Registration No. 333-17663
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 8 TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
SEPARATE ACCOUNT FP
of
THE EQUITABLE LIFE ASSURANCE Edward D. Miller, President
SOCIETY OF THE UNITED STATES The Equitable Life Assurance Society of
(Exact Name of Trust) the United States
THE EQUITABLE LIFE ASSURANCE 1290 Avenue of the Americas
SOCIETY OF THE UNITED STATES New York, New York 10104
(Exact Name of Depositor) (Name and Address of Agent for Service)
1290 Avenue of the Americas
New York, New York 10104
(Address of Depositor's Principal
Executive Offices)
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Telephone Number, Including Area Code: (212) 554-1234
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Please send copies of all communications to:
BETH N. LOWSON, ESQ. with a copy to:
Counsel Thomas C. Lauerman, Esq.
The Equitable Life Assurance Freedman, Levy, Kroll & Simonds
Society of the United States 1050 Connecticut Avenue, N.W., Suite 825
1290 Avenue of the Americas Washington, D.C. 20036
New York, New York 10104
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Securities Being Registered: Units of Interest in Separate Account FP
It is proposed that this filing will become effective (check appropriate line):
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on (May 1, 2000) pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) of Rule 485
_____ on ( date ) pursuant to paragraph (a) of Rule 485
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NOTE
This Post-Effective Amendment No. 8 ("PEA") to the Form S-6 Registration
Statement No. 333-17663 ("Registration Statement") of The Equitable Life
Assurance Society of the United States ("Equitable Life") and its Separate
Account FP is being filed for the purpose of including in the Registration
Statement the Incentive Life Prospectuses, dated May 1, 2000, for use in the
retail, wholesale and Merrill Lynch/First Union wholesale distribution channels
and the Incentive Life Plus Prospectus, dated May 1, 2000, for use in the retail
distribution channel. The Prospectuses contain audited year-end Financial
Statements for Equitable Life and for its Separate Account FP, and other
updating information. The Amendment also contains the updating Separate Account
FP supplements and other supplements relating to Incentive Life and Incentive
Life Plus variable life insurance policies.
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INCENTIVE LIFE(SM)
A FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE POLICY
PROSPECTUS DATED MAY 1, 2000
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.
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This prospectus describes many aspects of an Incentive Life policy, but is not
itself a policy. The policy is the actual contract that determines your benefits
and obligations under Incentive 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 INCENTIVE LIFE?
Incentive Life is issued by Equitable Life. It provides life insurance coverage,
plus the opportunity for you to earn a return in our guaranteed interest option
and/or one or more of the following variable investment options:
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VARIABLE INVESTMENT OPTIONS
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FIXED INCOME
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o Alliance High Yield o Alliance Money Market
o Alliance Intermediate o Alliance Quality Bond
Government Securities
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DOMESTIC STOCKS
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o EQ/Aggressive Stock(1) o EQ/Evergreen
o Alliance Common Stock o MFS Emerging Growth
o Alliance Equity Index Companies
o Alliance Growth and Income o MFS Growth with Income
o EQ/Alliance Premier Growth o MFS Research
o Alliance Small Cap Growth o Mercury Basic Value Equity(3)
o EQ/Alliance Technology(2) o EQ/Putnam Growth & Income
o Capital Guardian Research Value
o Capital Guardian U.S. Equity o T. Rowe Price Equity Income
o Warburg Pincus Small Company
Value
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INTERNATIONAL STOCKS
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o Alliance Global o Morgan Stanley Emerging
o Alliance International Markets Equity
o T. Rowe Price International
Stock
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BALANCED/HYBRID
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o Alliance Conservative Investors o Mercury World Strategy(5)
o Alliance Growth Investors o EQ/Putnam Balanced
o EQ/Balanced(4)
o EQ/Evergreen Foundation
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(1) Formerly named "Alliance Aggressive Stock"
(2) Anticipated to become available on or about May 22, 2000. This option
may not be available in California.
(3) Formerly named "Merrill Lynch Basic Value Equity"
(4) Formerly named "Alliance Balanced"
(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.
OTHER CHOICES YOU HAVE. You have considerable flexibility to tailor the policy
to your needs. For example, subject to our rules, you can (1) choose when and
how much you contribute (as "premiums") to your policy, (2) pay certain premium
amounts to guarantee that your insurance coverage will continue for a number of
years, regardless of investment performance, (3) borrow or withdraw amounts you
have accumulated, (4) change the amount of insurance coverage, (5) choose
between two life insurance benefit options, (6) elect to receive an insurance
benefit if the insured person becomes terminally ill, and (7) add or delete
certain optional benefits that we offer by "riders" to your policy.
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 Incentive 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.
72041 R
<PAGE>
2 CONTENTS OF THIS PROSPECTUS
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Contents of This Prospectus
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INCENTIVE LIFE
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What is Incentive 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 can pay for and contribute to your policy 12
The minimum amount of premiums you must pay 12
You can guarantee that your policy will not terminate before a certain date 13
You can elect a "paid up" death benefit guarantee 14
Investment options within your policy 15
About your life insurance benefit 16
You can increase or decrease your insurance coverage 18
Other benefits you can add by rider 19
Your options for receiving policy proceeds 19
Your right to cancel within a certain number of days 20
Variations among Incentive Life policies 20
Other Equitable Life policies 20
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2 DETERMINING YOUR POLICY'S VALUE 21
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Your account value 21
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3 TRANSFERRING YOUR MONEY AMONG OUR INVESTMENT OPTIONS 22
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Transfers you can make 22
Telephone and EQAccess transfers 22
Our dollar cost averaging service 22
Our asset rebalancing service 23
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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 Incentive Life in all states. This prospectus does not offer
Incentive 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
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4 ACCESSING YOUR MONEY 24
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Borrowing from your policy 24
Making withdrawals from your policy 25
Surrendering your policy for its net cash surrender value 26
Your option to receive a living benefit 26
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5 TAX INFORMATION 27
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Basic tax treatment for you and your beneficiary 27
Tax treatment of distributions to you 27
Tax treatment of living benefit proceeds 29
Effect of policy on interest deductions taken by business entities 29
Requirement that we diversify investments 29
Estate, gift, and generation-skipping taxes 30
Pension and profit-sharing plans 30
Other employee benefit programs 30
ERISA 30
Our taxes 30
When we withhold taxes from distributions 31
Possibility of future tax changes 31
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6 MORE INFORMATION ABOUT PROCEDURES
THAT APPLY TO YOUR POLICY 32
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Ways to make premium and loan payments 32
Requirements for surrender requests 32
Ways we pay policy proceeds 32
Assigning your policy 32
Dates and prices at which policy events occur 32
Policy issuance 34
Gender-neutral policies 34
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7 MORE INFORMATION ABOUT OTHER MATTERS 36
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Your voting privileges 36
About our Separate Account FP 36
About our general account 37
You can change your policy's insured person 37
Transfers of your account value 37
Telephone and EQAccess requests 38
Deducting policy charges 38
Customer loyalty credit 39
Suicide and certain misstatements 40
When we pay policy proceeds 40
Changes we can make 40
Reports we will send you 41
Legal proceedings 41
Illustrations of policy benefits 41
SEC registration statement 41
How we market the policies 41
Insurance regulation that applies to Equitable Life 42
Directors and principal officers 43
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8 FINANCIAL STATEMENTS OF SEPARATE
ACCOUNT FP AND EQUITABLE LIFE 51
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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 -- Investment performance record AA-1
II -- Our data on market performance BB-1
III -- An index of key words and phrases CC-1
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EQ ADVISORS TRUST PROSPECTUS (follows after page CC-1 of this prospectus, but
is not a part of this prospectus)
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<PAGE>
4 WHO IS EQUITABLE LIFE?
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Who is Equitable Life?
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We are The Equitable Life Assurance Society of the United States ("Equitable
Life"), a New York stock life insurance corporation. We have been doing business
since 1859. Equitable Life is a 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
$462.7 billion in assets as of December 31, 1999. 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?
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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:
P.O. Box 1047
Charlotte, North Carolina 28201-1047
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BY EXPRESS DELIVERY ONLY:
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at the Street Address for our Administrative Office:
Equitable Life--National Operations Center
10840 Ballantyne Commons Parkway
Charlotte, North Carolina 28277
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BY TOLL-FREE PHONE:
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1-888-855-5100 (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 E-MAIL:
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[email protected]
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BY FAX:
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1-704-540-9714
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BY INTERNET:
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Our Web site (www.equitable.com) can also provide information; some of the forms
listed below are available for you to print out through our Web site by clicking
on "Contact Us." You can also 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 investment options; and
(e) changes in allocation percentages for premiums and deductions.
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
<PAGE>
6 WHO IS EQUITABLE LIFE?
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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.
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 premium payments after the first one to our Administrative Office at
the above addresses; except that you should send any premiums 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 "Transfer of
your account value -- Market timing" later in this prospectus.
<PAGE>
7 CHARGES AND EXPENSES YOU WILL PAY
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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.
<TABLE>
<S> <C> <C>
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CHARGES WE DEDUCT FROM Premium charge (a) 6% of each premium payment you make up to a certain
AMOUNTS YOU CONTRIBUTE amount(1) and (b) 3% of each premium payment thereafter
TO YOUR POLICY: (which we may increase up to 6%)(2)
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CHARGES WE DEDUCT FROM Administrative charge(3) (i) For adults (age 18 and older), $20 in each of your
YOUR POLICY'S VALUE EACH policy's first 12 months; or, for children, $10 in each of
MONTH: your policy's first 24 months and (ii) for everyone, $7 in
each subsequent month (which we may increase up
to $10)
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Cost of insurance charges(3) and Amount varies depending on the specifics of your policy(4)
Optional rider charges
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Charge if you have elected our $.02 for each $1,000 of your policy's face amount at the
optional enhanced death time the charge is deducted(5)
benefit guarantee
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CHARGES WE DEDUCT FROM Mortality and expense .60% (effective annual rate) of the value you have in our
YOUR POLICY'S VARIABLE risk charge variable investment options (we may increase this rate up
INVESTMENT PERFORMANCE to .90%)(6)
EACH DAY:
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CHARGES WE DEDUCT FROM Surrender (turning in) of your A surrender charge that will not exceed the amount set
YOUR ACCOUNT VALUE AT THE policy during its first 15 years forth in your policy(7) (we will also deduct the remaining
TIME OF THE TRANSACTION: amount of surrender charge associated with any face
amount increase, as discussed immediately below)
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Surrender of your policy during An amount of surrender charge that we will compute on
the first 15 years after you have essentially the same basis as if each such face amount
requested an increase in your increase had been a separate, newly-issued Incentive Life
policy's face amount policy(8)
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Requested decrease in your A pro rata portion of the full surrender charge that would
policy's face amount apply to a surrender at the time of the decrease
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</TABLE>
<PAGE>
8 CHARGES AND EXPENSES YOU WILL PAY
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(1) Up to an amount equal to ten "target premiums." The "target premium" is
actuarially determined for each policy, based on that policy's
characteristics.
(2) The Illustrations of Policy Benefits that your financial professional will
provide will show the impact of the actual current and guaranteed maximum
rates of these and any other charges, based on various assumptions. We may
increase this charge higher than 6%, however, as a result of changes in the
tax laws which increase our expenses.
(3) Not applicable after the insured person reaches age 100.
(4) See "Monthly cost of insurance charge" and "Other benefits you can add by
rider" later in this prospectus.
(5) The "face amount" is the basic amount of insurance coverage under your
policy.
(6) This charge does not apply to amounts in our guaranteed interest option.
(7) Beginning in your policy's ninth year, this amount declines at a constant
rate each month until no surrender charge applies to surrender made after
the policy's 15th year. The initial amount of surrender charge depends on
each policy's specific characteristics. For any policy, the lowest initial
surrender charge per $1,000 of initial face amount would be $2.91, and the
highest initial surrender charge per $1,000 of initial face amount would be
$12.99.
(8) This additional surrender charge, however, applies only to the amount (if
any) by which the increase causes the face amount to exceed its highest
previous amount. For these purposes, we disregard any face amount changes
that we make automatically as a result of any change in your death benefit
option.
<PAGE>
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%
EQ/Balanced 0.57% 0.25% 0.05% 0.87% -- 0.87%
Alliance Common Stock 0.46% 0.25% 0.04% 0.75% -- 0.75%
Alliance Conservative Investors 0.60% 0.25% 0.07% 0.92% -- 0.92%
Alliance Equity Index 0.25% 0.25% 0.05% 0.55% -- 0.55%
Alliance Global 0.73% 0.25% 0.09% 1.07% -- 1.07%
Alliance Growth & Income 0.59% 0.25% 0.05% 0.89% -- 0.89%
Alliance Growth Investors 0.57% 0.25% 0.05% 0.87% -- 0.87%
Alliance High Yield 0.60% 0.25% 0.05% 0.90% -- 0.90%
Alliance Intermediate Government Securities 0.50% 0.25% 0.07% 0.82% -- 0.82%
Alliance International 0.85% 0.25% 0.20% 1.30% -- 1.30%
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 Quality Bond 0.53% 0.25% 0.05% 0.83% -- 0.83%
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%
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%
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 Balanced 0.60% 0.25% 0.28% 1.13% 0.23% 0.90%
EQ/Putnam Growth & Income Value 0.60% 0.25% 0.16% 1.01% 0.06% 0.95%
T. Rowe Price Equity Income 0.60% 0.25% 0.21% 1.06% 0.11% 0.95%
T. Rowe Price International Stock 0.85% 0.25% 0.30% 1.40% 0.15% 1.25%
Warburg Pincus Small Company Value 0.75% 0.25% 0.24% 1.24% 0.14% 1.10%
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</TABLE>
<PAGE>
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 Balanced, EQ/Putnam Growth & Income Value,
Warburg Pincus Small Company Value and T. Rowe Price International Stock
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. 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,
extraordinary expenses and 12b-1 fees) 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 MFS Emerging Growth
Companies, MFS Growth with Income, MFS Research, Mercury Basic Value
Equity, EQ/Putnam Growth & Income Value, T. Rowe Price Equity Income, T.
Rowe Price International Stock and Warburg Pincus Small Company Value
Portfolios reflect an increase effective on May 1, 2000. The expense
limitation for the EQ/Evergreen Portfolio reflects a decrease effective
on May 1, 2000.
(4) Initial seed capital was invested in the EQ/Alliance Premier Growth,
Capital Guardian Research and Capital Guardian U.S. Equity Portfolios on
April 30, 1999; thus, Other Expenses for the 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 annualized estimates for 2000. Initial seed
capital will be invested in the EQ/Alliance Technology Portfolio on or
about May 1, 2000.
<PAGE>
11 RISKS YOU SHOULD CONSIDER
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HOW WE ALLOCATE CHARGES AMONG YOUR INVESTMENT OPTIONS
In your application for a policy, you tell us from which investment options you
want us to take the policy's monthly deductions as they fall due. You can change
these instructions at any time. If we cannot deduct the charge as your most
current instructions direct, we will allocate the deduction among your
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); or (3) make a charge of up to $25 for each transfer among investment
options that you make.
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, premium payments, 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.
RISKS YOU SHOULD CONSIDER
Some of the principal risks of investing in a policy are as follows:
o If the investment options you choose perform poorly, you could lose some or
all of the premiums you pay.
o If the investment options you choose do not make enough money to pay for
the policy charges, you could have to pay more premiums to keep your policy
from terminating.
o We can increase certain charges without your consent, within limits stated
in your policy.
o You may have to pay a surrender charge if you wish to discontinue some or
all of your insurance coverage under a policy.
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>
12 POLICY FEATURES AND BENEFITS
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1
Policy features and benefits
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HOW YOU CAN PAY FOR AND CONTRIBUTE TO YOUR POLICY
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PREMIUM PAYMENTS. We call the amounts you contribute to your policy "premiums"
or "premium payments." The amount we require as your first premium varies
depending on the specifics of your policy and the insured person. Each
subsequent premium payment must be at least $100, although we can increase this
minimum if we give you advance notice. (Policies on an automatic premium payment
plan may have different minimums.) Otherwise, with a few exceptions mentioned
below, you can make premium payments at any time and in any amount.
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You can generally pay premiums at such times and in such amounts as you like, so
long as you don't exceed certain limits determined by the federal income tax
laws applicable to life insurance.
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LIMITS ON PREMIUM PAYMENTS. The federal tax law definition of "life insurance"
limits your ability to pay certain high levels of premiums (relative to the
amount of your policy's insurance coverage). Also, if your premium payments
exceed certain other amounts specified under the Internal Revenue Code, your
policy will become a "modified endowment contract," which may subject you to
additional taxes and penalties on any distributions from your policy. See "Tax
information" below. We may return any premium payments that would exceed those
limits to you.
You can ask your financial professional to provide you with an illustration of
policy benefits that shows you the amount of premium you can pay, based on
various assumptions, without exceeding these tax law limits. The tax law limits
can change as a result of certain changes you make to your policy. For example,
a reduction in the face amount of your policy may reduce the amount of premiums
that you can pay.
If at any time when your policy's account value is high enough that the
alternative death benefit discussed below would apply, we reserve the right to
limit the amount of any premiums that you pay, unless the insured person
provides us with adequate evidence that he/she continues to meet our
requirements for issuing insurance.
PLANNED PERIODIC PREMIUMS. Page 3 of your policy will specify a "planned
periodic premium." This is the amount that you request us to bill you. However,
payment of these or any other specific amounts of premiums is not mandatory.
Rather, you need to pay only the amount of premiums (if any) necessary to keep
your policy from lapsing and terminating as discussed below.
THE MINIMUM AMOUNT OF PREMIUMS YOU MUST PAY
POLICY "LAPSE" AND TERMINATION. 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 unless
o you have paid sufficient premiums to maintain one of our available
guarantees against termination and your policy is still within the period
of that guarantee (see "You can guarantee that your policy will not
terminate before a certain date" below) or
o you have elected the "paid up" death benefit guarantee and it remains in
effect (see "You can elect a "paid up" death benefit guarantee" below).
("Net cash surrender value" is explained under "Surrendering your policy for its
net cash surrender value" below.)
We will mail a notice to you at your last known address if your policy lapses.
You will have a 61-day grace period to pay at least an amount prescribed in your
policy which would be enough to keep your policy in force for approximately
three months (without regard to investment performance). You may not make any
transfers or request any other policy changes during a grace period. If we do
not receive your payment by the end of the grace period, your policy (and all
riders to the 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.
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13 POLICY FEATURES AND BENEFITS
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Your policy will terminate if you don't either (i) pay enough premiums to pay
the charges we deduct or (ii) maintain in effect one or more of our other
guarantees that can keep your policy from terminating. However, we will first
send you a notice and give you a chance to pay any shortfall.
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You may owe taxes 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 pay at least the amount of premium that we
require. Your policy contains additional information about the minimum amount of
this premium and about the values and terms of the policy after it is restored.
YOU CAN GUARANTEE THAT YOUR POLICY WILL NOT TERMINATE BEFORE A CERTAIN DATE
You can guarantee that your policy will not terminate for a number of years by
paying at least certain amounts of premiums. We call these amounts "guarantee
premiums" and they will be set forth on page 3 of your policy. In most states
you have three options for how long the guarantee will last. One of these
options is discussed below under "Enhanced death benefit guarantee." The other
two guarantee options are as follows:
(1) a guarantee for the first 5 years of your policy (the policy calls this the
"no-lapse guarantee")
or
(2) a guarantee until the insured reaches age 70, but in no case less than 10
years (the policy calls this the "death benefit guarantee").
In some states, these guarantees may be unavailable, limited to shorter periods,
or referred to by different names.
We make no extra charge for either of these two guarantees against policy
termination. However, in order for either of those guarantees to be available,
you must have satisfied the "guarantee premium test" (discussed below) and you
must not have any outstanding policy loans. In this connection, maintaining the
"age 70/10 year" guarantee against policy termination (where available) will
require you to pay more premiums than maintaining only the 5-year guarantee.
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In most states, if you pay at least certain prescribed amounts of premiums, and
have no policy loans, your policy will not terminate for a number of years, even
if the value in your policy becomes insufficient to pay the monthly charges.
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GUARANTEE PREMIUM TEST. If your policy's net cash surrender value is not
sufficient to pay a monthly deduction that has become due, we check to see if
the cumulative amount of premiums that you have paid to date at least equals the
cumulative guarantee premiums due to date for either of the two above-listed
guarantee options that are then available under your policy. If it does, your
policy will not lapse, provided that you have no policy loans outstanding (or
you repay all of such loans before the end of the 61-day grace period mentioned
above) and provided that the period of the corresponding guarantee has not
expired.
