 2,417 289,203 2,028,736 1,666,986
--------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)................... 1,605 (999,768) (849,043) 2,000,771
--------- ---------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS................. 2,848 243,512 1,449,066 3,679,646
NET ASSETS
BEGINNING OF PERIOD............................ -- 5,128,712 3,679,646 --
--------- ---------- ---------- ----------
NET ASSETS
END OF PERIOD.................................. $ 2,848 $5,372,224 $5,128,712 $3,679,646
========= ========== ========== ==========
</TABLE>
-------------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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>
-------------------------------------------------------------------
EQ/PUTNAM
BT EQ/PUTNAM INTER-
BT EQUITY INTERNATIONAL JPM CORE INVESTORS NATIONAL
500 INDEX EQUITY INDEX BOND GROWTH EQUITY
--------- -------------- ---------- --------- --------
1999 1999 1999 1999 1999
--------- -------------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income........................ $ 71 $ 8 $ 99 $ (5) $ 12
Net realized gain (loss)..................... 53 9 0 224 37
Change in unrealized appreciation
(depreciation) on investments............. 1,051 69 (116) 736 1
-------- ----------- ---------- --------- --------
Net increase (decrease) in net assets
from operations........................... 1,175 86 (17) 955 50
-------- ----------- ---------- --------- --------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)........................ 9,476 -- -- 10,348 666
Benefits and other policy-related
transactions (Note 3)..................... (1,279) (8) (70) (96) --
Net transfers among funds and
guaranteed interest account............... 9,316 1,182 2,277 199 --
-------- ----------- ---------- --------- --------
Net increase (decrease) in net assets
from policy related-transactions.......... 17,513 1,174 2,207 10,451 666
-------- ----------- ---------- --------- --------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4).............. 11 -- 2 5 --
-------- ----------- ---------- --------- --------
INCREASE (DECREASE) IN NET ASSETS............... 18,699 1,260 2,192 11,411 716
NET ASSETS
BEGINNING OF PERIOD.......................... -- -- -- -- --
-------- ----------- ---------- --------- --------
NET ASSETS
END OF PERIOD................................ $ 18,699 $ 1,260 $ 2,192 $ 11,411 $ 716
======== =========== ========== ========= ========
</TABLE>
-------------------------
See Notes to Financial Statements.
(a) Commencement of Operations on May 1, 1997.
(b) Commencement of Operations on August 20, 1997.
(c) Commencement of Operations on June 4, 1999.
(d) Commencement of Operations on August 30, 1999.
+ 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, 1999
1. General
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. EQ Advisors Trust ("EQAT" or "Trust") commenced operations on May 1,
1997. EQAT is an open-ended diversified management investment company that
sells shares to separate accounts of insurance companies. Each portfolio
has separate investment objectives.
For periods prior to October 18, 1999, the Alliance portfolios (other than
EQ/Alliance Premier Growth) were part of The Hudson River Trust ("HRT"). On
October 18, 1999, a Substitution of new portfolios of EQAT for the
portfolios of HRT was performed. At that time assets of each of the HRT
portfolios were transferred to the corresponding new portfolios of EQAT.
Class IA shares and Class IB shares of the HRT became Class IA shares and
Class IB shares of EQAT.
Prior to the Substitution, Alliance Capital Management L.P., an indirect,
majority-owned subsidiary of Equitable Life, was investment adviser for all
HRT portfolios. Post substitution, Alliance continues as investment adviser
for the Alliance portfolios (including EQ/Alliance Premier Growth).
Effective September 1999, Equitable Life serves as investment manager of
EQAT. As such, Equitable Life oversees the activities of the investment
advisers with respect to EQAT and is responsible for retaining or
discontinuing the services of those advisers. Prior to September 1999, AXA
Advisors, LLC (formerly EQ Financial Consultants, Inc.), a subsidiary of
Equitable Life, served as investment manager to EQAT.
AXA Advisors, LLC, and Equitable Distributors, Inc., earn fees from EQAT
under distribution agreements held with the Trust. Equitable Life also
earns fees under an investment management agreement with EQAT. Alliance
earns fees under an investment advisory agreement with Equitable Life.
The Account consists of thirty-five variable investment options of which
twenty-two are reported herein:
o Alliance Money Market
o Alliance High Yield
o Alliance Common Stock
o EQ/Alliance Premier Growth
o Capital Guardian Research
o Capital Guardian U.S. Equity
o Merrill Lynch Basic Value Equity
o MFS Growth with Income
o MFS Research
o EQ/Putnam Growth & Income Value
o Morgan Stanley Emerging Markets Equity
o Alliance Aggressive Stock
o Alliance Small Cap Growth
o EQ/Evergreen
o MFS Emerging Growth Companies
o EQ/Evergreen Foundation
o Merrill Lynch World Strategy
o BT Equity 500 Index
o BT International Equity Index
o JPM Core Bond
o EQ/Putnam Investors Growth
o EQ/Putnam International Equity
+ 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, 1999
1. General (Continued)
The assets in each fund are invested in Class IA shares or Class IB shares
of a corresponding mutual fund portfolio ("Portfolio") of EQAT. Class IA
and IB shares are offered by EQAT at net asset value. Both classes of
shares are subject to fees for investment management and advisory services
and other Trust expenses. Class IA shares are not subject to distribution
fees imposed pursuant to a distribution plan. Class IB shares are subject
to distribution fees imposed under a distribution plan (herein the "Rule
12b-1 Plans") adopted in 1997 pursuant to Rule 12b-1 under the 1940 Act, as
amended. The Rule 12b-1 Plans provide that EQAT, on behalf of each Fund,
may charge annually up to 0.25% of the average daily net assets of a Fund
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of the Class IB shares. These fees are
reflected in the net asset value of the shares.
The Account supports the operations of various Equitable life insurance
products. These products are sold through both Equitable's Agent
Distribution Channel and Equitable's Independent Broker Dealer Distribution
Channel. These financial statement footnotes discuss the products, charges
and investment return applicable to those life insurance products
(Incentive Life, Incentive Life Plus, Survivorship Incentive Life and
Survivorship 2000) which are sold through Equitable's Independent Broker
Dealer Distribution Channel.
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.
Receivable/payable for policy-related transactions represent amount due
to/from General Account predominately related to premiums, surrenders and
death benefits.
Policyowners may allocate amounts in their individual accounts to the
variable investment options 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 $(140,321,294), $56,300,263, and
$165,714,430 for the years ended 1999, 1998 and 1997, respectively, are
included in Net Transfers among variable investment options. The net assets
of any variable investment option may not be less than the aggregate of the
policyowners' accounts allocated to that variable investment option.
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 EQAT and are valued at the net asset
values per share of the respective Portfolios. The net asset value is
determined by EQAT using the market or fair value of the underlying assets
of the Portfolio less liabilities.
Investment transactions are recorded on the trade date. Dividend and
capital gains are declared and distributed by the Trust at the end of each
year and are automatically reinvested on the ex-dividend date. Realized
gains and losses include (1) gains and losses on redemptions of EQAT shares
(determined on the identified cost basis) and (2) Trust distributions
representing the net realized gains on Trust investment transactions.
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.
Under the Policies, Equitable Life assumes mortality and expense risks and,
to cover these risks, charges the daily net assets of the Account. These
charges apply to all products supported by the Account. The products sold
through Equitable's Independent Broker Dealer Distribution Channel have
charges currently for Incentive Life, Incentive Life Plus and Survivorship
Incentive Life of .60% , and for Survivorship 2000 of .90%. The products
sold through Equitable Life's Agent Distribution Channel have charges
ranging from 0.60% to 1.80% depending on the features of those products.
+ 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, 1999
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:
<TABLE>
<CAPTION>
Mortality and
Expense Mortality Administrative Total
---------------- ----------- ---------------- --------
<S> <C> <C> <C> <C>
Incentive Life,
Incentive Life 2000,
Incentive Life Plus
Second Series,
Champion 2000 (a) .60% -- -- .60%
IL Plus Original
Series, IL COLI (b) .85% -- -- .85%
Survivorship Incentive
Life (a) .60% -- -- .60%
Survivorship 2000 (a) .90% -- -- .90%
IL Protector (a) .80% -- -- .80%
SP Flex (a) .85% .60% .35% 1.80%
</TABLE>
-----------------------------
(a) Charged to daily net assets of the Account.
(b) Charged to Policy Account and is included in Benefits and other
policy-related transactions in the Statement of Changes in
Net Assets.
Before amounts are remitted to the Account for Incentive Life, Incentive
Life Plus, IL COLI, Survivorship Incentive Life 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,
Survivorship Incentive Life, Incentive Life Sales 1999 and after, 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.
Included in the Withdrawals and Administrative Charges line of the
Statement of Changes in Net Assets are certain administrative charges which
are deducted from the policyowners account value.
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.
The following table shows the surplus contributions (withdrawals) by
Equitable Life by investment fund:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------
VARIABLE INVESTMENT OPTIONS 1999 1998 1997
--------------------------- ---- ---- ----
<S> <C> <C> <C>
Alliance Money Market $ (531,900) $(1,591,380) --
Alliance High Yield 1,254,634 (1,839,368) --
</TABLE>
+ 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, 1999
4. Amounts Retained by Equitable Life in Separate Account FP (Continued)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------
VARIABLE INVESTMENT OPTIONS 1999 1998 1997
--------------------------- ---- ---- ----
<S> <C> <C> <C>
Alliance Common Stock $(24,309,506) $(17,381,053) $ --
EQ/Alliance Premier Growth (60,529) -- --
Capital Guardian Research -- -- --
Capital Guardian U.S. Equity -- -- --
Merrill Lynch Basic Value Equity (196,510) (1,459,281) 1,200,000
MFS Growth with Income 29,599 -- --
MFS Research (218,336) (2,558,541) 2,000,000
EQ/Putnam Growth & Income Value (177,637) (1,391,562) 1,200,000
Morgan Stanley Emerging Markets Equity (2,019,694) (21,425) 4,000,000
Alliance Aggressive Stock (3,284,577) (6,122,856) --
Alliance Small Cap Growth (384,204) (1,675,446) 1,200,000
EQ/Evergreen -- -- --
MFS Emerging Growth Companies (713,109) (2,732,997) 2,000,000
ASSET ALLOCATION OPTIONS
------------------------
EQ/Evergreen Foundation -- -- --
Merrill Lynch World Strategy (1,018,674) (861,511) 2,000,000
BT Equity 500 Index (21) -- --
BT International Equity Index -- -- --
JPM Core Bond -- -- --
EQ/Putnam Investors Growth -- -- --
EQ/Putnam International Equity -- -- --
</TABLE>
5. Distribution and Servicing Agreements
Equitable Life has entered into Distribution and Servicing Agreements with
AXA Advisors, LLC, an affiliate of Equitable Life, and EDI, whereby
registered representatives of AXA Advisors, LLC, 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 variable investment options for the periods shown. The
net return for each variable investment option is based upon beginning and
ending net unit value for a policy and is not based on the average net
assets in the variable investment option during such period. Gross return
is equal to the total return earned by the underlying EQAT investment which
is after deduction of EQAT expense.
The Separate Account rates of return attributable to Incentive Life,
Survivorship Incentive Life and Incentive Life Plus policyowners are
different than those attributable to Survivorship 2000 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-20
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
INCENTIVE LIFE PLUS, INCENTIVE LIFE,
-----------------------------------
SURVIVORSHIP INCENTIVE LIFE*
----------------------------
YEAR ENDED
DECEMBER 31,
-----------------
ALLIANCE MONEY MARKET 1999
--------------------- ----
Gross return..................... 4.71%
Net return....................... 4.10%
YEAR ENDED
DECEMBER 31,
-----------------
ALLIANCE HIGH YIELD 1999
------------------- ----
Gross return..................... (3.58)%
Net return....................... (4.16)%
YEAR ENDED
DECEMBER 31,
-----------------
ALLIANCE COMMON STOCK 1999
---------------------- ----
Gross return..................... 24.88%
Net return....................... 24.13%
JUNE 4 (C) TO
DECEMBER 31,
-----------------
EQ/ALLIANCE PREMIER GROWTH 1999
-------------------------- ----
Gross return..................... 18.97%
Net return....................... 18.52%
AUGUST 30 (C) TO
DECEMBER 31,
-----------------
CAPITAL GUARDIAN RESEARCH 1999
------------------------- ----
Gross return..................... 7.10%
Net return....................... 6.67%
AUGUST 30 (C) TO
DECEMBER 31,
-----------------
CAPITAL GUARDIAN U.S. EQUITY 1999
---------------------------- ----
Gross return..................... 3.76%
Net return....................... 3.32%
YEAR ENDED
DECEMBER 31,
-----------------
MERRILL LYNCH BASIC VALUE EQUITY 1999
-------------------------------- ----
Gross return..................... 19.00%
Net return....................... 18.23%
-------------------
+ Formerly known as Equitable Variable Life Insurance Company
Separate Account FP.
* 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 annualized rates of return.
(b) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflect performance on an
annualized basis. The net return reflects performance for the periods
indicated.
(c) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflects performance from
the Portfolio's commencement date of April 30, 1999 and are not annualized
rates of return. The net return reflects performance for the periods
indicated.
FSA-21
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
INCENTIVE LIFE PLUS, INCENTIVE LIFE,
------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
----------------------------
YEAR ENDED
DECEMBER 31,
-------------
MFS GROWTH WITH INCOME 1999
---------------------- ----
Gross return......................... 8.76%
Net return........................... 8.06%
YEAR ENDED
DECEMBER 31,
--------------
MFS RESEARCH 1999
------------ ----
Gross return......................... 23.12%
Net return........................... 22.38%
YEAR ENDED
DECEMBER 31,
--------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999
------------------------------- ----
Gross return......................... (1.27)%
Net return........................... (1.95)%
YEAR ENDED
DECEMBER 31,
--------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999
-------------------------------------- ----
Gross return......................... 95.82%
Net return........................... 94.57%
YEAR ENDED
DECEMBER 31,
--------------
ALLIANCE AGGRESSIVE STOCK 1999
------------------------- ----
Gross return......................... 18.55%
Net return........................... 17.83%
YEAR ENDED
DECEMBER 31,
--------------
ALLIANCE SMALL CAP GROWTH 1999
------------------------- ----
Gross return......................... 27.46%
Net return........................... 26.86%
YEAR ENDED
DECEMBER 31,
--------------
EQ/EVERGREEN 1999
------------ ----
Gross return......................... 9.70%
Net return........................... 9.06%
YEAR ENDED
DECEMBER 31,
---------------
MFS EMERGING GROWTH COMPANIES 1999
-------------------------------- ----
Gross return......................... 73.62%
Net return........................... 72.63%
-------------------
+ Formerly known as Equitable Variable Life Insurance Company
Separate Account FP.
* 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 annualized rates of return.
(b) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflect performance on an
annualized basis. The net return reflects performance for the periods
indicated.
(c) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflects performance from
the Portfolio's commencement date of April 30, 1999 and are not annualized
rates of return. The net return reflects performance for the periods
indicated.
FSA-22
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
INCENTIVE LIFE PLUS, INCENTIVE LIFE,
------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
----------------------------
YEAR ENDED
DECEMBER 31,
-----------------
EQ/EVERGREEN FOUNDATION 1999
----------------------- ----
Gross return..................... 7.38%
Net return....................... 6.72%
YEAR ENDED
DECEMBER 31,
-----------------
MERRILL LYNCH WORLD STRATEGY 1999
---------------------------- ----
Gross return..................... 21.35%
Net return....................... 20.62%
YEAR ENDED
DECEMBER 31,
-----------------
BT EQUITY 500 INDEX 1999
------------------- ----
Gross return..................... 20.30%
Net return....................... 19.58%
YEAR ENDED
DECEMBER 31,
-----------------
BT INTERNATIONAL EQUITY INDEX 1999
----------------------------- ----
Gross return..................... 27.50%
Net return....................... 26.70%
YEAR ENDED
DECEMBER 31,
-----------------
JPM CORE BOND 1999
--------------- ----
Gross return..................... (1.64)%
Net return....................... (2.19)%
YEAR ENDED
DECEMBER 31,
-----------------
EQ/PUTNAM INVESTORS GROWTH 1999
-------------------------- ----
Gross return..................... 30.24%
Net return....................... 29.48%
YEAR ENDED
DECEMBER 31,
-----------------
EQ/PUTNAM INTERNATIONAL EQUITY 1999
------------------------------ ----
Gross return..................... 60.24%
Net return....................... 59.29%
-------------------
+ Formerly known as Equitable Variable Life Insurance Company
Separate Account FP.
* 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 annualized rates of return.
(b) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflect performance on an
annualized basis. The net return reflects performance for the periods
indicated.
(c) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflects performance from
the Portfolio's commencement date of April 30, 1999 and are not annualized
rates of return. The net return reflects performance for the periods
indicated.
FSA-23
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
SURVIVORSHIP 2000
-----------------
YEAR ENDED
DECEMBER 31,
-----------------
ALLIANCE MONEY MARKET 1999
--------------------- ----
Gross return..................... 4.71%
Net return....................... 3.78%
YEAR ENDED
DECEMBER 31,
-----------------
ALLIANCE HIGH YIELD 1999
------------------- ----
Gross return..................... (3.35)%
Net return....................... (4.45)%
YEAR ENDED
DECEMBER 31,
-----------------
ALLIANCE COMMON STOCK 1999
---------------------- ----
Gross return..................... 24.88%
Net return....................... 23.76%
JUNE 4 (C) TO
DECEMBER 31,
-----------------
EQ/ALLIANCE PREMIER GROWTH 1999
-------------------------- ----
Gross return..................... 18.97%
Net return....................... 18.28%
AUGUST 30 (C) TO
DECEMBER 31,
-----------------
CAPITAL GUARDIAN RESEARCH 1999
------------------------- ----
Gross return..................... 7.10%
Net return....................... 6.46%
AUGUST 30 (C) TO
DECEMBER 31,
-----------------
CAPITAL GUARDIAN U.S. EQUITY 1999
---------------------------- ----
Gross return..................... 3.76%
Net return....................... 3.11%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MERRILL LYNCH BASIC VALUE EQUITY 1999
-------------------------------- ----
Gross return..................... 19.00%
Net return....................... 18.23%
-------------------
+ Formerly known as Equitable Variable Life Insurance Company
Separate Account FP.
* 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 annualized rates of return.
(b) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflect performance on an
annualized basis. The net return reflects performance for the periods
indicated.
(c) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflects performance from
the Portfolio's commencement date of April 30, 1999 and are not annualized
rates of return. The net return reflects performance for the periods
indicated.
FSA-24
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
SURVIVORSHIP 2000
-----------------
YEAR ENDED
DECEMBER 31,
--------------
MFS GROWTH WITH INCOME 1999
---------------------- ----
Gross return......................... 8.76%
Net return........................... 7.74%
YEAR ENDED
DECEMBER 31,
--------------
MFS RESEARCH 1999
-------------- ----
Gross return......................... 23.12%
Net return........................... 22.01%
YEAR ENDED
DECEMBER 31,
--------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999
--------------------------------- ----
Gross return......................... (1.27)%
Net return........................... (2.25)%
YEAR ENDED
DECEMBER 31,
--------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999
-------------------------------------- ----
Gross return......................... 95.82%
Net return........................... 93.98%
YEAR ENDED
DECEMBER 31,
---------------
ALLIANCE AGGRESSIVE STOCK 1999
------------------------- ----
Gross return......................... 18.55%
Net return........................... 17.43%
YEAR ENDED
DECEMBER 31,
--------------
ALLIANCE SMALL CAP GROWTH 1999
------------------------- ----
Gross return......................... 27.46%
Net return........................... 26.47%
YEAR ENDED
DECEMBER 31,
--------------
EQ/EVERGREEN 1999
------------ ----
Gross return......................... 9.70%
Net return........................... 8.73%
YEAR ENDED
DECEMBER 31,
--------------
MFS EMERGING GROWTH COMPANIES 1999
----------------------------- ----
Gross return......................... 73.62%
Net return........................... 72.11%
-------------------
+ Formerly known as Equitable Variable Life Insurance Company
Separate Account FP.
* 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 annualized rates of return.
(b) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflect performance on an
annualized basis. The net return reflects performance for the periods
indicated.
(c) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflects performance from
the Portfolio's commencement date of April 30, 1999 and are not annualized
rates of return. The net return reflects performance for the periods
indicated.
FSA-25
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
DECEMBER 31, 1999
RATES OF RETURN:
SURVIVORSHIP 2000
-----------------
YEAR ENDED
DECEMBER 31,
-----------------
EQ/EVERGREEN FOUNDATION 1999
----------------------- ----
Gross return..................... 7.38%
Net return....................... 6.14%
YEAR ENDED
DECEMBER 31,
-----------------
MERRILL LYNCH WORLD STRATEGY 1999
---------------------------- ----
Gross return..................... 21.35%
Net return....................... 20.62%
YEAR ENDED
DECEMBER 31,
-----------------
BT EQUITY 500 INDEX 1999
------------------- ----
Gross return..................... 20.30%
Net return....................... 19.22%
YEAR ENDED
DECEMBER 31,
-----------------
BT INTERNATIONAL EQUITY INDEX 1999
----------------------------- ----
Gross return..................... 27.50%
Net return....................... 26.32%
YEAR ENDED
DECEMBER 31,
-----------------
JPM CORE BOND 1999
------------- ----
Gross return..................... (1.64)%
Net return....................... (2.48)%
YEAR ENDED
DECEMBER 31,
-----------------
EQ/PUTNAM INVESTORS GROWTH 1999
-------------------------- ----
Gross return..................... 30.24%
Net return....................... 29.09%
YEAR ENDED
DECEMBER 31,
-----------------
EQ/PUTNAM INTERNATIONAL EQUITY 1999
------------------------------ ----
Gross return..................... 60.24%
Net return....................... 58.81%
-------------------
+ Formerly known as Equitable Variable Life Insurance Company
Separate Account FP.
* 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 annualized rates of return.
(b) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflect performance on an
annualized basis. The net return reflects performance for the periods
indicated.
(c) Date as of which net premiums under the policies were first allocated to
the variable investment option. The gross return reflects performance from
the Portfolio's commencement date of April 30, 1999 and are not annualized
rates of return. The net return reflects performance for the periods
indicated.
FSA-26
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------
ALLIANCE MONEY
MARKET ALLIANCE HIGH YIELD ALLIANCE COMMON STOCK
--------------------- --------------------- -----------------------
<S> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 319,507,813................ $326,960,614
164,137,140................ $137,495,589
2,919,235,892................ $3,597,949,882
429,262,521................
1,155,412................
931,869................
43,515,044................
890,464................
48,531,542................
23,005,276................
Receivable for Trust shares sold.................. 7,396,828 194,117 1,260,428
Receivable for policy-related
transactions.................................. -- 789,430 --
--------------------- --------------------- -----------------------
Total Assets...................................... $334,357,442 $138,479,136 $3,599,210,310
--------------------- --------------------- -----------------------
LIABILITIES
Payable for Trust shares purchased................ $ -- $ -- $ --
Payable for policy-related
transactions.................................. 6,969,671 -- 2,000,735
--------------------- --------------------- -----------------------
Total Liabilities................................. 6,969,671 -- 2,000,735
--------------------- --------------------- -----------------------
NET ASSETS........................................ $327,387,771 $138,479,136 $3,597,209,575
===================== ===================== =======================
Amount retained by Equitable Life
in Separate Account FP (Note 4)............... $ 1,053,225 $ 186,074 $ 2,851,101
Net Assets Attributable
to Contractowners............................. 326,334,546 138,293,062 3,594,358,474
--------------------- --------------------- -----------------------
NET ASSETS........................................ $327,387,771 $138,479,136 $3,597,209,575
===================== ===================== =======================
<CAPTION>
----------------------------------------------------------
EQ/ CAPITAL
ALLIANCE PREMIER GUARDIAN CAPITAL GUARDIAN
GROWTH RESEARCH U.S. EQUITY
--------------------- ----------------- -----------------
<S> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 319,507,813................
164,137,140................
2,919,235,892................
429,262,521................ $474,175,098
1,155,412................ $1,199,556
931,869................ $ 990,690
43,515,044................
890,464................
48,531,542................
23,005,276................
Receivable for Trust shares sold.................. -- 14,091 13,265
Receivable for policy-related
transactions.................................. 246,398 -- --
--------------------- ----------------- -----------------
Total Assets...................................... $474,421,496 $1,213,647 $1,003,955
--------------------- ----------------- -----------------
LIABILITIES
Payable for Trust shares purchased................ $ 242,596 $ -- $ --
Payable for policy-related
transactions.................................. -- 14,091 13,265
--------------------- ----------------- -----------------
Total Liabilities................................. 242,596 14,091 13,265
--------------------- ----------------- -----------------
NET ASSETS........................................ $474,178,900 $1,199,556 $ 990,690
===================== ================= =================
Amount retained by Equitable Life
in Separate Account FP (Note 4)............... $ 24,619 $ 787 $ 58,241
Net Assets Attributable
to Contractowners............................. 474,154,281 1,198,769 932,449
--------------------- ----------------- -----------------
NET ASSETS........................................ $474,178,900 $1,199,556 $ 990,690
===================== ================= =================
<CAPTION>
---------------------------------------------------------------------------
MFS
GROWTH
MERRILL LYNCH WITH EQ/PUTNAM GROWTH
BASIC VALUE EQUITY INCOME MFS RESEARCH & INCOME VALUE
------------------- --------------- ------------------- ------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 319,507,813................
164,137,140................
2,919,235,892................
429,262,521................
1,155,412................
931,869................
43,515,044................ $45,121,652
890,464................ $934,945
48,531,542................ $59,068,005
23,005,276................ $21,277,505
Receivable for Trust shares sold.................. -- -- -- 8,268
Receivable for policy-related
transactions.................................. 30,035 118 929,631 --
------------------- --------------- ------------------- ------------------
Total Assets...................................... $45,151,687 $935,063 $59,997,636 $21,285,773
------------------- --------------- ------------------- ------------------
LIABILITIES
Payable for Trust shares purchased................ $ 35,430 $ 118 $ 962,387 $ --
Payable for policy-related
transactions.................................. -- -- -- 19,017
------------------- --------------- ------------------- ------------------
Total Liabilities................................. 35,430 118 962,387 19,017
------------------- --------------- ------------------- ------------------
NET ASSETS........................................ $45,116,257 $934,945 $59,035,249 $21,266,756
=================== =============== =================== ==================
Amount retained by Equitable Life
in Separate Account FP (Note 4)............... $ 58,772 $ 62 $ 68,546 $ 43,854
Net Assets Attributable
to Contractowners............................. 45,057,485 934,883 58,966,703 21,222,902
------------------- --------------- ------------------- ------------------
NET ASSETS........................................ $45,116,257 $934,945 $59,035,249 $21,266,756
=================== =============== =================== ==================
</TABLE>
------------------------------
See Notes to Financial Statements.
FSA-27
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
MARCH 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------- --------------------------------------------------------------------
MORGAN STANLEY
EMERGING MARKETS ALLIANCE AGGRESSIVE ALLIANCE SMALL CAP
EQUITY STOCK GROWTH
----------------------------------------------------- ------------------- ----------------------- ---------------------
<S> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 56,718,571................ $68,119,129
873,780,135................ $1,012,478,065
61,551,417................ $100,939,048
259,130................
250,269,616................
33,641................
5,569,081................
161,628................
15,359................
52,487................
Receivable for Trust shares sold.................. -- -- 26,859,101
Receivable for policy-related
transactions.................................. 373,348 2,336,237 --
------------------- ----------------------- ---------------------
Total Assets...................................... $68,492,477 $1,014,814,302 $127,798,149
LIABILITIES
Payable for Trust shares purchased................ $ 474,279 $ 1,415,517 $ --
Payable for policy-related
transactions.................................. -- -- 27,063,965
------------------- ----------------------- ---------------------
Total Liabilities................................. 474,279 1,415,517 27,063,965
------------------- ----------------------- ---------------------
NET ASSETS........................................ $68,018,198 $1,013,398,785 $100,734,184
=================== ======================= =====================
Amount retained by Equitable Life
in Separate Account FP (Note 4)............... 2,131,032 $ 426,725 $ 238,154
Net Assets Attributable
to Contractowners............................. 65,887,166 1,012,972,060 100,496,030
------------------- ----------------------- ---------------------
NET ASSETS........................................ $68,018,198 $1,013,398,785 $100,734,184
=================== ======================= =====================
<CAPTION>
----------------------------------------------------- --------------------------------------------------------
EQ/
EQ/ MFS EMERGING GROWTH EVERGREEN
EVERGREEN COMPANIES FOUNDATION
----------------------------------------------------- -------------- --------------------- -----------------
<S> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 56,718,571................
873,780,135................
61,551,417................
259,130................ $266,794
250,269,616................ $339,765,051
33,641................ $34,614
5,569,081................
161,628................
15,359................
52,487................
Receivable for Trust shares sold.................. 597 -- --
Receivable for policy-related
transactions.................................. -- 4,356,452 1,598
-------------- --------------------- -------------
Total Assets...................................... $267,391 $344,121,503 $36,212
LIABILITIES
Payable for Trust shares purchased................ $ -- $ 4,419,711 $ --
Payable for policy-related
transactions.................................. 597 -- --
-------------- --------------------- -------------
Total Liabilities................................. 597 4,419,711 --
-------------- --------------------- -------------
NET ASSETS........................................ $266,794 $339,701,792 $36,212
============== ===================== =============
Amount retained by Equitable Life
in Separate Account FP (Note 4)............... $ 158 $ 98,357 $ --
Net Assets Attributable
to Contractowners............................. 266,636 339,603,435 36,212
-------------- --------------------- -------------
NET ASSETS........................................ $266,794 $339,701,792 $36,212
============== ===================== =============
<CAPTION>
----------------------------------------------------- -------------------------------------------------------------------------
BT
MERRILL EQUITY BT
LYNCH 500 INTERNATIONAL JPM CORE
WORLD STRATEGY INDEX EQUITY INDEX BOND
----------------------------------------------------- ---------------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 56,718,571................
873,780,135................
61,551,417................
259,130................
250,269,616................
33,641................
5,569,081................ $6,478,433
161,628................ $171,651
15,359................ $15,826
52,487................ $52,782
Receivable for Trust shares sold.................. -- -- -- --
Receivable for policy-related
transactions.................................. 11,175 127 120 --
------------------ -------------- ------------- -------------
Total Assets...................................... $6,489,608 $171,778 $15,946 $52,782
LIABILITIES
Payable for Trust shares purchased................ $ 10,676 $ 128 $ 120 $ --
Payable for policy-related
transactions.................................. -- -- -- --
------------------ -------------- ------------- -------------
Total Liabilities................................. 10,676 128 120 --
------------------ -------------- ------------- -------------
NET ASSETS........................................ $6,478,932 $171,650 $15,826 $52,782
================== ============== ============= =============
Amount retained by Equitable Life
in Separate Account FP (Note 4)............... $ 502,649 $ 17 $ 14 $ 7
Net Assets Attributable
to Contractowners............................. 5,976,283 171,633 15,812 52,775
------------------ -------------- ------------- -------------
NET ASSETS........................................ $6,478,932 $171,650 $15,826 $52,782
================== ============== ============= =============
</TABLE>
------------------------------
See Notes to Financial Statements.
FSA-28
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF ASSETS AND LIABILITIES (Concluded)
MARCH 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
-----------------------------------------------------------------
EQ/PUTNAM
EQ/PUTNAM INTERNATIONAL BT SMALL
INVESTORS GROWTH EQUITY COMPANY INDEX
----------------- ---------------- ----------------
<S> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $81,409.............. $87,624
53,440.............. $55,569
57.............. $ 57
2,346..............
347..............
17,812..............
Receivable for Trust shares sold........... -- -- --
Receivable for policy-related
transactions........................... -- 120 57
------------- ------------- ---------
Total Assets............................... $87,624 $55,689 $114
------------- ------------- ---------
LIABILITIES
Payable for Trust shares purchased......... $ -- $ 120 $ 57
Payable for policy-related
transactions........................... -- -- --
------------- ------------- ---------
Total Liabilities.......................... -- 120 57
------------- ------------- ---------
NET ASSETS................................. $87,624 55,569 $ 57
============= ============= =========
Amount retained by Equitable Life
in Separate Account FP (Note 4)........ $ 19 $ 4 $ --
Net Assets Attributable
to Contractowners...................... 87,605 55,565 57
------------- ------------- ---------
NET ASSETS................................. $87,624 $55,569 $ 57
============= ============= =========
<CAPTION>
----------------------------------------------------------------
CAPITAL
GUARDIAN LAZARD SMALL LAZARD LARGE
INTERNATIONAL CAP VALUE CAP VALUE
---------------- ---------------- ----------------
<S> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $81,409..............
53,440..............
57..............
2,346.............. $2,385
347.............. $363
17,812.............. $18,788
Receivable for Trust shares sold........... -- -- --
Receivable for policy-related
transactions........................... 121 64 63
----------- --------- -------------
Total Assets............................... $2,506 $427 $18,851
----------- --------- -------------
LIABILITIES
Payable for Trust shares purchased......... $ 121 $ 64 $ 63
Payable for policy-related
transactions........................... -- -- --
----------- --------- -------------
Total Liabilities.......................... 121 64 63
----------- --------- -------------
NET ASSETS................................. $2,385 $363 $18,788
=========== ========= =============
Amount retained by Equitable Life
in Separate Account FP (Note 4)........ $ 1 $ -- $ 11
Net Assets Attributable
to Contractowners...................... 2,384 363 18,777
----------- --------- -------------
NET ASSETS................................. $2,385 $363 $18,788
=========== ========= =============
</TABLE>
------------------------------
See Notes to Financial Statements.
FSA-29
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
---------------------------------------------------------------
ALLIANCE
MONEY ALLIANCE ALLIANCE
MARKET HIGH YIELD COMMON STOCK
------------------- ------------------ ------------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust ........................... $ -- $ -- $ --
Expenses (Note 3):
Mortality and expense risk charges ................. 443,573 198,216 5,088,719
----------------- ------------------- ---------------------
NET INVESTMENT INCOME (LOSS) ............................... (443,573) (198,216) (5,088,719)
----------------- ------------------- ---------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments ................ (1,046,171) (5,266,865) 147,933,616
Realized gain distribution from the Trust .......... -- -- --
----------------- ------------------- ---------------------
NET REALIZED GAIN (LOSS) ................................... (1,046,171) (5,266,865) 147,933,616
----------------- ------------------- ---------------------
Unrealized appreciation (depreciation) on investments:
Beginning of period ............................. 1,316,815 (28,742,353) 702,408,250
End of period ................................... 7,452,801 (26,641,551) 678,713,990
----------------- ------------------- ---------------------
Change in unrealized appreciation
(depreciation) during the period ....................... 6,135,986 2,100,802 (23,694,260)
----------------- ------------------- ---------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS .................................. 5,089,815 (3,166,063) 124,239,356
----------------- ------------------- ---------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $4,646,242 $(3,364,279) $119,150,637
================= =================== =====================
<CAPTION>
--------------------------------------------------------------
CAPITAL CAPITAL
EQ/ALLIANCE GUARDIAN GUARDIAN
PREMIER GROWTH RESEARCH U.S. EQUITY
------------------- ------------------ -------------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust ........................... $ -- $ -- $ --
Expenses (Note 3):
Mortality and expense risk charges ................. 447,637 528 819
------------------ ------------- ------------
NET INVESTMENT INCOME (LOSS) ............................... (447,637) (528) (819)
------------------ ------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments ................ 164,594 12,101 7,071
Realized gain distribution from the Trust .......... -- -- --
------------------ ------------- ------------
NET REALIZED GAIN (LOSS) ................................... 164,594 12,101 7,071
------------------ ------------- ------------
Unrealized appreciation (depreciation) on investments:
Beginning of period ............................. 5,068,707 11,093 17,325
End of period ................................... 44,912,577 44,144 58,821
------------------ ------------- ------------
Change in unrealized appreciation
(depreciation) during the period ....................... 39,843,870 33,051 41,496
------------------ ------------- ------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS .................................. 40,008,464 45,152 48,567
------------------ ------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $39,560,827 $44,624 $47,748
================== ============= ============
<CAPTION>
--------------------------------------------------------------
MERRILL LYNCH MFS GROWTH MFS
BASIC VALUE EQUITY WITH INCOME RESEARCH
------------------- ------------------ -----------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust ........................... $ -- $ -- $ --
Expenses (Note 3):
Mortality and expense risk charges ................. 51,556 773 69,871
--------------- ------------ -----------------
NET INVESTMENT INCOME (LOSS) ............................... (51,556) (773) (69,871)
--------------- ------------ -----------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments ................ 22,023 299 3,843,173
Realized gain distribution from the Trust .......... -- -- --
--------------- ----------- -----------------
NET REALIZED GAIN (LOSS) ................................... 22,023 299 3,843,173
--------------- ------------ -----------------
Unrealized appreciation (depreciation) on investments:
Beginning of period ............................. 1,270,622 20,637 10,033,986
End of period ................................... 1,606,608 44,481 10,536,463
--------------- ------------ -----------------
Change in unrealized appreciation
(depreciation) during the period ....................... 335,986 23,844 502,477
--------------- ------------ -----------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS .................................. 358,009 24,143 4,345,650
--------------- ------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $ 306,453 $23,370 $4,275,779
=============== ============ =================
</TABLE>
------------------------------
See Notes to Financial Statements.
FSA-30
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS (Continued)
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
---------------------------------------------------------------
MORGAN
EQ/PUTNAM STANLEY ALLIANCE
GROWTH EMERGING MARKETS AGGRESSIVE
& INCOME VALUE EQUITY STOCK
------------------ ------------------- -----------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust ........................... $ -- $ -- $ --
Expenses (Note 3):
Mortality and expense risk charges ................. 26,526 53,878 1,424,399
------------------ ----------------- -------------------
NET INVESTMENT INCOME (LOSS) ............................... (26,526) (53,878) (1,424,399)
------------------ ----------------- -------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments ................ (320,833) 2,517,607 17,382,253
Realized gain distribution from the Trust .......... -- -- --
------------------ ----------------- -------------------
NET REALIZED GAIN (LOSS) ................................... (320,833) 2,517,607 17,382,253
------------------ ----------------- -------------------
Unrealized appreciation (depreciation) on investments:
Beginning of period ............................. (1,472,797) 11,044,587 158,809,891
End of period ................................... (1,727,771) 11,400,558 138,697,930
------------------ ----------------- -------------------
Change in unrealized appreciation
(depreciation) during the period ....................... (254,974) 355,971 (20,111,961)
------------------ ----------------- -------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS .................................. (575,807) 2,873,578 (2,729,708)
------------------ ----------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $ (602,333) $2,819,700 $(4,154,107)
================== ================= ===================
<CAPTION>
----------------------------------------------------------------
MFS
EMERGING
ALLIANCE SMALL EQ/ GROWTH
CAP GROWTH EVERGREEN COMPANIES
------------------- ------------------ ------------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust ........................... $ -- $ -- $ --
Expenses (Note 3):
Mortality and expense risk charges ................. 129,291 135 388,334
------------------ ---------- ------------------
NET INVESTMENT INCOME (LOSS) ............................... (129,291) (135) (388,334)
------------------ ---------- ------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments ................ 5,643,896 1,853 15,125,358
Realized gain distribution from the Trust .......... -- -- --
------------------ ---------- ------------------
NET REALIZED GAIN (LOSS) ................................... 5,643,896 1,853 15,125,358
------------------ ---------- ------------------
Unrealized appreciation (depreciation) on investments:
Beginning of period ............................. 24,076,277 1,450 77,077,961
End of period ................................... 39,387,631 7,664 89,495,435
------------------ ---------- ------------------
Change in unrealized appreciation
(depreciation) during the period ....................... 15,311,354 6,214 12,417,474
------------------ ---------- ------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS .................................. 20,955,250 8,067 27,542,832
------------------ ---------- ------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $20,825,959 $7,932 $27,154,498
================== ========== ==================
<CAPTION>
----------------------------------------------------------------
EQ/
EVERGREEN MERRILL LYNCH BT EQUITY 500
FOUNDATION WORLD STRATEGY INDEX
------------------- ------------------- -------------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust ........................... $ -- $ -- $ --
Expenses (Note 3):
Mortality and expense risk charges ................. 3 5,852 111
----------- ------------- -----------
NET INVESTMENT INCOME (LOSS) ............................... (3) (5,852) (111)
----------- ------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments ................ 18 45,593 29
Realized gain distribution from the Trust .......... -- -- --
----------- ------------- -----------
NET REALIZED GAIN (LOSS) ................................... 18 45,593 29
----------- ------------- -----------
Unrealized appreciation (depreciation) on investments:
Beginning of period ............................. (1,505) 853,471 1,051
End of period ................................... 973 909,352 10,022
----------- ------------- -----------
Change in unrealized appreciation
(depreciation) during the period ....................... 2,478 55,881 8,971
----------- ------------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS .................................. 2,496 101,474 9,000
----------- ------------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $2,493 $95,622 $8,889
=========== ============= ===========
</TABLE>
------------------------------
See Notes to Financial Statements.
FSA-31
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS (Concluded)
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
------------------------------------------------------------------
BT
INTERNATIONAL EQ/PUTNAM
EQUITY JPM CORE BOND INVESTORS GROWTH
------------------- ------------------- -------------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust............................... $ -- $ -- $ --
Expenses (Note 3):
Mortality and expense risk charges .................... 13 5 84
-------- -------- -----------
NET INVESTMENT INCOME (LOSS) .................................. (13) (5) (84)
-------- -------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments ................... 4 (11) 1,126
Realized gain distribution from the Trust ............. -- -- --
-------- -------- -----------
NET REALIZED GAIN (LOSS) ...................................... 4 (11) 1,126
-------- -------- -----------
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ 69 (116) 736
End of period ...................................... 467 295 6,215
-------- -------- -----------
Change in unrealized appreciation
(depreciation) during the period .......................... 398 411 5,479
-------- -------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS ..................................... 402 400 6,605
-------- -------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................................. $389 $395 $6,521
======== ======== ===========
<CAPTION>
------------------------------------------------------------------
EQ/PUTNAM
INTERNATIONAL BT SMALL CAPITAL GUARDIAN
EQUITY COMPANY INDEX INTERNATIONAL
------------------- ------------------ -------------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust............................... $ -- $-- $--
Expenses (Note 3):
Mortality and expense risk charges .................... 46 -- 1
----------- ------- -------
NET INVESTMENT INCOME (LOSS) .................................. (46) -- (1)
----------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments ................... 24 -- 1
Realized gain distribution from the Trust ............. -- -- --
----------- ------- -------
NET REALIZED GAIN (LOSS) ...................................... 24 -- 1
----------- ------- -------
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ 1 -- --
End of period ...................................... 2,129 -- 39
----------- ------- -------
Change in unrealized appreciation
(depreciation) during the period .......................... 2,128 -- 39
----------- ------- -------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS ..................................... 2,152 -- 40
----------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................................. $2,106 $-- $39
=========== ======= =======
<CAPTION>
-----------------------------------------------
LAZARD SMALL CAP LAZARD LARGE CAP
VALUE VALUE
--------------------- -------------------
<S> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust............................... $-- $ --
Expenses (Note 3):
Mortality and expense risk charges .................... -- 11
------ ---------
NET INVESTMENT INCOME (LOSS) .................................. -- (11)
------ ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments ................... (1) (6)
Realized gain distribution from the Trust ............. -- --
------ ---------
NET REALIZED GAIN (LOSS) ...................................... (1) (6)
------ ---------
Unrealized appreciation (depreciation) on investments:
Beginning of period ................................ -- --
End of period ...................................... 16 976
------ ---------
Change in unrealized appreciation
(depreciation) during the period .......................... 16 976
---------
------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS ..................................... 15 970
------ ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................................. $15 $959
====== =========
</TABLE>
------------------------------
See Notes to Financial Statements.
FSA-32
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------
ALLIANCE MONEY ALLIANCE COMMON
MARKET ALLIANCE HIGH YIELD STOCK
------------------- --------------------- ----------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.............................. $ (443,573) $ (198,216) $ (5,088,719)
Net realized gain (loss) .......................... (1,046,171) (5,266,865) 147,933,616
Change in unrealized appreciation
(depreciation) on investments ................. 6,135,986 2,100,802 (23,694,260)
-------------------- -------------------- -----------------------
Net increase (decrease) in net assets
from operations ............................... 4,646,242 (3,364,279) 119,150,637
-------------------- -------------------- -----------------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............................. 68,994,297 10,331,859 100,467,507
Benefits and other policy-related
transactions (Note 3) ......................... (20,770,823) (4,929,566) (88,396,527)
Net transfers among funds and
guaranteed interest account ................... (68,860,276) (11,333,293) (319,641,219)
-------------------- -------------------- -----------------------
Net increase (decrease) in net assets
from policy-related transactions .............. (20,636,802) (5,931,000) (307,570,239)
-------------------- -------------------- -----------------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ...................... (1,050,046) (2,060,067) 5,759,985
-------------------- -------------------- -----------------------
INCREASE (DECREASE) IN NET ASSETS ..................... (17,040,606) (11,355,346) (182,659,617)
NET ASSETS
BEGINNING OF PERIOD ............................... 344,428,377 149,834,482 3,779,869,192
-------------------- -------------------- -----------------------
NET ASSETS
END OF PERIOD ..................................... $327,387,771 $138,479,136 $3,597,209,575
==================== ==================== =======================
<CAPTION>
----------------------------------------------------------------------
EQ/ALLIANCE PREMIER CAPITAL GUARDIAN
GROWTH CAPITAL GUARDIAN RESEARCH U.S. EQUITY
--------------------- -------------------------- ----------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.............................. $ (447,637) $ (528) $ (819)
Net realized gain (loss) .......................... 164,594 12,101 7,071
Change in unrealized appreciation
(depreciation) on investments ................. 39,843,870 33,051 41,496
--------------------- --------------------- ---------------
Net increase (decrease) in net assets
from operations ............................... 39,560,827 44,624 47,748
--------------------- --------------------- ---------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............................. 6,599,186 136,153 200,176
Benefits and other policy-related
transactions (Note 3) ......................... (1,441,655) (23,136) (29,887)
Net transfers among funds and
guaranteed interest account ................... 378,215,603 848,031 259,998
--------------------- --------------------- ---------------
Net increase (decrease) in net assets
from policy-related transactions .............. 383,373,134 961,048 430,287
--------------------- --------------------- ---------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ...................... 27,582 529 818
--------------------- --------------------- ---------------
INCREASE (DECREASE) IN NET ASSETS ..................... 422,961,543 1,006,201 478,853
NET ASSETS
BEGINNING OF PERIOD ............................... 51,217,357 193,355 511,837
--------------------- --------------------- ---------------
NET ASSETS
END OF PERIOD ..................................... $474,178,900 $ 1,199,556 $990,690
===================== ===================== ===============
<CAPTION>
---------------------------------------------------------------------
MERRILL LYNCH BASIC MFS GROWTH WITH
VALUE EQUITY INCOME MFS RESEARCH
--------------------- --------------------- -------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.............................. $ (51,556) $ (773) $ (69,871)
Net realized gain (loss) .......................... 22,023 299 3,843,173
Change in unrealized appreciation
(depreciation) on investments ................. 335,986 23,844 502,477
------------------- --------------- ------------------
Net increase (decrease) in net assets
from operations ............................... 306,453 23,370 4,275,779
------------------- --------------- ------------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3) ............................. 4,545,117 122,157 4,089,711
Benefits and other policy-related
transactions (Note 3) ......................... (965,141) (23,372) (1,329,286)
Net transfers among funds and
guaranteed interest account ................... 1,439,235 400,576 3,361,037
------------------- --------------- ------------------
Net increase (decrease) in net assets
from policy-related transactions .............. 5,019,211 499,361 6,121,462
------------------- --------------- ------------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4) ...................... 284 (3,500) 656
------------------- --------------- ------------------
INCREASE (DECREASE) IN NET ASSETS ..................... 5,325,948 519,231 10,397,897
NET ASSETS
BEGINNING OF PERIOD ............................... 39,790,309 415,714 48,637,352
------------------- --------------- ------------------
NET ASSETS
END OF PERIOD ..................................... $45,116,257 $934,945 $59,035,249
=================== =============== ==================
</TABLE>
------------------------------
See Notes to Financial Statements.