When we calculate the cumulative amount of guarantee premiums due for the two
above-listed guarantee options, we compound each amount at a 4% annual interest
rate from its due date through the date of the calculation. (This interest rate
is purely for purposes of determining whether you have satisfied the guarantee
test for an available duration. It does not bear any relation to the returns you
will actually earn or any loan interest you will actually pay.) We use the same
calculation for determining the cumulative amount of premiums paid, beginning
with the date each premium is received. The amount of premiums you must pay to
maintain a guarantee against termination will be increased by the cumulative
amount of any partial
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14 POLICY FEATURES AND BENEFITS
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withdrawals you have taken from your policy (calculated by the same method,
beginning with the date of withdrawal).
ENHANCED DEATH BENEFIT GUARANTEE. On your application for a policy, you may
elect an enhanced death benefit guarantee rider, that will guarantee your policy
against termination for a longer period of time than either of the two guarantee
options described above. If elected, a monthly charge of $.02 per $1,000 of the
policy's face amount is deducted from your account value for this guarantee. To
elect this feature, all of your policy's account value must be allocated to our
variable investment options.
While the enhanced death benefit guarantee is in effect, your policy will not
lapse, even if your net cash surrender value is insufficient to pay a monthly
deduction that has become due, as long as you do not have an outstanding loan
(or you repay the loan within the 61-day grace period). This guarantee is
available for the following periods:
(a) If you have always chosen death benefit Option A, for the life of the
insured person; or
(b) If you have ever selected death benefit Option B (even if you subsequently
changed it to Option A), until the later of the date the insured person
reaches age 80 or the end of the 15th year of the policy.
This option is not available in all states.
If you have elected the enhanced death benefit guarantee, we test on each policy
anniversary to see if the required premium (the enhanced death benefit
"guarantee premium") has been paid. (The enhanced guarantee premium will be set
forth on page 3 of your policy.) The required premium has been paid if the total
of all premiums paid, less all withdrawals, is at least equal to the total of
all enhanced guarantee premiums due to date. (In this comparison, unlike the
test for the shorter duration guarantees discussed above, we do not compound
these amounts using any hypothetical interest rate.)
If the required premium has not been paid as of any policy anniversary, we will
mail you a notice requesting that you send us the shortfall. If we do not
receive this additional premium, the enhanced death benefit guarantee will
terminate. The enhanced death benefit guarantee also will terminate if you
request that we cancel it, or if you allocate any value to our guaranteed
interest option. If the enhanced death benefit guarantee terminates, the related
charge terminates, as well. Once terminated, this guarantee can never be
reinstated or restored.
GUARANTEE PREMIUMS. The amount of the guarantee premiums for each of the
guarantees discussed above is set forth in your policy if that guarantee is
available to you. The guarantee premiums are actuarially determined at policy
issuance and depend on the age and other insurance risk characteristics of the
insured person, as well as the amount of the coverage and additional features
you select. Certain additional benefit riders will cause the guarantee premiums
to increase after policy issue. The guarantee premiums also may change if, for
example, you make policy changes that increase or decrease the face amount of
the policy or a rider, add or eliminate a rider, or if there is a change in the
insured person's risk characteristics. We will send you a new policy page
showing any change in your guarantee premiums. Any change will be prospective
only, and no change will extend a guarantee period beyond its original number of
years.
We will not bill you separately for guarantee premiums. If you want to be
billed, therefore, you must select a planned periodic premium that at least
equals the guarantee premium that you plan to pay. If you wish your bills for
planned periodic premiums to cover your guarantee premiums, please remember to
change your planned periodic premium amount, as necessary, if you take any
action that causes your guarantee premiums to change.
YOU CAN ELECT A "PAID UP" DEATH BENEFIT GUARANTEE
In most states, you may elect to take advantage of our "paid up death benefit
guarantee" at any time after the fourth year of your policy. If you elect the
paid up death benefit guarantee, we may initially reduce your policy's face
amount (see below). Thereafter, your policy will not lapse and the
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15 POLICY FEATURES AND BENEFITS
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death benefit will never be less than the face amount, so long as the guarantee
remains in effect. The guarantee will terminate, however, if (i) at any time
following the election, any outstanding policy loans and accrued loan interest,
together with any then applicable surrender charge, exceed your policy's account
value or if (ii) you request us to terminate the election.
In order to elect the paid up death benefit guarantee:
o you must have death benefit "Option A" in effect (see "About your life
insurance benefit" below),
o you must terminate any riders to your policy that carry additional charges,
o the election must not cause the policy to lose its qualification as life
insurance under the Internal Revenue Code or require a current distribution
from the policy to avoid such disqualification, and
o the election must not reduce the face amount (see below) to less than the
minimum face amount for which we would then issue a policy.
The paid up death benefit guarantee may not be available in all states.
POSSIBLE REDUCTION OF FACE AMOUNT. The face amount of your policy after this
guarantee is elected is the lesser of (a) the face amount immediately before the
election or (b) the policy account value divided by a factor based on the then
age of the insured person. The factors are set forth in your policy. As a
general matter, the factors change as the insured person ages so that, if your
account value stayed the same, the calculation under clause (b) above would be
lower the longer your policy is outstanding.
If electing the paid up death benefit guarantee causes a reduction in face
amount, we will deduct the same portion of any remaining surrender charge as we
would have deducted if you had requested that decrease directly (rather than
electing the paid up death benefit guarantee). See "Charges and expenses you
will pay" above.
OTHER EFFECTS OF THIS GUARANTEE. You generally may continue to pay premiums
after you have elected the paid up death benefit guarantee (subject to the same
limits as before), but premium payments are not required. If the election causes
your face amount to decrease, however, the amount of additional premiums you can
pay, if any, may be reduced. You may continue to make transfers, but you may not
change the death benefit option or add riders that have their own charges while
the paid up death benefit guarantee is in effect.
Partial withdrawals while the paid up death benefit guarantee is in effect will
generally be subject to the same terms and conditions as any other partial
withdrawal (see "Making withdrawals from your policy" below), except that:
o We may decline your request for a partial withdrawal (or any other policy
change) under the circumstances described in the paid up death benefit
guarantee policy endorsement. If this occurs, you may wish to consider
asking us to terminate the paid up death benefit guarantee.
o Partial withdrawals (and any distributions we may be required to make for
tax purposes) will generally reduce your policy's face amount by more than
the amount of the withdrawal.
Election of the paid up death benefit guarantee may cause your policy to become
a modified endowment contract under certain circumstances. See "Tax treatment of
distributions to you" below. You should consult your tax advisor before making
this election.
INVESTMENT OPTIONS WITHIN YOUR POLICY
We will initially put all amounts which your have allocated to variable
investment options into our Alliance Money Market 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 your
premium allocation instructions then in effect. You give such instructions in
your application to purchase a policy. You can change the premium allocation
percentages at any time, but this will not affect any prior allocations. The
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16 POLICY FEATURES AND BENEFITS
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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
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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 and EQ/Balanced)
o Capital Guardian Trust Company (for the "Capital Guardian" options; also,
jointly advises EQ/Balanced)
o Evergreen Asset Management Corp. (for the "EQ/Evergreen" options)
o Jennison Associates LLC (jointly advises EQ/Balanced)
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 Prudential Investments Fund Management LLC (jointly advises EQ/Balanced)
o Putnam Investment Management, Inc. (for both "EQ/Putnam" options)
o T. Rowe Price Associates, Inc. and Rowe Price-Fleming International, Inc.
(for both "T. Rowe Price" options)
o Warburg Pincus Asset Management, Inc. (for the "Warburg Pincus" option)
Each Portfolio is a part of EQ Advisors Trust. Equitable Life serves as
investment manager of EQ Advisors Trust. As such, 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.
GUARANTEED INTEREST OPTION. You can also allocate some or all of your policy's
value to our guaranteed interest option. We, in turn, invest such amounts as
part of our general assets. Periodically, we declare a fixed rate of interest
(3% minimum) on amounts you allocate to our guaranteed interest option. (The
guaranteed interest option is part of what your policy and other supplemental
material may refer to as the "Guaranteed Interest Account".)
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We will pay at least 3% annual interest on our guaranteed interest option.
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ABOUT YOUR LIFE INSURANCE BENEFIT
YOUR POLICY'S FACE AMOUNT. In your application to buy an Incentive Life policy,
you tell us how much insurance coverage you want on the life of the insured
person. We call this the "face amount" of the policy. $50,000 is the smallest
amount of coverage you can request.
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17 POLICY FEATURES AND BENEFITS
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If the insured person dies, we pay a life insurance benefit to the "beneficiary"
you have named. The amount we pay depends on whether you have chosen death
benefit Option A or death benefit Option B.
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YOUR POLICY'S "DEATH BENEFIT" OPTIONS. In your policy application, you also
choose whether the basic amount (or "benefit") we will pay if the insured person
dies is
o Option A -- THE POLICY'S FACE AMOUNT on the date of the insured person's
death. The amount of this death benefit doesn't change over time, unless
you take any action that changes the policy's face amount;
or
o Option B -- THE FACE AMOUNT PLUS THE POLICY'S "ACCOUNT VALUE" on the date
of death. Under this option, the amount of death benefit generally changes
from day to day, because many factors (including investment performance,
charges, premium payments and withdrawals) affect your policy's account
value.
Your policy's "account value" is the total amount that at any time is earning
interest for you or being credited with investment gains and losses under your
policy. (Account value is discussed in more detail under "Determining your
policy's value" below.)
Under Option B, your policy's death benefit will tend to be higher than under
Option A. As a result, the monthly insurance charge we deduct will also be
higher, to compensate us for our additional risk.
ALTERNATIVE HIGHER DEATH BENEFIT IN LIMITED CASES. Your policy is designed to
always provide a minimum level of insurance protection relative to your policy's
value, in part to meet the Internal Revenue Code's definition of "life
insurance." Thus, we will automatically pay an alternative death benefit if it
is higher than the basic Option A or Option B death benefit you have selected.
This alternative death benefit is computed by multiplying your policy's account
value on the insured person's date of death by a percentage specified in your
policy. The percentage depends on the insured person's age. Representative
percentages are as follows:
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If the value in your policy is high enough, relative to the face amount, the
life insurance benefit will automatically be greater than the Option A or Option
B death benefit you have selected.
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<TABLE>
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<S> <C> <C> <C> <C> <C> <C>
AGE* 40 45 50 55 60 65
AND UNDER
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% 250% 215% 185% 150% 130% 120%
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70 75-95 99-OVER
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% 115% 105% 101%
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</TABLE>
* For the then-current policy year.
This higher alternative death benefit exposes us to greater insurance risk than
the regular Option A and B death benefits. Because the cost of insurance charges
we make under your policy are based in part on the amount of our risk, you will
pay more cost of insurance charges for any periods during which the higher
alternative death benefit is the operative one.
OTHER ADJUSTMENTS TO DEATH BENEFIT. We will increase the death benefit proceeds
by the amount of any other benefits we owe upon the insured person's death under
any optional riders which are in effect.
We will reduce the death benefit proceeds by the amount of any remaining policy
loans and unpaid loan interest, as well as any amount of monthly charges under
the policy that remain unpaid because the insured person died during a grace
period. We also reduce the death benefit if we have already paid part of it
under a living benefit rider. We reduce it by the amount of the living benefit
payment plus interest. See "Your option to receive a living benefit" below.
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You can request a change in your death benefit option any time after the
second year of the policy.
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CHANGE OF DEATH BENEFIT OPTION. If you change from Option A to B, we
automatically reduce your policy's face
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18 POLICY FEATURES AND BENEFITS
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amount by an amount equal to your policy's account value at the time of the
change. We may refuse this change if the policy's face amount would be reduced
below our then current minimum for new policies. Changes from Option A to Option
B are not permitted once the insured person reaches age 81.
If you change from Option B to A, we automatically increase your policy's face
amount by an amount equal to your policy's account value at the time of the
change.
If the alternative death benefit discussed above would be in effect at the time
of the change, we will determine the new face amount somewhat differently from
the general procedures described above.
We will not deduct or establish any amount of surrender charge as a result of a
change in death benefit option. Please refer to "Tax information" below, to
learn about certain possible income tax consequences that may result from a
change in death benefit option, including the effect of an increase or decrease
in face amount.
YOU CAN INCREASE OR DECREASE YOUR INSURANCE COVERAGE
If the face amount increase endorsement is issued with your policy, you may
increase the life insurance coverage under your policy by requesting an increase
in your policy's face amount. You can do so any time after the first year of
your policy. You may request a decrease in your policy's face amount any time
after the second year of your policy. The requested increase or decrease must be
at least $10,000. Please refer to "Tax information" for certain possible tax
consequences of changing the face amount.
We can refuse any requested increase or decrease. We will not approve any
increase or decrease if we are at that time being required to waive charges or
pay premiums under any optional disability waiver rider that is part of the
policy. We will also not approve a face amount increase if the insured person
has reached age 81. The following additional conditions also apply:
FACE AMOUNT INCREASES. We treat an increase in face amount in many respects as
if it were the issuance of a new policy. For example, you must submit
satisfactory evidence that the insured person still meets our requirements for
coverage. Also, we establish additional amounts of surrender charge and
guarantee premiums under your policy for the face amount increase, reflecting
the amount of additional coverage.
In most states, you can cancel the face amount increase within 10 days after you
receive a new policy page showing the increase. If you cancel, we will reverse
any charges attributable to the increase and recalculate all values under your
policy to what they would have been had the increase not taken place.
The monthly insurance charge we make for the amount of the increase will be
based on the age and other insurance risk characteristics of the insured person
at the time of the increase. If we refuse a requested face amount increase
because the insured person's risk characteristics have become less favorable, we
may issue the additional coverage as a separate Incentive Life policy with a
different insurance risk classification. In that case, we would waive the
monthly administrative charge that otherwise would apply to that separate
policy.
FACE AMOUNT DECREASES. You may not reduce the face amount below the minimum we
are then requiring for new policies. Nor will we permit a decrease that would
cause your policy to fail the Internal Revenue Code's definition of life
insurance. Guarantee premiums, as well as our monthly deductions for the cost of
insurance coverage, will generally decrease from the time you reduce the face
amount.
If you reduce the face amount during the first 15 years of your policy, or
during the first 15 years after a face amount increase you have requested, we
will deduct all or part of the remaining surrender charge from your policy.
Assuming you have not previously changed the face amount, the amount of
surrender charge we will deduct will be determined by dividing the amount of the
decrease by the initial face amount and multiplying that fraction by the total
amount of surrender charge that still remains applicable to your policy.
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19 POLICY FEATURES AND BENEFITS
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We deduct the charge from the same investment options as if it were a part of a
regular monthly deduction under your policy.
In some cases, we may have to make a distribution to you from your policy at the
time of the decrease in order to decrease your policy's face amount. This may be
necessary in order to preserve your policy's status as life insurance under the
Internal Revenue Code. We may also be required to make such a distribution to
you in the future on account of a prior decrease in face amount.
OTHER BENEFITS YOU CAN ADD BY RIDER
You may be eligible for the following other optional benefits we currently make
available by rider:
o disability waiver benefits
o ten-year term insurance on the insured person or an additional insured
person
o accidental death benefit
o option to purchase additional insurance
o children's term insurance
o cost-of-living rider
Equitable Life or your financial professional can provide you with more
information about these riders. The riders provide additional information, and
we will furnish samples of them to you on request. The maximum amount of any
charge we make for a rider will be set forth in the rider or in the policy
itself. We can, however, add, delete, or modify the riders we are making
available, at any time before they become effective as part of your policy.
The option to purchase additional insurance rider permits you to purchase
additional coverage on the insured person, without evidence of insurability, if
specified events occur.
The cost-of-living rider provides for scheduled automatic face amount increases
that, within limits, reflect increases in the Consumer Price Index. These
automatic face amount increases will result in a prospective increase in your
guarantee premiums and an additional surrender charge, in the same manner as
would any other face amount increase you request.
See also "Tax information" below for certain possible tax consequences of face
amount increases or adding or deleting riders.
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.
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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.
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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
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20 POLICY FEATURES AND BENEFITS
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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. Our financial professionals will take reasonable steps to
arrange for prompt delivery to the beneficiary.
PAYMENT OPTIONS FOR SURRENDER AND WITHDRAWAL PROCEEDS. You can also choose to
receive all or part of any proceeds from a surrender or 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 premiums paid. 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.
VARIATIONS AMONG INCENTIVE 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 Incentive Life where
special circumstances result in sales or administrative expenses or mortality
risks that are different from those normally associated with Incentive 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.
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21 DETERMINING YOUR POLICY'S VALUE
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2
DETERMINING YOUR POLICY'S VALUE
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YOUR ACCOUNT VALUE
As set forth above, we deduct certain charges from each premium payment you
make. We credit the rest of each premium payment to your policy's "account
value." You instruct us to allocate your account value to one or more of the
policy's 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, (ii) your amounts in our guaranteed interest option, and (iii) 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) and (iii) above as our
"Guaranteed Interest Account.") These amounts are subject to certain charges
discussed in "Charges and expenses you will pay."
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Your account value will be credited with the same returns as are achieved by the
Portfolios (or guaranteed interest option) that you select, but will also be
reduced by the amount of 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, withdrawals and surrenders are made from that option. Similarly, you
"purchase" additional units having the same value as the amount of any premium,
loan repayment, or transfer that you allocate to that option.
The value of each unit will increase or decrease each day, as though 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" in "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.
YOUR POLICY'S VALUE IN OUR GUARANTEED INTEREST OPTION. Your policy's value in
our guaranteed interest option includes: (i) any amounts you have specifically
requested that we allocate to that option and (ii) any "restricted" amounts that
we hold in that option as a result of your election to receive a living benefit
(these restricted amounts may be referred to in your policy as "liened policy
amounts"). See "Your option to receive a living benefit" below. We credit all of
such amounts with interest at rates we declare from time to time. We guarantee
that these rates will not be less than a 3% effective annual rate. The mortality
and expense risk charge mentioned above does not apply to our guaranteed
interest option.
Amounts may be allocated to or removed from your policy's value in our
guaranteed interest option for the same purposes as described above for the
variable investment options. We credit your policy with a number of dollars in
that option that equals any amount that is being allocated to it. Similarly, if
amounts are being removed from your guaranteed interest option for any reason,
we reduce the amount you have credited to that option on a dollar-for-dollar
basis.
<PAGE>
22 TRANSFERRING YOUR MONEY AMONG OUR INVESTMENT OPTIONS
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3
Transferring your money among our investment options
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TRANSFERS YOU CAN MAKE
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You can transfer among our variable investment options and into our guaranteed
interest option.
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After your policy's Allocation Date, you can transfer amounts from one
investment option to another. The total of all transfers you make on the same
day must be at least $500; except that you may transfer your entire balance in
an investment option, even if it is less than $500. 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).
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Transfers out of our guaranteed interest option are more limited.
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RESTRICTIONS ON TRANSFER OUT OF THE GUARANTEED INTEREST OPTION. We only permit
you to make one transfer out of our guaranteed interest option during each
policy year. (No such limit applies to transfers out of our variable investment
options.) Also, the maximum transfer from our guaranteed interest option is the
greater of (a) 25% of your then current balance in that option (b) $500, or (c)
the amount (if any) that you transferred out of the guaranteed interest option
during the immediately preceding policy year.
We will not accept a request to transfer out of the guaranteed interest option
unless we receive it within the period beginning 30 days before and ending 60
days after an anniversary of your policy. If we receive the request within that
period, the transfer will occur as of that anniversary or, if later, the date we
receive it.
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 will never apply to a transfer of all of your variable investment
option amounts to our guaranteed investment option, or to any transfer pursuant
to our dollar cost averaging or asset rebalancing service, as 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.
<PAGE>
23 TRANSFERRING YOUR MONEY AMONG OUR INVESTMENT OPTIONS
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Using the dollar cost averaging service does not guarantee that you will earn a
profit or be protected against losses.
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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.
This 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.
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>
24 ACCESSING YOUR MONEY
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4
Accessing your money
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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 amount that we hold on a
"restricted" basis following your receipt of a living benefit payment, as well
as by any other loans (and accrued loan interest) you have outstanding. See
"Your option to receive a living benefit" below.
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You can use policy loans to obtain funds from your policy without surrender
charges or, in most cases, paying current income taxes. However, the borrowed
amount is no longer credited with the investment results of any of our
investment options under the policy.
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When you take a policy loan, we remove an amount equal to the loan from one or
more of your 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 under the same terms and
conditions as apply to amounts supporting our guaranteed interest option, with
several exceptions:
o you cannot make transfers or withdrawals of the collateral;
o we expect to credit different rates of interest to loan collateral than we
credit under our guaranteed interest option;
o we do not count the collateral when we compute our customer loyalty credit;
and
o 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 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
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
investment options in proportion to your value in each.