FSA-33
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Morgan Stanley Alliance
EQ/Putnam Growth Emerging Aggressive Alliance Small
& Income Value Markets Equity Stock Cap
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income...................... $ (26,526) $ (53,878) $ (1,424,399) $ (129,291)
Net realized gain (loss)................... (320,833) 2,517,607 17,382,253 5,643,896
Change in unrealized appreciation
(depreciation) on investments........... (254,974) 355,971 (20,111,961) 15,311,354
---------------- ---------------- ------------------- ------------------
Net increase (decrease) in net assets
from operations......................... (602,333) 2,819,700 (4,154,107) 20,825,959
---------------- ---------------- ------------------- ------------------
From Policy-Related Transactions:
Net premiums (Note 3)...................... 1,998,130 3,933,344 41,842,948 5,019,446
Benefits and other policy-related
transactions (Note 3)................... (747,611) (1,526,731) (30,021,940) (1,999,582)
Net transfers among funds and
guaranteed interest account............. (1,173,520) 21,809,959 (44,013,208) 6,507,953
---------------- ---------------- ------------------- ------------------
Net increase (decrease) in net assets
from policy-related transactions........ 76,999 24,216,572 (32,192,200) 9,527,817
---------------- ---------------- ------------------- ------------------
Net Increase (Decrease) in Amount
Retained by Equitable Life in
Separate Account FP (Note 4)............... (1,689) 291,377 (2,299,971) (13)
---------------- ---------------- ------------------- ------------------
Increase (Decrease) in Net Assets ............ (527,023) 27,327,649 (38,646,278) 30,353,763
Net Assets
Beginning of Period........................ 21,793,779 40,690,549 1,052,045,063 70,380,421
---------------- ---------------- ------------------- ------------------
Net Assets
End of Period.............................. $21,266,756 $68,018,198 $1,013,398,785 $100,734,184
================ ================ =================== ==================
<CAPTION>
---------------------------------------------------------
MFS Emerging EQ/
EQ/ MFS Emerging Evergreen
Evergreen Growth Companies Foundation
---------------- ----------------- ----------------
<S> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income...................... $ (135) $ (388,334) $ (3)
Net realized gain (loss)................... 1,853 15,125,358 18
Change in unrealized appreciation
(depreciation) on investments........... 6,214 12,417,474 2,478
------------ -----------------
----------
Net increase (decrease) in net assets
from operations......................... 7,932 27,154,498 2,493
------------ ----------------- ----------
From Policy-Related Transactions:
Net premiums (Note 3)...................... 24,281 17,249,489 30,192
Benefits and other policy-related
transactions (Note 3)................... 3,832 (6,644,194) (893)
Net transfers among funds and
guaranteed interest account............. 201,933 63,751,609 1,575
------------ ----------------- ----------
Net increase (decrease) in net assets
from policy-related transactions........ 230,046 74,356,904 30,874
------------ ----------------- ----------
Net Increase (Decrease) in Amount
Retained by Equitable Life in
Separate Account FP (Note 4)............... 136 7,349 (3)
------------ ----------------- ----------
Increase (Decrease) in Net Assets ............ 238,114 101,518,751 33,364
Net Assets
Beginning of Period........................ 28,680 238,183,041 2,848
------------ ----------------- ----------
Net Assets
End of Period.............................. $266,794 $339,701,792 $36,212
============ ================= ==========
<CAPTION>
------------------------------------
Merrill Lynch BT Equity 500
World Strategy Index
---------------- ----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income...................... $ (5,852) $ (111)
Net realized gain (loss)................... 45,593 29
Change in unrealized appreciation
(depreciation) on investments........... 55,881 8,971
-------------- ------------
Net increase (decrease) in net assets
from operations......................... 95,622 8,889
-------------- ------------
From Policy-Related Transactions:
Net premiums (Note 3)...................... 513,812 45,712
Benefits and other policy-related
transactions (Note 3)................... (185,439) (2,807)
Net transfers among funds and
guaranteed interest account............. 682,666 101,148
-------------- ------------
Net increase (decrease) in net assets
from policy-related transactions........ 1,011,039 144,053
-------------- ------------
Net Increase (Decrease) in Amount
Retained by Equitable Life in
Separate Account FP (Note 4)............... 47 9
-------------- ------------
Increase (Decrease) in Net Assets ............ 1,106,708 152,951
Net Assets
Beginning of Period........................ 5,372,224 18,699
-------------- ------------
Net Assets
End of Period.............................. $6,478,932 $171,650
============== ============
</TABLE>
------------------------------
See Notes to Financial Statements.
FSA-34
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS (Concluded)
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------
BT INTERNATIONAL EQ/PUTNAM
EQUITY JPM CORE BOND INVESTORS GROWTH
------------------- ---------------- -----------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income...................... $ (13) $ (5) $ (84)
Net realized gain (loss)................... 4 (11) 1,126
Change in unrealized appreciation
(depreciation) on investments........... 398 411 5,479
----------- ----------- ----------
Net increase (decrease) in net assets
from operations......................... 389 395 6,521
----------- ----------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)...................... 4,867 -- 13,845
Benefits and other policy-related
transactions (Note 3)................... (423) (209) (1,221)
Net transfers among funds and
guaranteed interest account............. 9,720 50,399 57,055
----------- ----------- ----------
Net increase (decrease) in net assets
from policy-related transactions........ 14,164 50,190 69,679
----------- ----------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)............... 13 5 13
----------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS ............ 14,566 50,590 76,213
NET ASSETS
BEGINNING OF PERIOD........................ 1,260 2,192 11,411
----------- ----------- ----------
NET ASSETS
END OF PERIOD.............................. $15,826 $52,782 $87,624
=========== =========== ==========
<CAPTION>
---------------------------------------------------------------
EQ/PUTNAM
INTERNATIONAL BT SMALL CAPITAL GUARDIAN
EQUITY COMPANY INTERNATIONAL
----------------- ---------------- ------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income...................... $ (46) $-- $ (1)
Net realized gain (loss)................... 24 -- 1
Change in unrealized appreciation
(depreciation) on investments........... 2,128 -- 39
----------- ----- ---------
Net increase (decrease) in net assets
from operations......................... 2,106 -- 39
----------- ----- ---------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)...................... -- -- --
Benefits and other policy-related
transactions (Note 3)................... (920) (32) (131)
Net transfers among funds and
guaranteed interest account............. 53,664 89 2,476
----------- ----- ---------
Net increase (decrease) in net assets
from policy-related transactions........ 52,744 57 2,345
----------- ----- ---------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)............... 3 -- 1
----------- ----- ---------
INCREASE (DECREASE) IN NET ASSETS ............ 54,853 57 2,385
NET ASSETS
BEGINNING OF PERIOD........................ 716 -- --
----------- ----- ---------
NET ASSETS
END OF PERIOD.............................. $55,569 $57 $2,385
=========== ===== =========
<CAPTION>
-----------------------------------------
LAZARD SMALL CAP LAZARD LARGE
VALUE CAP VALUE
------------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income...................... $ -- $ (11)
Net realized gain (loss)................... (1) (6)
Change in unrealized appreciation
(depreciation) on investments........... 16 976
------- ----------
Net increase (decrease) in net assets
from operations......................... 15 959
------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)...................... -- 431
Benefits and other policy-related
transactions (Note 3)................... (99) (161)
Net transfers among funds and
guaranteed interest account............. 447 17,547
------- ----------
Net increase (decrease) in net assets
from policy-related transactions........ 348 17,817
------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)............... -- 12
------- ----------
INCREASE (DECREASE) IN NET ASSETS ............ 363 18,788
NET ASSETS
BEGINNING OF PERIOD........................ -- --
------- ----------
NET ASSETS
END OF PERIOD.............................. $363 $18,788
======= ==========
</TABLE>
------------------------------
See Notes to Financial Statements.
FSA-35
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000
1. General
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.
EQ Advisors Trust ("EQAT" or "Trust") commenced operations on May 1, 1997.
EQAT is an open-ended diversified management investment company that sells
shares to separate accounts of insurance companies. Each portfolio has
separate investment objectives.
For periods prior to October 18, 1999, the Alliance portfolios (other than
EQ/Alliance Premier Growth) were part of The Hudson River Trust ("HRT"). On
October 18, 1999, a Substitution of new portfolios of EQAT for the
portfolios of HRT was performed. At that time assets of each of the HRT
portfolios were transferred to the corresponding new portfolios of EQAT.
Class IA shares and Class IB shares of the HRT became Class IA shares and
Class IB shares of EQAT.
Prior to the Substitution, Alliance Capital Management L.P., an indirect,
majority-owned subsidiary of Equitable Life, was investment adviser for all
HRT portfolios. Post Substitution, Alliance continues as investment adviser
for the Alliance portfolios (including EQ/Alliance Premier Growth).
Effective September 1999, Equitable Life serves as investment manager of
EQAT. As such, Equitable Life oversees the activities of the investment
advisers with respect to EQAT and is responsible for retaining or
discontinuing the services of those advisers. Prior to September 1999, AXA
Advisors, LLC (formerly EQ Financial Consultants, Inc.), then a subsidiary
of Equitable Life, served as investment manager to EQAT.
AXA Advisors, LLC, and Equitable Distributors, Inc., a subsidiary of
Equitable Life, earn fees from EQAT under distribution agreements held with
the Trust. Equitable Life also earns fees under an investment management
agreement with EQAT. Alliance earns fees under an investment advisory
agreement with Equitable Life.
The Account consists of thirty-five variable investment options of which
twenty-six are reported herein:
o Alliance Money Market
o Alliance High Yield
o Alliance Common Stock
o EQ/Alliance Premier Growth
o Capital Guardian Research
o Capital Guardian U.S. Equity
o Merrill Lynch Basic Value Equity
o MFS Growth with Income
o MFS Research
o EQ/Putnam Growth & Income Value
o Morgan Stanley Emerging Markets Equity
o Alliance Aggressive Stock
o Alliance Small Cap Growth
o EQ/Evergreen
o MFS Emerging Growth Companies
o EQ/Evergreen Foundation
o Merrill Lynch World Strategy
o BT Equity 500 Index
o BT International Equity Index
o JPM Core Bond
o EQ/Putnam Investors Growth
o EQ/Putnam International Equity
o BT Small Company Index
o Capital Guardian International
o Lazard Small Cap Value
o Lazard Large Cap Value
FSA-36
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
1. General (Continued)
The assets in each fund are invested in Class IA shares or Class IB shares
of a corresponding mutual fund portfolio ("Portfolio") of EQAT. Class IA and
IB shares are offered by EQAT at net asset value. Both classes of shares are
subject to fees for investment management and advisory services and other
Trust expenses. Class IA shares are not subject to distribution fees imposed
pursuant to a distribution plan. Class IB shares are subject to distribution
fees imposed under a distribution plan (herein the "Rule 12b-1 Plans")
adopted in 1997 pursuant to Rule 12b-1 under the 1940 Act, as amended. The
Rule 12b-1 Plans provide that EQAT, on behalf of each Fund, may charge
annually up to 0.25% of the average daily net assets of a Fund attributable
to its Class IB shares in respect of activities primarily intended to result
in the sale of the Class IB shares. These fees are reflected in the net
asset value of the shares.
The Account supports the operations of various Equitable life insurance
products. These products are sold through both Equitable's Agent
Distribution Channel and Equitable's Independent Broker Dealer Distribution
Channel. These financial statement footnotes discuss the products, charges
and investment return applicable to those life insurance products (Incentive
Life, Incentive Life Plus, Survivorship Incentive Life and Survivorship
2000) which are sold through Equitable's Independent Broker Dealer
Distribution Channel.
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.
Receivable/payable for policy-related transactions represent amount due
to/from General Account predominately related to premiums, surrenders and
death benefits.
Policyowners may allocate amounts in their individual accounts to the
variable investment options 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 $72,689,669 for the three months ended March
31, 2000, are included in Net Transfers among variable investment options.
The net assets of any variable investment option may not be less than the
aggregate of the policyowners' accounts allocated to that variable
investment option. 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 EQAT and are valued at the net asset
values per share of the respective Portfolios. The net asset value is
determined by EQAT using the market or fair value of the underlying assets
of the Portfolio less liabilities.
Investment transactions are recorded on the trade date. Dividend and capital
gains are declared and distributed by the Trust at the end of each year and
are automatically reinvested on the ex-dividend date. Realized gains and
losses include (1) gains and losses on redemptions of EQAT shares
(determined on the identified cost basis) and (2) Trust distributions
representing the net realized gains on Trust investment transactions.
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.
Under the Policies, Equitable Life assumes mortality and expense risks and,
to cover these risks, charges the daily net assets of the Account. These
charges apply to all products supported by the Account. The products sold
through Equitable's Independent Broker Dealer Distribution Channel have
charges currently for Incentive Life, Incentive Life Plus and Survivorship
Incentive Life of .60% , and for Survivorship 2000 of .90%. The products
sold through Equitable Life's Agent Distribution Channel have charges
ranging from 0.60% to 1.80% depending on the features of those products.
FSA-37
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
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:
<TABLE>
<CAPTION>
Mortality
and Expense Mortality Administrative Total
-------------- ------------- --------------- ------------
<S> <C> <C> <C> <C>
Incentive Life,
Incentive Life 2000,
Incentive Life Plus
Second Series,
Champion 2000 (a) .60% -- -- .60%
IL Plus Original
Series, IL COLI (b) .85% -- -- .85%
Survivorship
Incentive Life (a) .60% -- -- .60%
Survivorship 2000 (a) .90% -- -- .90%
IL Protector (a) .80% -- -- .80%
SP Flex (a) .85% .60% .35% 1.80%
</TABLE>
----------------------
(a) Charged to daily net assets of the Account.
(b) Charged to Policy Account and is included in Benefits and
other policy-related transactions in the Statement of
Changes in Net Assets.
Before amounts are remitted to the Account for Incentive Life, Incentive
Life Plus, IL COLI, Survivorship Incentive Life 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,
Survivorship Incentive Life, Incentive Life Sales 1999 and after, 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.
Included in the Withdrawals and Administrative Charges line of the Statement
of Changes in Net Assets are certain administrative charges which are
deducted from the policyowners account value.
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.
The following table shows the surplus contributions (withdrawals) by
Equitable Life by investment fund:
THREE MONTHS
ENDED
MARCH 31,
--------------
2000
VARIABLE INVESTMENT OPTIONS ----
Alliance Money Market $(1,493,620)
Alliance High Yield (2,258,283)
FSA-38
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
4. Amounts Retained by Equitable Life in Separate Account FP (Continued)
THREE MONTHS
ENDED
MARCH 31,
--------------
2000
VARIABLE INVESTMENT OPTIONS ----
Alliance Common Stock 671,266
EQ/Alliance Premier Growth (420,055)
Capital Guardian Research --
Capital Guardian U.S. Equity --
Merrill Lynch Basic Value Equity (51,272)
MFS Growth with Income (30,729)
MFS Research (69,216)
EQ/Putnam Growth & Income Value (28,216)
Morgan Stanley Emerging Markets Equity 237,498
Alliance Aggressive Stock (3,724,371)
Alliance Small Cap Growth (129,304)
EQ/Evergreen --
MFS Emerging Growth Companies (380,984)
EQ/Evergreen Foundation --
Merrill Lynch World Strategy (5,805)
BT Equity 500 Index (102)
BT International Equity Index --
JPM Core Bond --
EQ/Putnam Investors Growth (70)
EQ/Putnam International Equity (43)
BT Small Company Index --
Captial Guardian International --
Lazard Small Cap Value --
Lazard Large Cap Value --
5. Distribution and Servicing Agreements
Equitable Life has entered into Distribution and Servicing Agreements with
AXA Advisors, LLC, an affiliate of Equitable Life, and EDI, whereby
registered representatives of AXA Advisors, LLC, authorized as variable life
insurance agents under applicable state insurance laws, sell the Policies.
6. Investment Returns
The tables on the following pages show the gross and net investment returns
with respect to the variable investment options for the periods shown. The
net return for each variable investment option is based upon beginning and
ending net unit value for a policy and is not based on the average net
assets in the variable investment option during such period. Gross return is
equal to the total return earned by the underlying EQAT investment which is
after deduction of EQAT expense.
The Separate Account rates of return attributable to Incentive Life,
Survivorship Incentive Life and Incentive Life Plus policyowners are
different than those attributable to Survivorship 2000 policyowners because
asset charges are deducted at different rates under each policy (see Note
3).
FSA-39
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
RATES OF RETURN:
INCENTIVE LIFE PLUS, INCENTIVE LIFE,
SURVIVORSHIP INCENTIVE LIFE*
THREE MONTHS ENDED
MARCH 31, (A)
---------------------
ALLIANCE MONEY MARKET 2000
---------------------- ----
Gross return..................... 1.34%
Net return....................... 1.18%
ALLIANCE HIGH
YIELD
------------------
Gross return..................... (2.32)%
Net return....................... (2.47)%
ALLIANCE COMMON STOCK
----------------------
Gross return..................... 3.70%
Net return....................... 3.55%
EQ/ALLIANCE PREMIER
GROWTH
--------------------------
Gross return..................... 6.16%
Net return....................... 5.95%
CAPITAL GUARDIAN
RESEARCH
-------------------------
Gross return..................... 5.61%
Net return....................... 5.45%
CAPITAL GUARDIAN U.S.
EQUITY
--------------------------
Gross return..................... 3.00%
Net return....................... 2.86%
MERRILL LYNCH BASIC VALUE
EQUITY
------------------------------
Gross return..................... 0.36%
Net return....................... 0.20%
-------------------
(a) The gross return and the net return for the periods indicated are not
annualized rates of return.
FSA-40
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
RATES OF RETURN:
INCENTIVE LIFE PLUS, INCENTIVE LIFE,
SURVIVORSHIP INCENTIVE LIFE*
THREE MONTHS ENDED
MARCH 31, (A)
--------------------
MFS GROWTH WITH INCOME 2000
------------------------ ----
Gross return......................... 1.75%
Net return........................... 1.66%
MFS RESEARCH
--------------
Gross return......................... 8.62%
Net return........................... 8.42%
EQ/PUTNAM GROWTH & INCOME VALUE
---------------------------------
Gross return......................... (2.85)%
Net return........................... (2.96)%
MORGAN STANLEY EMERGING MARKETS
EQUITY
--------------------------------------
Gross return......................... 6.60%
Net return........................... 6.61%
ALLIANCE AGGRESSIVE
STOCK
------------------------
Gross return......................... 0.20%
Net return........................... (0.34)%
ALLIANCE SMALL CAP
GROWTH
-------------------------
Gross return......................... 21.46%
Net return........................... 21.13%
EQ/EVERGREEN
--------------
Gross return......................... 3.57%
Net return........................... 3.35%
MFS EMERGING GROWTH COMPANIES
--------------------------------
Gross return......................... 10.43%
Net return........................... 10.25%
-------------------
(a) The gross return and the net return for the periods indicated are not
annualized rates of return.
FSA-41
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
RATES OF RETURN:
INCENTIVE LIFE PLUS, INCENTIVE LIFE,
SURVIVORSHIP INCENTIVE LIFE*
THREE MONTHS ENDED
MARCH 31, (A)
---------------------
EQ/EVERGREEN FOUNDATION 2000
------------------------ ----
Gross return..................... 3.01%
Net return....................... 2.86%
MERRILL LYNCH WORLD
STRATEGY
---------------------------
Gross return..................... 1.62%
Net return....................... 1.44%
BT EQUITY 500
INDEX
-------------------
Gross return..................... 2.09%
Net return....................... 1.98%
BT INTERNATIONAL EQUITY
INDEX
---------------------------
Gross return..................... (1.28)%
Net return....................... (1.41)%
JPM CORE BOND
---------------
Gross return..................... 2.42%
Net return....................... 2.19%
EQ/PUTNAM INVESTORS GROWTH
---------------------------
Gross return..................... 3.32%
Net return....................... 3.16%
EQ/PUTNAM INTERNATIONAL
EQUITY
-----------------------------
Gross return..................... 4.81%
Net return....................... 4.69%
BT SMALL COMPANY INDEX
-----------------------
Gross return..................... 6.45%
Net return....................... 6.29%
CAPITAL GUARDIAN
INTERNATIONAL
-----------------------------
Gross return..................... 2.55%
Net return....................... 2.53%
LAZARD SMALL CAP
VALUE
----------------------
Gross return..................... 6.01%
Net return....................... 5.82%
LAZARD LARGE CAP
VALUE
----------------------
Gross return..................... 0.00%
Net return....................... (0.15)%
-------------------
(a) The gross return and the net return for the periods indicated are not
annualized rates of return.
FSA-42
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
RATES OF RETURN:
SURVIVORSHIP 2000
THREE MONTHS ENDED
MARCH 31, (A)
---------------------
ALLIANCE MONEY MARKET 2000
---------------------- ----
Gross return..................... 1.34%
Net return....................... 1.11%
ALLIANCE HIGH
YIELD
------------------
Gross return..................... (2.32)%
Net return....................... (2.54)%
ALLIANCE COMMON STOCK
----------------------
Gross return..................... 3.70%
Net return....................... 3.47%
EQ/ALLIANCE PREMIER
GROWTH
--------------------------
Gross return..................... 6.16%
Net return....................... 5.87%
CAPITAL GUARDIAN
RESEARCH
-------------------------
Gross return..................... 5.61%
Net return....................... 5.37%
CAPITAL GUARDIAN U.S.
EQUITY
--------------------------
Gross return..................... 3.00%
Net return....................... 2.78%
MERRILL LYNCH BASIC VALUE
EQUITY
-----------------------------
Gross return..................... 0.36%
Net return....................... 0.13%
-------------------
(a) The gross return and the net return for the periods indicated are not
annualized rates of return.
FSA-43
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 2000
RATES OF RETURN:
SURVIVORSHIP 2000
THREE MONTHS ENDED
MARCH 31, (A)
--------------------
MFS GROWTH WITH INCOME 2000
------------------------ ----
Gross return......................... 1.75%
Net return........................... 1.59%
MFS RESEARCH
--------------
Gross return......................... 8.62%
Net return........................... 8.34%
EQ/PUTNAM GROWTH & INCOME VALUE
---------------------------------
Gross return......................... (2.85)%
Net return........................... (3.03)%
MORGAN STANLEY EMERGING MARKETS
EQUITY
--------------------------------------
Gross return......................... 6.60%
Net return........................... 6.53%
ALLIANCE AGGRESSIVE
STOCK
------------------------
Gross return......................... 0.20%
Net return........................... (0.42)%
ALLIANCE SMALL CAP
GROWTH
-------------------------
Gross return......................... 21.46%
Net return........................... 21.04%
EQ/EVERGREEN
--------------
Gross return......................... 3.57%
Net return........................... 3.28%
MFS EMERGING GROWTH COMPANIES
--------------------------------
Gross return......................... 10.43%
Net return........................... 10.17%
-------------------
(a) The gross return and the net return for the periods indicated are not
annualized rates of return.
FSA-44
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
MARCH 31, 2000
RATES OF RETURN:
SURVIVORSHIP 2000
THREE MONTHS ENDED
MARCH 31, (A)
---------------------
EQ/EVERGREEN FOUNDATION 2000
------------------------ ----
Gross return..................... 3.01%
Net return....................... 2.79%
MERRILL LYNCH WORLD
STRATEGY
---------------------------
Gross return..................... 1.62%
Net return....................... 1.37%
BT EQUITY 500 INDEX
--------------------
Gross return..................... 2.09%
Net return....................... 1.90%
BT INTERNATIONAL EQUITY
INDEX
---------------------------
Gross return..................... (1.28)%
Net return....................... (1.48)%
JPM CORE BOND
---------------
Gross return..................... 2.42%
Net return....................... 2.12%
EQ/PUTNAM INVESTORS GROWTH
---------------------------
Gross return..................... 3.32%
Net return....................... 3.08%
EQ/PUTNAM INTERNATIONAL
EQUITY
------------------------------
Gross return..................... 4.81%
Net return....................... 4.62%
BT SMALL COMPANY INDEX
-----------------------
Gross return..................... 6.45%
Net return....................... 6.21%
CAPITAL GUARDIAN
INTERNATIONAL
-----------------------------
Gross return..................... 2.55%
Net return....................... 2.45%
LAZARD SMALL CAP
VALUE
----------------------
Gross return..................... 6.01%
Net return....................... 5.74%
LAZARD LARGE CAP
VALUE
----------------------
Gross return..................... 0.00%
Net return....................... (0.22)%
-------------------
(a) The gross return and the net return for the periods indicated are not
annualized rates of return.
FSA-45
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
The Equitable Life Assurance Society of the United States
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, of shareholder's equity and comprehensive
income and of cash flows present fairly, in all material respects, the financial
position of The Equitable Life Assurance Society of the United States and its
subsidiaries ("Equitable Life") at December 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States of America. 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 auditing standards
generally accepted in the United States of America, 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.
PricewaterhouseCoopers LLP
New York, New York
February 1, 2000
F-1
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------- --------------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value............................. $ 18,599.7 $ 18,993.7
Held to maturity, at amortized cost..................................... 133.2 125.0
Mortgage loans on real estate............................................. 3,270.0 2,809.9
Equity real estate........................................................ 1,160.2 1,676.9
Policy loans.............................................................. 2,257.3 2,086.7
Other equity investments.................................................. 671.2 713.3
Investment in and loans to affiliates..................................... 1,201.8 928.5
Other invested assets..................................................... 911.6 808.2
------------- -------------
Total investments..................................................... 28,205.0 28,142.2
Cash and cash equivalents................................................... 628.0 1,245.5
Deferred policy acquisition costs........................................... 4,033.0 3,563.8
Other assets................................................................ 3,868.3 3,054.6
Closed Block assets......................................................... 8,607.3 8,632.4
Separate Accounts assets.................................................... 54,453.9 43,302.3
------------- -------------
TOTAL ASSETS................................................................ $ 99,795.5 $ 87,940.8
============= =============
LIABILITIES
Policyholders' account balances............................................. $ 21,351.4 $ 20,857.5
Future policy benefits and other policyholders' liabilities................. 4,777.6 4,726.4
Short-term and long-term debt............................................... 1,407.9 1,181.7
Other liabilities........................................................... 3,133.6 3,474.3
Closed Block liabilities.................................................... 9,025.0 9,077.0
Separate Accounts liabilities............................................... 54,332.5 43,211.3
------------- -------------
Total liabilities..................................................... 94,028.0 82,528.2
------------- -------------
Commitments and contingencies (Notes 11, 13, 14, 15 and 16)
SHAREHOLDER'S EQUITY
Common stock, $1.25 par value 2.0 million shares authorized, issued
and outstanding........................................................... 2.5 2.5
Capital in excess of par value.............................................. 3,557.2 3,110.2
Retained earnings........................................................... 2,600.7 1,944.1
Accumulated other comprehensive (loss) income............................... (392.9) 355.8
------------- -------------
Total shareholder's equity............................................ 5,767.5 5,412.6
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY.................................. $ 99,795.5 $ 87,940.8
============= =============
</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, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------- -------------
(IN MILLIONS)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee
income...................................................... $ 1,257.5 $ 1,056.2 $ 950.6
Premiums...................................................... 558.2 588.1 601.5
Net investment income......................................... 2,240.9 2,228.1 2,282.8
Investment (losses) gains, net................................ (96.9) 100.2 (45.2)
Commissions, fees and other income............................ 2,177.9 1,503.0 1,227.2
Contribution from the Closed Block............................ 86.4 87.1 102.5
------------ ------------- -------------
Total revenues.......................................... 6,224.0 5,562.7 5,119.4
------------ ------------- -------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances.......... 1,078.2 1,153.0 1,266.2
Policyholders' benefits....................................... 1,038.6 1,024.7 978.6
Other operating costs and expenses............................ 2,797.3 2,201.2 2,203.9
------------ ------------- -------------
Total benefits and other deductions..................... 4,914.1 4,378.9 4,448.7
------------ ------------- -------------
Earnings from continuing operations before Federal
income taxes and minority interest.......................... 1,309.9 1,183.8 670.7
Federal income taxes.......................................... 332.0 353.1 91.5
Minority interest in net income of consolidated subsidiaries.. 199.4 125.2 54.8
------------ ------------- -------------
Earnings from continuing operations........................... 778.5 705.5 524.4
Discontinued operations, net of Federal income taxes.......... 28.1 2.7 (87.2)
------------ ------------- -------------
Net Earnings.................................................. $ 806.6 $ 708.2 $ 437.2
============ ============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------- -------------
(IN MILLIONS)
<S> <C> <C> <C>
Common stock, at par value, beginning and end of year......... $ 2.5 $ 2.5 $ 2.5
------------ ------------- -------------
Capital in excess of par value, beginning of year............. 3,110.2 3,105.8 3,105.8
Additional capital in excess of par value..................... 447.0 4.4 -
------------ ------------- -------------
Capital in excess of par value, end of year................... 3,557.2 3,110.2 3,105.8
------------ ------------- -------------
Retained earnings, beginning of year.......................... 1,944.1 1,235.9 798.7
Net earnings.................................................. 806.6 708.2 437.2
Dividend paid to the Holding Company.......................... (150.0) - -
------------ ------------- -------------
Retained earnings, end of year................................ 2,600.7 1,944.1 1,235.9
------------ ------------- -------------
Accumulated other comprehensive income,
beginning of year........................................... 355.8 516.3 177.0
Other comprehensive (loss) income............................. (748.7) (160.5) 339.3
------------ ------------- -------------
Accumulated other comprehensive (loss) income, end of year.... (392.9) 355.8 516.3
------------ ------------- -------------
TOTAL SHAREHOLDER'S EQUITY, END OF YEAR....................... $ 5,767.5 $ 5,412.6 $ 4,860.5
============ ============= ============
COMPREHENSIVE INCOME
Net earnings.................................................. $ 806.6 $ 708.2 $ 437.2
------------ ------------- -------------
Change in unrealized (losses) gains, net of reclassification
adjustment.................................................. (776.9) (149.5) 343.7
Minimum pension liability adjustment.......................... 28.2 (11.0) (4.4)
------------ ------------- -------------
Other comprehensive (loss) income............................. (748.7) (160.5) 339.3
------------ ------------- -------------
COMPREHENSIVE INCOME.......................................... $ 57.9 $ 547.7 $ 776.5
============ ============= ============
</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, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------- -------------
(IN MILLIONS)
<S> <C> <C> <C>
Net earnings.................................................. $ 806.6 $ 708.2 $ 437.2
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Interest credited to policyholders' account balances........ 1,078.2 1,153.0 1,266.2
Universal life and investment-type product
policy fee income......................................... (1,257.5) (1,056.2) (950.6)
Investment losses (gains)................................... 96.9 (100.2) 45.2
Change in Federal income tax payable........................ 157.4 123.1 (74.4)
Change in property and equipment............................ (256.3) (81.8) (9.6)
Change in deferred acquisition costs........................ (260.7) (314.0) (220.7)
Other, net.................................................. (168.8) 70.9 399.7
------------ ------------- -------------
Net cash provided by operating activities..................... 195.8 503.0 893.0
------------ ------------- -------------
Cash flows from investing activities:
Maturities and repayments................................... 2,019.0 2,289.0 2,702.9
Sales....................................................... 7,572.9 16,972.1 10,385.9
Purchases................................................... (10,737.3) (18,578.5) (13,205.4)
(Increase) decrease in short-term investments............... (178.3) 102.4 (555.0)
Decrease in loans to discontinued operations................ - 660.0 420.1
Sale of subsidiaries........................................ - - 261.0
Other, net.................................................. (134.8) (341.8) (612.6)
------------ ------------- -------------
Net cash (used) provided by investing activities.............. (1,458.5) 1,103.2 (603.1)
------------ ------------- -------------
Cash flows from financing activities: Policyholders'
account balances:
Deposits.................................................. 2,366.2 1,508.1 1,281.7
Withdrawals............................................... (1,765.8) (1,724.6) (1,886.8)
Net increase (decrease) in short-term financings............ 378.2 (243.5) 419.9
Repayments of long-term debt................................ (41.3) (24.5) (196.4)
Payment of obligation to fund accumulated deficit of
discontinued operations................................... - (87.2) (83.9)
Dividend paid to the Holding Company........................ (150.0) - -
Other, net.................................................. (142.1) (89.5) (62.7)
------------ ------------- -------------
Net cash provided (used) by financing activities.............. 645.2 (661.2) (528.2)
------------ ------------- -------------
Change in cash and cash equivalents........................... (617.5) 945.0 (238.3)
Cash and cash equivalents, beginning of year.................. 1,245.5 300.5 538.8
------------ ------------- -------------
Cash and Cash Equivalents, End of Year........................ $ 628.0 $ 1,245.5 $ 300.5
============ ============= =============
Supplemental cash flow information
Interest Paid............................................... $ 92.2 $ 130.7 $ 217.1
============ ============= =============
Income Taxes Paid........................................... $ 116.5 $ 254.3 $ 170.0
============ ============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) ORGANIZATION
The Equitable Life Assurance Society of the United States ("Equitable
Life") is an indirect, wholly owned subsidiary of AXA Financial, Inc. (the
"Holding Company," and collectively with its consolidated subsidiaries,
"AXA Financial"). Equitable Life's insurance business is conducted
principally by Equitable Life and its wholly owned life insurance
subsidiaries, Equitable of Colorado ("EOC"), and, prior to December 31,
1996, Equitable Variable Life Insurance Company ("EVLICO"). Effective
January 1, 1997, EVLICO was merged into Equitable Life. 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, a French holding company for an
international group of insurance and related financial services companies,
is the Holding Company's largest shareholder, owning approximately 58.0% at
December 31, 1999 (53.0% if all securities convertible into, and options
on, common stock were to be converted or exercised).
On September 20, 1999, as part of AXA Financial's "branding" strategic
initiative, EQ Financial Consultants, Inc., a broker-dealer subsidiary of
Equitable Life, was merged into a new company, AXA Advisors, LLC ("AXA
Advisors"). Also, on September 21, 1999, AXA Advisors was transferred by
Equitable Life to AXA Distribution Holding Corporation ("AXA
Distribution"), a wholly owned indirect subsidiary of the Holding Company,
for $15.3 million. The excess of the sales price over AXA Advisors' book
value has been recorded in Equitable Life's books as a capital
contribution. Equitable Life will continue to develop and market the
"Equitable" brand of life and annuity products, while AXA Distribution and
its subsidiaries begin to assume responsibility for providing financial
advisory services, product distribution and customer relationship
management.
The Insurance segment offers a variety of traditional, variable and
interest-sensitive life insurance products, disability income, annuity
products, mutual fund and other investment products to individuals and
small groups. It also administers traditional participating group annuity
contracts with conversion features, generally for corporate qualified
pension plans, and association plans which provide full service retirement
programs for individuals affiliated with professional and trade
associations. This segment includes Separate Accounts for individual
insurance and annuity products.
The Investment Services segment includes Alliance and the results of DLJ
which are accounted for on an equity basis. In 1999, Alliance reorganized
into Alliance Capital Management Holding L.P. ("Alliance Holding") and
Alliance (the "Reorganization"). Alliance Holding's principal asset is its
interest in Alliance and it functions as a holding entity through which
holders of its publicly traded units own an indirect interest in the
operating partnership. The Company exchanged substantially all of its
Alliance Holding units for units in Alliance ("Alliance Units"). As a
result of the reorganization, the Company was the beneficial owner of
approximately 2% of Alliance Holding and 56% of Alliance. Alliance provides
diversified investment fund management services to a variety of
institutional clients, including pension funds, endowments, and foreign
financial institutions, as well as to individual investors, principally
through a broad line of mutual funds. This segment includes institutional
Separate Accounts which provide various investment options for large group
pension clients, primarily deferred benefit contribution plans, through
pooled or single group accounts. At December 31, 1999, Equitable Life has a
31.7% ownership interest in DLJ. DLJ's businesses include securities
underwriting, sales and trading, merchant banking, financial advisory
services, investment research, venture capital, correspondent brokerage
services, online interactive brokerage services and asset management. DLJ
serves institutional, corporate, governmental and individual clients both
domestically and internationally. Through June 10, 1997, this segment also
includes Equitable Real Estate Investment Management Inc. ("EREIM") which
was sold. EREIM provided real estate investment management services,
property management services, mortgage servicing and loan asset management,
and agricultural investment management.
F-6
<PAGE>
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 certain of its subsidiaries engaged in insurance related
business (collectively, the "Insurance Group"); other subsidiaries,
principally Alliance and through June 10, 1997, EREIM (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, liabilities and results of operations are presented in the
consolidated financial statements as single line items (see Note 7). Unless
specifically stated, all other footnote disclosures contained herein
exclude the Closed Block related amounts.
All significant intercompany transactions and balances except those with
the Closed Block, DLJ and discontinued operations (see Note 8) have been
eliminated in consolidation. The years "1999," "1998" and "1997" refer to
the years ended December 31, 1999, 1998 and 1997, respectively. Certain
reclassifications have been made in the amounts presented for prior periods
to conform these periods with the 1999 presentation.
Closed Block
------------
On July 22, 1992, Equitable Life established the Closed Block for the
benefit of certain individual participating policies which were in force on
that date. The assets allocated to the Closed Block, together with
anticipated revenues from policies included in the Closed Block, were
reasonably expected to be sufficient to support such business, including
provision for payment of claims, certain expenses and taxes, and for
continuation of dividend scales payable in 1991, assuming the experience
underlying such scales continues.
Assets allocated to the Closed Block inure solely to the benefit of the
Closed Block policyholders and will not revert to the benefit of the
Holding Company. No reallocation, transfer, borrowing or lending of assets
can be made between the Closed Block and other portions of Equitable Life's
General Account, any of its Separate Accounts or any affiliate of Equitable
Life without the approval of the New York Superintendent of Insurance (the
"Superintendent"). Closed Block assets and liabilities are carried on the
same basis as similar assets and liabilities held in the General Account.
The excess of Closed Block liabilities over Closed Block assets represents
the expected future post-tax contribution from the Closed Block which would
be recognized in income over the period the policies and contracts in the
Closed Block remain in force.
Discontinued Operations
-----------------------
Discontinued operations at December 31, 1999, principally consists of the
Group Non-Participating Wind-Up Annuities ("Wind-Up Annuities"), for which
a premium deficiency reserve has been established. Management reviews the
adequacy of the allowance each quarter and believes the allowance for
future losses at December 31, 1999 is adequate to provide for all future
losses; however, the quarterly allowance review continues to involve
numerous estimates and subjective judgments regarding the expected
performance of Discontinued Operations Investment Assets. There can be no
assurance the losses provided for will not differ from the losses
ultimately realized. To the extent actual results or future projections of
the discontinued operations differ from management's current best estimates
and assumptions underlying the allowance for future losses, the difference
would be reflected in the consolidated statements of earnings in
discontinued operations. In particular, to the extent income, sales
proceeds and holding periods for equity real estate differ from
management's previous assumptions, periodic adjustments to the allowance
are likely to result (see Note 8).
F-7
<PAGE>
Accounting Changes
------------------
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use," which
requires capitalization of external and certain internal costs incurred to
obtain or develop internal-use computer software during the application
development stage. The Company applied the provisions of SOP 98-1
prospectively effective January 1, 1998. The adoption of SOP 98-1 did not
have a material impact on the Company's consolidated financial statements.
Capitalized internal-use software is amortized on a straight-line basis
over the estimated useful life of the software.
New Accounting Pronouncements
-----------------------------
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," which establishes
accounting and reporting standards for derivative instruments, including
certain derivatives embedded in other contracts, and for hedging
activities. It requires all derivatives to be recognized on the balance
sheet at fair value. The accounting for changes in the fair value of a
derivative depends on its intended use. Derivatives not used in hedging
activities must be adjusted to fair value through earnings. Changes in the
fair value of derivatives used in hedging activities will, depending on the
nature of the hedge, either be offset in earnings against the change in
fair value of the hedged item attributable to the risk being hedged or
recognized in other comprehensive income until the hedged item affects
earnings. For all hedging activities, the ineffective portion of a
derivative's change in fair value will be immediately recognized in
earnings. In June 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133," which defers the effective date of SFAS
No. 133 to all fiscal quarters of all fiscal years beginning after June 15,
2000. The Company expects to adopt SFAS No. 133 effective January 1, 2001.
Adjustments resulting from initial adoption of the new requirements will be
reported in a manner similar to the cumulative effect of a change in
accounting principle and will be reflected in net income or accumulated
other comprehensive income based upon existing hedging relationships, if
any. Management currently is assessing the impact of adoption. However,
Alliance's adoption of the new requirements is not expected to have a
significant impact on the Company's consolidated balance sheet or statement
of earnings. Also, since most of DLJ's derivatives are carried at fair
values, the Company's consolidated earnings and financial position are not
expected to be significantly affected by DLJ's adoption of the new
requirements.
Valuation of Investments
------------------------
Fixed maturities identified as available for sale are reported at estimated
fair value. Fixed maturities, which the Company has both the ability and
the intent to hold to maturity, are stated principally at amortized cost.
The amortized cost of fixed maturities is adjusted for impairments in value
deemed to be other than temporary.
Valuation allowances are netted against the asset categories to which they
apply.
Mortgage loans on real estate are stated at unpaid principal balances, net
of unamortized discounts and valuation allowances. Valuation allowances are
based on the present value of expected future cash flows discounted at the
loan's original effective interest rate or the collateral value if the loan
is collateral dependent. However, if foreclosure is or becomes probable,
the measurement method used is collateral value.
Real estate, including real estate acquired in satisfaction of debt, is
stated at depreciated cost less valuation allowances. At the date of
foreclosure (including in-substance foreclosure), real estate acquired in
satisfaction of debt is valued at estimated fair value. Impaired real
estate is written down to fair value with the impairment loss being
included in investment gains (losses), net. Valuation allowances on real
estate held for sale are computed using the lower of depreciated cost or
current estimated fair value, net of disposition costs. Depreciation is
discontinued on real estate held for sale.
F-8
<PAGE>
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.
Equity securities, comprised of common stock classified as both trading and
available for sale securities, 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 (losses).
Unrealized gains (losses) on publicly-traded common equity securities
classified as trading securities are reflected in net investment income.
Unrealized investment gains (losses) on fixed maturities and equity
securities available for sale held by the Company are accounted for as a
separate component of accumulated comprehensive income, net of related
deferred Federal income taxes, amounts attributable to discontinued
operations, participating group annuity contracts and deferred policy
acquisition costs ("DAC") related to universal life and investment-type
products and participating traditional life contracts.
Recognition of Insurance Income and Related Expenses
----------------------------------------------------
Premiums from universal life and investment-type contracts are reported as
deposits to policyholders' account balances. Revenues from these contracts
consist of amounts assessed during the period against policyholders'
account balances for mortality charges, policy administration charges and
surrender charges. Policy benefits and claims that are charged to expense
include benefit claims incurred in the period in excess of related
policyholders' account balances.
Premiums from participating and non-participating traditional life and
annuity policies with life contingencies generally are recognized as income
when due. Benefits and expenses are matched with such income so as to
result in the recognition of profits over the life of the contracts. This
match is accomplished by means of the provision for liabilities for future
policy benefits and the deferral and subsequent amortization of policy
acquisition costs.
For contracts with a single premium or a limited number of premium payments
due over a significantly shorter period than the total period over which
benefits are provided, premiums are recorded as income when due with any
excess profit deferred and recognized in income in a constant relationship
to insurance in force or, for annuities, the amount of expected future
benefit payments.
Premiums from individual health contracts are recognized as income over the
period to which the premiums relate in proportion to the amount of
insurance protection provided.
F-9
<PAGE>
Deferred Policy Acquisition Costs
---------------------------------
The costs of acquiring new business, principally commissions, underwriting,
agency and policy issue expenses, all of which vary with and are primarily
related to the production of new business, are deferred. DAC is subject to
recoverability testing at the time of policy issue and loss recognition
testing at the end of each accounting period.
For universal life products and investment-type products, DAC is amortized
over the expected total life of the contract group (periods ranging from 25
to 35 years and 5 to 17 years, respectively) as a constant percentage of
estimated gross profits arising principally from investment results,
mortality and expense margins and surrender charges based on historical and
anticipated future experience, updated at the end of each accounting
period. The effect on the amortization of DAC of revisions to estimated
gross profits is reflected in earnings in the period such estimated gross
profits are revised. The effect on the DAC asset that would result from
realization of unrealized gains (losses) is recognized with an offset to
accumulated other comprehensive income in consolidated shareholder's equity
as of the balance sheet date.
As part of its asset/liability management process, in second quarter 1999,
management initiated a review of the matching of invested assets to
Insurance product lines given their different liability characteristics and
liquidity requirements. As a result of this review, management reallocated
the current and prospective interests of the various product lines in the
invested assets. These asset reallocations and the related changes in
investment yields by product line, in turn, triggered a review of and
revisions to the estimated future gross profits used to determine the
amortization of DAC for universal life and investment-type products. The
revisions to estimated future gross profits resulted in an after-tax
writedown of DAC of $85.6 million (net of a Federal income tax benefit of
$46.1 million).
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, 1999, the expected investment yield, excluding policy loans, generally
ranged from 7.75% grading to 7.5% over a 20 year period. Estimated gross
margin includes anticipated premiums and investment results less claims and
administrative expenses, changes in the net level premium reserve and
expected annual policyholder dividends. The effect on the amortization of
DAC of revisions to estimated gross margins is reflected in earnings in the
period such estimated gross margins are revised. The effect on the DAC
asset that would result from realization of unrealized gains (losses) is
recognized with an offset to accumulated comprehensive income in
consolidated shareholder's equity as of the balance sheet date.
For non-participating traditional life 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.
Policyholders' Account Balances and Future Policy Benefits
----------------------------------------------------------
Policyholders' account balances for universal life and investment-type
contracts are equal to the policy account values. The policy account values
represents an accumulation of gross premium payments plus credited interest
less expense and mortality charges and withdrawals.
For participating traditional life policies, future policy benefit
liabilities are calculated using a net level premium method on the basis of
actuarial assumptions equal to guaranteed mortality and dividend fund
interest rates. The liability for annual dividends represents the accrual
of annual dividends earned. Terminal dividends are accrued in proportion to
gross margins over the life of the contract.
For non-participating traditional life insurance policies, future policy
benefit liabilities are estimated using a net level premium method on the
basis of actuarial assumptions as to mortality, persistency and interest
established at policy issue. Assumptions established at policy issue as to
mortality and persistency are based on the Insurance Group's experience
which, together with interest and expense assumptions, includes a margin
for adverse deviation. When the liabilities for future policy benefits plus
the present value of expected future gross premiums for a product are
insufficient to provide for expected future policy benefits
F-10
<PAGE>
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 8.35% for
annuity liabilities.
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. While
management believes its disability income ("DI") reserves have been
calculated on a reasonable basis and are adequate, there can be no
assurance reserves will be sufficient to provide for future liabilities.
Claim reserves and associated liabilities for individual DI and major
medical policies were $948.4 million and $951.7 million at December 31,
1999 and 1998, respectively. Incurred benefits (benefits paid plus changes
in claim reserves) and benefits paid for individual DI and major medical
are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Incurred benefits related to current year.......... $ 150.7 $ 140.1 $ 132.3
Incurred benefits related to prior years........... 64.7 84.2 60.0
------------- ------------ ------------
Total Incurred Benefits............................ $ 215.4 $ 224.3 $ 192.3
============= ============ ============
Benefits paid related to current year.............. $ 28.9 $ 17.0 $ 28.8
Benefits paid related to prior years............... 189.8 155.4 146.2
------------- ------------ ------------
Total Benefits Paid................................ $ 218.7 $ 172.4 $ 175.0
============= ============ ============
</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, 1999, participating policies, including those in the Closed
Block, represent approximately 23.0% ($47.0 billion) of directly written
life insurance in force, net of amounts ceded.
Federal Income Taxes
--------------------
The Company files a consolidated Federal income tax return with the Holding
Company and its consolidated subsidiaries. Current Federal income taxes are
charged or credited to operations based upon amounts estimated to be
payable or recoverable as a result of taxable operations for the current
year. Deferred income tax assets and liabilities are recognized based on
the difference between financial statement carrying amounts and income tax
bases of assets and liabilities using enacted income tax rates and laws.
Separate Accounts
-----------------
Separate Accounts are established in conformity with the New York State
Insurance Law and generally are not chargeable with liabilities that arise
from any other business of the Insurance Group. Separate Accounts assets
are subject to General Account claims only to the extent the value of such
assets exceeds Separate Accounts liabilities.