LOAN INTEREST WE CHARGE. The interest we charge on a policy loan accrues daily
at an adjustable interest rate. We determine the rate at the beginning of each
year of your policy and that rate applies to all policy loans that are
outstanding at any time during the year. The maximum rate is the greater of (a)
4% or (b) the "Monthly Average Corporate" yield published in Moody's Corporate
Bond Yield Averages for the month that ends two months before the interest rate
is set. (If that average is no longer published, we will use another average, as
the policy provides.) In no event, however, will the loan interest rate be
greater than 15%. We will notify you of the current loan interest rate when you
apply for a loan, and will notify you in advance of any rate increase.
Loan interest payments are due on each policy anniversary. If not paid when due,
we automatically add the interest as a new policy loan.
INTEREST THAT WE CREDIT ON LOAN COLLATERAL. Under our current rules, the annual
interest rate we credit on your loan collateral during any of your policy's
first fifteen years will be 1% less than the rate we are then charging you for
policy loan interest, and, beginning in the policy's 16th year, equal to the
loan interest rate. The elimination of the rate differential is not guaranteed.
Accordingly, we have discretion to increase the rate differential for any
period, including under policies that are already outstanding (and may have
outstanding loans). We do guarantee that the annual rate of interest credited on
your loan collateral will never be less than 3% and that the differential will
not exceed 2% (except if tax law changes increase the taxes we pay on policy
loans or loan interest). Because we first offered Incentive Life policies in
1999 the interest rate differential has not yet been eliminated under any
outstanding policies.
We credit interest on your loan collateral daily. On each anniversary of your
policy (or when your policy loans are fully
<PAGE>
25 ACCESSING YOUR MONEY
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repaid) we contribute that interest to your policy's investment options in the
same proportions as if it were a premium payment.
EFFECTS OF POLICY LOANS. A loan can reduce the length of time that your
insurance remains in force, because the amount we set aside as loan collateral
cannot be used to pay charges as they become due. A loan can also cause any paid
up guaranteed death benefit to terminate or may cause any other guarantee
against termination to become unavailable. We will deduct any outstanding policy
loan plus accrued loan interest from your policy's proceeds if you do not pay it
back. Even if 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.
PAYING OFF YOUR LOAN. You can repay all or part of your loan at any time. We
normally assume that payments you send us are premium payments. Therefore, you
must submit instructions with your payment indicating that it is a loan
repayment. If you send us more than all of the loan principal and interest you
owe, we will treat the excess as a premium payment.
When you send us a loan repayment, we will transfer an amount equal to such
repayment from your loan collateral back to the investment options under your
policy. First we will restore any amounts that, before being designated as loan
collateral, had been in the guaranteed interest option under your policy. We
will allocate any additional repayments among investment options as you
instruct; or, if you don't instruct us, in the same proportion as if they were
premium payments.
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,
however, and we have discretion to decline any request. If you do not tell us
from which investment options you wish us to take the withdrawal, 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 withdrawal from all of
your investment options in proportion to your value in each.
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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.
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EFFECT OF PARTIAL WITHDRAWALS ON INSURANCE COVERAGE. If the Option A death
benefit is in effect, a partial withdrawal results in a dollar-for-dollar
automatic reduction in the policy's face amount (and, hence, an equal reduction
in the Option A death benefit). If the paid up death benefit guarantee is in
effect, a partial withdrawal will generally reduce the face amount by more than
the amount of the withdrawal. Face amount reductions that occur automatically as
a result of withdrawals, however, do not result in our deducting any portion of
any then remaining surrender charge. We will not permit a partial withdrawal
that would reduce the face amount below our minimum for new policy issuances at
the time, or that would cause the policy to no longer be treated as life
insurance for federal income tax purposes.
If death benefit Option B is in effect, a partial withdrawal reduces the death
benefit on a dollar for dollar basis, but does not affect the face amount.
The result is different, however, during any time when the alternative death
benefit (discussed above) would be higher than the Option A or B death benefit
you have selected. In that case, a partial withdrawal will cause the death
benefit to decrease by more than the amount of the withdrawal, even if the paid
up death benefit guarantee is not then in effect. Please also remember that a
partial withdrawal reduces the amount of your premium payments that counts
toward maintaining our other guarantees against termination, as well.
You should refer to "Tax information" below, for information about possible tax
consequences of partial withdrawals and any associated reduction in policy
benefits.
<PAGE>
26 ACCESSING YOUR MONEY
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A partial withdrawal may 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 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, minus any amount of your account
value that is "restricted" as a result of previously distributed "living
benefits," and minus any surrender charge that then remains applicable. The
surrender charge is described in "Charges and expenses you will pay" above.
Please refer to "Tax information" below for the possible tax consequences of
surrendering your policy.
YOUR OPTION TO RECEIVE A LIVING BENEFIT
Subject to our insurance underwriting guidelines and availability in your state,
your policy will automatically include our living benefit rider. This feature
enables you to receive a portion (generally 75%) of the policy's death benefit
(excluding death benefits payable under certain other policy riders), if the
insured person has a terminal illness (as defined in the rider).
We make no additional charge for the rider. However, if you tell us that you do
not wish to have the living benefit rider added at issue, but you later ask to
add it, we will need to evaluate the insurance risk at that time, and we may
decline to issue the rider.
If you receive a living benefit, the remaining benefits under your policy will
be affected. We will deduct the amount of any living benefit we have paid, plus
interest (as specified in the rider), from the death benefit proceeds that
become payable under the policy if and when the insured person dies.
When we pay a living benefit we automatically transfer a pro rata portion of
your policy's net cash surrender value to the policy's guaranteed interest
option. This amount, together with the interest you earn thereon, will be
"restricted" - that is, it will not be available for any loans, transfers or
partial withdrawals that you may wish to make. In addition, it may not be used
to satisfy the charges we deduct from your policy's value, and we do not count
it in computing any customer loyalty credit. We will deduct these restricted
amounts from any subsequent surrender proceeds that we pay. (In your policy, we
refer to this as a "lien" we establish against your policy.)
The receipt of a living benefit payment may qualify for exclusion from income
tax. See "Tax information" below. Receipt of a living benefit payment may affect
your eligibility for certain government benefits or entitlements.
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You can arrange to receive a "living benefit" if the insured person becomes
terminally ill.
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<PAGE>
27 TAX INFORMATION
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5
Tax information
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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 Incentive 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 generally
will 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 STATUS. Your policy will be a "modified
endowment contract" if, at any time during the first seven years of your policy,
you have paid a cumulative amount of premiums that exceeds the cumulative
seven-pay limit. The cumulative seven-pay limit is the amount of premiums that
you would have paid by that time under a similar fixed-benefit insurance policy
that was designed (based on certain assumptions mandated under the Code) to
provide for paid up future benefits after the payment of seven equal annual
premiums. ("Paid up" means that no future premiums would be required.) This is
called the "seven-pay" test.
Whenever there is a "material change" under a policy, the policy will generally
be (a) treated as a new contract for purposes of determining whether the policy
is a modified endowment contract and (b) subjected to a new seven-pay period and
a new seven-pay limit. The new seven-pay limit would be determined taking into
account, under a prescribed formula, the account value of the policy at the time
of such change. A materially changed policy would be considered a modified
endowment contract if it failed to satisfy the new seven-pay limit at any time
during the new seven-pay period. A "material change" for these purposes could
occur as a result of a change in death benefit option, the selection of
additional rider benefits, an increase in your policy's face amount (including
pursuant to our cost-of-living rider), or certain other changes.
If your policy's benefits are reduced during its first seven years (or within
seven years after a material change), the seven-pay limit will be redetermined
based on the reduced level of benefits and applied retroactively for purposes of
the seven-pay test. (Such a reduction in benefits could include, for example, a
requested decrease in face amount, the termination of additional benefits under
a rider or, in some cases, a partial withdrawal.) If the premiums previously
paid are greater than the recalculated (lower) seven-pay limit, the policy will
become a modified endowment contract.
A life insurance policy that you receive in exchange for a modified endowment
contract will also be considered a modified endowment contract.
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28 TAX INFORMATION
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In addition to the above premium limits for testing for modified endowment
status, there are overall limits on the amount of premiums you may pay under
your policy in order for it to qualify as life insurance. Changes made to your
policy, for example, a decrease in face amount (including any decrease that may
occur as a result of a partial withdrawal) or other decrease in benefits may
impact the maximum amount of premiums that can be paid, as well as the maximum
amount of account value that may be maintained under the policy. In some cases,
this may cause us to take current or future action in order to assure that your
policy continues to qualify as life insurance, including distribution of amounts
to you that may be includible as income. See "Changes we can make" below.
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 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 premiums you have paid, less the amount of any previous distributions from
your policy that were not taxable.) During the first 15 years, however, the
proceeds from a partial withdrawal could 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.
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 this
purpose include a loan (including any increase in the loan amount to pay
interest on an existing loan or an assignment or a pledge to secure a loan) or
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 is similar to the basis described above for
other policies, except that it 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 (excluding certain qualified plans) 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.
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 such) 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
<PAGE>
29 TAX INFORMATION
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policy, will be subject to federal income tax and, unless an exception applies,
the 10% penalty tax.
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 in the four preceding paragraphs. 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.
TAX TREATMENT OF LIVING BENEFIT PROCEEDS
Amounts received under an insurance policy on the life of an individual who is
terminally ill, as defined by the tax law, are generally excludable from the
payee's gross income. We believe that the benefits provided under our living
benefit rider meet the tax law's definition of terminally ill and can qualify
for this income tax exclusion. This exclusion does not apply to amounts paid to
someone other than the insured person, however, if the payee has an insurable
interest in the insured person's life only because the insured person is a
director, officer or employee of the payee or by reason of the insured person
being financially interested in any trade or business carried on by the payee.
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 face amount that you request, 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
<PAGE>
30 TAX INFORMATION
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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 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.
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.
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
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31 TAX INFORMATION
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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 not a 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 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 change of
interpretation. Any changes in federal, state, local or foreign tax law or
interpretations could have a retroactive effect both on our taxes and on 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. Premiums or loan payments 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 accept third-party checks payable
to someone other than Equitable Life and endorsed over to Equitable Life only
(1) as a direct payment from a qualified retirement plan or (2) if it is made
out to a trustee who owns the policy and endorses the entire check (without any
refund) as a payment to the policy.
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.
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, withdrawal 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. Further, 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. 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.
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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 YOU MAKE. The following are reflected in your policy as of the date we
receive them:
o premium payments received after the policy's investment start date
(discussed below)
o loan repayments and interest payments
REQUESTS YOU MAKE. The following transactions occur as of the date we receive
your request:
o withdrawals
o tax withholding elections
o face amount decreases that result from a withdrawal
o changes of allocation percentages for premium payments or monthly
deductions
o surrenders
o changes of beneficiary
o transfers from a variable investment option to the guaranteed interest
option
o changes in form of death benefit payment
o loans
o transfers among variable investment options
o assignments
o termination of paid up death benefit guarantee
The following transactions occur on your policy's next monthly anniversary that
coincides with or follows the date we approve your request:
o changes in face amount
o election of paid up death benefit guarantee
o changes in death benefit option
o changes of insured person
o termination of enhanced death benefit guarantee
o restoration of terminated policies
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 before 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
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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.
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 surrender or partial
withdrawal request after the insured person has died. Also, all insurance
coverage ends on the date as of which we process any request for a 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.
o If you submit the full minimum initial premium to your financial
professional at the time you sign the application, and we issue the policy
as it was applied for, then the register date will be the later of (a) the
date you signed part I of the policy application or (b) the date a medical
professional signed part II of the policy application.
o If we do not receive your full minimum initial premium at our
Administrative Office before the issue date or, if we issue the policy on a
different basis than you applied for, the register date will 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.
We may also permit an earlier than customary register date (a) for
employer-sponsored cases, to accommodate a common register date for all
employees or (b) to provide a younger age at issue. (A younger age at issue
reduces the monthly charges that we deduct under a policy.) The charges and
deductions commence as of the register date, even when we have permitted an
early register date. We may also permit policyowners to delay a register date
(up to three months) in employer-sponsored cases.
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). Generally, this is the register date, or, if later, the date we receive
your full minimum initial premium at our Administrative Office.
COMMENCEMENT OF INSURANCE COVERAGE. You must give the full minimum initial
premium to your financial professional on or before the day 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 payment and delivery are
completed and (2) the information in the application continues to be true and
complete, without material change, as of the time of such payment. If you submit
the full minimum initial 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, 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 to
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be the same for males and females. In addition, employers and employee
organizations should consider, in consultation with counsel, the impact of Title
VII of the Civil Rights Act of 1964 on the purchase of Incentive Life in
connection with an employment-related insurance or benefit plan. In a 1983
decision, the United States Supreme Court held that, under Title VII, optional
annuity benefits under a deferred compensation plan could not vary on the basis
of sex.
There will be no distinctions based on sex in the cost of insurance rates for
Incentive Life policies sold in Montana. We will also make such gender-neutral
policies available on request in connection with certain employee benefit plans.
Cost of insurance rates applicable to a gender-neutral policy will not be
greater than the comparable male rates under a gender specific Incentive Life
policy.
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7
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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 Incentive 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 Incentive 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 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 Incentive Life policies and, more specifically, the guaranteed
interest option). 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).
Because of applicable exemptions and exclusions, we have not registered
interests in the general account under the Securities Act of 1933 or registered
the general account as an investment company with the SEC. Accordingly, neither
the general account, the guaranteed interest option, nor any interests therein,
are subject to regulation under those acts. The staff of the SEC has not
reviewed the portions of this prospectus that relate to the general account and
the guaranteed interest option. The disclosure, however, may be subject to
certain provisions of the federal securities law relating to the accuracy and
completeness of statements made in prospectuses.
We declare the rate of interest periodically, but it will not be less than 3%.
We credit and compound the interest daily at an effective annual rate that
equals the declared rate. The rates we are at any time declaring on outstanding
policies may differ from the rates we are then declaring for newly issued
policies.
YOU CAN CHANGE YOUR POLICY'S INSURED PERSON
After the policy's second year, we will permit you to request that a new insured
person replace the existing one. This requires that you provide us with adequate
evidence that the proposed new insured person meets our requirements for
insurance. Other requirements are outlined in your policy.
Upon making this change, the monthly insurance charges we deduct and prospective
guarantee premiums will be based on the new insured person's insurance risk
characteristics. The change of insured person will not, however, affect the
surrender charge computation for the amount of coverage that is then in force.
Substituting the insured person is a taxable event and may, depending upon
individual circumstances, have other tax consequences as well. For example, the
change could cause the policy to be a "modified endowment contract" or to fail
the Internal Revenue Code's definition of "life insurance," unless we also
distribute certain amounts to you from the policy. See "Tax information" above.
You should consult your tax advisor prior to substituting the insured person. As
a condition to substituting the insured person we may require you to sign a form
acknowledging the potential tax consequences. In no event, however, will we
permit a change that causes your policy to fail the definition of life
insurance.
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 the request does not comply with our transfer limitations, or where you
request transfer of an amount greater than that currently allocated to an
investment option.
Similarly, 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 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
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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 between
investment options 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 premium 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 confirmation letter by first class mail.
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 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 that is then applicable to
your policy by the amount we have at risk under your policy. 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
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that would be payable if the insured person died on that date and (b) the then
total account value under the policy. A greater amount at risk, or a higher cost
of insurance rate, will result in a higher monthly charge.
As a general rule, the cost of insurance rate increases each year that you own
your policy. This happens automatically because of the insured person's
increasing age.
Our cost of insurance rates are guaranteed not to exceed those that will be
specified in your policy. For most insured persons at most ages, our current
rates are lower than those maximums. Therefore, we have the ability to raise
these rates up to the guaranteed maximum at any time. The guaranteed maximum
cost of insurance rates for gender neutral Incentive Life policies are based on
the 1980 Commissioner's Standard Ordinary SB Smoker and NB Non-Smoker Mortality
Table. For all other policies, the guaranteed maximum cost of insurance rates
are based on the 1980 Commissioner's Standard Ordinary Male and Female Smoker
and Non-Smoker Mortality Tables.
Our cost of insurance rates will generally be lower (except in Montana and in
connection with certain employee benefit plans) if the insured person is a
female than if a male. They also will generally be lower for non-tobacco users
than tobacco users and lower for persons that have other highly favorable health
characteristics, as compared to those that do not. On the other hand, insured
persons who present particular health, occupational or avocational risks may be
charged higher cost of insurance rates and other additional charges as specified
in their policies. In addition, the current rates also vary depending on the
duration of the policy (i.e., the length of time since the policy was issued).
We offer lower rates for non-tobacco users only if they are at least age 18. You
may ask us to review a younger insured person's tobacco habits following the
policy anniversary on which such person is age 18.
DATE OF MONTHLY DEDUCTIONS. We make the regular monthly deductions as of the
first day of each month of the policy.
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., the administrative charge, cost of insurance
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. Similarly, the premium charge is designed primarily
to defray sales and tax expenses we incur that are based on premium payments.
CUSTOMER LOYALTY CREDIT
We provide a customer loyalty credit for policies that have been outstanding for
more than six years. This is added to the account value each month. The dollar
amount of the credit is a percentage of the total amount you then have in our
investment options (not including any value we are holding as collateral for any
policy loans or for a living benefit payment). The percentage credit is
currently at an annual rate of .60% beginning in the policy's seventh year. This
credit is not guaranteed, however. Because we first offered Incentive Life in
1999, no credit has yet been attained under any outstanding policy.
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40 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 (and certain rider benefits), as described in the
policy (or rider).
WHEN WE PAY POLICY PROCEEDS
GENERAL. We will generally pay any death benefit, surrender, 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 GUARANTEED INTEREST OPTION PROCEEDS. We also have the right to defer
payment or transfers of amounts out of our guaranteed interest option for up to
six months. If we delay more than 30 days in paying you such amounts, we will
pay interest of at least 3% per year from the date we receive your request.
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 or any rider 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 or rider. 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 Incentive Life from one 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.
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41 MORE INFORMATION ABOUT OTHER MATTERS
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If you then wish to transfer the amount you have in that option to another
investment option, you may do so.
We may make any changes in the policy or its riders, require additional premium
payments, or make distributions from the policy to the extent we deem necessary
to ensure that your policy qualifies or continues to 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 insurance risk characteristics of the insured
person under your policy and such factors as the face amount, death benefit
option, premium payment amounts, 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 Incentive 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 Incentive Life) and
variable annuity contracts through AXA Advisors, LLC ("AXA Advisors"), the
successor to EQ Financial Consultants, Inc. and an affiliate of Equitable Life.
The Investment Company Act of 1940, therefore, classifies AXA Advisors as the
"principal underwriter" of those policies and contracts. AXA Advisors also
serves as a principal underwriter of EQ Advisors Trust and, prior to September
1999, AXA Advisors' predecessor was the manager of EQ Advisors Trust. AXA
Advisors' address is 1290 Avenue of the Americas, New York, NY 10104. AXA
Advisors is registered with the SEC as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. In 1998 and 1999, AXA Advisors
was paid a fee of $325,380, annually, for its services as principal underwriter
of our policies.
We sell Incentive Life through financial professionals who are licensed
insurance agents and are also registered representatives of AXA Advisors. The
financial professional who sells you this policy receives sales commissions from
Equitable Life. The commissions don't cost you anything above the charges and
expenses already discussed elsewhere in this prospectus. Generally, the agents
will receive maximum commissions of: 50% of the amount of the target premium you
pay in your policy's first year, plus 4% of all other premiums paid in your
policy's first year; plus 4% of
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42 MORE INFORMATION ABOUT OTHER MATTERS
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the amount of the premium you pay in the second through tenth years; plus 3% of
all other premiums you pay in subsequent years. We pay comparable commissions on
the amount of premiums you pay that we deem attributable to any face amount
increase that you request. The agent may be required to return to us any
commissions on premiums that we have refunded to a policyowner.
We also sell the policies through financial professionals who are licensed
independent insurance brokers and are also registered representatives either of
AXA Advisors or of another SEC registered broker-dealer. The commissions for
independent brokers will be no more than those for agents. The commissions will
be paid through the registered broker-dealer and may be subject to our
above-noted return policy if premiums are refunded.