F-11
<PAGE>
Assets and liabilities of the Separate Accounts, representing net deposits
and accumulated net investment earnings less fees, held primarily for the
benefit of contractholders, and for which the Insurance Group does not bear
the investment risk, are shown as separate captions in the consolidated
balance sheets. The Insurance Group bears the investment risk on assets
held in one Separate Account; therefore, such assets are carried on the
same basis as similar assets held in the General Account portfolio. Assets
held in the other Separate Accounts are carried at quoted market values or,
where quoted values are not available, at estimated fair values as
determined by the Insurance Group.
The investment results of Separate Accounts on which the Insurance Group
does not bear the investment risk are reflected directly in Separate
Accounts liabilities. For 1999, 1998 and 1997, investment results of such
Separate Accounts were $6,045.5 million, $4,591.0 million and $3,411.1
million, respectively.
Deposits to Separate Accounts are reported as increases in Separate
Accounts liabilities and are not reported in revenues. Mortality, policy
administration and surrender charges on all Separate Accounts are included
in revenues.
Employee Stock Option Plan
--------------------------
The Company accounts for stock option plans sponsored by the Holding
Company, DLJ and Alliance in accordance with the provisions of Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees," and related interpretations. In accordance with the opinion,
compensation expense is recorded on the date of grant only if the current
market price of the underlying stock exceeds the option strike price at the
grant date. See Note 22 for the pro forma disclosures for the Holding
Company, DLJ and Alliance required by SFAS No. 123, "Accounting for
Stock-Based Compensation".
F-12
<PAGE>
3) INVESTMENTS
The following tables provide additional information relating to fixed
maturities and equity securities:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------------- ------------- ------------ -------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1999
-----------------
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 14,866.8 $ 139.5 $ 787.0 $ 14,219.3
Mortgage-backed.................... 2,554.5 2.3 87.8 2,469.0
U.S. Treasury, government and
agency securities................ 1,194.1 18.9 23.4 1,189.6
States and political subdivisions.. 110.0 1.4 4.9 106.5
Foreign governments................ 361.8 16.2 14.8 363.2
Redeemable preferred stock......... 286.4 1.7 36.0 252.1
------------- ------------- ------------ -------------
Total Available for Sale............... $ 19,373.6 $ 180.0 $ 953.9 $ 18,599.7
============= ============= ============ =============
Held to Maturity: Corporate......... $ 133.2 $ - $ - $ 133.2
============= ============= ============ =============
Equity Securities:
Common stock available for sale...... 25.5 1.5 17.8 9.2
Common stock trading securities...... 7.2 9.1 2.2 14.1
------------- ------------- ------------ -------------
Total Equity Securities................ $ 32.7 $ 10.6 $ 20.0 $ 23.3
============= ============= ============ =============
December 31, 1998
-----------------
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 14,520.8 $ 793.6 $ 379.6 $ 14,934.8
Mortgage-backed.................... 1,807.9 23.3 .9 1,830.3
U.S. Treasury, government and
agency securities................ 1,464.1 107.6 .7 1,571.0
States and political subdivisions.. 55.0 9.9 - 64.9
Foreign governments................ 363.3 20.9 30.0 354.2
Redeemable preferred stock......... 242.7 7.0 11.2 238.5
------------- ------------- ------------ -------------
Total Available for Sale............... $ 18,453.8 $ 962.3 $ 422.4 $ 18,993.7
============= ============= ============ =============
Held to Maturity: Corporate......... $ 125.0 $ - $ - $ 125.0
============= ============= ============ =============
Equity Securities:
Common stock available for sale...... $ 58.3 $ 114.9 $ 22.5 $ 150.7
============= ============= ============ =============
</TABLE>
For publicly traded fixed maturities and equity securities, estimated fair
value is determined using quoted market prices. For fixed maturities
without a readily ascertainable market value, the Company determines an
estimated fair value using a discounted cash flow approach, including
provisions for credit risk, generally based on the assumption such
securities will be held to maturity. Estimated fair values for equity
securities, substantially all of which do not have a readily ascertainable
market value, have been determined by the Company. Such estimated fair
values do not necessarily represent the values for which these securities
could have been sold at the dates of the consolidated balance sheets. At
December 31, 1999 and 1998, securities without a readily ascertainable
market value having an amortized cost of $3,322.2 million and $3,539.9
million, respectively, had estimated fair values of $3,177.7 million and
$3,748.5 million, respectively.
F-13
<PAGE>
The contractual maturity of bonds at December 31, 1999 is shown below:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
-------------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less................................................ $ 479.1 $ 477.8
Due in years two through five.......................................... 2,991.8 2,921.2
Due in years six through ten........................................... 7,197.9 6,813.0
Due after ten years.................................................... 5,864.0 5,666.5
Mortgage-backed securities............................................. 2,554.4 2,469.1
------------ ------------
Total.................................................................. $ 19,087.2 $ 18,347.6
============ ============
</TABLE>
Corporate bonds held to maturity with an amortized cost and estimated fair
value of $133.2 million are due in one year or less.
Bonds not due at a single maturity date have been included in the above
table in the year of final maturity. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
The Insurance Group's fixed maturity investment portfolio includes
corporate high yield securities consisting of public high yield bonds,
redeemable preferred stocks and directly negotiated debt in leveraged
buyout transactions. The Insurance Group seeks to minimize the higher than
normal credit risks associated with such securities by monitoring
concentrations in any single issuer or a particular industry group. Certain
of these corporate high yield securities are classified as other than
investment grade by the various rating agencies, i.e., a rating below Baa
or National Association of Insurance Commissioners ("NAIC") designation of
3 (medium grade), 4 or 5 (below investment grade) or 6 (in or near
default). At December 31, 1999, approximately 14.9% of the $18,344.3
million aggregate amortized cost of bonds held by the Company was
considered to be other than investment grade.
In addition, the Insurance Group is an equity investor in limited
partnership interests which primarily invest in securities considered to be
other than investment grade. The carrying values at December 31, 1999 and
1998 were $647.9 million and $562.6 million, respectively.
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Balances, beginning of year........................ $ 230.6 $ 384.5 $ 137.1
Additions charged to income........................ 68.2 86.2 334.6
Deductions for writedowns and
asset dispositions............................... (150.2) (240.1) (87.2)
------------- ------------ ------------
Balances, End of Year.............................. $ 148.6 $ 230.6 $ 384.5
============= ============ ============
Balances, end of year comprise:
Mortgage loans on real estate.................... $ 27.5 $ 34.3 $ 55.8
Equity real estate............................... 121.1 196.3 328.7
------------- ------------ ------------
Total.............................................. $ 148.6 $ 230.6 $ 384.5
============= ============ ============
</TABLE>
F-14
<PAGE>
At December 31, 1999, the carrying value of fixed maturities which are
non-income producing for the twelve months preceding the consolidated
balance sheet date was $152.1 million.
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 $106.0 million and $115.1
million at December 31, 1999 and 1998, 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 $9.5
million, $10.3 million and $17.2 million in 1999, 1998 and 1997,
respectively. Gross interest income on these loans included in net
investment income aggregated $8.2 million, $8.3 million and $12.7 million
in 1999, 1998 and 1997, respectively.
Impaired mortgage loans along with the related provision for losses were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1999 1998
-------------- --------------
(IN MILLIONS)
<S> <C> <C>
Impaired mortgage loans with provision for losses.................. $ 142.4 $ 125.4
Impaired mortgage loans without provision for losses............... 2.2 8.6
-------------- --------------
Recorded investment in impaired mortgage loans..................... 144.6 134.0
Provision for losses............................................... (23.0) (29.0)
-------------- --------------
Net Impaired Mortgage Loans........................................ $ 121.6 $ 105.0
============== ==============
</TABLE>
Impaired mortgage loans without provision for losses are loans where the
fair value of the collateral or the net present value of the expected
future cash flows related to the loan equals or exceeds the recorded
investment. Interest income earned on loans where the collateral value is
used to measure impairment is recorded on a cash basis. Interest income on
loans where the present value method is used to measure impairment is
accrued on the net carrying value amount of the loan at the interest rate
used to discount the cash flows. Changes in the present value attributable
to changes in the amount or timing of expected cash flows are reported as
investment gains or losses.
During 1999, 1998 and 1997, respectively, the Company's average recorded
investment in impaired mortgage loans was $141.7 million, $161.3 million
and $246.9 million. Interest income recognized on these impaired mortgage
loans totaled $12.0 million, $12.3 million and $15.2 million ($0.0 million,
$.9 million and $2.3 million recognized on a cash basis) for 1999, 1998 and
1997, 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, 1999 and 1998, the carrying value of equity real estate held
for sale amounted to $382.2 million and $836.2 million, respectively. For
1999, 1998 and 1997, respectively, real estate of $20.5 million, $7.1
million and $152.0 million was acquired in satisfaction of debt. At
December 31, 1999 and 1998, the Company owned $443.9 million and $552.3
million, respectively, of real estate acquired in satisfaction of debt.
Depreciation of real estate held for production of income is computed using
the straight-line method over the estimated useful lives of the properties,
which generally range from 40 to 50 years. Accumulated depreciation on real
estate was $251.6 million and $374.8 million at December 31, 1999 and 1998,
respectively. Depreciation expense on real estate totaled $21.8 million,
$30.5 million and $74.9 million for 1999, 1998 and 1997, respectively.
F-15
<PAGE>
4) JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information for real estate joint ventures
(25 individual ventures at both December 31, 1999 and 1998) 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, follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1999 1998
------------- -------------
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEETS
Investments in real estate, at depreciated cost........................ $ 861.1 $ 913.7
Investments in securities, generally at estimated fair value........... 678.4 636.9
Cash and cash equivalents.............................................. 68.4 85.9
Other assets........................................................... 239.3 279.8
------------- -------------
Total Assets........................................................... $ 1,847.2 $ 1,916.3
============= =============
Borrowed funds - third party........................................... $ 354.2 $ 367.1
Borrowed funds - AXA Financial......................................... 28.9 30.1
Other liabilities...................................................... 313.9 197.2
------------- -------------
Total liabilities...................................................... 697.0 594.4
------------- -------------
Partners' capital...................................................... 1,150.2 1,321.9
------------- -------------
Total Liabilities and Partners' Capital................................ $ 1,847.2 $ 1,916.3
============= =============
Equity in partners' capital included above............................. $ 316.5 $ 365.6
Equity in limited partnership interests not included above and other... 524.1 390.1
------------- -------------
Carrying Value......................................................... $ 840.6 $ 755.7
============= =============
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures............. $ 180.5 $ 246.1 $ 310.5
Revenues of other limited partnership interests.... 455.1 128.9 506.3
Interest expense - third party..................... (39.8) (33.3) (91.8)
Interest expense - AXA Financial................... (2.5) (2.6) (7.2)
Other expenses..................................... (139.0) (197.0) (263.6)
------------- ------------ ------------
Net Earnings....................................... $ 454.3 $ 142.1 $ 454.2
============= ============ ============
Equity in net earnings included above.............. $ 10.5 $ 44.4 $ 76.7
Equity in net earnings of limited partnership
interests not included above..................... 76.0 37.9 69.5
Other.............................................. - - (.9)
------------- ------------ ------------
Total Equity in Net Earnings....................... $ 86.5 $ 82.3 $ 145.3
============= ============ ============
</TABLE>
F-16
<PAGE>
5) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities................................... $ 1,499.8 $ 1,489.0 $ 1,459.4
Mortgage loans on real estate...................... 253.4 235.4 260.8
Equity real estate................................. 250.2 356.1 390.4
Other equity investments........................... 165.1 83.8 156.9
Policy loans....................................... 143.8 144.9 177.0
Other investment income............................ 161.3 185.7 181.7
------------- ------------ ------------
Gross investment income.......................... 2,473.6 2,494.9 2,626.2
Investment expenses.............................. (232.7) (266.8) (343.4)
------------- ------------ ------------
Net Investment Income.............................. $ 2,240.9 $ 2,228.1 $ 2,282.8
============= ============ ============
</TABLE>
Investment (losses) gains, net, including changes in the valuation
allowances, follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities................................... $ (290.9) $ (24.3) $ 88.1
Mortgage loans on real estate...................... (3.3) (10.9) (11.2)
Equity real estate................................. (2.4) 74.5 (391.3)
Other equity investments........................... 88.1 29.9 14.1
Sale of subsidiaries............................... - (2.6) 252.1
Issuance and sales of Alliance Units............... 5.5 19.8 -
Issuance and sales of DLJ common stock............. 106.0 18.2 3.0
Other.............................................. .1 (4.4) -
------------- ------------ ------------
Investment (Losses) Gains, Net..................... $ (96.9) $ 100.2 $ (45.2)
============= ============ ============
</TABLE>
Writedowns of fixed maturities amounted to $223.2 million, $101.6 million
and $11.7 million for 1999, 1998 and 1997, respectively, and writedowns of
equity real estate amounted to $136.4 million for 1997. In fourth quarter
1997, the Company reclassified $1,095.4 million depreciated cost of equity
real estate from real estate held for the production of income to real
estate held for sale. Additions to valuation allowances of $227.6 million
were recorded upon these transfers. Additionally, in fourth quarter 1997,
$132.3 million of writedowns on real estate held for production of income
were recorded.
For 1999, 1998 and 1997, respectively, proceeds received on sales of fixed
maturities classified as available for sale amounted to $7,138.6 million,
$15,961.0 million and $9,789.7 million. Gross gains of $74.7 million,
$149.3 million and $166.0 million and gross losses of $214.3 million, $95.1
million and $108.8 million, respectively, were realized on these sales. The
change in unrealized investment (losses) gains related to fixed maturities
classified as available for sale for 1999, 1998 and 1997 amounted to
$(1,313.8) million, $(331.7) million and $513.4 million, respectively.
On January 1, 1999, investments in publicly-traded common equity securities
in the General Account portfolio within other equity investments amounting
to $102.3 million were transferred from available for sale securities to
trading securities. As a result of this transfer, unrealized investment
gains of $83.3 million ($43.2 million net of related DAC and Federal income
taxes) were recognized as realized investment gains in the consolidated
statements of earnings. Net unrealized holding gains of $7.0 million were
included in net investment income in the consolidated statements of
earnings for 1999. These trading securities had a carrying value of $14.1
million and costs of $7.2 million at December 31, 1999.
F-17
<PAGE>
During 1999, DLJ completed its offering of a new class of its Common Stock
to track the financial performance of DLJdirect, its online brokerage
business. As a result of this offering, the Company recorded a non-cash
pre-tax realized gain of $95.8 million.
For 1999, 1998 and 1997, investment results passed through to certain
participating group annuity contracts as interest credited to
policyholders' account balances amounted to $131.5 million, $136.9 million
and $137.5 million, respectively.
In 1997, Equitable Life sold EREIM (other than its interest in Column
Financial, Inc.) ("ERE") to Lend Lease Corporation Limited ("Lend Lease"),
for $400.0 million and recognized an investment gain of $162.4 million, net
of Federal income tax of $87.4 million. Equitable Life entered into
long-term advisory agreements whereby ERE continues to provide
substantially the same services to Equitable Life's General Account and
Separate Accounts, for substantially the same fees, as provided prior to
the sale. Through June 10, 1997, the businesses sold reported combined
revenues of $91.6 million and combined net earnings of $10.7 million.
On June 30, 1997, Alliance reduced the recorded value of goodwill and
contracts associated with Alliance's 1996 acquisition of Cursitor Holdings
L.P. and Cursitor Holdings Limited (collectively, "Cursitor") by $120.9
million since Cursitor's business fundamentals no longer supported the
carrying value of its investment. The Company's earnings from continuing
operations 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.
Net unrealized investment gains (losses), included in the consolidated
balance sheets as a component of accumulated comprehensive income and the
changes for the corresponding years, follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year......................... $ 384.1 $ 533.6 $ 189.9
Changes in unrealized investment (losses) gains.... (1,486.6) (242.4) 543.3
Changes in unrealized investment losses
(gains) attributable to:
Participating group annuity contracts.......... 24.7 (5.7) 53.2
DAC............................................ 208.6 13.2 (89.0)
Deferred Federal income taxes.................. 476.4 85.4 (163.8)
------------- ------------ ------------
Balance, End of Year............................... $ (392.8) $ 384.1 $ 533.6
============= ============ ============
Balance, end of year comprises:
Unrealized investment (losses) gains on:
Fixed maturities............................... $ (773.9) $ 539.9 $ 871.2
Other equity investments....................... (16.3) 92.4 33.7
Other, principally Closed Block................ 46.8 111.1 80.9
------------- ------------ ------------
Total........................................ (743.4) 743.4 985.8
Amounts of unrealized investment gains
attributable to:
Participating group annuity contracts........ - (24.7) (19.0)
DAC.......................................... 80.8 (127.8) (141.0)
Deferred Federal income taxes................ 269.8 (206.8) (292.2)
------------- ------------ ------------
Total.............................................. $ (392.8) $ 384.1 $ 533.6
============= ============ ============
</TABLE>
Changes in unrealized gains (losses) reflect changes in fair value of only
those fixed maturities and equity securities classified as available for
sale and do not reflect any changes in fair value of policyholders' account
balances and future policy benefits.
F-18
<PAGE>
6) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated other comprehensive income (loss) represents cumulative gains
and losses on items that are not reflected in earnings. The balances for
the past three years follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Unrealized (losses) gains on investments........... $ (392.8) $ 384.1 $ 533.6
Minimum pension liability.......................... (.1) (28.3) (17.3)
------------- ------------ ------------
Total Accumulated Other
Comprehensive (Loss) Income...................... $ (392.9) $ 355.8 $ 516.3
============= ============ ============
</TABLE>
The components of other comprehensive income (loss) for the past three
years follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Net unrealized (losses) gains on investment
securities:
Net unrealized (losses) gains arising during
the period..................................... $ (1,682.3) $ (186.1) $ 564.0
Adjustment to reclassify losses (gains)
included in net earnings during the period..... 195.7 (56.3) (20.7)
------------- ------------ ------------
Net unrealized (losses) gains on investment
securities..................................... (1,486.6) (242.4) 543.3
Adjustments for policyholder liabilities,
DAC and deferred Federal income taxes.......... 709.7 92.9 (199.6)
------------- ------------ ------------
Change in unrealized losses (gains), net of
adjustments.................................... (776.9) (149.5) 343.7
Change in minimum pension liability................ 28.2 (11.0) (4.4)
------------- ------------ ------------
Total Other Comprehensive (Loss) Income............ $ (748.7) $ (160.5) $ 339.3
============= ============ ============
</TABLE>
F-19
<PAGE>
7) CLOSED BLOCK
Summarized financial information for the Closed Block follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C
BALANCE SHEETS
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost,
$4,144.8 and $4,149.0)........................................... $ 4,014.0 $ 4,373.2
Mortgage loans on real estate........................................ 1,704.2 1,633.4
Policy loans......................................................... 1,593.9 1,641.2
Cash and other invested assets....................................... 194.4 86.5
DAC.................................................................. 895.5 676.5
Other assets......................................................... 205.3 221.6
------------ ------------
Total Assets......................................................... $ 8,607.3 $ 8,632.4
============ ============
Future policy benefits and policyholders' account balances........... $ 9,011.7 $ 9,013.1
Other liabilities.................................................... 13.3 63.9
------------ ------------
Total Liabilities.................................................... $ 9,025.0 $ 9,077.0
============ ============
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Premiums and other revenue......................... $ 619.1 $ 661.7 $ 687.1
Investment income (net of investment
expenses of $15.8, $15.5 and $27.0).............. 574.2 569.7 574.9
Investment (losses) gains, net..................... (11.3) .5 (42.4)
------------- ------------ ------------
Total revenues............................... 1,182.0 1,231.9 1,219.6
------------- ------------ ------------
Policyholders' benefits and dividends.............. 1,024.7 1,082.0 1,066.7
Other operating costs and expenses................. 70.9 62.8 50.4
------------- ------------ ------------
Total benefits and other deductions.......... 1,095.6 1,144.8 1,117.1
------------- ------------ ------------
Contribution from the Closed Block................. $ 86.4 $ 87.1 $ 102.5
============= ============ ============
</TABLE>
Impaired mortgage loans along with the related provision for losses
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1999 1998
------------- -------------
(IN MILLIONS)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 26.8 $ 55.5
Impaired mortgage loans without provision for losses................... 4.5 7.6
------------- -------------
Recorded investment in impaired mortgages.............................. 31.3 63.1
Provision for losses................................................... (4.1) (10.1)
------------- -------------
Net Impaired Mortgage Loans............................................ $ 27.2 $ 53.0
============= =============
</TABLE>
During 1999, 1998 and 1997, the Closed Block's average recorded investment
in impaired mortgage loans was $37.0 million, $85.5 million and $110.2
million, respectively. Interest income recognized on these impaired
mortgage loans totaled $3.3 million, $4.7 million and $9.4 million ($.3
million, $1.5 million and $4.1 million recognized on a cash basis) for
1999, 1998 and 1997, respectively.
F-20
<PAGE>
Valuation allowances amounted to $4.6 million and $11.1 million on mortgage
loans on real estate and $24.7 million and $15.4 million on equity real
estate at December 31, 1999 and 1998, respectively. Writedowns of fixed
maturities amounted to $3.5 million for 1997. Writedowns of equity real
estate amounted to $28.8 million for 1997.
In fourth quarter 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. Also in fourth quarter 1997, $28.8 million
of writedowns on real estate held for production of income were recorded.
Many expenses related to Closed Block operations are charged to operations
outside of the Closed Block; accordingly, the contribution from the Closed
Block does not represent the actual profitability of the Closed Block
operations. Operating costs and expenses outside of the Closed Block are,
therefore, disproportionate to the business outside of the Closed Block.
F-21
<PAGE>
8) DISCONTINUED OPERATIONS
Summarized financial information for discontinued operations follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEETS
Mortgage loans on real estate........................................ $ 454.6 $ 553.9
Equity real estate................................................... 426.6 611.0
Other equity investments............................................. 55.8 115.1
Other invested assets................................................ 87.1 24.9
------------ ------------
Total investments.................................................. 1,024.1 1,304.9
Cash and cash equivalents............................................ 164.5 34.7
Other assets......................................................... 213.0 219.0
------------ ------------
Total Assets......................................................... $ 1,401.6 $ 1,558.6
============ ============
Policyholders' liabilities........................................... $ 993.3 $ 1,021.7
Allowance for future losses.......................................... 242.2 305.1
Other liabilities.................................................... 166.1 231.8
------------ ------------
Total Liabilities.................................................... $ 1,401.6 $ 1,558.6
============ ============
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Investment income (net of investment
expenses of $49.3, $63.3 and $97.3).............. $ 98.7 $ 160.4 $ 188.6
Investment (losses) gains, net..................... (13.4) 35.7 (173.7)
Policy fees, premiums and other income............. .2 (4.3) .2
------------- ------------ ------------
Total revenues..................................... 85.5 191.8 15.1
Benefits and other deductions...................... 104.8 141.5 169.5
(Losses charged) earnings credited to allowance
for future losses................................ (19.3) 50.3 (154.4)
------------- ------------ ------------
Pre-tax loss from operations....................... - - -
Pre-tax earnings from releasing (loss from
strengthening) the allowance for future
losses........................................... 43.3 4.2 (134.1)
Federal income tax (expense) benefit............... (15.2) (1.5) 46.9
------------- ------------ ------------
Earnings (Loss) from Discontinued Operations....... $ 28.1 $ 2.7 $ (87.2)
============= ============ ============
</TABLE>
The Company's quarterly process for evaluating the allowance for future
losses applies the current period's results of the discontinued operations
against the allowance, re-estimates future losses and adjusts the
allowance, if appropriate. Additionally, as part of the Company's annual
planning process which takes place in the fourth quarter of each year,
investment and benefit cash flow projections are prepared. These updated
assumptions and estimates resulted in a release of allowance in 1999 and
1998 and strengthening of allowance in 1997.
In fourth quarter 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. Also in fourth quarter
1997, $92.5 million of writedowns on real estate held for production of
income were recognized.
F-22
<PAGE>
Benefits and other deductions includes $26.6 million and $53.3 million of
interest expense related to amounts borrowed from continuing operations in
1998 and 1997, respectively.
Valuation allowances of $1.9 million and $3.0 million on mortgage loans on
real estate and $54.8 million and $34.8 million on equity real estate were
held at December 31, 1999 and 1998, respectively. Writedowns of equity real
estate were $95.7 million in 1997.
During 1999, 1998 and 1997, discontinued operations' average recorded
investment in impaired mortgage loans was $13.8 million, $73.3 million and
$89.2 million, respectively. Interest income recognized on these impaired
mortgage loans totaled $1.7 million, $4.7 million and $6.6 million ($.0
million, $3.4 million and $5.3 million recognized on a cash basis) for
1999, 1998 and 1997, respectively.
At December 31, 1999 and 1998, discontinued operations had real estate
acquired in satisfaction of debt with carrying values of $24.1 million and
$50.0 million, respectively.
9) SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Short-term debt...................................................... $ 557.0 $ 179.3
------------ ------------
Long-term debt:
Equitable Life:
Surplus notes, 6.95% due 2005...................................... 399.5 399.4
Surplus notes, 7.70% due 2015...................................... 199.7 199.7
Other.............................................................. .4 .3
------------ ------------
Total Equitable Life........................................... 599.6 599.4
------------ ------------
Wholly Owned and Joint Venture Real Estate:
Mortgage notes, 5.43% - 9.5%, due through 2017..................... 251.3 392.2
------------ ------------
Alliance:
Other.............................................................. - 10.8
------------ ------------
Total long-term debt................................................. 850.9 1,002.4
------------ ------------
Total Short-term and Long-term Debt.................................. $ 1,407.9 $ 1,181.7
============ ============
</TABLE>
Short-term Debt
---------------
Equitable Life has a $700.0 million bank credit facility available to fund
short-term working capital needs and to facilitate the securities
settlement process. The credit facility consists of two types of borrowing
options with varying interest rates and expires in September 2000. The
interest rates are based on external indices dependent on the type of
borrowing and at December 31, 1999 range from 5.76% to 8.5%. There were no
borrowings outstanding under this bank credit facility at December 31,
1999.
Equitable Life has a commercial paper program with an issue limit of $1.0
billion. This program is available for general corporate purposes used to
support Equitable Life's liquidity needs and is supported by Equitable
Life's existing $700.0 million bank credit facility. At December 31, 1999,
there were $166.9 million outstanding under this program.
Alliance has a $425.0 million five-year revolving credit facility with a
group of commercial 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. During
July 1999, Alliance increased the size of its commercial paper program by
$200.0 million from $425.0 million for a total available limit of $625.0
million. Borrowings from the revolving credit facility and the original
commercial paper program may not exceed $425.0 million in the aggregate.
The revolving credit facility provides backup liquidity for commercial
paper issued under
F-23
<PAGE>
Alliance's commercial paper program and can be used as a direct source of
borrowing. The revolving credit facility contains covenants that require
Alliance to, among other things, meet certain financial ratios. At December
31, 1999, Alliance had commercial paper outstanding totaling $384.7 million
at an effective interest rate of 5.9%; there were no borrowings outstanding
under Alliance's revolving credit facility.
In December 1999, Alliance established a $100.0 million extendible
commercial notes ("ECN") program to supplement its commercial paper
program. ECN's are short-term debt instruments that do not require any
back-up liquidity support.
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. At
December 31, 1999, the Company is in compliance with all debt covenants.
The Company has pledged real estate, mortgage loans, cash and securities
amounting to $323.6 million and $640.2 million at December 31, 1999 and
1998, respectively, as collateral for certain short-term and long-term
debt.
At December 31, 1999, aggregate maturities of the long-term debt based on
required principal payments at maturity was $3.0 million for 2000 and
$848.7 million for 2005 and thereafter.
10) FEDERAL INCOME TAXES
A summary of the Federal income tax expense in the consolidated statements
of earnings follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current.......................................... $ 174.0 $ 283.3 $ 186.5
Deferred......................................... 158.0 69.8 (95.0)
------------- ------------ ------------
Total.............................................. $ 332.0 $ 353.1 $ 91.5
============= ============ ============
</TABLE>
F-24
<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 their tax effects
follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Expected Federal income tax expense................ $ 458.4 $ 414.3 $ 234.7
Non-taxable minority interest...................... (47.8) (33.2) (38.0)
Non-taxable subsidiary gains....................... (37.1) (6.4) -
Adjustment of tax audit reserves................... 27.8 16.0 (81.7)
Equity in unconsolidated subsidiaries.............. (64.0) (39.3) (45.1)
Other.............................................. (5.3) 1.7 21.6
------------- ------------ ------------
Federal Income Tax Expense......................... $ 332.0 $ 353.1 $ 91.5
============= ============ ============
</TABLE>
The components of the net deferred Federal income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999 December 31, 1998
----------------------------- -----------------------------
ASSETS LIABILITIES Assets Liabilities
----------- ------------ ------------ -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Compensation and related benefits...... $ - $ 37.7 $ 235.3 $ -
Other.................................. - 20.6 27.8 -
DAC, reserves and reinsurance.......... - 329.7 - 231.4
Investments............................ 115.1 - - 364.4
----------- ------------ ------------ -----------
Total.................................. $ 115.1 $ 388.0 $ 263.1 $ 595.8
=========== ============ ============ ===========
</TABLE>
At December 31, 1999, in conjunction with the non-qualified employee
benefit plans, $236.8 million in deferred tax asset was transferred to the
Holding Company. See Note 12 for discussion of the benefit plans
transferred.
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 their
tax effects follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
DAC, reserves and reinsurance...................... $ 83.2 $ (7.7) $ 46.2
Investments........................................ 3.2 46.8 (113.8)
Compensation and related benefits.................. 21.0 28.6 3.7
Other.............................................. 50.6 2.1 (31.1)
------------- ------------ ------------
Deferred Federal Income Tax
Expense (Benefit)................................ $ 158.0 $ 69.8 $ (95.0)
============= ============ ============
</TABLE>
The Internal Revenue Service (the "IRS") is in the process of examining the
Holding Company's consolidated Federal income tax returns for the years
1992 through 1996. Management believes these audits will have no material
adverse effect on the Company's results of operations.
F-25
<PAGE>
11) REINSURANCE AGREEMENTS
The Insurance Group assumes and cedes reinsurance with other insurance
companies. The Insurance Group evaluates the financial condition of its
reinsurers to minimize its exposure to significant losses from reinsurer
insolvencies. Ceded reinsurance does not relieve the originating insurer of
liability. The effect of reinsurance (excluding group life and health) is
summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Direct premiums.................................... $ 420.6 $ 438.8 $ 448.6
Reinsurance assumed................................ 206.7 203.6 198.3
Reinsurance ceded.................................. (69.1) (54.3) (45.4)
------------- ------------ ------------
Premiums........................................... $ 558.2 $ 588.1 $ 601.5
============= ============ ============
Universal Life and Investment-type Product
Policy Fee Income Ceded.......................... $ 69.7 $ 75.7 $ 61.0
============= ============ ============
Policyholders' Benefits Ceded...................... $ 99.6 $ 85.9 $ 70.6
============= ============ ============
Interest Credited to Policyholders' Account
Balances Ceded................................... $ 38.5 $ 39.5 $ 36.4
============= ============ ============
</TABLE>
Since 1997, the Company reinsures on a yearly renewal term basis 90% of the
mortality risk on new issues of certain term, universal and variable life
products. The Company's retention limit on joint survivorship policies is
$15.0 million. All in force business above $5.0 million is reinsured. The
Insurance Group also reinsures the entire risk on certain substandard
underwriting risks and in certain other cases.
The Insurance Group cedes 100% of its group life and health business to a
third party insurer. Premiums ceded totaled $.1 million, $1.3 million and
$1.6 million for 1999, 1998 and 1997, respectively. Ceded death and
disability benefits totaled $44.7 million, $15.6 million and $4.3 million
for 1999, 1998 and 1997, respectively. Insurance liabilities ceded totaled
$510.5 million and $560.3 million at December 31, 1999 and 1998,
respectively.
F-26
<PAGE>
12) EMPLOYEE BENEFIT PLANS
The Company sponsors qualified and non-qualified defined benefit plans
covering substantially all employees (including certain qualified part-time
employees), managers and certain agents. The pension plans are
non-contributory. Equitable Life's benefits are based on a cash balance
formula or years of service and final average earnings, if greater, under
certain grandfathering rules in the plans. Alliance's benefits are based on
years of credited service, average final base salary and primary social
security benefits. The Company's funding policy is to make the minimum
contribution required by the Employee Retirement Income Security Act of
1974 ("ERISA").
Effective December 31, 1999, the Holding Company legally assumed primary
liability from Equitable Life for all current and future obligations of its
Excess Retirement Plan, Supplemental Executive Retirement Plan and certain
other employee benefit plans that provide participants with medical, life
insurance, and deferred compensation benefits; Equitable Life remains
secondarily liable. The amount of the liability associated with employee
benefits transferred was $676.5 million, including $183.0 million of
non-qualified pension benefit obligations and $394.1 million of
postretirement benefits obligations at December 31, 1999. This transfer was
recorded as a non-cash capital contribution to Equitable Life.
Components of net periodic pension (credit) cost for the qualified and
non-qualified plans follow:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost....................................... $ 36.7 $ 33.2 $ 32.5
Interest cost on projected benefit obligations..... 131.6 129.2 128.2
Actual return on assets............................ (189.8) (175.6) (307.6)
Net amortization and deferrals..................... 7.5 6.1 166.6
------------- ------------ ------------
Net Periodic Pension Cost (Credit)................. $ (14.0) $ (7.1) $ 19.7
============= ============ ============
</TABLE>
The projected benefit obligations under the qualified and non-qualified
pension plans were comprised of:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Benefit obligations, beginning of year................................. $ 1,933.4 $ 1,801.3
Service cost........................................................... 36.7 33.2
Interest cost.......................................................... 131.6 129.2
Actuarial (gains) losses............................................... (53.3) 108.4
Benefits paid.......................................................... (123.1) (138.7)
------------ ------------
Subtotal before transfer............................................... 1,925.3 1,933.4
Transfer of Non-qualified Pension Benefit Obligation
to the Holding Company............................................... (262.5) -
------------ ------------
Benefit Obligation, End of Year........................................ $ 1,662.8 $ 1,933.4
============ ============
</TABLE>
F-27
<PAGE>
The funded status of the qualified and non-qualified pension plans was as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Plan assets at fair value, beginning of year........................... $ 2,083.1 $ 1,867.4
Actual return on plan assets........................................... 369.0 338.9
Contributions.......................................................... .1 -
Benefits paid and fees................................................. (108.5) (123.2)
------------ ------------
Plan assets at fair value, end of year................................. 2,343.7 2,083.1
Projected benefit obligations.......................................... 1,925.3 1,933.4
------------ ------------
Excess of plan assets over projected benefit obligations............... 418.4 149.7
Unrecognized prior service cost........................................ (5.2) (7.5)
Unrecognized net (gain) loss from past experience different
from that assumed.................................................... (197.3) 38.7
Unrecognized net asset at transition................................... (.1) 1.5
------------ ------------
Subtotal before transfer............................................... 215.8 182.4
Transfer of Accrued Non-qualified Pension Benefit Obligation
to the Holding Company............................................... 183.0 -
------------ ------------
Prepaid Pension Cost, Net.............................................. $ 398.8 $ 182.4
============ ============
</TABLE>
The prepaid pension cost for pension plans with assets in excess of
projected benefit obligations was $412.2 million and $363.9 million and the
accrued liability for pension plans with projected benefit obligations in
excess of plan assets was $13.5 million and $181.5 million at December 31,
1999 and 1998, respectively.
The pension plan assets include corporate and government debt securities,
equity securities, equity real estate and shares of group trusts managed by
Alliance. The discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of projected benefit
obligations were 8.0% and 6.38%, respectively, at December 31, 1999 and
7.0% and 3.83%, respectively, at December 31, 1998. As of January 1, 1999
and 1998, the expected long-term rate of return on assets for the
retirement plan was 10.0% and 10.25%, respectively.
The Company recorded, as a reduction of shareholder's equity, an additional
minimum pension liability of $.1 million, $28.3 million and $17.3 million,
net of Federal income taxes, at December 31, 1999, 1998 and 1997,
respectively, primarily representing the excess of the accumulated benefit
obligation of the non-qualified pension plan over the accrued liability.
The aggregate accumulated benefit obligation and fair value of plan assets
for pension plans with accumulated benefit obligations in excess of plan
assets were $325.7 million and $36.3 million, respectively, at December 31,
1999 and $309.7 million and $34.5 million, respectively, at December 31,
1998.
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 $30.2 million,
$31.8 million and $33.2 million for 1999, 1998 and 1997, 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 1999, 1998 and 1997, the Company made estimated postretirement
benefits payments of $29.5 million, $28.4 million and $18.7 million,
respectively.
F-28
<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>
1999 1998 1997
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost....................................... $ 4.7 $ 4.6 $ 4.5
Interest cost on accumulated postretirement
benefits obligation.............................. 34.4 33.6 34.7
Unrecognized prior service costs................... (7.0) - -
Net amortization and deferrals..................... 8.4 .5 1.9
----------------- ---------------- -----------------
Net Periodic Postretirement Benefits Costs......... $ 40.5 $ 38.7 $ 41.1
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Accumulated postretirement benefits obligation, beginning
of year.............................................................. $ 490.4 $ 490.8
Service cost........................................................... 4.7 4.6
Interest cost.......................................................... 34.4 33.6
Contributions and benefits paid........................................ (29.5) (28.4)
Actuarial gains........................................................ (29.0) (10.2)
------------ ------------
Accumulated postretirement benefits obligation, end of year............ 471.0 490.4
Unrecognized prior service cost........................................ 26.9 31.8
Unrecognized net loss from past experience different
from that assumed and from changes in assumptions.................... (86.0) (121.2)
------------ ------------
Subtotal before transfer............................................... 411.9 401.0
Transfer to the Holding Company........................................ (394.1) -
------------ ------------
Accrued Postretirement Benefits Cost................................... $ 17.8 $ 401.0
============ ============
</TABLE>
Since January 1, 1994, costs to the Company for providing these medical
benefits available to retirees under age 65 are the same as those offered
to active employees and medical benefits will be limited to 200% of 1993
costs for all participants.
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefits obligation was 7.5% in 1999, gradually declining to
4.75% in the year 2010, and in 1998 was 8.0%, gradually declining to 2.5%
in the year 2009. The discount rate used in determining the accumulated
postretirement benefits obligation was 8.0% and 7.0% at December 31, 1999
and 1998, respectively.
If the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefits obligation as of December 31, 1999
would be increased 3.55%. The effect of this change on the sum of the
service cost and interest cost would be an increase of 3.91%. If the health
care cost trend rate assumptions were decreased by 1% the accumulated
postretirement benefits obligation as of December 31, 1999 would be
decreased by 4.38%. The effect of this change on the sum of the service
cost and interest cost would be a decrease of 4.96%.
F-29
<PAGE>
13) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivatives
-----------
The Insurance Group primarily uses derivatives for asset/liability risk
management and for hedging individual securities. Derivatives mainly are
utilized to reduce the Insurance Group's exposure to interest rate
fluctuations. Accounting for interest rate swap transactions is on an
accrual basis. Gains and losses related to interest rate swap transactions
are amortized as yield adjustments over the remaining life of the
underlying hedged security. Income and expense resulting from interest rate
swap activities are reflected in net investment income. The notional amount
of matched interest rate swaps outstanding at December 31, 1999 and 1998,
respectively, was $797.3 million and $880.9 million. The average unexpired
terms at December 31, 1999 ranged from two months to 5.0 years. At December
31, 1999, the cost of terminating swaps in a loss position was $1.8
million. Equitable Life maintains an interest rate cap program designed to
hedge crediting rates on interest-sensitive individual annuities contracts.
The outstanding notional amounts at December 31, 1999 of contracts
purchased and sold were $7,575.0 million and $875.0 million, respectively.
The net premium paid by Equitable Life on these contracts was $51.6 million
and is being amortized ratably over the contract periods ranging from 1 to
4 years. Income and expense resulting from this program are reflected as an
adjustment to interest credited to policyholders' account balances.
DLJ enters into certain contractual agreements referred to as derivatives
or off-balance-sheet financial instruments primarily for trading purposes
and to provide products for its clients. DLJ performs the following
activities: writing over-the-counter ("OTC") options to accommodate
customer needs; trading in forward contracts in U.S. government and agency
issued or guaranteed securities; trading 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 also enters into swap agreements, primarily equity, interest
rate and foreign currency swaps. DLJ is not significantly involved in
commodity derivative instruments.
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, 1999 and 1998.
F-30
<PAGE>
Fair values for mortgage loans on real estate are estimated by discounting
future contractual cash flows using interest rates at which loans with
similar characteristics and credit quality would be made. Fair values for
foreclosed mortgage loans and problem mortgage loans are limited to the
estimated fair value of the underlying collateral if lower.
Fair values of policy loans are estimated by discounting the face value of
the loans from the time of the next interest rate review to the present, at
a rate equal to the excess of the current estimated market rates over the
current interest rate charged on the loan.
The estimated fair values for the Company's association plan contracts,
supplementary contracts not involving life contingencies ("SCNILC") and
annuities certain, which are included in policyholders' account balances,
and guaranteed interest contracts are estimated using projected cash flows
discounted at rates reflecting expected current offering rates.
The estimated fair values for variable deferred annuities and single
premium deferred annuities ("SPDA"), which are included in policyholders'
account balances, are estimated by discounting the account value back from
the time of the next crediting rate review to the present, at a rate equal
to the excess of current estimated market rates offered on new policies
over the current crediting rates.
Fair values for long-term debt are determined using published market
values, where available, or contractual cash flows discounted at market
interest rates. The estimated fair values for non-recourse mortgage debt
are determined by discounting contractual cash flows at a rate which takes
into account the level of current market interest rates and collateral
risk. The estimated fair values for recourse mortgage debt are determined
by discounting contractual cash flows at a rate based upon current interest
rates of other companies with credit ratings similar to the Company. The
Company's carrying value of short-term borrowings approximates their
estimated fair value.
The following table discloses carrying value and estimated fair value for
financial instruments not otherwise disclosed in Notes 3, 7 and 8:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------------
1999 1998
--------------------------------- ---------------------------------
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.......... $ 3,270.0 $ 3,239.3 $ 2,809.9 $ 2,961.8
Other limited partnership interests.... 647.9 647.9 562.6 562.6
Policy loans........................... 2,257.3 2,359.5 2,086.7 2,370.7
Policyholders' account balances -
investment contracts................. 12,740.4 12,800.5 12,892.0 13,396.0
Long-term debt......................... 850.9 834.9 1,002.4 1,025.2
Closed Block Financial Instruments:
-----------------------------------
Mortgage loans on real estate.......... $ 1,704.2 $ 1,650.3 $ 1,633.4 $ 1,703.5
Other equity investments............... 36.3 36.3 56.4 56.4
Policy loans........................... 1,593.9 1,712.0 1,641.2 1,929.7
SCNILC liability....................... 22.8 22.5 25.0 25.0
Discontinued Operations Financial
---------------------------------
Instruments:
------------
Mortgage loans on real estate.......... $ 454.6 $ 467.0 $ 553.9 $ 599.9
Fixed maturities....................... 85.5 85.5 24.9 24.9
Other equity investments............... 55.8 55.8 115.1 115.1
Guaranteed interest contracts.......... 33.2 27.5 37.0 34.0
Long-term debt......................... 101.9 101.9 147.1 139.8
</TABLE>
F-31
<PAGE>
14) COMMITMENTS AND CONTINGENT LIABILITIES
The Company has provided, from time to time, certain guarantees or
commitments to affiliates, investors and others. These arrangements include
commitments by the Company, under certain conditions: to make capital
contributions of up to $59.4 million to affiliated real estate joint
ventures; and to provide equity financing to certain limited partnerships
of $373.8 million at December 31, 1999, under existing loan or loan
commitment agreements.
Equitable Life is the obligor under certain structured settlement
agreements which it had entered into with unaffiliated insurance companies
and beneficiaries. To satisfy its obligations under these agreements,
Equitable Life owns single premium annuities issued by previously wholly
owned life insurance subsidiaries. Equitable Life has directed payment
under these annuities to be made directly to the beneficiaries under the
structured settlement agreements. A contingent liability exists with
respect to these agreements should the previously wholly owned subsidiaries
be unable to meet their obligations. Management believes the satisfaction
of those obligations by Equitable Life is remote.
The Insurance Group had $24.9 million of letters of credit outstanding at
December 31, 1999.
15) LITIGATION
The Company
-----------
Life Insurance and Annuity Sales Cases
A number of lawsuits are pending as individual claims and purported class
actions against Equitable Life, its subsidiary insurance company and a
former insurance subsidiary. These actions involve, among other things,
sales of life and annuity products for varying periods from 1980 to the
present, and allege, among other things, sales practice misrepresentation
primarily involving: the number of premium payments required; the propriety
of a product as an investment vehicle; the propriety of a product as a
replacement of an existing policy; and failure to disclose a product as
life insurance. Some actions are in state courts and others are in U.S.
District Courts in different jurisdictions, and are in varying stages of
discovery and motions for class certification.
In general, the plaintiffs request an unspecified amount of damages,
punitive damages, enjoinment from the described practices, prohibition
against cancellation of policies for non-payment of premium or other
remedies, as well as attorneys' fees and expenses. Similar actions have
been filed against other life and health insurers and have resulted in the
award of substantial judgments, including material amounts of punitive
damages, or in substantial settlements. Although the outcome of litigation
cannot be predicted with certainty, particularly in the early stages of an
action, the Company's management believes that the ultimate resolution of
these cases 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.
Discrimination Case
Equitable Life is a defendant in an action, certified as a class action in
September 1997, in the United States District Court for the Northern
District of Alabama, Southern Division, involving alleged discrimination on
the basis of race against African-American applicants and potential
applicants in hiring individuals as sales agents. Plaintiffs seek a
declaratory judgment and affirmative and negative injunctive relief,
including the payment of back-pay, pension and other compensation. Although
the outcome of litigation cannot be predicted with certainty, the 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.
Agent Health Benefits Case
Equitable Life is a defendant in an action, certified as a class action in
March 1999, in the United States District Court for the Northern District
of California, alleging, among other things, that Equitable Life violated
ERISA by eliminating certain alternatives pursuant to which agents of
Equitable Life could qualify for health care coverage. The class consists
of "[a]ll current, former and retired Equitable agents, who while
F-32
<PAGE>
associated with Equitable satisfied [certain alternatives] to qualify for
health coverage or contributions thereto under applicable plans."
Plaintiffs allege various causes of action under ERISA, including claims
for enforcement of alleged promises contained in plan documents and for
enforcement of agent bulletins, breach of unilateral contract, breach of
fiduciary duty and promissory estoppel. The parties are currently engaged
in discovery. 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.
Prime Property Fund Case
In January 2000, the California Supreme Court denied the Company's petition
for review of an October 1999 decision by the California Superior Court of
Appeal. Such decision reversed the dismissal by the Supreme Court of Orange
County, California of an action which was commenced in 1995 by a real
estate developer in connection with a limited partnership formed in 1991
with the Company on behalf of Prime Property Fund ("PPF"). The Company
serves as investment manager for PPF, an open-end, commingled real estate
separate account of the Company for pension clients. Plaintiff alleges
breach of fiduciary duty and other claims principally in connection with
PPF's 1995 purchase and subsequent foreclosure of the loan which financed
the partnership's property. Plaintiff seeks compensatory and punitive
damages. The case has been remanded to the Superior Court for further
proceedings. Although the outcome of 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 this matter will have a material
adverse effect on the Company's results of operations in any particular
period.
Alliance Capital
----------------
In July 1995, a class action complaint was filed against Alliance North
American Government Income Trust, Inc. (the "Fund"), Alliance Holding and
certain other defendants affiliated with Alliance, including the Holding
Company, alleging violations of Federal securities laws, fraud and breach
of fiduciary duty in connection with the Fund's investments in Mexican and
Argentine securities. The original complaint was dismissed in 1996; on
appeal, the dismissal was affirmed. In October 1996, plaintiffs filed a
motion for leave to file an amended complaint, alleging the Fund failed to
hedge against currency risk despite representations that it would do so,
the Fund did not properly disclose that it planned to invest in
mortgage-backed derivative securities and two Fund advertisements
misrepresented the risks of investing in the Fund. In October 1998, the
U.S. Court of Appeals for the Second Circuit issued an order granting
plaintiffs' motion to file an amended complaint alleging that the Fund
misrepresented its ability to hedge against currency risk and denying
plaintiffs' motion to file an amended complaint containing the other
allegations. In December 1999, the United States District Court for the
Southern District of New York granted the defendants' motion for summary
judgment on all claims against all defendants. Later in December 1999, the
plaintiffs filed motions for reconsideration of the Court's ruling. These
motions are currently pending with the Court.