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>
<TABLE>
<CAPTION>
43 DIRECTORS AND PRINCIPAL OFFICERS
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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
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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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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 January
New York, NY 10020 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
- -----------------------------------------------------------------------------------------------------------------------------------
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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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
44 DIRECTORS AND PRINCIPAL OFFICERS
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DIRECTORS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
NORMAN C. FRANCIS
- -----------------------------------------------------------------------------------------------------------------------------------
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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DONALD J. GREENE
- -----------------------------------------------------------------------------------------------------------------------------------
LeBouef, Lamb, Greene & MacRae, L.L.P. Director of Equitable Life (since July 1991). Of Counsel, LeBoeuf, Lamb, Greene &
125 West 55th Street MacRae, L.L.P. (since 1999). Prior thereto, Partner of the firm (1965 to 1999).
New York, NY 10019-4513 Director of AXA Financial (since May 1992).
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JOHN T. HARTLEY
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
SBC Warburg Dillon Read LLC Director of Equitable Life (since July 1992); Director of AXA Financial (since July
535 Madison Avenue 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).
- -----------------------------------------------------------------------------------------------------------------------------------
MARY (NINA) HENDERSON
- -----------------------------------------------------------------------------------------------------------------------------------
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).
- -----------------------------------------------------------------------------------------------------------------------------------
W. EDWIN JARMAIN
- -----------------------------------------------------------------------------------------------------------------------------------
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 Company,
Toronto, Ontario M5H 3T9 and AXA Pacific Insurance Company, and Alternate Director, AXA Asia Pacific
Canada Holdings Limited. Chairman (non-executive) and Director, FCA International Ltd.
(January 1994 to May 1998). Director of AXA Financial, Inc. (since July 1992).
- -----------------------------------------------------------------------------------------------------------------------------------
GEORGE T. LOWY
- -----------------------------------------------------------------------------------------------------------------------------------
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>
<PAGE>
<TABLE>
<CAPTION>
45 DIRECTORS AND PRINCIPAL OFFICERS
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DIRECTORS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
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 February
75008 Paris, France 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).
- -----------------------------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------------------
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).
- -----------------------------------------------------------------------------------------------------------------------------------
DAVE H. WILLIAMS
- -----------------------------------------------------------------------------------------------------------------------------------
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).
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
46 DIRECTORS AND PRINCIPAL OFFICERS
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OFFICERS - DIRECTORS
- -----------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
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).
- -----------------------------------------------------------------------------------------------------------------------------------
EDWARD D. MILLER
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
STANLEY B. TULIN
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
47 DIRECTORS AND PRINCIPAL OFFICERS
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- -----------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
LEON B. BILLIS
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
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).
- -----------------------------------------------------------------------------------------------------------------------------------
HARVEY BLITZ
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
KEVIN R. BYRNE
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
JOHN A. CAROSELLI
- -----------------------------------------------------------------------------------------------------------------------------------
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).
- -----------------------------------------------------------------------------------------------------------------------------------
JUDY A. FAUCETT
- -----------------------------------------------------------------------------------------------------------------------------------
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).
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
48 DIRECTORS AND PRINCIPAL OFFICERS
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
ALVIN H. FENICHEL
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
PAUL J. FLORA
- -----------------------------------------------------------------------------------------------------------------------------------
Senior Vice President and Auditor, Equitable Life. Vice President and Auditor, AXA
Financial.
- -----------------------------------------------------------------------------------------------------------------------------------
ROBERT E. GARBER
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
DONALD R. KAPLAN
- -----------------------------------------------------------------------------------------------------------------------------------
Senior Vice President (since September 1999), Chief Compliance Officer and
Associate General Counsel, Equitable Life. Previously held other officerships with
Equitable Life.
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
Richard J. Matteis
- -----------------------------------------------------------------------------------------------------------------------------------
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).
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
49 DIRECTORS AND PRINCIPAL OFFICERS
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
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).
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
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.
- -----------------------------------------------------------------------------------------------------------------------------------
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>
<TABLE>
<CAPTION>
50 DIRECTORS AND PRINCIPAL OFFICERS
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
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>
51 FINANCIAL STATEMENTS OF SEPARATE ACCOUNT FP AND EQUITABLE LIFE
- --------------------------------------------------------------------------------
8
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
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>
52 FINANCIAL STATEMENTS OF SEPARATE ACCOUNT FP AND EQUITABLE LIFE
- --------------------------------------------------------------------------------
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
INDEX TO FINANCIAL STATEMENTS
<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-15
Notes to Financial Statements...................................................................... FSA-24
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants..................................................................... F-1
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 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, 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
+ Formerly known as Equitable Variable Life Insurance Company Separate Account FP.
</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 Intermediate Government Securities, Alliance Money
Market, Alliance Quality Bond, Alliance High Yield, Alliance Common Stock,
Alliance Equity Index, Alliance Growth & Income, 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, T. Rowe Price Equity Income, Alliance Global, Alliance International,
Morgan Stanley Emerging Markets Equity, T. Rowe Price International Stock,
Alliance Aggressive Stock, Alliance Small Cap Growth, EQ/Evergreen, MFS Emerging
Growth Companies, Warburg Pincus Small Company Value, Alliance Balanced,
Alliance Conservative Investors, Alliance Growth Investors, EQ/Evergreen
Foundation, EQ/Putnam Balanced and Merrill Lynch World Strategy ("EQ Advisors
Trust Variable Investment Options"), 30 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>
FIXED INCOME OPTIONS: EQUITY OPTIONS:
------------------------------------------------------ ----------------------------
ALLIANCE
INTERMEDIATE ALLIANCE ALLIANCE ALLIANCE
GOVERNMENT MONEY ALLIANCE HIGH COMMON ALLIANCE
SECURITIES MARKET QUALITY BOND YIELD STOCK EQUITY INDEX
------------ ------------ ------------ ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 80,139,159................. $78,746,672
342,765,909................. $344,082,723
246,885,528................. $233,631,434
177,773,173................. $149,030,820
3,081,451,600................. $3,783,859,850
621,830,916................. $850,584,523
205,101,089.................
46,147,852.................
182,262.................
494,512.................
38,508,013.................
391,533.................
Receivable for Trust shares sold.......... 58,836 -- -- 5,046 -- --
Receivable for policy-related
transactions.......................... 68,831 4,909,455 434,709 798,616 15,840,922 2,266,891
----------- ------------ ------------ ------------ -------------- ------------
Total Assets.............................. $78,874,339 $348,992,178 $234,066,143 $149,834,482 $3,799,700,772 $852,851,414
----------- ------------ ------------ ------------ -------------- ------------
LIABILITIES
Payable for Trust shares purchased........ $ -- $ 4,563,801 $ 161,711 $ -- $ 19,831,580 $ 2,546,878
Payable for policy-related
transactions.......................... -- -- -- -- -- --
----------- ------------ ------------ ------------ -------------- ------------
Total Liabilities......................... -- 4,563,801 161,711 -- 19,831,580 2,546,878
----------- ------------ ------------ ------------ -------------- ------------
NET ASSETS................................ $78,874,339 $344,428,377 $233,904,432 $149,834,482 $3,779,869,192 $850,304,536
=========== ============ ============ ============ ============== ============
Amount retained by Equitable Life
in Separate Account FP (Note 4)....... $ 945,030 $ 16,198 $ 1,326,200 $ 1,280 $ 80,914 $ 121,396
Net Assets Attributable
to Contractowners..................... 77,929,309 344,412,179 232,578,232 149,833,202 3,779,788,278 850,183,140
----------- ------------ ------------ ------------ -------------- ------------
NET ASSETS................................ $78,874,339 $344,428,377 $233,904,432 $149,834,482 $3,779,869,192 $850,304,536
=========== ============ ============ ============ ============== ============
<CAPTION>
EQUITY OPTIONS:
--------------------------------------------------------------------
EQ/ CAPITAL MERRILL MFS
ALLIANCE ALLIANCE CAPITAL GUARDIAN LYNCH GROWTH
GROWTH PREMIER GUARDIAN U.S. BASIC VALUE WITH
& INCOME GROWTH RESEARCH EQUITY EQUITY INCOME
----------- ----------- -------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 80,139,159.................
342,765,909.................
246,885,528.................
177,773,173.................
3,081,451,600.................
621,830,916.................
205,101,089................. $232,271,328
46,147,852................. $51,216,559
182,262................. $193,355
494,512................. $511,837
38,508,013................. $39,778,636
391,533................. $412,169
Receivable for Trust shares sold.......... 160,367 -- -- -- -- --
Receivable for policy-related
transactions.......................... -- 283,944 24,204 -- 23,002 8,035
------------ ----------- -------- -------- ----------- --------
Total Assets.............................. $232,431,695 $51,500,503 $217,559 $511,837 $39,801,638 $420,204
------------ ----------- -------- -------- ----------- --------
LIABILITIES
Payable for Trust shares purchased........ $ -- $ 283,146 $ 24,204 $ -- $ 11,329 $ 4,490
Payable for policy-related
transactions.......................... 112,046 -- -- -- -- --
------------ ----------- -------- -------- ----------- --------
Total Liabilities......................... 112,046 283,146 24,204 -- 11,329 4,490
------------ ----------- -------- -------- ----------- --------
NET ASSETS................................ $232,319,649 $51,217,357 $193,355 $511,837 $39,790,309 $415,714
============ =========== ======== ======== =========== ========
Amount retained by Equitable Life
in Separate Account FP (Note 4)....... $ 434,457 $ 3,545 $ 219 $ 387 $ 81,800 $ 3,570
Net Assets Attributable
to Contractowners..................... 231,885,192 51,213,812 193,136 511,450 39,708,509 412,144
------------ ----------- -------- -------- ----------- --------
NET ASSETS................................ $232,319,649 $51,217,357 $193,355 $511,837 $39,790,309 $415,714
============ =========== ======== ======== =========== ========
</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>
EQUITY OPTIONS (CONCLUDED):
-----------------------------------------------------------------------------
MORGAN
EQ/PUTNAM T. ROWE STANLEY
GROWTH & PRICE EMERGING
MFS INCOME EQUITY ALLIANCE ALLIANCE MARKETS
RESEARCH VALUE INCOME GLOBAL INTERNATIONAL EQUITY
----------- ----------- ----------- ------------ ------------- -----------
<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
54,114,065..................... $53,161,413
552,424,363..................... $724,986,725
51,584,951..................... $76,876,125
29,914,338..................... $40,958,925
43,913,498.....................
892,630,699.....................
46,097,819.....................
27,230.....................
160,950,031.....................
38,188,722.....................
Receivable for Trust shares sold.............. 252,705 -- -- -- -- --
Receivable for policy-related
transactions.............................. -- 82,740 194,627 1,126,946 92,708 82,278
----------- ----------- ----------- ------------ ----------- -----------
Total Assets.................................. $48,850,291 $21,863,477 $53,356,040 $726,113,671 $76,968,833 $41,041,203
----------- ----------- ----------- ------------ ----------- -----------
LIABILITIES
Payable for Trust shares purchased............ $ -- $ 69,698 $ 154,373 $ 1,211,437 $ 87,078 $ 350,654
Payable for policy-related
transactions.............................. 212,939 -- -- -- -- --
----------- ----------- ----------- ------------ ----------- -----------
Total Liabilities............................. 212,939 69,698 154,373 1,211,437 87,078 350,654
----------- ----------- ----------- ------------ ----------- -----------
NET ASSETS................................... $48,637,352 $21,793,779 $53,201,667 $724,902,234 $76,881,755 $40,690,549
=========== =========== =========== ============ =========== ===========
Amount retained by Equitable Life
in Separate Account FP (Note 4)........... $ 142,291 $ 69,602 $ 126,030 $ 3,388 $ 964,072 $ 1,767,601
Net Assets Attributable
to Policyowners........................... 48,495,061 21,724,177 53,075,637 724,898,846 75,917,683 38,922,948
----------- ----------- ----------- ------------ ----------- -----------
NET ASSETS.................................... $48,637,352 $21,793,779 $53,201,667 $724,902,234 $76,881,755 $40,690,549
=========== =========== =========== ============ =========== ===========
<CAPTION>
EQUITY OPTIONS (CONCLUDED):
----------------------------------------------------------------------------
WARBURG
T. ROWE MFS PINCUS
PRICE ALLIANCE ALLIANCE EMERGING SMALL
INTERNATIONAL AGGRESSIVE SMALL CAP EQ/ GROWTH COMPANY
STOCK STOCK GROWTH EVERGREEN COMPANIES VALUE
------------- -------------- ----------- --------- ------------ -----------
<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.....................
23,253,533.....................
54,114,065.....................
552,424,363.....................
51,584,951.....................
29,914,338.....................
43,913,498..................... $53,258,879
892,630,699..................... $1,051,440,590
46,097,819..................... $70,174,096
27,230..................... $28,680
160,950,031..................... $238,027,993
38,188,722..................... $35,893,840
Receivable for Trust shares sold.............. -- 2,154,914 22,666,998 -- -- 71,466
Receivable for policy-related
transactions.............................. 57,539 -- -- -- 1,271,988 --
----------- -------------- ----------- ------- ------------ -----------
Total Assets.................................. $53,316,418 $1,053,595,504 $92,841,094 $28,680 $239,299,981 $35,965,306
----------- -------------- ----------- ------- ------------ -----------
LIABILITIES
Payable for Trust shares purchased............ $ 2,392 $ -- $ -- $ -- $ 1,116,940 $ --
Payable for policy-related
transactions.............................. -- 1,550,441 22,460,673 -- -- 17,093
----------- -------------- ----------- ------- ------------ -----------
Total Liabilities............................. 2,392 1,550,441 22,460,673 -- 1,116,940 17,093
----------- -------------- ----------- ------- ------------ -----------
NET ASSETS................................... $53,314,026 $1,052,045,063 $70,380,421 $28,680 $238,183,041 $35,948,213
=========== ============== =========== ======= ============ ===========
Amount retained by Equitable Life
in Separate Account FP (Note 4)........... $ 178,040 $ 3,855 $ 527,774 $ 18 $ 386,768 $ 164,967
Net Assets Attributable
to Policyowners........................... 53,135,986 1,052,041,208 69,852,647 28,662 237,796,273 35,783,246
----------- -------------- ----------- ------- ------------ -----------
NET ASSETS.................................... $53,314,026 $1,052,045,063 $70,380,421 $28,680 $238,183,041 $35,948,213
=========== ============== =========== ======= ============ ===========
</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>
ASSET ALLOCATION OPTIONS:
------------------------------------------------------------------------------------
MERRILL
ALLIANCE ALLIANCE EQ/ EQ/ LYNCH
ALLIANCE CONSERVATIVE GROWTH EVERGREEN PUTNAM WORLD
BALANCED INVESTORS INVESTORS FOUNDATION BALANCED STRATEGY
------------ ------------ -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $453,630,311..................... $546,866,262
194,380,806..................... $217,969,178
928,527,892..................... $1,216,541,911
2,749..................... $ 2,848
8,911,255..................... $8,418,996
4,518,718..................... $5,372,189
Receivable for Trust shares sold.............. -- 15,822 -- -- -- --
Receivable for policy-related
transactions.............................. -- 115,963 703,914 -- 16,607 1,267
------------ ------------ -------------- ------- ---------- ----------
Total Assets.................................. $546,866,262 $218,100,963 $1,217,245,825 $ 2,848 $8,435,603 $5,373,456
------------ ------------ -------------- ------- ---------- ----------
LIABILITIES
Payable for Trust shares purchased............ $ 31,321 $ -- $ 353,476 $ -- $ 4,500 $ 1,232
Payable for policy-related
transactions.............................. 123,383 -- -- -- -- --
------------ ------------ -------------- ------- ---------- ----------
Total Liabilities............................. 154,704 -- 353,476 -- 4,500 1,232
------------ ------------ -------------- ------- ---------- ----------
NET ASSETS.................................... $546,711,558 $218,100,963 $1,216,892,349 $ 2,848 $8,431,103 $5,372,224
============ ============ ============== ======= ========== ==========
Amount retained by Equitable Life
in Separate Account FP (Note 4)........... $ 1,088,939 $ 521,116 $ 924,554 $ 2 $ 70,099 $ 494,770
Net Assets Attributable
to Contractowners......................... 545,622,619 217,579,847 1,215,967,795 2,846 8,361,004 4,877,454
------------ ------------ -------------- ------- ---------- ----------
NET ASSETS.................................... $546,711,558 $218,100,963 $1,216,892,349 $ 2,848 $8,431,103 $5,372,224
============ ============ ============== ======= ========== ==========
</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>
FIXED INCOME OPTIONS:
-------------------------------------------------------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES ALLIANCE MONEY MARKET
---------------------------------- ------------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 4,049,521 $3,477,938 $2,914,613 $13,943,193 $10,719,684 $9,754,675
Expenses (Note 3):
Mortality and expense
risk charges..................... 378,916 350,536 282,422 1,613,234 1,204,220 1,101,168
----------- ---------- ---------- ----------- ----------- ----------
NET INVESTMENT INCOME..................... 3,670,605 3,127,402 2,632,191 12,329,959 9,515,464 8,653,507
----------- ---------- ---------- ----------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (194,507) 60,260 (95,509) 517,935 (161,314) (513,800)
Realized gain distribution
from the Trust................... -- -- -- 10,344 7,750 13,435
----------- ---------- ---------- ----------- ----------- ----------
NET REALIZED GAIN (LOSS).................. (194,507) 60,260 (95,509) 528,279 (153,564) (500,365)
----------- ---------- ---------- ----------- ----------- ----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............... 2,391,062 868,053 (141,479) 1,536,450 804,349 24,023
End of period..................... (1,392,487) 2,391,062 868,053 1,316,815 1,536,450 804,349
----------- ---------- ---------- ----------- ----------- ----------
Change in unrealized appreciation
(depreciation) during the period..... (3,783,549) 1,523,009 1,009,532 (219,635) 732,101 780,326
----------- ---------- ---------- ----------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ (3,978,056) 1,583,269 914,023 308,644 578,537 279,961
----------- ---------- ---------- ----------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ (307,451) $4,710,671 $3,546,214 $12,638,603 $10,094,001 $8,933,468
=========== ========== ========== =========== =========== ==========
<CAPTION>
FIXED INCOME OPTIONS:
----------------------------------------
ALLIANCE QUALITY BOND
---------------------------------------
1999 1998 1997
------------ ----------- -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 12,542,857 $10,317,238 $ 8,869,740
Expenses (Note 3):
Mortality and expense
risk charges..................... 1,329,147 1,106,136 845,069
------------ ----------- -----------
NET INVESTMENT INCOME..................... 11,213,710 9,211,102 8,024,671
------------ ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (1,493,664) 34,937 (504,580)
Realized gain distribution
from the Trust................... 870,458 4,596,907 --
------------ ----------- -----------
NET REALIZED GAIN (LOSS).................. (623,206) 4,631,844 (504,580)
------------ ----------- -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............... 3,367,697 2,395,718 (1,961,822)
End of period..................... (13,254,094) 3,367,697 2,395,718
------------ ----------- -----------
Change in unrealized appreciation
(depreciation) during the period..... (16,621,791) 971,979 4,357,540
------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ (17,244,997) 5,603,823 3,852,960
------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ (6,031,287) $14,814,925 $11,877,631
============ =========== ===========
</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>
FIXED INCOME OPTIONS (CONCLUDED): EQUITY OPTIONS:
--------------------------------------- ----------------------------------------
ALLIANCE HIGH YIELD ALLIANCE COMMON STOCK
--------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
------------ ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 17,378,455 $ 18,449,747 $12,918,934 $ 20,107,533 $ 15,939,680 $ 10,668,337
Expenses (Note 3):
Mortality and expense
risk charges..................... 889,065 1,007,106 789,982 19,069,959 14,600,706 11,435,936
------------ ------------ ----------- ------------ ------------ ------------
NET INVESTMENT INCOME..................... 16,489,390 17,442,641 12,128,952 1,037,574 1,338,974 (767,599)
------------ ------------ ----------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (15,192,553) (2,344,392) 936,554 221,690,581 169,109,310 53,841,049
Realized gain distribution
from the Trust................... 161,999 3,396,523 6,365,633 497,324,765 353,834,250 164,814,473
------------ ------------ ----------- ------------ ------------ ------------
NET REALIZED GAIN (LOSS).................. (15,030,554) 1,052,131 7,302,187 719,015,346 522,943,560 218,655,522
------------ ------------ ----------- ------------ ------------ ------------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ (20,898,855) 8,622,836 5,664,824 689,309,204 567,231,009 294,432,897
End of period.................. (28,742,353) (20,898,854) 8,622,836 702,408,250 689,309,204 567,231,009
------------ ------------ ----------- ------------ ------------ ------------
Change in unrealized appreciation
(depreciation) during the period..... (7,843,498) (29,521,690) 2,958,012 13,099,046 122,078,195 272,798,112
------------ ------------ ----------- ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ (22,874,052) (28,469,559) 10,260,199 732,114,392 645,021,755 491,453,634
------------ ------------ ----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ (6,384,662) $(11,026,918) $22,389,151 $733,151,966 $646,360,729 $490,686,035
============ ============ =========== ============ ============ ============
<CAPTION>
EQUITY OPTIONS:
---------------------------------------
ALLIANCE EQUITY INDEX
---------------------------------------
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 7,575,355 $ 3,958,217 $ 2,610,223
Expenses (Note 3):
Mortality and expense
risk charges..................... 3,729,959 1,862,376 977,620
------------ ------------ -----------
NET INVESTMENT INCOME..................... 3,845,396 2,095,841 1,632,603
------------ ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 21,008,249 5,460,381 (414,497)
Realized gain distribution
from the Trust................... 6,196,508 128,151 850,437
------------ ------------ -----------
NET REALIZED GAIN (LOSS).................. 27,204,757 5,588,532 435,940
------------ ------------ -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 136,665,316 63,055,426 21,448,224
End of period.................. 228,753,607 136,665,316 63,055,426
------------ ------------ -----------
Change in unrealized appreciation
(depreciation) during the period..... 92,088,291 73,609,890 41,607,202
------------ ------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 119,293,048 79,198,422 42,043,142
------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $123,138,444 $ 81,294,263 $43,675,745
============ ============ ===========
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-7
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------------------------------
CAPITAL
EQ/ALLIANCE CAPITAL GUARDIAN
PREMIER GUARDIAN U.S.
ALLIANCE GROWTH & INCOME GROWTH (C) RESEARCH (d) EQUITY (d)
--------------------------------------- ----------- ------------ ----------
1999 1998 1997 1999 1999 1999
----------- ----------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 530,384 $ 415,436 $ 636,335 $ 30,540 $ 280 $ 1,159
Expenses (Note 3):
Mortality and expense
risk charges..................... 1,048,745 668,795 358,997 63,730 209 378
----------- ----------- ----------- ---------- ------- -------
NET INVESTMENT INCOME..................... (518,361) (253,359) 277,338 (33,190) 71 781
----------- ----------- ----------- ---------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 730,688 7,289,936 530,421 83,605 2,810 451
Realized gain distribution
from the Trust................... 20,855,872 12,146,928 5,006,247 106,890 27 1,508
----------- ----------- ----------- ---------- ------- -------
NET REALIZED GAIN (LOSS).................. 21,586,560 19,436,864 5,536,668 190,495 2,837 1,959
----------- ----------- ----------- ---------- ------- -------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 16,240,511 13,021,603 5,074,338 -- -- --
End of period.................. 27,170,239 16,240,511 13,021,603 5,068,707 11,093 17,325
----------- ----------- ----------- ---------- ------- -------
Change in unrealized appreciation
(depreciation) during the period..... 10,929,728 3,218,908 7,947,265 5,068,707 11,093 17,325
----------- ----------- ----------- ---------- ------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 32,516,288 22,655,772 13,483,933 5,259,202 13,930 19,284
----------- ----------- ----------- ---------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $31,997,927 $22,402,413 $13,761,271 $5,226,012 $14,001 $20,065
=========== =========== =========== ========== ======= =======
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------------
MERRILL LYNCH
BASIC VALUE EQUITY (A)
------------------------------------------
1999 1998 1997
---------- --------- --------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 468,257 $ 192,441 $ 35,810
Expenses (Note 3):
Mortality and expense
risk charges..................... 153,456 66,427 9,349
---------- --------- --------
NET INVESTMENT INCOME..................... 314,801 126,014 26,461
---------- --------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 426,168 207,032 6,656
Realized gain distribution
from the Trust................... 1,963,197 667,083 33,738
---------- --------- --------
NET REALIZED GAIN (LOSS).................. 2,389,365 874,115 40,394
---------- --------- --------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ (91,959) 135,003 --
End of period.................. 1,270,622 (91,959) 135,003
---------- --------- --------
Change in unrealized appreciation
(depreciation) during the period..... 1,362,581 (226,962) 135,003
---------- --------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 3,751,946 647,153 175,397
---------- --------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $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-8
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------------------------------
MFS
GROWTH
WITH EQ/PUTNAM
INCOME (C) MFS RESEARCH (A) GROWTH & INCOME VALUE (A)
---------- --------------------------------- ---------------------------------
1999 1999 1998 1997 1999 1998 1997
---------- ----------- ---------- -------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 1,268 $ 52,831 $ 71,137 $ 20,442 $ 278,910 $ 143,999 $ 33,273
Expenses (Note 3):
Mortality and expense
risk charges..................... 431 208,639 86,044 13,127 110,374 56,995 9,655
------- ----------- ---------- -------- ----------- ---------- --------
NET INVESTMENT INCOME..................... 837 (155,808) (14,907) 7,315 168,536 87,004 23,618
------- ----------- ---------- -------- ----------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (227) 995,232 494,412 6,989 276,186 209,398 1,078
Realized gain distribution
from the Trust................... -- 1,086,222 -- 81,156 1,499,307 130,047 27,226
------- ----------- ---------- -------- ----------- ---------- --------
NET REALIZED GAIN (LOSS).................. (227) 2,081,454 494,412 88,145 1,775,493 339,445 28,304
------- ----------- ---------- -------- ----------- ---------- --------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ -- 3,313,063 249,382 -- 1,160,602 269,561 --
End of period.................. 20,637 10,033,987 3,313,063 249,382 (1,472,796) 1,160,602 269,561
------- ----------- ---------- -------- ----------- ---------- --------
Change in unrealized appreciation
(depreciation) during the period..... 20,637 6,720,924 3,063,681 249,382 (2,633,398) 891,041 269,561
------- ----------- ---------- -------- ----------- ---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 20,410 8,802,378 3,558,093 337,527 (857,905) 1,230,486 297,865
------- ----------- ---------- -------- ----------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $21,247 $ 8,646,570 $3,543,186 $344,842 $ (689,369) $1,317,490 $321,483
======= =========== ========== ======== =========== ========== ========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------
T. ROWE PRICE EQUITY INCOME (A)
------------------------------------
1999 1998 1997
------------ ---------- ----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 998,227 $ 722,954 $ 145,613
Expenses (Note 3):
Mortality and expense
risk charges..................... 272,123 173,802 29,706
----------- ---------- ----------
NET INVESTMENT INCOME..................... 726,104 549,152 115,907
----------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 655,822 341,473 56,634
Realized gain distribution
from the Trust................... 2,081,914 930,853 53,840
----------- ---------- ----------
NET REALIZED GAIN (LOSS).................. 2,737,736 1,272,326 110,474
----------- ---------- ----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 1,585,616 1,073,548 --
End of period.................. (952,652) 1,585,616 1,073,548
----------- ---------- ----------
Change in unrealized appreciation
(depreciation) during the period..... (2,538,268) 512,068 1,073,548
----------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 199,468 1,784,394 1,184,022
----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ 925,572 $2,333,546 $1,299,929
=========== ========== ==========
</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-9
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-----------------------------------------------------------------------------------
ALLIANCE GLOBAL ALLIANCE INTERNATIONAL
--------------------------------------- --------------------------------------
1999 1998 1997 1999 1998 1997
------------ ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 561,424 $ 5,636,672 $ 8,803,070 $ -- $ 996,913 $ 1,386,732
Expenses (Note 3):
Mortality and expense
risk charges..................... 3,438,444 2,777,697 2,805,310 321,035 289,066 297,278
------------ ----------- ------------ ----------- ----------- -----------
NET INVESTMENT INCOME..................... (2,877,020) 2,858,975 5,997,760 (321,035) 707,847 1,089,454
------------ ----------- ------------ ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 67,795,783 17,406,382 30,411,238 1,164,532 (3,606,669) (57,635)
Realized gain distribution
from the Trust................... 44,485,709 33,241,409 26,426,403 1,299,989 10,663 2,325,403
------------ ----------- ------------ ----------- ----------- -----------
NET REALIZED GAIN (LOSS).................. 112,281,492 50,647,791 56,837,641 2,464,521 (3,596,006) 2,267,768
------------ ----------- ------------ ----------- ----------- -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 83,560,503 46,113,189 58,618,054 5,502,451 (2,793,834) 1,857,793
End of period.................. 172,562,362 83,560,503 46,113,189 25,291,174 5,502,451 (2,793,834)
------------ ----------- ------------ ----------- ----------- -----------
Change in unrealized appreciation
(depreciation) during the period..... 89,001,859 37,447,314 (12,504,865) 19,788,723 8,296,285 (4,651,627)
------------ ----------- ------------ ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 201,283,351 88,095,105 44,332,776 22,253,244 4,700,279 (2,383,859)
------------ ----------- ------------ ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $198,406,331 $90,954,080 $ 50,330,536 $21,932,209 $ 5,408,126 $(1,294,405)
============ =========== ============ =========== =========== ===========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------
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-10
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-----------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK (A) ALLIANCE AGGRESSIVE STOCK
-------------------------------------- ------------------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 192,580 $ 258,382 $ 2,393 $ 3,163,286 $ 4,461,389 $ 1,311,613
Expenses (Note 3):
Mortality and expense
risk charges..................... 200,684 119,672 26,332 5,481,701 5,581,296 5,299,127
----------- ---------- --------- ------------ ------------ ------------
NET INVESTMENT INCOME..................... (8,104) 138,710 (23,939) (2,318,415) (1,119,907) (3,987,514)
----------- ---------- --------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 4,626,661 354,551 (50,331) (27,888,194) (39,688,312) 28,217,939
Realized gain distribution
from the Trust................... 583,215 268 -- 61,642,419 46,528,461 79,729,154
----------- ---------- --------- ------------ ------------ ------------
NET REALIZED GAIN (LOSS).................. 5,209,876 354,819 (50,331) 33,754,225 6,840,149 107,947,093
----------- ---------- --------- ------------ ------------ ------------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 1,603,083 (820,718) -- 26,715,214 32,695,620 46,617,235
End of period.................. 9,345,381 1,603,083 (820,718) 158,809,890 26,715,214 32,695,620
----------- ---------- --------- ------------ ------------ ------------
Change in unrealized appreciation
(depreciation) during the period..... 7,742,298 2,423,801 (820,718) 132,094,676 (5,980,406) (13,921,615)
----------- ---------- --------- ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 12,952,174 2,778,620 (871,049) 165,848,901 859,743 94,025,478
----------- ---------- --------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $12,944,070 $2,917,330 $(894,988) $163,530,486 $ (260,164) $ 90,037,964
=========== ========== ========= ============ ============ ============
<CAPTION>
EQUITY OPTIONS (CONTINUED)
-------------------------------------
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
=========== =========== =========
</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-11
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONCLUDED):
--------------------------------------------------------------------------------------
EQ/ MFS EMERGING WARBURG PINCUS
EVERGREEN (C) GROWTH COMPANIES (A) SMALL COMPANY VALUE (A)
------------- ---------------------------------- -----------------------------------
1999 1999 1998 1997 1999 1998 1997
------------- ----------- ----------- -------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 99 $ -- $ 969 $ 24,358 $ 67,108 $ 171,716 $ 21,651
Expenses (Note 3):
Mortality and expense
risk charges..................... 18 640,976 157,484 18,835 180,999 168,543 44,889
------ ----------- ----------- -------- ----------- ----------- ---------
NET INVESTMENT INCOME..................... 81 (640,976) (156,515) 5,523 (113,891) 3,173 (23,238)
------ ----------- ----------- -------- ----------- ----------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 20 13,577,250 4,270,964 161,034 (1,591,217) (142,969) 29,803
Realized gain distribution
from the Trust................... -- 3,969,879 -- 296,998 -- -- 110,391
------ ----------- ----------- -------- ----------- ----------- ---------
NET REALIZED GAIN (LOSS).................. 20 17,547,129 4,270,964 458,032 (1,591,217) (142,969) 140,194
------ ----------- ----------- -------- ----------- ----------- ---------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ -- 6,996,177 171,320 -- (4,215,341) (228,709) --
End of period.................. 1,450 77,077,961 6,996,177 171,320 (2,294,882) (4,215,340) (228,709)
------ ----------- ----------- -------- ----------- ----------- ---------
Change in unrealized appreciation
(depreciation) during the period..... 1,450 70,081,784 6,824,857 171,320 1,920,459 (3,986,631) (228,709)
------ ----------- ----------- -------- ----------- ----------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 1,470 87,628,913 11,095,821 629,352 329,242 (4,129,600) (88,515)
------ ----------- ----------- -------- ----------- ----------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $1,551 $86,987,937 $10,939,306 $634,875 $ 215,351 $(4,126,427) $(111,753)
====== =========== =========== ======== =========== =========== =========
</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 OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION OPTIONS:
------------------------------------------------------------------------------
ALLIANCE BALANCED ALLIANCE CONSERVATIVE INVESTORS
------------------------------------- -------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $14,371,360 $12,467,646 $13,756,520 $ 7,166,906 $ 7,360,794 $ 7,217,860
Expenses (Note 3):
Mortality and expense
risk charges..................... 3,107,759 2,765,767 2,544,300 1,244,722 1,136,634 1,066,078
----------- ----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME..................... 11,263,601 9,701,879 11,212,220 5,922,184 6,224,160 6,151,782
----------- ----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 9,085,444 2,733,445 5,910,524 2,045,436 1,432,988 818,458
Realized gain distribution
from the Trust................... 50,638,464 41,525,872 21,117,088 9,007,765 10,768,916 5,486,742
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED GAIN (LOSS).................. 59,723,908 44,259,317 27,027,612 11,053,201 12,201,904 6,305,200
----------- ----------- ----------- ----------- ----------- -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 81,344,863 60,878,286 42,382,824 21,507,963 16,228,145 7,700,135
End of period.................. 93,235,951 81,344,863 60,878,286 23,588,372 21,507,963 16,228,145
----------- ----------- ----------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation) during the period..... 11,891,088 20,466,577 18,495,462 2,080,409 5,279,818 8,528,010
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 71,614,996 64,725,894 45,523,074 13,133,610 17,481,722 14,833,210
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $82,878,597 $74,427,773 $56,735,294 $19,055,794 $23,705,882 $20,984,992
=========== =========== =========== =========== =========== ===========
<CAPTION>
ASSET ALLOCATION OPTIONS:
------------------------------------------
ALLIANCE GROWTH INVESTORS
------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 17,092,741 $ 18,252,039 $ 19,280,574
Expenses (Note 3):
Mortality and expense
risk charges..................... 6,207,073 5,194,905 4,570,289
------------ ------------ ------------
NET INVESTMENT INCOME..................... 10,885,668 13,057,134 14,710,285
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 15,284,978 7,745,162 10,531,767
Realized gain distribution
from the Trust................... 104,658,738 78,060,201 42,780,443
------------ ------------ ------------
NET REALIZED GAIN (LOSS).................. 119,943,716 85,805,363 53,312,210
------------ ------------ ------------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 167,705,597 115,056,641 67,150,693
End of period.................. 288,014,018 167,705,600 115,056,641
------------ ------------ ------------
Change in unrealized appreciation
(depreciation) during the period..... 120,308,421 52,648,959 47,905,948
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 240,252,137 138,454,322 101,218,158
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $251,137,805 $151,511,456 $115,928,443
============ ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ 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 OPERATIONS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION OPTIONS (CONCLUDED):
-------------------------------------------------------------------------------
EQ/EVERGREEN MERRILL LYNCH
FOUNDATION (C) EQ/PUTNAM BALANCED WORLD STRATEGY (A)
-------------- ------------------------------- ----------------------------
1999 1999 1998 1997 1999 1998 1997
------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust........... $ 31 $ 42,372 $111,099 $ 46,468 $ 41,786 $ 36,750 $ 17,124
Expenses (Note 3):
Mortality and expense
risk charges...................... 2 39,416 18,744 2,741 18,905 12,469 2,678
------- --------- -------- -------- -------- -------- --------
NET INVESTMENT INCOME...................... 29 2,956 92,355 43,727 22,881 24,281 14,446
------- --------- -------- -------- -------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments.................... 302 185,026 348,952 561 197,727 19,432 (3,626)
Realized gain distribution
from the Trust.................... -- 447,013 71,044 31,119 67,733 -- 38,995
------- --------- -------- -------- -------- -------- --------
NET REALIZED GAIN (LOSS)................... 302 632,039 419,996 31,680 265,460 19,432 35,369
------- --------- -------- -------- -------- -------- --------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............. -- 259,883 270,232 -- 187,734 (37,926) --
End of period................... (1,505) (492,259) 259,882 270,232 853,470 187,734 (37,926)
------- --------- -------- -------- -------- -------- --------
Change in unrealized appreciation
(depreciation) during the period...... (1,505) (752,142) (10,350) 270,232 665,736 225,660 (37,926)
------- --------- -------- -------- -------- -------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS......................... (1,203) (120,103) 409,646 301,912 931,196 245,092 (2,557)
------- --------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.............. $(1,174) $(117,147) $502,001 $345,639 $954,077 $269,373 $ 11,889
======= ========= ======== ======== ======== ======== ========
</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
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FIXED INCOME OPTIONS:
------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES ALLIANCE MONEY MARKET
------------------------------------- ------------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 3,670,605 $ 3,127,402 $ 2,632,191 $ 12,329,959 $ 9,515,464 $ 8,653,507
Net realized gain (loss).............. (194,507) 60,260 (95,509) 528,279 (153,564) (500,365)
Change in unrealized appreciation
(depreciation) on investments..... (3,783,549) 1,523,009 1,009,532 (219,635) 732,101 780,326
----------- ----------- ----------- ------------ ------------- -------------
Net increase (decrease) in net assets
from operations................... (307,451) 4,710,671 3,546,214 12,638,603 10,094,001 8,933,468
----------- ----------- ----------- ------------ ------------- -------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 16,691,635 11,828,290 8,749,531 231,007,033 229,608,273 234,059,930
Benefits and other policy-related
transactions (Note 3)............. (8,904,461) (9,081,050) (5,971,751) (63,463,349) (41,370,215) (40,687,124)
Net transfers among funds and
guaranteed interest account....... (3,762,164) 9,141,659 7,704,724 (91,919,848) (128,607,686) (259,049,840)
----------- ----------- ----------- ------------ ------------- -------------
Net increase (decrease) in net assets
from policy-related transactions.. 4,025,010 11,888,899 10,482,504 75,623,836 59,630,372 (65,677,034)
----------- ----------- ----------- ------------ ------------- -------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... 184,108 (335,126) 13,307 1,075,796 (387,161) 46,036
----------- ----------- ----------- ------------ ------------- -------------
INCREASE (DECREASE) IN NET ASSETS ........ 3,901,667 16,264,444 14,042,025 89,338,235 69,337,212 (56,697,530)
NET ASSETS
BEGINNING OF PERIOD................... 74,972,672 58,708,229 44,666,204 255,090,142 185,752,930 242,450,460
----------- ----------- ----------- ------------ ------------- -------------
NET ASSETS
END OF PERIOD......................... $78,874,339 $74,972,673 $58,708,229 $344,428,377 $ 255,090,142 $ 185,752,930
=========== =========== =========== ============ ============= =============
<CAPTION>
FIXED INCOME OPTIONS:
-----------------------------------------
ALLIANCE QUALITY BOND
-----------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 11,213,710 $ 9,211,102 $ 8,024,671
Net realized gain (loss).............. (623,206) 4,631,844 (504,580)
Change in unrealized appreciation
(depreciation) on investments..... (16,621,791) 971,979 4,357,540
------------ ------------ ------------
Net increase (decrease) in net assets
from operations................... (6,031,287) 14,814,925 11,877,631
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 19,416,861 14,952,560 8,423,097
Benefits and other policy-related
transactions (Note 3)............. (9,082,840) (5,388,113) (3,002,993)
Net transfers among funds and
guaranteed interest account....... 1,195,276 49,220,715 12,678,032
------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions.. 11,529,297 58,785,162 18,098,136
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (553,219) (402,883) 38,587
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS ........ 4,944,791 73,197,204 30,014,354
NET ASSETS
BEGINNING OF PERIOD................... 228,959,641 155,762,437 125,748,083
------------ ------------ ------------
NET ASSETS
END OF PERIOD......................... $233,904,432 $228,959,641 $155,762,437
============ ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ 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 (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FIXED INCOME OPTIONS (CONCLUDED):
-----------------------------------------
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>
EQUITY OPTIONS:
----------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK ALLIANCE EQUITY INDEX
---------------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
-------------- -------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 1,037,574 $ 1,338,974 $ (767,599) $ 3,845,396 $ 2,095,841 $ 1,632,603
Net realized gain (loss).............. 719,015,346 522,943,560 218,655,522 27,204,757 5,588,532 435,940
Change in unrealized appreciation
(depreciation) on investments..... 13,099,046 122,078,195 272,798,112 92,088,291 73,609,890 41,607,202
-------------- -------------- -------------- ------------ ------------ ------------
Net increase (decrease) in net assets
from operations................... 733,151,966 646,360,729 490,686,035 123,138,444 81,294,263 43,675,745
-------------- -------------- -------------- ------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 361,261,385 322,874,015 282,279,826 123,310,198 82,390,480 53,262,239
Benefits and other policy-related
transactions (Note 3)............. (302,304,428) (250,079,870) (199,662,183) (60,880,027) (34,756,406) (18,975,147)
Net transfers among funds and
guaranteed interest account....... 49,877,173 24,136,275 56,849,823 222,120,321 74,806,928 67,867,827
-------------- -------------- -------------- ------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions.. 108,834,130 96,930,420 139,467,466 284,550,492 122,441,002 102,154,919
-------------- -------------- -------------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (5,343,344) (2,780,348) 516,970 (1,148,745) (430,965) 54,423
-------------- -------------- -------------- ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS......... 836,642,752 740,510,801 630,670,471 406,540,191 203,304,300 145,885,087
NET ASSETS
BEGINNING OF PERIOD................... 2,943,226,440 2,202,715,639 1,572,045,168 443,764,345 240,460,045 94,574,958
-------------- -------------- -------------- ------------ ------------ ------------
NET ASSETS
END OF PERIOD......................... $3,779,869,192 $2,943,226,440 $2,202,715,639 $850,304,536 $443,764,345 $240,460,045
============== ============== ============== ============ ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ 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+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------------------------------
CAPITAL
EQ/ALLIANCE CAPITAL GUARDIAN
PREMIER GUARDIAN U.S.