In connection with the Reorganization; Alliance assumed any liabilities
which Alliance Holding may have with respect to this action. Alliance and
Alliance Holding believe that the allegations in the amended complaint are
without merit and intend to vigorously defend against these claims. While
the ultimate outcome of this matter cannot be determined at this time,
management of Alliance Holding and Alliance do not expect that it will have
a material adverse effect on Alliance Holding's or Alliance's results of
operations or financial condition.
DLJSC
-----
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC") is a
defendant along with certain other parties in a class action complaint
involving the underwriting of units, consisting of notes and warrants to
purchase common shares, of Rickel Home Centers, Inc. ("Rickel"), which
filed a voluntary petition for reorganization pursuant to Chapter 11 of the
Bankruptcy Code. The complaint seeks unspecified compensatory and punitive
damages from DLJSC, as an underwriter and as an owner of 7.3% of the common
stock, for alleged violation of Federal securities laws and common law
fraud for alleged misstatements and omissions contained in the prospectus
and registration statement used in the offering of the units. In April
1999, the complaint against DLJSC and the other defendants was dismissed.
The plaintiffs have appealed. DLJSC intends to defend itself vigorously
against all the allegations contained in the complaint.
DLJSC is a defendant in a purported class action filed in a Texas State
Court on behalf of the holders of $550 million principal amount of
subordinated redeemable discount debentures of National Gypsum Corporation
("NGC"). The debentures were canceled in connection with a Chapter 11 plan
of reorganization for NGC consummated in July 1993. The litigation seeks
compensatory and punitive damages for DLJSC's activities as financial
advisor to NGC in the course of NGC's Chapter 11 proceedings. In March
1999, the Court granted motions for summary judgment filed by DLJSC and the
other defendants. The plaintiffs have appealed. DLJSC intends to defend
itself vigorously against all the allegations contained in the complaint.
In November 1998, three purported class actions were filed in the U.S.
District Court for the Southern District of New York against more than 25
underwriters of initial public offering securities, including DLJSC. The
complaints allege that defendants conspired to fix the "fee" paid for
underwriting initial public offering securities by setting the
underwriters' discount or "spread" at 7%, in violation of the Federal
antitrust laws. The complaints seek treble damages in an unspecified amount
and injunctive relief as well as attorneys' fees and costs. In March 1999,
the plaintiffs filed a consolidated amended complaint. A motion by all
defendants
F-33
<PAGE>
to dismiss the complaints on several grounds is pending. Separately, the
U.S. Department of Justice has issued a Civil Investigative Demand to
several investment banking firms, including DLJSC, seeking documents and
information relating to "alleged" price-fixing with respect to underwriting
spreads in initial public offerings. The Justice Department has not made
any charges against DLJSC or the other investment banking firms. DLJSC is
cooperating with the Justice Department in providing the requested
information and believes that no violation of law by DLJSC has occurred.
Although there can be no assurance, DLJ's management does not believe that
the ultimate resolution of the litigations described above to which DLJSC
is a party will have a material adverse effect on DLJ's consolidated
financial condition. Based upon the information currently available to it,
DLJ's management cannot predict whether or not such litigations will have a
material adverse effect on DLJ's results of operations in any particular
period.
Other Matters
In addition to the matters described above, the Holding Company and its
subsidiaries are involved in various legal actions and proceedings in
connection with their businesses. Some of the actions and proceedings have
been brought on behalf of various alleged classes of claimants and certain
of these claimants seek damages of unspecified amounts. While the ultimate
outcome of such matters cannot be predicted with certainty, in the opinion
of management no such matter is likely to have a material adverse effect on
the Company's consolidated financial position or results of operations.
16) LEASES
The Company has entered into operating leases for office space and certain
other assets, principally information technology equipment and office
furniture and equipment. Future minimum payments under noncancelable leases
for 2000 and the four successive years are $111.2 million, $93.3 million,
$78.3 million, $71.9 million, $66.5 million and $523.7 million thereafter.
Minimum future sublease rental income on these noncancelable leases for
2000 and the four successive years is $5.2 million, $4.1 million, $2.8
million, $2.8 million, $2.8 million and $23.8 million thereafter.
At December 31, 1999, the minimum future rental income on noncancelable
operating leases for wholly owned investments in real estate for 2000 and
the four successive years is $120.7 million, $113.5 million, $96.0 million,
$79.7 million, $74.1 million and $354.6 million thereafter.
17) OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C>
Compensation costs................................. $ 1,010.6 $ 772.0 $ 721.5
Commissions........................................ 549.5 478.1 409.6
Short-term debt interest expense................... 16.7 26.1 31.7
Long-term debt interest expense.................... 76.3 84.6 121.2
Amortization of policy acquisition costs........... 314.5 292.7 287.3
Capitalization of policy acquisition costs......... (709.9) (609.1) (508.0)
Writedown of policy acquisition costs.............. 131.7 - -
Rent expense, net of sublease income............... 113.9 100.0 101.8
Cursitor intangible assets writedown............... - - 120.9
Other.............................................. 1,294.0 1,056.8 917.9
------------- ------------ ------------
Total.............................................. $ 2,797.3 $ 2,201.2 $ 2,203.9
================= ================ =================
</TABLE>
F-34
<PAGE>
During 1997, the Company restructured certain operations in connection with
cost reduction programs and recorded a pre-tax provision of $42.4 million.
The amount paid during 1999 associated with cost reduction programs totaled
$15.6 million. At December 31, 1999, the remaining liabilities associated
with cost reduction programs was $8.8 million. The 1997 cost reduction
program included costs related to employee termination and exit costs.
18) INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
Equitable Life is restricted as to the amounts it may pay as shareholder
dividends. 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 1999, 1998 and 1997, statutory net income (loss) totaled
$547.0 million, $384.4 million and ($351.7) million, respectively.
Statutory surplus, capital stock and Asset Valuation Reserve ("AVR")
totaled $5,570.6 million and $4,728.0 million at December 31, 1999 and
1998, respectively. In September 1999, $150.0 million in dividends were
paid to the Holding Company by Equitable Life, the first such payment since
Equitable Life's demutualization in 1992.
At December 31, 1999, the Insurance Group, in accordance with various
government and state regulations, had $26.8 million of securities deposited
with such government or state agencies.
The differences between statutory surplus and capital stock determined in
accordance with Statutory Accounting Principles ("SAP") and total
shareholder's equity under GAAP are primarily: (a) the inclusion in SAP of
an AVR intended to stabilize surplus from fluctuations in the value of the
investment portfolio; (b) future policy benefits and policyholders' account
balances under SAP differ from GAAP due to differences between actuarial
assumptions and reserving methodologies; (c) certain policy acquisition
costs are expensed under SAP but deferred under GAAP and amortized over
future periods to achieve a matching of revenues and expenses; (d) external
and certain internal costs incurred to obtain or develop internal use
computer software during the application development stage is capitalized
under GAAP but expensed under SAP; (e) Federal income taxes are generally
accrued under SAP based upon revenues and expenses in the Federal income
tax return while under GAAP deferred taxes provide for timing differences
between recognition of revenues and expenses for financial reporting and
income tax purposes; (f) the valuation of assets under SAP and GAAP differ
due to different investment valuation and depreciation methodologies, as
well as the deferral of interest-related realized capital gains and losses
on fixed income investments; and (g) differences in the accrual
methodologies for post-employment and retirement benefit plans.
F-35
<PAGE>
19) BUSINESS SEGMENT INFORMATION
The Company's operations consist of Insurance and Investment Services. The
Company's management evaluates the performance of each of these segments
independently and allocates resources based on current and future
requirements of each segment. Management evaluates the performance of each
segment based upon operating results adjusted to exclude the effect of
unusual or non-recurring events and transactions and certain revenue and
expense categories not related to the base operations of the particular
business net of minority interest. Information for all periods is presented
on a comparable basis.
Intersegment investment advisory and other fees of approximately $75.6
million, $61.8 million and $84.1 million for 1999, 1998 and 1997,
respectively, are included in total revenues of the Investment Services
segment. These fees, excluding amounts related to discontinued operations
of $.5 million, $.5 million and $4.2 million for 1999, 1998 and 1997,
respectively, are eliminated in consolidation.
The following tables reconcile each segment's revenues and operating
earnings to total revenues and earnings from continuing operations before
Federal income taxes and cumulative effect of accounting change as reported
on the consolidated statements of earnings and the segments' assets to
total assets on the consolidated balance sheets, respectively.
<TABLE>
<CAPTION>
INVESTMENT
INSURANCE SERVICES ELIMINATION TOTAL
------------- ------------ ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1999
----
Segment revenues..................... $ 4,283.0 $ 2,052.7 $ (23.8) $ 6,311.9
Investment (losses) gains............ (199.4) 111.5 - (87.9)
------------- ------------ ------------ ------------
Total Revenues....................... $ 4,083.6 $ 2,164.2 $ (23.8) $ 6,224.0
============= ============ ============ ============
Pre-tax operating earnings........... $ 895.7 $ 427.0 $ - $ 1,322.7
Investment (losses) gains , net of
DAC and other charges.............. (208.4) 110.5 - (97.9)
Non-recurring DAC adjustments........ (131.7) - - (131.7)
Pre-tax minority interest............ - 216.8 - 216.8
------------- ------------ ------------ ------------
Earnings from Continuing
Operations......................... $ 555.6 $ 754.3 $ - $ 1,309.9
============= ============ ============ ============
Total Assets......................... $ 86,842.7 $ 12,961.7 $ (8.9) $ 99,795.5
============= ============ ============ ============
1998
----
Segment revenues..................... $ 4,029.8 $ 1,438.4 $ (5.7) $ 5,462.5
Investment gains..................... 64.8 35.4 - 100.2
------------- ------------ ------------ ------------
Total Revenues....................... $ 4,094.6 $ 1,473.8 $ (5.7) $ 5,562.7
============= ============ ============ ============
Pre-tax operating earnings........... $ 688.6 $ 284.3 $ - $ 972.9
Investment gains, net of
DAC and other charges.............. 41.7 27.7 - 69.4
Pre-tax minority interest............ - 141.5 - 141.5
------------- ------------ ------------ ------------
Earnings from Continuing
Operations......................... 730.3 453.5 - 1,183.8
============= ============ ============ ============
Total Assets......................... $ 75,626.0 $ 12,379.2 $ (64.4) $ 87,940.8
============= ============ ============ ============
</TABLE>
F-36
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT
INSURANCE SERVICES ELIMINATION TOTAL
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
1997
----
Segment revenues..................... $ 3,990.8 $ 1,200.0 $ (7.7) $ 5,183.1
Investment (losses) gains............ (318.8) 255.1 - (63.7)
------------- ------------ ------------ ------------
Total Revenues....................... $ 3,672.0 $ 1,455.1 $ (7.7) $ 5,119.4
============= ============ ============ ============
Pre-tax operating earnings........... $ 507.0 $ 258.3 $ - $ 765.3
Investment (losses) gains, net of
DAC and other charges.............. (292.5) 252.7 - (39.8)
Non-recurring costs and expenses..... (41.7) (121.6) - (163.3)
Pre-tax minority interest............ - 108.5 - 108.5
------------- ------------ ------------ ------------
Earnings from Continuing
Operations......................... $ 172.8 $ 497.9 $ - $ 670.7
============= ============ ============ ============
Total Assets......................... $ 67,762.4 $ 13,691.4 $ (96.1) $ 81,357.7
============= ============ ============ ============
</TABLE>
20) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations for 1999 and 1998 are summarized below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
------------- ------------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1999
----
Total Revenues................ $ 1,484.3 $ 1,620.3 $ 1,512.1 $ 1,607.3
============= ============= ============ ============
Earnings from Continuing
Operations.................. $ 187.3 $ 222.6 $ 186.5 $ 182.1
============= ============= ============ ============
Net Earnings.................. $ 182.0 $ 221.3 $ 183.1 $ 220.2
============= ============= ============ ============
1998
----
Total Revenues................ $ 1,470.2 $ 1,422.9 $ 1,297.6 $ 1,372.0
============= ============= ============ ============
Earnings from Continuing
Operations.................. $ 212.8 $ 197.0 $ 136.8 $ 158.9
============= ============= ============ ============
Net Earnings.................. $ 213.3 $ 198.3 $ 137.5 $ 159.1
============= ============= ============ ============
</TABLE>
F-37
<PAGE>
21) INVESTMENT IN DLJ
At December 31, 1999, the Company's ownership of DLJ interest was
approximately 31.71%. The Company's ownership interest in DLJ will continue
to be reduced upon the exercise of options granted to certain DLJ employees
and the vesting of forfeitable restricted stock units acquired by DLJ
employees. DLJ restricted stock units represent forfeitable rights to
receive approximately 5.2 million shares of DLJ common stock through
February 2000.
The results of operations of DLJ are accounted for on the equity basis and
are included in commissions, fees and other income in the consolidated
statements of earnings. The Company's carrying value of DLJ is included in
investment in and loans to affiliates in the consolidated balance sheets.
Summarized balance sheets information for DLJ, reconciled to the Company's
carrying value of DLJ, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1999 1998
------------ ------------
(IN MILLIONS)
<S> <C> <C>
Assets:
Trading account securities, at market value............................ $ 27,982.4 $ 13,195.1
Securities purchased under resale agreements........................... 29,538.1 20,063.3
Broker-dealer related receivables...................................... 44,998.1 34,264.5
Other assets........................................................... 6,493.5 4,759.3
------------ ------------
Total Assets........................................................... $ 109,012.1 $ 72,282.2
============ ============
Liabilities:
Securities sold under repurchase agreements............................ $ 56,474.4 $ 35,775.6
Broker-dealer related payables......................................... 37,207.4 26,161.5
Short-term and long-term debt.......................................... 6,518.6 3,997.6
Other liabilities...................................................... 4,704.5 3,219.8
------------ ------------
Total liabilities...................................................... 104,904.9 69,154.5
DLJ's company-obligated mandatorily redeemed preferred
securities of subsidiary trust holding solely debentures of DLJ...... 200.0 200.0
Total shareholders' equity............................................. 3,907.2 2,927.7
------------ ------------
Total Liabilities, Cumulative Exchangeable Preferred Stock and
Shareholders' Equity................................................. $ 109,012.1 $ 72,282.2
============ ============
DLJ's equity as reported............................................... $ 3,907.2 $ 2,927.7
Unamortized cost in excess of net assets acquired in 1985
and other adjustments................................................ 22.9 23.7
The Holding Company's equity ownership in DLJ.......................... (1,341.4) (1,002.4)
Minority interest in DLJ............................................... (1,479.3) (1,118.2)
------------ ------------
The Company's Carrying Value of DLJ.................................... $ 1,109.4 $ 830.8
============ ============
</TABLE>
F-38
<PAGE>
Summarized statements of earnings information for DLJ reconciled to the
Company's equity in earnings of DLJ is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ -------------
(IN MILLIONS)
<S> <C> <C> <C>
Commission, fees and other income..................... $ 4,145.1 $ 3,150.5 $ 2,430.7
Net investment income................................. 2,175.3 2,189.1 1,652.1
Principal Transactions, net........................... 825.9 67.4 557.7
------------ ------------ -------------
Total revenues........................................ 7,146.3 5,407.0 4,640.5
Total expenses including income taxes................. 6,545.6 5,036.2 4,232.2
------------ ------------ -------------
Net earnings.......................................... 600.7 370.8 408.3
Dividends on preferred stock.......................... 21.2 21.3 12.2
------------ ------------ -------------
Earnings Applicable to Common Shares.................. $ 579.5 $ 349.5 $ 396.1
============ ============ =============
DLJ's earnings applicable to common shares as
reported............................................ $ 579.5 $ 349.5 $ 396.1
Amortization of cost in excess of net assets
acquired in 1985.................................... (.9) (.8) (1.3)
The Holding Company's equity in DLJ's earnings........ (222.7) (136.8) (156.8)
Minority interest in DLJ.............................. (172.9) (99.5) (109.1)
------------ ------------ -------------
The Company's Equity in DLJ's Earnings................ $ 183.0 $ 112.4 $ 128.9
============ ============ =============
</TABLE>
22) ACCOUNTING FOR STOCK-BASED COMPENSATION
The Holding Company sponsors a stock incentive 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 1999,
1998 and 1997 would have been $757.1 million, $678.4 million and $426.3
million, respectively.
The fair values of options granted after December 31, 1994, used as a basis
for the pro forma disclosures above, were estimated as of the grant dates
using the Black-Scholes option pricing model. The option pricing
assumptions for 1999, 1998 and 1997 follow:
<TABLE>
<CAPTION>
HOLDING COMPANY DLJ ALLIANCE
------------------------------ ------------------------------- ----------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
--------- ---------- --------- ---------- --------- ---------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividend yield...... 0.31% 0.32% 0.48% 0.56% 0.69% 0.86% 8.70% 6.50% 8.00%
Expected volatility. 28% 28% 20% 36% 40% 33% 29% 29% 26%
Risk-free interest
rate.............. 5.46% 5.48% 5.99% 5.06% 5.53% 5.96% 5.70% 4.40% 5.70%
Expected life
in years.......... 5 5 5 5 5 5 7 7.2 7.2
Weighted average
fair value per
option at
grant-date........ $10.78 $11.32 $6.13 $17.19 $16.27 $10.81 $3.88 $3.86 $2.18
</TABLE>
F-39
<PAGE>
A summary of the Holding Company, DLJ and Alliance's option plans follows:
<TABLE>
<CAPTION>
HOLDING COMPANY DLJ ALLIANCE
----------------------------- ----------------------------- -----------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Price of Price of Price of
Shares Options Shares Options Units Options
(In Millions) Outstanding (In Millions) Outstanding (In Millions) Outstanding
--------------- ------------- --------------- ------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of
January 1, 1997........ 13.4 $10.40 22.2 $14.03 10.0 $ 9.54
Granted................ 6.4 $20.93 6.4 $30.54 2.2 $18.28
Exercised.............. (3.2) $10.13 (.2) $16.01 (1.2) $ 8.06
Forfeited.............. (.8) $11.72 (.2) $13.79 (.4) $10.64
--------------- ------------- ---------------
Balance as of
December 31, 1997...... 15.8 $14.53 28.2 $17.78 10.6 $11.41
Granted................ 8.6 $33.13 1.5 $38.59 2.8 $26.28
Exercised.............. (2.2) $10.59 (1.4) $14.91 (.9) $ 8.91
Forfeited.............. (.8) $23.51 (.1) $17.31 (.2) $13.14
--------------- ------------- ---------------
Balance as of
December 31, 1998...... 21.4 $22.00 28.2 $19.04 12.3 $14.92
Granted................ 4.3 $31.70 4.8 $45.23 2.0 $30.18
Exercised.............. (2.4) $13.26 (2.2) $34.61 (1.5) $ 9.51
Forfeited.............. (.6) $24.29 (.1) $15.85 (.3) $17.79
--------------- ------------- ---------------
Balance as of
December 31, 1999...... 22.7 $24.60 30.7 $23.30 12.5 $17.95
=============== ============= ===============
</TABLE>
F-40
<PAGE>
Information about options outstanding and exercisable at December 31, 1999
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> <C>
$ 9.06 -$13.88 5.6 4.2 $10.50 10.9 $18.98
$14.25 -$22.63 5.2 7.7 $20.95 - -
$25.32 -$34.59 8.2 8.7 $29.08 - -
$40.97 -$41.28 3.7 8.6 $41.28 - -
----------------- ------------------
$ 9.06 -$41.28 22.7 7.3 $24.60 10.9 $18.98
================= ================ =============== ================== ================
DLJ
--------------------
$13.50 -$25.99 20.2 8.4 $14.61 20.6 $16.62
$26.00 -$38.99 4.9 7.8 $33.99 - -
$39.00 -$52.875 4.8 9.0 $43.28 - -
$53.00 -$76.875 .8 9.7 $57.09 - -
----------------- ------------------
$13.50 -$76.875 30.7 8.4 $23.30 20.6 $16.62
================= ================ =============== ================== ================
Alliance
--------------------
$ 3.66 -$ 9.81 2.6 3.8 $ 8.31 2.2 $ 8.12
$ 9.88 -$12.56 3.3 5.6 $11.16 2.6 $10.92
$13.75 -$18.47 1.8 7.9 $18.34 .7 $18.34
$18.78 -$26.31 2.8 8.9 $26.16 .6 $26.06
$27.31 -$30.94 2.0 9.9 $30.24 - -
----------------- ------------------
$ 3.66 -$30.94 12.5 7.0 $17.95 6.1 $12.12
================= ================ =============== ================== ================
</TABLE>
F-41
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------------- -----------------
(In Millions)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value............................. $ 18,385.0 $ 18,599.7
Held to maturity, at amortized cost..................................... 135.4 133.2
Mortgage loans on real estate............................................. 3,196.8 3,270.0
Equity real estate........................................................ 1,149.4 1,160.2
Policy loans.............................................................. 2,302.4 2,257.3
Other equity investments.................................................. 738.5 671.2
Investment in and loans to affiliates..................................... 1,274.3 1,201.8
Other invested assets..................................................... 983.1 911.6
----------------- -----------------
Total investments..................................................... 28,164.9 28,205.0
Cash and cash equivalents................................................... 187.3 628.0
Deferred policy acquisition costs........................................... 4,147.7 4,033.0
Other assets................................................................ 4,109.3 3,868.3
Closed Block assets......................................................... 8,629.3 8,607.3
Separate Accounts assets.................................................... 57,446.8 54,453.9
----------------- -----------------
Total Assets................................................................ $ 102,685.3 $ 99,795.5
================= =================
LIABILITIES
Policyholders' account balances............................................. $ 20,674.2 $ 21,351.4
Future policy benefits and other policyholders liabilities... .............. 4,840.4 4,777.6
Short-term and long-term debt............................................... 1,383.5 1,407.9
Other liabilities........................................................... 3,436.4 3,133.6
Closed Block liabilities.................................................... 9,036.1 9,025.0
Separate Accounts liabilities............................................... 57,319.8 54,332.5
----------------- -----------------
Total liabilities..................................................... 96,690.4 94,028.0
----------------- -----------------
Commitments and contingencies (Note 8)
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.............................................. 3,558.7 3,557.2
Retained earnings........................................................... 2,822.4 2,600.7
Accumulated other comprehensive loss........................................ (388.7) (392.9)
----------------- -----------------
Total shareholder's equity............................................ 5,994.9 5,767.5
----------------- -----------------
Total Liabilities and Shareholder's Equity.................................. $ 102,685.3 $ 99,795.5
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-42
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
----------------- -----------------
(In Millions)
<S> <C> <C>
REVENUES
Universal life and investment-type product policy fee income................ $ 340.4 $ 296.7
Premiums.................................................................... 133.0 134.9
Net investment income....................................................... 606.2 568.5
Investment losses, net...................................................... (124.1) (19.3)
Commissions, fees and other income.......................................... 650.3 489.3
Contribution from the Closed Block.......................................... 16.7 18.9
----------------- -----------------
Total revenues........................................................ 1,622.5 1,489.0
----------------- -----------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances........................ 262.1 270.2
Policyholders' benefits..................................................... 282.0 240.8
Other operating costs and expenses.......................................... 686.4 648.2
----------------- -----------------
Total benefits and other deductions................................... 1,230.5 1,159.2
----------------- -----------------
Earnings from continuing operations before Federal income taxes
and minority interest..................................................... 392.0 329.8
Federal income taxes........................................................ 91.2 100.4
Minority interest in net income of consolidated subsidiaries................ 74.2 42.1
----------------- -----------------
Earnings from continuing operations......................................... 226.6 187.3
Discontinued operations, net of Federal income taxes........................ (4.9) (5.3)
----------------- -----------------
Net Earnings................................................................ $ 221.7 $ 182.0
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-43
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
AND COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
----------------- -----------------
(In Millions)
<S> <C> <C>
SHAREHOLDER'S EQUITY
Common stock, at par value, beginning of year and end of period............. $ 2.5 $ 2.5
----------------- -----------------
Capital in excess of par value, beginning of year........................... 3,557.2 3,110.2
Capital contribution........................................................ 1.5 -
----------------- -----------------
Capital in excess of par value, end of period............................... 3,558.7 3,110.2
----------------- -----------------
Retained earnings, beginning of year........................................ 2,600.7 1,944.1
Net earnings................................................................ 221.7 182.0
----------------- -----------------
Retained earnings, end of period............................................ 2,822.4 2,126.1
----------------- -----------------
Accumulated other comprehensive (loss) income, beginning of year............ (392.9) 355.8
Other comprehensive income (loss)........................................... 4.2 (243.0)
----------------- -----------------
Accumulated other comprehensive (loss) income, end of period................ (388.7) 112.8
----------------- -----------------
Total Shareholder's Equity, End of Period................................... 5,994.9 $ 5,351.6
================= =================
COMPREHENSIVE INCOME (LOSS)
Net earnings................................................................ $ 221.7 $ 182.0
----------------- -----------------
Change in unrealized gains (losses), net of reclassification adjustment..... 4.2 (243.0)
----------------- -----------------
Other comprehensive income (loss)........................................... 4.2 (243.0)
----------------- -----------------
Comprehensive Income (Loss)................................................. $ 225.9 $ (61.0)
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-44
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
----------------- -----------------
(In Millions)
<S> <C> <C>
Net earnings................................................................ $ 221.7 $ 182.0
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Interest credited to policyholders' account balances.................... 262.1 270.2
Universal life and investment-type product policy fee income............ (340.4) (296.7)
Investment losses, net.................................................. 124.1 19.3
Change in Federal income tax payable.................................... 98.9 101.6
Change in property and equipment........................................ (52.9) (35.6)
Change in deferred policy acquisition costs............................. (113.3) (46.4)
Other, net.............................................................. (50.2) (69.8)
----------------- -----------------
Net cash provided by operating activities................................... 150.0 124.6
----------------- -----------------
Cash flows from investing activities:
Maturities and repayments................................................. 456.9 541.0
Sales..................................................................... 1,181.0 1,719.2
Purchases................................................................. (1,491.4) (3,118.6)
Other, net................................................................ (69.5) (138.7)
----------------- -----------------
Net cash provided (used) by investing activities............................ 77.0 (997.1)
----------------- -----------------
Cash flows from financing activities:
Policyholders' account balances:
Deposits................................................................ 632.6 616.1
Withdrawals and transfers to Separate Accounts.......................... (1,256.9) (453.9)
Net (decrease) increase in short-term financings.......................... (11.1) 357.0
Repayments of long-term debt.............................................. - (5.8)
Other, net................................................................ (32.3) (29.5)
----------------- -----------------
Net cash (used) provided by financing activities............................ (667.7) 483.9
----------------- -----------------
Change in cash and cash equivalents......................................... (440.7) (388.6)
Cash and cash equivalents, beginning of year................................ 628.0 1,245.5
----------------- -----------------
Cash and Cash Equivalents, End of Period.................................... $ 187.3 $ 856.9
================= =================
Supplemental cash flow information
Interest Paid............................................................. $ 12.2 $ 6.9
================= =================
Income Taxes Paid......................................................... $ - $ -
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-45
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1) BASIS OF PRESENTATION
The accompanying consolidated financial statements are prepared in
conformity with GAAP which 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. These statements should be read in
conjunction with the consolidated financial statements of the Company for
the year ended December 31, 1999. The results of operations for the three
months ended March 31, 2000 are not necessarily indicative of the results
to be expected for the full year.