ALLIANCE GROWTH & INCOME GROWTH (C) RESEARCH (D) EQUITY (D)
--------------------------------------- ----------- ------------ ----------
1999 1998 1997 1999 1999 1999
------------ ------------ ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ (518,361) $ (253,359) $ 277,338 $ (33,190) $ 71 $ 781
Net realized gain (loss).............. 21,586,560 19,436,864 5,536,668 190,495 2,837 1,959
Change in unrealized appreciation
(depreciation) on investments..... 10,929,728 3,218,908 7,947,265 5,068,707 11,093 17,325
------------ ------------ ----------- ----------- -------- --------
Net increase (decrease) in net assets
from operations................... 31,997,927 22,402,413 13,761,271 5,226,012 14,001 20,065
------------ ------------ ----------- ----------- -------- --------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 43,151,141 30,251,270 17,923,903 6,362,938 63,883 115,934
Benefits and other policy-related
transactions (Note 3)............. (19,321,951) (12,461,722) (6,498,823) (1,028,342) (503) (15,128)
Net transfers among funds and
guaranteed interest account....... 25,186,273 23,343,531 25,301,886 40,652,847 115,765 390,588
------------ ------------ ----------- ----------- -------- --------
Net increase (decrease) in net assets
from policy-related transactions.. 49,015,463 41,133,079 36,726,966 45,987,443 179,145 491,394
------------ ------------ ----------- ----------- -------- --------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (144,843) (617,058) 19,921 3,902 209 378
------------ ------------ ----------- ----------- -------- --------
INCREASE (DECREASE) IN NET ASSETS......... 80,868,547 62,918,434 50,508,158 51,217,357 193,355 511,837
NET ASSETS
BEGINNING OF PERIOD................... 151,451,102 88,532,668 38,024,510 -- -- --
------------ ------------ ----------- ----------- -------- --------
NET ASSETS
END OF PERIOD......................... $232,319,649 $151,451,102 $88,532,668 $51,217,357 $193,355 $511,837
============ ============ =========== =========== ======== ========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------
MERRILL LYNCH
BASIC VALUE EQUITY (A)
--------------------------------------
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 314,801 $ 126,014 $ 26,461
Net realized gain (loss).............. 2,389,365 874,115 40,394
Change in unrealized appreciation
(depreciation) on investments..... 1,362,581 (226,962) 135,003
----------- ----------- ----------
Net increase (decrease) in net assets
from operations................... 4,066,747 773,167 201,858
----------- ----------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 10,931,366 6,388,355 1,097,822
Benefits and other policy-related
transactions (Note 3)............. (3,171,744) (1,430,414) (135,034)
Net transfers among funds and
guaranteed interest account....... 7,845,599 8,794,685 4,661,128
----------- ----------- ----------
Net increase (decrease) in net assets
from policy-related transactions.. 15,605,221 13,752,626 5,623,916
----------- ----------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (43,053) (1,392,853) 1,202,680
----------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS......... 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......................... $39,790,309 $20,161,394 $7,028,454
=========== =========== ==========
</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-17
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------------------------------
MFS
GROWTH
WITH
INCOME (C) MFS RESEARCH (A)
--------------- ----------------------------------------------
1999 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......................... 0 28,021,980 9,752,859 0
-------- ----------- ----------- ----------
NET ASSETS
END OF PERIOD............................... $415,714 $48,637,352 $28,021,980 $9,752,859
======== =========== =========== ==========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------
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 0
----------- ----------- ----------
NET ASSETS
END OF PERIOD................................ $21,793,779 $16,743,255 $7,059,068
=========== =========== ==========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-----------------------------------------------------
T. ROWE PRICE EQUITY INCOME (A)
-----------------------------------------------------
1999 1998 1997
------------- -------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income........................ $ 726,104 $ 549,152 $ 115,907
Net realized gain (loss)..................... 2,737,736 1,272,326 110,474
Change in unrealized appreciation
(depreciation) on investments............ (2,538,268) 512,068 1,073,548
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.......................... 925,572 2,333,546 1,299,929
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)........................ 14,411,461 11,367,975 2,540,460
Benefits and other policy-related
transactions (Note 3).................... (5,261,454) (4,190,748) (351,660)
Net transfers among funds and
guaranteed interest account.............. (470,263) 16,615,531 14,259,773
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions......... 8,679,744 23,792,758 16,448,573
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)................. (93,180) (1,149,701) 1,308,426
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS................ 9,512,136 24,632,603 19,056,928
NET ASSETS
BEGINNING OF PERIOD.......................... 43,689,531 19,056,928 0
----------- ----------- -----------
NET ASSETS
END OF PERIOD................................ $53,201,667 $43,689,531 $19,056,928
=========== =========== ===========
</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-18
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------------------------
ALLIANCE GLOBAL
--------------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (2,877,020) $ 2,858,975 $ 5,997,760
Net realized gain (loss)............... 112,281,492 50,647,791 56,837,641
Change in unrealized appreciation
(depreciation) on investments...... 89,001,859 37,447,314 (12,504,865)
------------ ------------ ------------
Net increase (decrease) in net assets
from operations.................... 198,406,331 90,954,080 50,330,536
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 71,950,825 78,722,218 85,714,413
Benefits and other policy-related
transactions (Note 3).............. (63,170,211) (52,796,664) (48,793,564)
Net transfers among funds and
guaranteed interest account........ (8,015,060) (21,919,102) (89,131,113)
------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions... 765,554 4,006,452 (52,210,264)
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... 23,216 (854,897) 103,777
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS.......... 199,195,101 94,105,635 (1,775,951)
NET ASSETS
BEGINNING OF PERIOD.................... 525,707,133 431,601,498 433,377,449
------------ ------------ ------------
NET ASSETS
END OF PERIOD.......................... $724,902,234 $525,707,133 $431,601,498
============= ============ ============
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-------------------------------------------------------
MORGAN STANLEY
ALLIANCE INTERNATIONAL
-------------------------------------------------------
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (321,035) $ 707,847 $ 1,089,454
Net realized gain (loss)............... 2,464,521 (3,596,006) 2,267,768
Change in unrealized appreciation
(depreciation) on investments...... 19,788,723 8,296,285 (4,651,627)
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.................... 21,932,209 5,408,126 (1,294,405)
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 11,367,096 13,567,993 14,198,839
Benefits and other policy-related
transactions (Note 3).............. (6,261,836) (5,406,284) (4,716,765)
Net transfers among funds and
guaranteed interest account........ (5,340,816) (4,357,456) (3,886,303)
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions... (235,556) 3,804,253 5,595,771
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... (49,840) (109,052) 11,328
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS.......... 21,646,813 9,103,327 4,312,694
NET ASSETS
BEGINNING OF PERIOD.................... 55,234,942 46,131,615 41,818,921
----------- ----------- -----------
END OF PERIOD.......................... $76,881,755 $55,234,942 $46,131,615
=========== =========== ===========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-------------------------------------------------------
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 0
----------- ----------- ----------
NET ASSETS
END OF PERIOD.......................... $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-19
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK (A)
--------------------------------------------------------
1999 1998 1997
----------- ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (8,104) $ 138,710 $ (23,939)
Net realized gain (loss)............... 5,209,876 354,819 (50,331)
Change in unrealized appreciation
(depreciation) on investments...... 7,742,298 2,423,801 (820,718)
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.................... 12,944,070 2,917,330 (894,988)
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 10,327,110 7,881,587 2,268,440
Benefits and other policy-related
transactions (Note 3).............. (3,787,076) (2,527,577) (295,221)
Net transfers among funds and
guaranteed interest account........ 3,167,992 8,401,386 12,953,165
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions... 9,708,026 13,755,396 14,926,384
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... 1,577 (4,050,846) 4,007,078
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS.......... 22,653,673 12,621,880 18,038,474
NET ASSETS
BEGINNING OF PERIOD.................... 30,660,353 18,038,474 --
----------- ----------- -----------
NET ASSETS
END OF PERIOD.......................... $53,314,026 $30,660,353 $18,038,474
=========== =========== ===========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------
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
============== ============ ============
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------------------------
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
=========== =========== ===========
</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-20
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONCLUDED):
------------------------------------------------------------------
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>
EQUITY OPTIONS (CONCLUDED):
-------------------------------------------------
WARBURG PINCUS
SMALL COMPANY VALUE (A)
-------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (113,891) $ 3,173 $ (23,238)
Net realized gain (loss)............... (1,591,217) (142,969) 140,194
Change in unrealized appreciation
(depreciation) on investments...... 1,920,459 (3,986,631) (228,709)
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.................... 215,351 (4,126,427) (111,753)
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 11,009,658 13,378,658 4,397,634
Benefits and other policy-related
transactions (Note 3).............. (4,607,292) (4,042,103) (608,891)
Net transfers among funds and
guaranteed interest account........ (7,372,698) 7,112,708 20,737,304
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions... (970,332) 16,449,263 24,526,047
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... (23,731) (622,058) 611,853
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS.......... (778,712) 11,700,778 25,026,147
NET ASSETS
BEGINNING OF PERIOD.................... 36,726,925 25,026,147 --
----------- ----------- -----------
NET ASSETS
END OF PERIOD.......................... $35,948,213 $36,726,925 $25,026,147
=========== =========== ===========
</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-21
<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>
ASSET ALLOCATION OPTIONS:
----------------------------------------------------
ALLIANCE BALANCED
----------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................... $ 11,263,601 $ 9,701,879 $ 11,212,220
Net realized gain (loss)...................... 59,723,908 44,259,317 27,027,612
Change in unrealized appreciation
(depreciation) on investments............. 11,891,088 20,466,577 18,495,462
------------ ------------ ------------
Net increase (decrease) in net assets
from operations........................... 82,878,597 74,427,773 56,735,294
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)......................... 45,762,044 46,234,769 48,722,966
Benefits and other policy-related
transactions (Note 3)..................... (55,698,939) (48,368,610) (48,611,396)
Net transfers among funds and
guaranteed interest account............... (25,094,055) (4,765,223) (55,377,177)
------------ ------------ ------------
Net increase (decrease) in net assets
from policy related-transactions.......... (35,030,950) (6,899,064) (55,265,607)
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............... 34,900 (601,644) 106,438
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS................. 47,882,547 66,927,065 1,576,125
NET ASSETS
BEGINNING OF PERIOD........................... 498,829,011 431,901,946 430,325,821
------------ ------------ ------------
NET ASSETS
END OF PERIOD................................. $546,711,558 $498,829,011 $431,901,946
============ ============ ============
<CAPTION>
ASSET ALLOCATION OPTIONS:
----------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS
----------------------------------------------------------
1999 1998 1997
------------ ------------ -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................... $ 5,922,184 $ 6,224,160 $ 6,151,782
Net realized gain (loss)...................... 11,053,201 12,201,904 6,305,200
Change in unrealized appreciation
(depreciation) on investments............. 2,080,409 5,279,818 8,528,010
------------ ------------ ------------
Net increase (decrease) in net assets
from operations........................... 19,055,794 23,705,882 20,984,992
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)......................... 27,333,794 26,438,125 30,425,833
Benefits and other policy-related
transactions (Note 3)..................... (25,964,810) (23,690,706) (24,998,155)
Net transfers among funds and
guaranteed interest account............... (4,292,515) (6,267,736) (18,978,233)
------------ ------------ ------------
Net increase (decrease) in net assets
from policy related-transactions.......... (2,923,531) (3,520,317) (13,550,555)
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............... (195,000) (365,872) 44,115
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS................. 15,937,263 19,819,693 7,478,552
NET ASSETS
BEGINNING OF PERIOD........................... 202,163,700 182,344,007 174,865,455
------------ ------------ ------------
NET ASSETS
END OF PERIOD................................. $218,100,963 $202,163,700 $182,344,007
============= ============ ============
<CAPTION>
ASSET ALLOCATION OPTIONS:
----------------------------------------------------------
ALLIANCE GROWTH INVESTORS
----------------------------------------------------------
1999 1998 1997
-------------- ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................... $ 10,885,668 $ 13,057,134 $ 14,710,285
Net realized gain (loss)...................... 119,943,716 85,805,363 53,312,210
Change in unrealized appreciation
(depreciation) on investments............. 120,308,421 52,648,959 47,905,948
-------------- ------------ ------------
Net increase (decrease) in net assets
from operations........................... 251,137,805 151,511,456 115,928,443
-------------- ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)......................... 118,892,312 128,264,748 139,280,509
Benefits and other policy-related
transactions (Note 3)..................... (114,804,492) (99,015,298) (95,656,635)
Net transfers among funds and
guaranteed interest account............... (15,949,611) (25,554,600) (35,207,298)
-------------- ------------ ------------
Net increase (decrease) in net assets
from policy related-transactions.......... (11,861,791) 3,694,850 8,416,576
-------------- ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............... (471,570) (418,319) 194,270
-------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS................. 238,804,444 154,787,987 124,539,289
NET ASSETS
BEGINNING OF PERIOD........................... 978,087,905 823,299,918 698,760,629
-------------- ------------ ------------
NET ASSETS
END OF PERIOD................................. $1,216,892,349 $978,087,905 $823,299,918
============== ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-22
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION OPTIONS (CONCLUDED):
---------------------------------------------------------------------
EQ/EVERGREEN
FOUNDATION (C) EQ/PUTNAM BALANCED
-------------- -------------------------------------------------
1999 1999 1998 1997
-------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................... $ 29 $ 2,956 $ 92,355 $ 243,727
Net realized gain (loss)................ 302 632,039 419,996 31,680
Change in unrealized appreciation
(depreciation) on investments....... (1,505) (752,142) (10,350) 270,232
------- ---------- ----------- ----------
Net increase (decrease) in net assets
from operations..................... (1,174) (117,147) 502,001 345,639
------- ---------- ----------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................... 93 2,976,182 1,733,126 213,829
Benefits and oth`er policy-related
transactions (Note 3)............... (53) (738,901) (429,944) (60,092)
Net transfers among funds and
guaranteed interest account......... 2,377 381,163 2,537,998 1,458,185
------- ---------- ----------- ----------
Net increase (decrease) in net assets
from policy related-transactions.... 2,417 2,618,444 3,841,180 1,611,922
------- ---------- ----------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)......... 1,605 (79,687) (2,292,055) 2,000,806
------- ---------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS........... 2,848 2,421,610 2,051,126 3,958,367
NET ASSETS
BEGINNING OF PERIOD..................... -- 6,009,493 3,958,367 --
------- ---------- ----------- ----------
NET ASSETS
END OF PERIOD........................... $ 2,848 $8,431,103 $ 6,009,493 $ 3,958,367
======= ========== =========== ===========
<CAPTION>
ASSET ALLOCATION OPTIONS (CONCLUDED):
-----------------------------------------------
MERRILL LYNCH
WORLD STRATEGY (A)
-----------------------------------------------
1999 1998 1997
------------- ---------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income...................... $ 22,881 $ 24,281 $ 14,446
Net realized gain (loss)................... 265,460 19,432 35,369
Change in unrealized appreciation
(depreciation) on investments.......... 665,736 225,660 (37,926)
---------- ---------- ----------
Net increase (decrease) in net assets
from operations........................ 954,077 269,373 11,889
---------- ---------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)...................... 1,304,821 1,050,984 334,133
Benefits and oth`er policy-related
transactions (Note 3).................. (511,416) (294,100) (41,646)
Net transfers among funds and
guaranteed interest account............ (504,202) 1,271,852 1,374,499
---------- ---------- ----------
Net increase (decrease) in net assets
from policy related-transactions....... 289,203 2,028,736 1,666,986
---------- ---------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............ (999,768) (849,043) 2,000,771
---------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS.............. 243,512 1,449,066 3,679,646
NET ASSETS
BEGINNING OF PERIOD........................ 5,128,712 3,679,646 --
----------- ----------- ----------
NET ASSETS
END OF PERIOD.............................. $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-23
<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 variable investment options:
FIXED INCOME OPTIONS:
Domestic Fixed Income:
o Alliance Intermediate Government Securities
o Alliance Money Market
o Alliance Quality Bond
Aggressive Fixed Income:
o Alliance High Yield
EQUITY OPTIONS:
Domestic Equity:
o Alliance Common Stock
o Alliance Equity Index
o Alliance Growth & Income
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 T. Rowe Price Equity Income
International Equity:
o Alliance Global
o Alliance International
o Morgan Stanley Emerging Markets Equity
o T. Rowe Price International Stock
Aggressive Equity:
o Alliance Aggressive Stock
o Alliance Small Cap Growth
o EQ/Evergreen
o MFS Emerging Growth Companies
o Warburg Pincus Small Company Value
ASSET ALLOCATION OPTIONS:
o Alliance Balanced
o Alliance Conservative Investors
o Alliance Growth Investors
o EQ/Evergreen Foundation
o EQ/Putnam Balanced
o Merrill Lynch World Strategy
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-24
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (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 Incentive Life, Incentive Life 2000,
Incentive Life Plus(SM), IL Protector(SM) and IL COLI, flexible premium
variable life insurance policies, Champion 2000, modified premium variable
whole life insurance policies; Survivorship 2000, Survivorship Incentive
Life, flexible premium joint survivorship variable life insurance policies;
and SP-Flex, variable life insurance policies with additional premium option
(collectively, the "Policies"). The Incentive Life 2000, Champion 2000 and
Survivorship 2000 policies are herein referred to as the "Series 2000
Policies." Incentive Life Plus(SM) policies offered with a prospectus dated
on or after September 15, 1995, are referred to as Incentive Life Plus(SM)
Second Series. Incentive Life Plus policies issued with a prior prospectus
are referred to as Incentive Life Plus Original Series. Incentive Life
policies sold during 1999 and thereafter ("Incentive Life sales 1999 and
after") reflect an investment in Class IB of the Alliance portfolios and are
different from Incentive Life products (see Note 6).
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.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-25
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 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>
FIXED INCOME OPTIONS:
Alliance Intermediate Government Securities $ (194,809) $ (685,662) $ --
Alliance Money Market (531,900) (1,591,380) --
Alliance Quality Bond (1,882,364) (1,509,018) --
Alliance High Yield 1,254,634 (1,839,368) --
</TABLE>
+ Formerly known as Equitable Variable Life Insurance Company Separate
Account FP.