The terms "first quarter 2000" and "first quarter 1999" refer to the three
months ended March 31, 2000 and 1999, respectively.
Certain reclassifications have been made in the amounts presented for
prior periods to conform these periods with the current presentation.
2) INVESTMENTS
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
2000 1999
--------------- ---------------
(In Millions)
<S> <C> <C>
Balances, beginning of year............................................... $ 148.6 $ 230.6
Additions charged to income............................................... 8.4 9.1
Deductions for writedowns and asset dispositions.......................... (2.1) (26.0)
--------------- ---------------
Balances, End of Period................................................... $ 154.9 $ 213.7
=============== ===============
Balances, end of period:
Mortgage loans on real estate........................................... $ 29.1 $ 34.1
Equity real estate...................................................... 125.8 179.6
--------------- ---------------
Total..................................................................... $ 154.9 $ 213.7
=============== ===============
</TABLE>
For the first quarters of 2000 and 1999, investment income is shown net of
investment expenses of $56.7 million and $60.2 million, respectively.
As of March 31, 2000 and December 31, 1999, fixed maturities classified as
available for sale had amortized costs of $19,152.2 million and $19,373.6
million and fixed maturities in the held to maturity portfolio had
estimated fair values of $135.4 million and $133.2 million, respectively.
Other equity investments include equity securities with carrying values of
$27.5 million and $23.3 million and costs of $29.7 million and $32.7
million as of March 31, 2000 and December 31, 1999, respectively.
F-46
<PAGE>
On January 1, 1999, investments in publicly-traded common equity
securities in the General Account portfolio within other equity
investments amounting to $102.3 million were transferred from available
for sale securities to trading securities. As a result of this transfer,
unrealized investment gains of $83.3 million ($43.2 million net of related
DAC and Federal income taxes) were recognized as realized investment gains
in the consolidated statement of earnings. In first quarter 2000 and 1999,
net unrealized holding gains of $3.9 million and $71.4 million were
included in net investment income in the consolidated statements of
earnings. These trading securities had a carrying value of $13.5 million
and costs of $11.1 million at March 31, 2000.
For the first quarters of 2000 and 1999, proceeds received on sales of
fixed maturities classified as available for sale amounted to $1,125.2
million and $1,592.6 million, respectively. Gross gains of $24.5 million
and $17.3 million and gross losses of $87.9 million and $56.7 million were
realized on these sales for the first quarters of 2000 and 1999,
respectively. Unrealized investment gains (losses) related to fixed
maturities classified as available for sale increased by $6.4 million
during the first three months of 2000, resulting in a balance of $(767.5)
million at March 31, 2000.
Impaired mortgage loans along with the related provision for losses were
as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses....................... $ 141.7 $ 142.4
Impaired mortgage loans without provision for losses.................... 1.9 2.2
--------------- -----------------
Recorded investment in impaired mortgage loans.......................... 143.6 144.6
Provision for losses.................................................... (24.7) (23.0)
--------------- -----------------
Net Impaired Mortgage Loans............................................. $ 118.9 $ 121.6
=============== =================
</TABLE>
During the first quarters of 2000 and 1999, respectively, the Company's
average recorded investment in impaired mortgage loans was $144.1 million
and $133.8 million. Interest income recognized on these impaired mortgage
loans totaled $2.9 million and $1.9 million for the first quarters of 2000
and 1999, respectively.
F-47
<PAGE>
3) CLOSED BLOCK
Summarized financial information for the Closed Block follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------------- -----------------
(In Millions)
<S> <C> <C>
BALANCE SHEETS
Fixed maturities:
Available for sale, at estimated fair value (amortized cost of
$4,150.7 and $4,144.8)............................................. $ 4,027.9 $ 4,014.0
Mortgage loans on real estate.......................................... 1,672.9 1,704.2
Policy loans........................................................... 1,588.2 1,593.9
Cash and other invested assets......................................... 237.9 194.4
DAC.................................................................... 877.7 895.5
Other assets........................................................... 224.7 205.3
----------------- -----------------
Total Assets........................................................... $ 8,629.3 $ 8,607.3
================= =================
Future policy benefits and other policyholders' account balances....... $ 9,006.9 $ 9,011.7
Other liabilities...................................................... 29.2 13.3
----------------- -----------------
Total Liabilities...................................................... $ 9,036.1 $ 9,025.0
================= =================
Three Months Ended
March 31,
-----------------------------------
2000 1999
---------------- ---------------
(In Millions)
STATEMENTS OF EARNINGS
Premiums and other income................................................. $ 153.0 $ 156.0
Investment income (net of investment expenses of $3.4 and $5.2)........... 143.0 142.0
Investment losses, net.................................................... (3.0) (1.9)
--------------- ---------------
Total revenues.......................................................... 293.0 296.1
--------------- ---------------
Policyholders' benefits and dividends..................................... 260.7 266.4
Other operating costs and expenses........................................ 15.6 10.8
--------------- ---------------
Total benefits and other deductions..................................... 276.3 277.2
--------------- ---------------
Contribution from the Closed Block........................................ $ 16.7 $ 18.9
=============== ===============
</TABLE>
Investment valuation allowances amounted to $5.2 million and $4.6 million
on mortgage loans and $26.2 million and $24.7 million on equity real
estate at March 31, 2000 and December 31, 1999, respectively.
F-48
<PAGE>
Impaired mortgage loans along with the related provision for losses were
as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------------- -------------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 27.0 $ 26.8
Impaired mortgage loans without provision for losses................... 4.2 4.5
----------------- -------------------
Recorded investment in impaired mortgages.............................. 31.2 31.3
Provision for losses................................................... (4.7) (4.1)
----------------- -------------------
Net Impaired Mortgage Loans............................................ $ 26.5 $ 27.2
================= ===================
During the first quarters of 2000 and 1999, respectively, the Closed
Block's average recorded investment in impaired mortgage loans was $31.3
million and $49.8 million.
4) DISCONTINUED OPERATIONS
Summarized financial information for discontinued operations follows:
March 31, December 31,
2000 1999
----------------- -------------------
(In Millions)
BALANCE SHEETS
Mortgage loans on real estate.......................................... $ 444.7 $ 454.6
Equity real estate..................................................... 419.9 426.6
Other equity investments............................................... 54.5 55.8
Other invested assets.................................................. 188.2 87.1
----------------- -------------------
Total investments.................................................... 1,107.3 1,024.1
Cash and cash equivalents.............................................. 50.2 164.5
Other assets........................................................... 209.7 213.0
----------------- -------------------
Total Assets........................................................... $ 1,367.2 $ 1,401.6
================= ===================
Policyholders' liabilities............................................. $ 987.2 $ 993.3
Allowance for future losses............................................ 252.9 242.2
Other liabilities...................................................... 127.1 166.1
----------------- -------------------
Total Liabilities...................................................... $ 1,367.2 $ 1,401.6
================= ===================
</TABLE>
F-49
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------------
2000 1999
----------------- -----------------
(In Millions)
<S> <C> <C>
STATEMENTS OF EARNINGS
Investment income (net of investment expenses of $10.4 and $13.1)......... $ 29.0 $ 19.6
Investment losses, net.................................................... (2.3) (7.0)
Policy fees, premiums and other income.................................... - -
----------------- -----------------
Total revenues............................................................ 26.7 12.6
Benefits and other deductions............................................. 26.7 25.4
Losses charged to allowance for future losses............................. - (12.8)
----------------- -----------------
Pre-tax results from operations........................................... - -
Pre-tax loss from strengthening the allowance for future losses........... (7.6) (8.2)
Federal income tax benefit................................................ 2.7 2.9
----------------- -----------------
Loss from Discontinued Operations......................................... $ (4.9) $ (5.3)
================= =================
</TABLE>
The Company's quarterly process for evaluating the allowance for future
losses applies the current period's results of discontinued operations
against the allowance, re-estimates future losses, and adjusts the
allowance, if appropriate. The evaluations performed in the first quarters
of 2000 and 1999 resulted in management's decision to strengthen the
allowance by $7.6 million for the first quarter of 2000 and by $8.2
million for the first quarter of 1999. This resulted in after-tax losses
of $4.9 million for first quarter 2000 and after-tax losses of $5.3
million for first quarter 1999.
Management believes the allowance for future losses at March 31, 2000 is
adequate to provide for all future losses; however, the determination of
the allowance involves 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 discontinued operations differ from management's
current 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 loss
allowance are likely to result.
Investment valuation allowances amounted to $1.7 million and $1.9 million
on mortgage loans and $54.5 million and $54.8 million on equity real
estate at March 31, 2000 and December 31, 1999, respectively.
5) FEDERAL INCOME TAXES
Federal income taxes for interim periods have been computed using an
estimated annual effective tax rate. This rate is revised, if necessary,
at the end of each successive interim period to reflect the current
estimate of the annual effective tax rate.
6) RESTRUCTURING COSTS
At March 31, 2000, the restructuring liabilities included costs related to
employee termination and exit costs, the termination of operating leases
and the consolidation of insurance operations' service centers and
amounted to $7.7 million. The amounts paid during first quarter 2000
totaled $2.5 million.
F-50
<PAGE>
7) RELATED PARTIES TRANSACTIONS
Effective January 1, 2000, the Company reimburses the Holding Company for
expenses relating to the Excess Retirement Plan, Supplemental Executive
Retirement Plan and certain other employee benefit plans that provide
participants with medical, life insurance, and deferred compensation
benefits. Such reimbursement is made on the basis of the cost to the
Holding Company of the benefits provided which totaled $3.8 million for
first quarter 2000. The Company paid $181.2 million of commission fees to
AXA Distribution and its subsidiaries for first quarter 2000. Effective
January 1, 2000, the Company charged AXA Distribution's subsidiaries for
their applicable share of operating expenses pursuant to the Agreements
for Services. Such charges totaled $41.9 million for first quarter 2000.
8) LITIGATION
There have been no new material legal proceedings and no material
developments in specific litigations previously described in the Company's
Notes to Consolidated Financial Statements for the year ended December 31,
1999, except as follows:
Equitable Life is a defendant in a purported class action commenced in
March 2000 on behalf of persons who purchased variable annuities from
Equitable Life from January 1989 to the present. The complaint alleges
various improper sales practices including misrepresentations in
connection with the use of variable annuities in a qualified retirement
plan or similar arrangement, charging inflated or hidden fees, and failure
to disclose unnecessary tax deferral fees. The plaintiff seeks damages
including punitive damages. In May 2000, Equitable Life filed a motion to
dismiss the complaint. 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 this
litigation 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.
In September 1999, an action was brought on behalf of a purported class of
owners of limited partnership units of Alliance Holding challenging the
then-proposed reorganization of Alliance Holding. Named defendants include
Alliance Holding, Alliance, four Alliance Holding executives and the
general partner of Alliance Holding and Alliance. Equitable Life is
obligated to indemnify the defendants for losses and expenses arising out
of the litigation. Plaintiffs allege inadequate and misleading
disclosures, breaches of fiduciary duties, and the improper adoption of an
amended partnership agreement by Alliance Holding and seek payment of
unspecified money damages and an accounting of all benefits alleged to
have been improperly obtained by the defendants. 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.
In the Alliance North American Government Income Trust action, a
Stipulation and Agreement of Settlement has been signed with the lawyers
for the plaintiffs settling this action. Under the Stipulation and
Agreement of Settlement, the Operating Partnership will permit Fund
shareholders to invest up to $250 million in Alliance mutual funds free of
initial sales charges. The Stipulation and Agreement of Settlement is
subject to court approval.
In addition to the matters previously reported and those described above,
the Holding Company and its subsidiaries are involved in various legal
actions and proceedings in connection with their businesses. Some of the
actions and proceedings have been brought on behalf of various alleged
classes of claimants and certain of these claimants seek damages of
unspecified amounts. While the ultimate outcome of such matters cannot be
predicted with certainty, in the opinion of management no such matter is
likely to have a material adverse effect on the Company's consolidated
financial position or results of operations.
F-51
<PAGE>
9) BUSINESS SEGMENT INFORMATION
<TABLE>
<CAPTION>
Investment
Insurance Services Elimination Total
--------------- ----------------- --------------- -----------------
(In Millions)
<S> <C> <C> <C> <C>
Three Months Ended
March 31, 2000
---------------------------------------
Segment revenues..................... $ 1,151.3 $ 624.6 $ (29.3) $ 1,746.6
Investment (losses) gains............ (130.5) 6.4 - (124.1)
--------------- ----------------- --------------- -----------------
Total Revenues....................... $ 1,020.8 $ 631.0 $ (29.3) $ 1,622.5
=============== ================= =============== =================
Pre-tax operating earnings........... $ 270.7 $ 163.1 $ - $ 433.8
Investment (losses) gains , net of
related DAC and other charges...... (123.3) 6.1 - (117.2)
Pre-tax minority interest............ - 75.4 - 75.4
--------------- ----------------- --------------- -----------------
Pre-tax earnings from
Continuing Operations.............. $ 147.4 $ 244.6 $ - $ 392.0
=============== ================= =============== =================
Three Months Ended
March 31, 1999
---------------------------------------
Segment revenues..................... $ 1,047.3 $ 456.2 $ (1.4) $ 1,502.1
Investment (losses) gains............ (23.5) 10.4 - (13.1)
--------------- ----------------- --------------- -----------------
Total Revenues....................... $ 1,023.8 $ 466.6 $ (1.4) $ 1,489.0
=============== ================= =============== =================
Pre-tax operating earnings........... $ 221.2 $ 86.1 $ - $ 307.3
Investment (losses) gains, net of
related DAC and other charges...... (35.0) 10.2 - (24.8)
Pre-tax minority interest............ - 47.3 - 47.3
--------------- ----------------- --------------- -----------------
Pre-tax earnings from Continuing
Operations......................... $ 186.2 $ 143.6 $ - $ 329.8
=============== ================= =============== =================
Total Assets:
March 31, 2000....................... $ 89,592.5 $ 13,135.9 $ (43.1) $ 102,685.3
=============== ================= =============== =================
December 31, 1999.................... $ 86,842.7 $ 12,961.7 $ (8.9) $ 99,795.5
=============== ================= =============== =================
F-52
</TABLE>
<PAGE>
Appendix I: Our data on market performance
------
A-1 APPENDIX I: OUR DATA ON MARKET PERFORMANCE
--------------------------------------------------------------------------------
In reports or other communications to policyowners or in advertising material,
we may describe general economic and market conditions affecting our variable
investment options and the Portfolios and may compare the performance or
ranking of those options and the Portfolios with:
o those of other insurance company separate accounts or mutual funds included
in the rankings prepared by Lipper Analytical Services, Inc., Morningstar,
Inc. or similar investment services that monitor the performance of
insurance company separate accounts or mutual funds;
o other appropriate indices of investment securities and averages for peer
universes of mutual funds; or
o data developed by us derived from such indices or averages.
We also may furnish to present or prospective policyowners advertisements or
other communications that include evaluations of a variable investment option
or Portfolio by nationally recognized financial publications. Examples of such
publications are:
<TABLE>
----------------------------------------------------------------
<S> <C>
Barron's Investment Management Weekly
Morningstar's Variable Money Management Letter
Annuities/Life Investment Dealers Digest
Business Week National Underwriter
Forbes Pension & Investments
Fortune USA Today
Institutional Investor Investor's Daily
Money The New York Times
Kiplinger's Personal Finance The Wall Street Journal
Financial Planning The Los Angeles Times
Investment Adviser The Chicago Tribune
----------------------------------------------------------------
</TABLE>
Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer
universes of Portfolios with similar investment objectives in its Lipper
Variable Insurance Products Performance Analysis Service (Lipper Survey).
Morningstar, Inc. compiles similar data in the Morningstar Variable
Annuity/Life Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800
mutual funds underlying variable annuity and life insurance products. It
divides these actively managed portfolios into 25 categories by portfolio
objectives. The Lipper Survey contains two different universes, which reflect
different types of fees in performance data:
o The "Separate Account" universe reports performance data net of investment
management fees, direct operating expenses and asset-based charges
applicable under variable insurance and annuity contracts; and
o The "Mutual Fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects only
charges that relate to the underlying mutual fund.
The Morningstar Report consists of nearly 700 variable life and annuity
portfolios, all of which report their data net of investment management fees,
direct operating expenses and separate account level charges.
LONG-TERM MARKET TRENDS
The following chart presents historical return trends for various types of
securities. The information presented does not directly relate to the
performance of our variable investment options or the Trust. Nevertheless, it
may help you gain 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 Accumulator Life premium(s).
Historically, the investment performance of common stocks over the long term
has generally been superior to that of long- or short-term debt securities.
However, common stocks have also experienced dramatic changes in value over
short periods of time. One of our variable investment options that invests
primarily in common stocks may, therefore, be a desirable selection for owners
who are willing to accept such risks. If, on the other hand, you wish to limit
your short-term risk, you may find it preferable to allocate a smaller
percentage of net premiums to those options that invest primarily in common
stock. All investments in securities, whether equity or debt, involve varying
degrees of risk. They also offer varying degrees of potential reward.
<PAGE>
------
A-2 APPENDIX I: OUR DATA ON MARKET PERFORMANCE
--------------------------------------------------------------------------------
The chart below illustrates the average annual compound rates of return over
selected time periods between December 31, 1926 and December 31, 1999 for the
types of securities indicated in the chart. These rates of return assume the
reinvestment of dividends, capital gains and interest. The Consumer Price
Index is also shown as a measure of inflation for comparison purposes. The
investment return information presented is an historical record of unmanaged
categories of securities. In addition, the rates of return shown do not
reflect either (1) investment management fees and expenses, or (2) costs and
charges associated with ownership of a variable life insurance policy.
The rates of return illustrated do not represent returns of our variable
investment options or the Portfolios and do not constitute a representation
that the performance of those options or the Portfolios will correspond to
rates of return such as those illustrated in the chart.
AVERAGE ANNUAL RATES OF RETURN
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
LONG-TERM LONG-TERM INTERMEDIATE-
FOR THE FOLLOWING PERIODS ENDING COMMON GOVERNMENT CORPORATE TERM GOV'T U.S. TREASURY CONSUMER
DECEMBER 31, 1999 STOCKS BONDS BONDS BONDS BILLS PRICE INDEX
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Year 21.04% (8.96)% (7.45)% (1.77)% 4.68% 2.81%
3 Years 27.56% 6.04% 5.01% 5.47% 4.93% 2.04%
5 years 28.55% 9.24% 8.35% 6.95% 5.12% 2.39%
10 years 18.20% 8.79% 8.36% 7.20% 4.92% 2.94%
20 years 17.87% 10.69% 10.66% 9.53% 6.89% 4.01%
30 years 13.72% 8.94% 9.17% 8.68% 6.69% 5.12%
40 years 12.22% 7.01% 7.24% 7.35% 5.98% 4.46%
50 years 13.61% 5.56% 5.97% 6.12% 5.15% 4.01%
60 years 12.86% 5.17% 5.42% 5.39% 4.34% 4.24%
Since 1926 11.35% 5.12% 5.61% 5.22% 3.79% 3.07%
Inflation Adjusted Since 1926 8.03% 1.98% 2.46% 2.08% 0.69% 0.00%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: Ibbotson, Roger G. and Rex A. Sinquefield, STOCKS, BONDS, BILLS, AND
INFLATION (SBBI), 1982, updated in STOCKS, BONDS, BILLS, AND INFLATION 2000
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 1969-1999, 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
1969-1999; 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.
Consumer Price Index - Measured by the Consumer Price Index for all Urban
Consumers (CPI-U), not seasonally adjusted.
<PAGE>
Appendix II: An index of key words and phrases
------
B-1 APPENDIX II: AN INDEX OF KEY WORDS AND PHRASES
--------------------------------------------------------------------------------
This index should help you locate more information on the terms used in this
prospectus.
<TABLE>
<CAPTION>
PAGE
<S> <C>
account value 17
Accumulator Life cover
Administrative Office 5
age 30
Allocation Date 14
amount at risk 33
anniversary 30
assign; assignment 28
automatic transfer service 18
AXA Financial, Inc. 4
basis 24
beneficiary 15
business day 29
cash surrender value 22
Code 23
collateral 24
cost of insurance charge 33
cost of insurance rates 33
day 29
default 13
dollar cost averaging service 18
EQ Advisors Trust 14
Equitable Distributors 14
Equitable Life 4
Equitable Access Account 15
grace period 13
guaranteed minimum death benefit 14
insured person 13
Investment Funds 14
issue date 30
lapse 13
loan, loan interest 21
modified endowment contract 20
month, year 30
monthly deduction 7
net cash surrender value 22
our 2
owner 2
partial withdrawal 22
payment option 15
policy cover
Portfolio cover
premium payment 12
prospectus cover
rebalancing 19
receive 29
restore, restoration 13
SEC cover
Separate Account FP 31
state 2
subaccount 31
surrender 22
surrender charge 7
telephone transfer 18
transfers 18
Trust 14
units 17
unit values 17
us 2
variable investment option 14
we 2
you, your 2
</TABLE>
<PAGE>