FSA-26
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 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>
EQUITY OPTIONS:
Alliance Common Stock $(24,309,506) $(17,381,053) $ --
Alliance Equity Index (4,878,705) (2,293,340) --
Alliance Growth & Income (1,193,588) (1,285,852) --
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
T. Rowe Price Equity Income (365,303) (1,667,503) 1,300,000
Alliance Global (3,414,228) (3,632,595) --
Alliance International (370,877) (398,118) --
Morgan Stanley Emerging Markets Equity (2,019,694) (21,425) 4,000,000
T. Rowe Price International Stock (194,106) (4,170,518) 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
Warburg Pincus Small Company Value (204,730) (790,600) 600,000
ASSET ALLOCATION OPTIONS:
Alliance Balanced $(3,060,971) $(3,367,411) $ --
Alliance Conservative Investors (1,439,722) (1,502,507) --
Alliance Growth Investors (6,678,645) (5,613,223) --
EQ/Evergreen Foundation -- -- --
EQ/Putnam Balanced (119,105) (2,310,799) 2,000,000
Merrill Lynch World Strategy (1,018,674) (861,511) 2,000,000
</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.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-27
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
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, Incentive Life 2000, Incentive Life Plus Second
Series and Champion 2000 policyowners are different than those attributable
to Survivorship 2000, Incentive Life Plus Original Series, IL Protector, IL
COLI, and to SP-Flex policyowners because asset charges are deducted at
different rates under each policy (see Note 3). The Separate Account rates
of return attributable to Incentive Life Sales 1999 and after, Survivorship
Incentive Life and Survivorship 2000 for the Alliance Money Market, Alliance
Intermediate Government Securities, Alliance Quality Bond, Alliance High
Yield, Alliance Growth & Income, Alliance Equity Index, Alliance Common
Stock, Alliance Global, Alliance International, Alliance Aggressive,
Alliance Small Cap Growth, Alliance Conservative Investors, Alliance
Balanced, Alliance Growth Investors are different from other products in the
same variable investment option because distribution fees of 0.25% of the
average daily assets of the variable investment option are deducted (see
Note 1).
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-28
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
INCENTIVE LIFE,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
APRIL 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
ALLIANCE INTERMEDIATE ------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES 1999 1998 1997 1996 1995 1994 1993 1992 1991
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 0.02% 7.74% 7.29% 3.78% 13.33% (4.37)% 10.58% 5.60% 12.26%
Net return........................ (0.46)% 7.10% 6.65% 3.15% 12.65% (4.95)% 9.88% 4.96% 11.60%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ---------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 4.96% 5.34% 5.42% 5.33% 5.74% 4.02% 3.00% 3.56% 6.18% 8.24%
Net return........................ 4.35% 4.71% 4.79% 4.70% 5.11% 3.39% 2.35% 2.94% 5.55% 7.59%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------------- -----------------
ALLIANCE QUALITY BOND 1999 1998 1997 1996 1995 1994 1993
- --------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... (2.00)% 8.69% 9.14% 5.36% 17.02% (5.10)% (0.51)%
Net return........................ (2.59)% 8.03% 8.49% 4.73% 16.32% (5.67)% (0.66)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... (3.35)% (5.15)% 18.47% 22.89% 19.92% (2.79)% 23.15% 12.31% 24.46% (1.12)%
Net return........................ (3.93)% (5.72)% 17.76% 22.14% 19.20% (3.37)% 22.41% 11.64% 23.72% (1.71)%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 25.19% 29.39% 29.40% 24.28% 32.45% (2.14)% 24.84% 3.22% 37.88% (8.12)%
Net return........................ 24.44% 28.61% 28.44% 23.53% 31.66% (2.73)% 24.08% 2.60% 37.06% (8.67)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30 (A)
YEARS ENDED DECEMBER 31, TO DECEMBER 31,
----------------------------------------------- -----------------
ALLIANCE EQUITY INDEX 1999 1998 1997 1996 1995 1994
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return...................... 20.38% 28.07% 32.58% 22.39% 36.48% 1.08%
Net return........................ 19.66% 27.30% 31.77% 21.65% 35.66% 0.58%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------------- -----------------
ALLIANCE GROWTH & INCOME 1999 1998 1997 1996 1995 1994 1993
- ------------------------ ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 18.66% 20.86% 26.90% 20.09% 24.07% (0.58)% (0.25)%
Net return........................ 17.95% 20.14% 25.99% 19.36% 23.33% (1.17)% (0.41)%
</TABLE>
- -------------------
+ 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
variable investment option. The gross return and net return reflects
performance for the periods indicated, and 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 reflects 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-29
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
EQUITY OPTIONS (CONTINUED):
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%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
Gross return...................... 19.00% 11.59% 16.99%
Net return........................ 18.23% 10.91% 16.55%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return...................... 8.76%
Net return........................ 8.06%
MAY 1 (A) to
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MFS RESEARCH 1999 1998 1997
- -------------- ---- ---- ----
Gross return...................... 23.12% 24.11% 16.07%
Net return........................ 22.38% 23.36% 15.59%
MAY 1 (A) to
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999 1998 1997
- ------------------------------- ---- ---- ----
Gross return...................... (1.27)% 12.75% 16.23%
Net return........................ (1.95)% 12.14% 15.75%
- -------------------
+ 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
variable investment option. The gross return and net return reflects
performance for the periods indicated, and 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 reflects 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-30
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
EQUITY OPTIONS (CONTINUED):
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
T. ROWE PRICE EQUITY INCOME 1999 1998 1997
- --------------------------- ---- ---- ----
Gross return...................... 3.54% 9.11% 22.11%
Net return........................ 2.93% 8.42% 21.64%
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 38.53% 21.80% 11.66% 14.60% 18.81% 5.23% 32.09% (0.50)% 30.55% (6.07)%
Net return........................ 37.70% 21.07% 10.88% 13.91% 18.11% 4.60% 31.33% (1.10)% 29.77% (6.63)%
</TABLE>
<TABLE>
<CAPTION>
APRIL 3 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------- -----------------
ALLIANCE INTERNATIONAL 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return...................... 37.31% 10.57% (2.98)% 9.82% 11.29%
Net return........................ 36.96% 9.90% (3.63)% 9.15% 10.79%
</TABLE>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
MORGAN STANLEY EMERGING ----------------------------- ---------------
MARKETS EQUITY 1999 1998 1997
- -------------- ---- ---- ----
Gross return...................... 95.82% (27.10)% (20.16)%
Net return........................ 94.57% (27.46)% (20.37)%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
T. ROWE PRICE INTERNATIONAL
STOCK 1999 1998 1997
- --------------------------- ---- ---- ----
Gross return...................... 31.92% 13.68% (1.49)%
Net return........................ 31.08% 13.01% (1.90)%
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 18.84% 0.29% 10.94% 22.20% 31.63% (3.81)% 16.77% (3.16)% 86.86% 8.17%
Net return........................ 18.13% (0.31)% 10.14% 21.46% 30.85% (4.39)% 16.05% (3.74)% 85.75% 7.51%
</TABLE>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
Gross return...................... 27.75% (4.28)% 26.74%
Net return........................ 27.14% (4.85)% 26.18%
- -------------------
+ 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-31
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
EQUITY OPTIONS (CONCLUDED):
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return...................... 9.70%
Net return........................ 9.06%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
Gross return...................... 73.62% 34.57% 22.42%
Net return........................ 72.63% 33.71% 21.95%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
WARBURG PINCUS
SMALL COMPANY VALUE 1999 1998 1997
- ------------------- ---- ---- ----
Gross return...................... 1.80% (10.02)% 19.15%
Net return........................ 1.19% (10.55)% 18.65%
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 17.79% 18.11% 15.06% 11.68% 19.75% (8.02)% 12.28% (2.84)% 41.26% 0.24 %
Net return........................ 17.09% 17.40% 14.30% 11.00% 19.03% (8.57)% 11.64% (3.42)% 40.42% (0.36)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE
INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 10.14% 13.88% 13.25% 5.21% 20.40% (4.10)% 10.76% 5.72% 19.87% 6.37%
Net return........................ 9.48% 13.20% 12.55% 4.57% 19.68% (4.67)% 10.15% 5.09% 19.16% 5.73%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 26.58% 19.13% 16.87% 12.61% 26.37% (3.15)% 15.26% 4.90% 48.89% 10.66%
Net return........................ 25.82% 18.41% 16.07% 11.93% 25.62% (3.73)% 14.58% 4.27% 48.01% 10.00%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return..................... 7.38%
Net return....................... 6.72%
- -------------------
+ 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-32
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
ASSET ALLOCATION OPTIONS (CONCLUDED):
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
Gross return...................... 0.01% 11.92% 14.38%
Net return........................ (0.56)% 11.14% 14.02%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MERRILL LYNCH WORLD STRATEGY 1999 1998 1997
- ---------------------------- ---- ---- ----
Gross return...................... 21.35% 6.81% 4.70%
Net return........................ 20.62% 6.18% 4.29%
- -------------------
+ 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-33
<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 SALES 1999 AND AFTER
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
FIXED INCOME OPTIONS:
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES 1999
- ---------------------- ----
Gross return...................... (0.23)%
Net return........................ 0.32%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE MONEY MARKET 1999
- --------------------- ----
Gross return...................... 4.71%
Net return........................ 4.10%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE QUALITY BOND 1999
- --------------------- ----
Gross return...................... (2.25)%
Net return........................ (0.95)%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE HIGH YIELD 1999
- ------------------ ----
Gross return...................... (3.58)%
Net return........................ (4.16)%
EQUITY OPTIONS:
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE COMMON STOCK 1999
- --------------------- ----
Gross return...................... 24.88%
Net return........................ 24.13%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE EQUITY INDEX 1999
- --------------------- ----
Gross return...................... 20.08%
Net return........................ 9.66%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE GROWTH & INCOME 1999
- ------------------------ ----
Gross return...................... 18.37%
Net return........................ 6.33%
- -------------------
+ 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-34
<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 SALES 1999 AND AFTER,
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
EQUITY OPTIONS (CONTINUED):
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%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MERRILL LYNCH BASIC VALUE EQUITY 1999
- -------------------------------- ----
Gross return...................... 19.00%
Net return........................ 18.23%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return...................... 8.76%
Net return........................ 8.06%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS RESEARCH 1999
- ------------ ----
Gross return...................... 23.12%
Net return........................ 22.38%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999
- ------------------------------- ----
Gross return...................... (1.27)%
Net return........................ (1.95)%
- -------------------
+ 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-35
<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 SALES 1999 AND AFTER
- -----------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
EQUITY OPTIONS (CONTINUED):
JUNE 4 (B) TO
DECEMBER 31,
--------------
T. ROWE PRICE EQUITY INCOME 1999
- --------------------------- ----
Gross return........................... 3.54%
Net return............................. 2.93%
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE GLOBAL 1999
- --------------- ----
Gross return........................... 38.17%
Net return............................. 27.23%
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE INTERNATIONAL 1999
- --------------------- ----
Gross return........................... 36.90%
Net return............................. 34.41%
JUNE 4 (B) TO
DECEMBER 31,
--------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999
- -------------------------------------- ----
Gross return........................... 95.82%
Net return............................. 94.57%
JUNE 4 (B) TO
DECEMBER 31,
--------------
T. ROWE PRICE INTERNATIONAL STOCK 1999
- --------------------------------- ----
Gross return........................... 31.92%
Net return............................. 31.08%
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE AGGRESSIVE STOCK 1999
- ------------------------- ----
Gross return........................... 18.55%
Net return............................. 17.83%
- -------------------
+ 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-36
<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 SALES 1999 AND AFTER,
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
EQUITY OPTIONS (CONCLUDED):
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE SMALL CAP GROWTH 1999
- ------------------------- ----
Gross return........................... 27.46%
Net return............................. 26.86%
JUNE 4 (B) TO
DECEMBER 31,
--------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return........................... 9.70%
Net return............................. 9.06%
JUNE 4 (B) TO
DECEMBER 31,
--------------
MFS EMERGING GROWTH COMPANIES 1999
- ----------------------------- ----
Gross return........................... 73.62%
Net return............................. 72.63%
JUNE 4 (B) TO
DECEMBER 31,
--------------
WARBURG PINCUS SMALL COMPANY VALUE 1999
- ---------------------------------- ----
Gross return........................... 1.80%
Net return............................. 1.19%
- -------------------
+ 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-37
<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 SALES 1999 AND AFTER,
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
ASSET ALLOCATION OPTIONS:
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE BALANCED 1999
- ----------------- ----
Gross return...................... 17.50%
Net return........................ 10.98%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE CONSERVATIVE INVESTORS 1999
- ------------------------------- ----
Gross return...................... 9.87%
Net return........................ 5.79%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE GROWTH INVESTORS 1999
- ------------------------- ----
Gross return...................... 26.27%
Net return........................ 15.36%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return...................... 7.38%
Net return........................ 6.72%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/PUTNAM BALANCED 1999
- -------------------- ----
Gross return...................... 0.01%
Net return........................ (0.56)%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MERRILL LYNCH WORLD STRATEGY 1999
- ---------------------------- ----
Gross return...................... 21.35%
Net return........................ 20.62%
- -------------------
+ 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-38
<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
- -----------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- -----------------
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 0.02% 7.74% 7.29% 3.78% 13.33% (4.37)% 10.58% 0.90%
Net return.................................... (0.76)% 6.78% 6.33% 2.84% 12.31% (5.23)% 9.55% 0.56%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- -----------------
ALLIANCE MONEY MARKET 1999 1998 1997 1996 1995 1994 1993 1992
- --------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 4.96% 5.34% 5.42% 5.33% 5.74% 4.02% 3.00% 1.11%
Net return.................................... 4.04% 4.39% 4.47% 4.38% 4.80% 3.08% 2.04% 0.77%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- -----------------
ALLIANCE QUALITY BOND 1999 1998 1997 1996 1995 1994 1993
- --------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. (2.00)% 8.69% 9.14% 5.36% 17.02% (5.10)% (0.51)%
Net return.................................... (2.88)% 7.71% 8.16% 4.41% 15.97% (5.95)% (0.73)%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE HIGH YIELD 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. (3.35)% (5.15)% 18.47% 22.89% 19.92% (2.79)% 23.15% 1.84%
Net return.................................... (4.22)% (6.00)% 17.40% 21.77% 18.84% (3.66)% 22.04% 1.50%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- -----------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995 1994 1993 1992
- ---------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 25.19% 29.39% 29.40% 24.28% 32.45% (2.14)% 24.84% 5.28%
Net return.................................... 24.07% 28.22% 28.06% 23.15% 31.26% (3.02)% 23.70% 4.93%
</TABLE>
<TABLE>
<CAPTION>
MARCH 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------------ -----------------
ALLIANCE EQUITY INDEX 1999 1998 1997 1996 1995 1994
- -------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.................................. 20.38% 28.07% 32.58% 22.39% 36.48% 1.08%
Net return.................................... 19.30% 26.92% 31.38% 21.28% 35.26% 0.33%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- -----------------
ALLIANCE GROWTH & INCOME 1999 1998 1997 1996 1995 1994 1993
- ------------------------ ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 18.66% 20.86% 26.90% 20.09% 24.07% (0.58)% (0.25)%
Net return.................................... 17.60% 19.78% 25.61% 19.00% 22.96% (1.47)% (0.48)%
</TABLE>
- -------------------
+ 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-39
<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
- -----------------
EQUITY OPTIONS (CONTINUED):
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%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 19.00% 11.59% 16.99%
Net return.................................... 17.87% 10.58% 16.32%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return.................................. 8.76%
Net return.................................... 7.74%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MFS RESEARCH 1999 1998 1997
- ------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 23.12% 24.11% 16.07%
Net return.................................... 22.01% 22.99% 15.36%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999 1998 1997
- ------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. (1.27)% 12.75% 16.23%
Net return.................................... (2.25)% 11.81% 15.52%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
T. ROWE PRICE EQUITY INCOME FUND 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 3.54% 9.11% 22.11%
Net return.................................... 2.62% 8.09% 21.40%
</TABLE>
- -------------------
+ 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-40
<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
- -----------------
EQUITY OPTIONS (CONTINUED):
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------------- ----------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995 1994 1993 1992
- --------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return................................. 38.53% 21.80% 11.66% 14.60% 18.81% 5.23% 32.09% 4.87%
Net return................................... 37.28% 20.70% 10.54% 13.56% 17.75% 4.29% 30.93% 44.52%
</TABLE>
<TABLE>
<CAPTION>
APRIL 3 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------- ----------------
ALLIANCE
INTERNATIONAL 1999 1998 1997 1996 1995
- ------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return................................. 37.31% 10.57% (2.98)% 9.82% 11.29%
Net return................................... 36.55% 9.57% (3.93)% 8.82% 10.55%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------- ---------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999 1998 1997
- -------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 95.82% (27.10)% (20.16)%
Net return.................................... 93.98% (27.68)% (20.46)%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ ------------
T. ROWE PRICE INTERNATIONAL STOCK 1999 1998 1997
- --------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 31.92% 13.68% (1.49)%
Net return.................................... 30.68% 12.67% (2.10)%
</TABLE>
<TABLE>
<CAPTION>
MARCH 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- --------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 18.84% 0.29% 10.94% 22.20% 31.63% (3.81)% 16.77% 11.49%
Net return.................................... 17.77% (0.62)% 9.81% 21.09% 30.46% (4.68)% 15.70% 11.11%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 27.75% (4.28)% 26.74%
Net return.................................... 26.76% (5.14)% 25.92%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return.................................. 9.70%
Net return.................................... 8.73%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 73.62% 34.57% 22.42%
Net return.................................... 72.11% 33.31% 21.70%
</TABLE>
- -------------------
+ 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-41
<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
- -----------------
EQUITY OPTIONS (CONCLUDED):
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
WARBURG PINCUS SMALL COMPANY VALUE 1999 1998 1997
- ---------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 1.80% (10.02)% 19.15%
Net return.................................... 0.88% (10.82)% 18.41%
</TABLE>
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995 1994 1993 1992
- ----------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 17.79% 18.11% 15.06% 11.68% 19.75% (8.02)% 12.28% 5.37%
Net return.................................... 16.73% 17.05% 13.96% 10.67% 18.68% (8.84)% 11.30% 5.02%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE CONSERVATIVE INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 10.14% 13.88% 13.25% 5.21% 20.40% (4.10)% 10.76% 1.38%
Net return.................................... 9.15% 12.85% 12.21% 4.26% 19.32% (4.96)% 9.81% 1.04%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE GROWTH INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 26.58% 19.13% 16.87% 12.61% 26.37% (3.15)% 15.26% 6.89%
Net return.................................... 25.44% 18.06% 15.72% 11.59% 25.24% (4.02)% 14.24% 6.53%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
----------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return.................................. 7.38%
Net return.................................... 6.14%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 0.01% 11.92% 14.38%
Net return.................................... (0.86)% 10.81% 13.79%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
MERRILL LYNCH WORLD STRATEGY 1999 1998 1997
- ---------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 21.35% 6.81% 4.70%
Net return.................................... 20.25% 5.86% 4.08%
</TABLE>
- -------------------
+ 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-42
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES 1999 1998 1997 1996 1995
- -------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 0.02% 7.74% 7.29% 3.78% 13.31%
Net return ........................... 0.02% 7.74% 7.29% 3.78% 13.31%
ALLIANCE MONEY MARKET
- ----------------------
Gross return ......................... 4.96% 5.34% 5.42% 5.33% 5.69%
Net return ........................... 4.96% 5.34% 5.42% 5.33% 5.69%
ALLIANCE QUALITY BOND
- ---------------------
Gross return ......................... (2.00)% 8.69% 9.14% 5.36% 17.13%
Net return ........................... (2.00)% 8.69% 9.14% 5.36% 17.13%
ALLIANCE HIGH YIELD
- -------------------
Gross return ......................... (3.35)% (5.15)% 18.47% 22.89% 19.95%
Net return ........................... (3.35)% (5.15)% 18.47% 22.89% 19.95%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995
- --------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 25.19% 29.39% 29.40% 24.28% 33.07%
Net return ........................... 25.19% 29.39% 29.40% 24.28% 33.07%
ALLIANCE EQUITY INDEX
- ---------------------
Gross return ......................... 20.38% 28.07% 32.57% 22.38% 36.53%
Net return ........................... 20.38% 28.07% 32.57% 22.38% 36.53%
ALLIANCE GROWTH & INCOME
- ------------------------
Gross return ......................... 18.66% 20.86% 26.90% 20.09% 24.38%
Net return ........................... 18.66% 20.86% 26.90% 20.09% 24.38%
</TABLE>
JUNE 4 (C) TO
DECEMBER 31,
------------------
EQ/ALLIANCE PREMIER GROWTH 1999
- -------------------------- ----
Gross return ......................... 18.97%
Net return ........................... 19.55%
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no Separate Account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1995 indicated is not an
annualized rate of return.
(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-43
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
EQUITY OPTIONS (CONTINUED):
AUGUST 30 (C) TO
DECEMBER 31,
------------------
CAPITAL GUARDIAN RESEARCH 1999
- ------------------------- ----
Gross return ......................... 7.10%
Net return ........................... 8.04%
CAPITAL GUARDIAN U.S. EQUITY
- ----------------------------
Gross return ......................... 3.76%
Net return ........................... 3.56%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 19.00% 11.59% 17.02%
Net return ........................... 19.00% 11.59% 17.02%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return ......................... 8.76%
Net return ........................... 3.50%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS RESEARCH 1999 1998 1997
- ------------ ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 23.12% 24.11% 16.05%
Net return ........................... 23.12% 24.11% 16.05%
EQ/PUTNAM GROWTH & INCOME VALUE
- -------------------------------
Gross return ......................... (1.27)% 12.75% 14.48%
Net return ........................... (1.27)% 12.75% 14.48%
T. ROWE PRICE EQUITY INCOME
- ---------------------------
Gross return ......................... 3.54% 9.11% 22.13%
Net return ........................... 3.54% 9.11% 22.13%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no Separate Account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1995 indicated is not an
annualized rate of return.
(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-44
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
EQUITY OPTIONS (CONTINUED):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995
- --------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 38.53% 21.80% 11.66% 14.60% 19.38%
Net return ........................... 38.53% 21.80% 11.66% 14.60% 19.38%
</TABLE>
<TABLE>
<CAPTION>
APRIL 30 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
--------------------------------------------------- --------------------------------
ALLIANCE INTERNATIONAL 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 37.31% 10.57% (3.05)% 9.81% 11.29%
Net return ........................... 37.31% 10.57% (3.05)% 9.81% 11.29%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 20 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ----------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999 1998 1997
- -------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 95.82% (27.10)% (20.19)%
Net return ........................... 95.82% (27.10)% (20.19)%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
T. ROWE PRICE INTERNATIONAL STOCK 1999 1998 1997
- --------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 31.92% 13.68% (1.50)%
Net return ........................... 31.92% 13.68% (1.50)%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no separate account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1998 indicated is not an
annualized rate of return.
(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-45
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
EQUITY OPTIONS (CONCLUDED):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995
- ------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 18.84% 0.29% 10.94% 22.20% 33.00%
Net return ........................... 18.84% 0.29% 10.94% 22.20% 33.00%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 20 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ----------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 27.75% (4.28)% 26.69%
Net return ........................... 27.75% (4.28)% 26.69%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return ......................... 9.70%
Net return ........................... 7.10%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 73.62% 34.57% 22.44%
Net return ........................... 73.62% 34.57% 22.44%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
WARBURG PINCUS SMALL COMPANY VALUE 1999 1998 1997
- ---------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 1.80% (10.02)% 19.13%
Net return ........................... 1.80% (10.02)% 19.13%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no separate account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1998 indicated is not an
annualized rate of return.
(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-46
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995
- ----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 17.79% 18.11% 15.06% 11.68% 20.32%
Net return ........................... 17.79% 18.11% 15.06% 11.68% 20.32%
ALLIANCE CONSERVATIVE INVESTORS
- -------------------------------
Gross return ......................... 10.14% 13.88% 13.25% 5.21% 20.59%
Net return ........................... 10.14% 13.88% 13.25% 5.21% 20.59%
ALLIANCE GROWTH INVESTORS
- -------------------------
Gross return ......................... 26.58% 19.13% 16.87%% 12.61% 26.92%
Net return ........................... 27.58% 19.13% 16.87%% 12.61% 26.92%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return ......................... 7.38%
Net return ........................... 6.97%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- --------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 0.01% 11.92% 14.48%
Net return ........................... 0.01% 11.92% 14.48%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MERRILL LYNCH WORLD STRATEGY 1999 1998 1997
- ---------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 21.35% 6.81% 4.71%
Net return ........................... 21.35% 6.81% 4.71%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no separate account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1998 indicated is not an
annualized rate of return.
(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-47
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- ---------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES 1999 1998 1997 1996
- --------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 0.02% 7.74% 7.29% 3.78%
Net return ........................... (0.66)% 6.88% 6.43% 4.49%
ALLIANCE MONEY MARKET
- ---------------------
Gross return ......................... 4.96% 5.34% 5.42% 5.33%
Net return ........................... 4.14% 4.50% 4.57% 2.98%
ALLIANCE QUALITY BOND
- ---------------------
Gross return ......................... (2.00)% 8.69% 9.14% 5.36%
Net return ........................... (2.78)% 7.82% 8.27% 7.86%
ALLIANCE HIGH YIELD
- -------------------
Gross return ......................... (3.35)% (5.15)% 18.47% 22.89%
Net return ........................... (4.13)% (5.91)% 17.52% 13.90%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- ---------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996
- --------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 25.19% 29.39% 29.40% 24.28%
Net return ........................... 24.19% 28.35% 28.18% 17.44%
ALLIANCE EQUITY INDEX
- ---------------------
Gross return ......................... 20.38% 28.07% 32.58% 22.39%
Net return ........................... 19.42% 27.05% 31.51% 16.25%
ALLIANCE GROWTH AND INCOME
- --------------------------
Gross return ......................... 18.66% 20.86% 26.90% 20.09%
Net return ........................... 17.71% 19.90% 25.74% 15.63%
</TABLE>
JUNE 4 (C) TO
DECEMBER 31,
-------------------
EQ/ALLIANCE PREMIER GROWTH 1999
- -------------------------- ----
Gross return ......................... 18.97%
Net return ........................... 18.36%
- -------------------
+ 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-48
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
EQUITY OPTIONS (CONTINUED):
AUGUST 30 (C) TO
DECEMBER 31,
-------------------
CAPITAL GUARDIAN RESEARCH 1999
- ------------------------- ----
Gross return ......................... 7.10%
Net return ........................... 6.53%
AUGUST 30 (C) TO
DECEMBER 31,
-------------------
CAPITAL GUARDIAN U.S. EQUITY 1999
- ---------------------------- ----
Gross return ......................... 3.76%
Net return ........................... 3.28%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- -----------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 19.00% 11.59% 16.99%
Net return ........................... 17.99% 10.69% 16.40%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-------------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return ......................... 8.76%
Net return ........................... 7.85%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS RESEARCH 1999 1998 1997
- ------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 23.12% 24.11% 16.07%
Net return............................ 22.13% 23.11% 15.43%
EQ/PUTNAM GROWTH & INCOME VALUE
- ---------------------------------
Gross return.......................... (1.27)% 12.75% 16.23%
Net return............................ (2.15)% 11.92% 13.87%
T. ROWE PRICE EQUITY INCOME
- ---------------------------
Gross return.......................... 3.54% 9.11% 22.11%
Net return............................ 2.73% 8.20% 21.48%
</TABLE>
- -------------------
+ 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-49
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
EQUITY OPTIONS (CONTINUED):
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------- ----------------
ALLIANCE GLOBAL 1999 1998 1997 1996
- --------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 38.53% 21.80% 11.66% 14.60%
Net return ........................... 37.42% 20.83% 10.65% 6.78%
ALLIANCE INTERNATIONAL
- ----------------------
Gross return ......................... 37.31% 10.57% (2.98)% 9.82%
Net return ........................... 36.68% 9.68% (3.83)% 2.11%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999 1998 1997
- -------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 95.82% (27.10)% (20.16)%
Net return............................ 94.18% (27.60)% (20.43)%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
T. ROWE PRICE INTERNATIONAL STOCK 1999 1998 1997
- --------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 31.92% 13.68% (1.49)%
Net return............................ 30.81% 12.79% (2.03)%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------------------------- ---------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996
- ------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 18.84% 0.29% 10.94% 22.20%
Net return ........................... 17.89% (0.52)% 9.92% 6.22%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 27.75% (4.28)% 26.74%
Net return............................ 26.89% (5.04)% 26.01%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return.......................... 9.70%
Net return............................ 6.81%
- -------------------
+ 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-50
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
EQUITY OPTIONS: (CONCLUDED):
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 73.62% 34.57% 22.42%
Net return............................ 72.28% 33.44% 21.78%
WARBURG PINCUS SMALL COMPANY VALUE
- -----------------------------------
Gross return.......................... 1.80% (10.02)% 19.15%
Net return............................ 0.99% (10.73)% 18.49%
</TABLE>
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
AUGUST 5 (A)
TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- ---------------
ALLIANCE BALANCED 1999 1998 1997 1996
- ----------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 17.79% 18.11% 15.06% 11.68%
Net return ........................... 16.85% 17.17% 14.07% 8.67%
ALLIANCE CONSERVATIVE INVESTORS
- -------------------------------
Gross return ......................... 10.14% 13.88% 13.25% 5.21%
Net return ........................... 9.26% 12.97% 12.32% 7.94%
ALLIANCE GROWTH INVESTORS
- -------------------------
Gross return ......................... 26.58% 19.13% 16.87% 12.61%
Net return ........................... 25.57% 18.18% 15.84% 9.38%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-------------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return.......................... 7.38%
Net return............................ 9.83%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 0.01% 11.92% 14.38%
Net return............................ (0.76)% 10.92% 13.87%
MERRILL LYNCH WORLD STRATEGY
- ----------------------------
Gross return.......................... 21.35% 6.81% 4.70%
Net return............................ 20.37% 5.97% 4.15%
</TABLE>
- -------------------
+ 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-51
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
SP-FLEX
- -------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
APRIL 1 (A) TO
ALLIANCE INTERMEDIATE YEARS ENDED DECEMBER 31, DECEMBER 31,
GOVERNMENT --------------------------------------------------------------------------- -------------------
SECURITIES 1999 1998 1997 1996 1995 1994 1993 1992 1991
- ---------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 0.02% 7.74% 7.29% 3.78% 13.33% (4.37)% 10.58% 5.60% 12.10%
Net return................ (1.65)% 5.82% 5.38% 1.91% 11.31% (6.08)% 8.57% 3.71% 10.59%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 4.96% 5.34% 5.42% 5.33% 5.74% 4.02% 3.00% 3.56% 6.17% 8.24%
Net return................ 3.11% 3.46% 3.54% 3.44% 3.86% 2.17% 1.13% 1.71% 4.29% 6.30%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE QUALITY BOND 1999 1998 1997 1996 1995 1994
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. (2.00)% 8.69% 9.14% 5.36% 17.02% (2.20)%
Net return................ (3.75)% 6.75% 7.19% 3.47% 14.94% (2.35)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. (3.35)% (5.15)% 18.47% 22.89% 19.92% (2.79)% 23.15% 12.31% 24.46% (1.12)%
Net return................ (5.08)% (6.84)% 16.35% 20.68% 17.79% (4.52)% 20.96% 10.30% 22.25% (2.89)%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 25.19% 29.39% 29.40% 24.28% 32.45% (2.14)% 24.84% 3.23% 37.87% (8.12)%
Net return................ 22.96% 27.08% 26.91% 22.04% 30.10% (3.88)% 22.60% 1.38% 35.43% (9.76)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE EQUITY INDEX 1999 1998 1997 1996 1995 1994
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 20.38% 28.07% 32.58% 22.39% 36.48% (2.54)%
Net return................ 18.24% 25.79% 30.21% 20.19% 34.06% (2.69)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE GROWTH & INCOME 1999 1998 1997 1996 1995 1994
- ------------------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 18.66% 20.86% 26.90% 20.09% 24.07% (3.40)%
Net return................ 16.55% 18.71% 24.50% 17.93% 21.87% (3.55)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 38.53% 21.80% 11.66% 14.60% 18.81% 5.23% 32.09% (0.50)% 30.55% (6.07)%
Net return................ 36.06% 19.63% 9.56% 12.54% 16.70% 3.36% 29.77% (2.28)% 28.23% (7.75)%
</TABLE>
- -------------------
+ 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-52
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
DECEMBER 31, 1999
RATES OF RETURN (CONCLUDED):
SP-FLEX
- -------
EQUITY OPTIONS (CONCLUDED):
<TABLE>
<CAPTION>
APRIL 3 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE INTERNATIONAL 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return.............. 37.31% 10.57% (3.05)% 9.82% 11.29%
Net return................ 35.33% 8.60% (4.78)% 7.84% 9.82%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 18.84% 0.29% 10.94% 22.20% 31.63% (3.81)% 16.77% (3.16)% 86.86% 8.17%
Net return................ 16.72% (1.50)% 8.83% 20.00% 29.30% (5.53)% 14.67% (4.89)% 83.54% 6.23%
</TABLE>
ASSET ALLOCATION SERIES:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................. 17.79% 18.11% 15.06% 11.68% 19.75% (8.02)% 12.28% (2.83)% 41.27% 0.24 %
Net return.................... 15.69% 16.01% 12.94% 9.67% 17.62% (9.66)% 10.31% (4.57)% 38.75% (1.56)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
ALLIANCE YEARS ENDED DECEMBER 31 DECEMBER 31,
CONSERVATIVE --------------------------------------------------------------------------- -------------------
INVESTORS 1999 1998 1997 1996 1995 1994
- --------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.................. 10.14% 13.88% 13.25% 5.21% 20.40% (1.83)%
Net return.................... 8.18% 11.85% 11.21% 3.32% 18.26% (1.98)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE GROWTH INVESTORS 1999 1998 1997 1996 1995 1994
- ------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.................. 26.58% 19.13% 16.87% 12.61% 26.37% (3.16)%
Net return.................... 24.33% 17.00% 14.69% 10.58% 24.12% (3.31)%
</TABLE>
- -------------------
+ 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.
- ------------------------------
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-53
<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>
AA-1 APPENDIX I: INVESTMENT PERFORMANCE RECORD
- --------------------------------------------------------------------------------
Appendix I: Investment performance record
- --------------------------------------------------------------------------------
The tables below show performance information for the variable investment
options. The performance shown for each option equals the performance of the
Portfolio corresponding to that option, reduced by the current rate of the
policies' mortality and expense risk charge (.60% annual rate). You can find
more information about the performance of the Portfolios in the EQ Advisors
Trust prospectus attached at the end of this prospectus. The performance figures
on which the tables are based are after deduction of all fees and expenses paid
by the Trust or any of the Portfolios.
For periods prior to October 18, 1999, the "Alliance" Portfolios (other than
EQ/Alliance Premier Growth and EQ/Alliance Technology) were part of The Hudson
River Trust. On October 18, 1999, these Portfolios became corresponding
Portfolios of EQ Advisors Trust. In each case, the performance shown is for the
indicated EQ Advisors Trust Portfolio and any predecessors that it may have had.
In addition, we have adjusted the results for these Portfolios prior to the
dates when the Class IB shares for these Portfolios were available, to reflect
the 12b-1 fees currently imposed.
Class IB shares of Alliance Money Market, Alliance High Yield, Alliance Common
Stock, Alliance Global, EQ/Aggressive Stock* and Alliance Growth Investors
Portfolios first became available in EQ Advisors Trust's predecessor on October
2, 1996. Class IB shares of Alliance Intermediate Government Securities,
Alliance Growth & Income, Alliance Equity Index, Alliance International,
Alliance Small Cap Growth and Alliance Conservative Investors Portfolios first
became available in the Trust's predecessor on May 1, 1997. Class IB shares of
Alliance Quality Bond and EQ/Balanced** Portfolios first became available in the
Trust's predecessor on July 8, 1998.
The tables below, however, do not take into account the following additional
charges that we will deduct under your policy: (1) the sales charge that we
deduct from each premium payment you make; (2) the monthly cost of insurance
charge; (3) the surrender charge; (4) any charge for optional rider benefits you
may select or (5) the policies' monthly administrative charge (currently $20 for
your policy's first 12 months and $7 per month thereafter, for issue ages 18 and
older). For more information about these charges, see "Charges and expenses you
will pay" in this prospectus. If we reflected these charges, the performance
shown below would be reduced. We have not done so, however, because the actual
impact of these charges on a particular policy varies considerably based on such
factors as the insurance risk characteristics of the insured person; the face
amount and other options you select for your policy; the amount and timing of
your premium payments; and whether you make withdrawals, take policy loans, or
surrender your policy. In order to better understand how the charges we have
omitted from the below tables will affect your policy's value, you should refer
to your Illustrations of Policy Benefits that your financial professional will
provide. You can request Equitable Life or your financial professional to
provide you with such illustrations at any time, whether before or after you
purchase a policy.
In a few cases, the return information shown in the first table below includes a
period of time prior to when Separate Account FP first offered a corresponding
variable investment option under any form of variable life insurance policy.
Therefore, the second table below provides additional performance information
from the date that those investment options actually received initial funding.
- ---------------------
* Previously "Alliance Aggressive Stock"
** Previously "Alliance Balanced"
<PAGE>
<TABLE>
<CAPTION>
AA-2 APPENDIX I: INVESTMENT PERFORMANCE RECORD
- ----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN
AFTER DEDUCTION OF MORTALITY AND EXPENSE
RISK CHARGE FOR PERIODS ENDING
DECEMBER 31, 1999*
- ----------------------------------------------------------------------------------------------------------------------------------
SINCE PORTFOLIO INCEPTION
VARIABLE INVESTMENT OPTION 1 YR. 3 YRS. 5 YRS. 10 YRS. 20 YRS. (DATE**)
- ----------------------------------------------------------------------------------------------------------------------------------
FIXED INCOME
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance High Yield ............................. (4.16%) 1.92% 8.92% 9.30% - 8.44% (1/2/87)
Alliance Intermediate Government Securities ..... (0.71%) 4.07% 5.45% - - 5.37% (4/1/91)
Alliance Money Market ........................... 4.10% 4.35% 4.47% 4.29% - 6.06% (7/13/81)
Alliance Quality Bond ........................... (2.84%) 4.16% 6.51% - - 4.03% (10/1/93)
- ----------------------------------------------------------------------------------------------------------------------------------
DOMESTIC STOCKS
- ----------------------------------------------------------------------------------------------------------------------------------
EQ/Aggressive Stock ........................... 17.83% 8.83% 15.35% 15.71% - 16.92% (1/27/86)
Alliance Common Stock ......................... 24.13% 26.89% 26.97% 17.59% 17.39% 15.76% (1/13/76)
Alliance Equity Index ......................... 19.36% 25.99% 26.84% - - 22.69% (3/1/94)
Alliance Growth & Income ...................... 17.66% 21.07% 21.06% - - 16.17% (10/1/93)
Alliance Small Cap Growth ..................... 26.86% - - - - 16.95% (5/1/97)
EQ/Evergreen .................................. 9.06% - - - - 9.06% (12/31/98)
EQ/Putnam Growth & Income Value ............... (1.95%) - - - - 9.46% (5/1/97)
MFS Emerging Growth Companies ................. 72.63% - - - - 47.38% (5/1/97)
MFS Growth with Income ........................ 8.06% - - - - 8.06% (12/31/98)
MFS Research .................................. 22.38% - - - - 23.20% (5/1/97)
Mercury Basic Value Equity .................... 18.23% - - - - 17.23% (5/1/97)
T. Rowe Price Equity Income ................... 2.93% - - - - 12.14% (5/1/97)
Warburg Pincus Small Company Value ............ 1.19% - - - - 2.71% (5/1/97)
- ----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL STOCKS
- ----------------------------------------------------------------------------------------------------------------------------------
Alliance Global ............................... 37.34% 22.46% 19.70% 14.86% - 13.52% (8/27/87)
Alliance International ........................ 36.62% 12.78% - - - 12.19% (4/3/95)
Morgan Stanley Emerging Markets Equity ........ 94.57% - - - - 5.07% (8/20/97)
T. Rowe Price International Stock ............. 31.08% - - - - 15.04% (5/1/97)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AA-3 APPENDIX I: INVESTMENT PERFORMANCE RECORD
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
SINCE PORTFOLIO INCEPTION
VARIABLE INVESTMENT OPTION 1 YR. 3 YRS. 5 YRS. 10 YRS. 20 YRS. (DATE**)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCED/HYBRID INVESTMENT OPTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Conservative Investors ............... 9.21% 11.44% 11.50% 9.00% - 9.07% (10/2/89)
Alliance Growth Investors ..................... 25.51% 19.77% 19.14% 16.08% - 16.08% (10/2/89)
EQ/Balanced ................................... 16.80% 15.52% 15.18% 10.70% - 12.06% (1/27/86)
EQ/Evergreen Foundation ....................... 6.72% - - - - 6.72% (12/31/98)
EQ/Putnam Balanced ............................ (0.56%) - - - - 9.05% (5/1/97)
Mercury World Strategy ........................ 20.62% - - - - 11.45% (5/1/97)
- ----------------------------------------------------------------------------------------------------------------------------------
* No performance information is shown for EQ/Alliance Technology as that Portfolio had not received its initial funding prior
to December 31, 1999. Additionally, no performance information is shown for EQ/Alliance Premier Growth, Capital Guardian
Research or Capital Guardian U.S. Equity, as these Portfolios became available after December 31, 1998. The inception dates
for these Portfolios is April 30, 1999.
** The inception date shown is the date that the relevant Portfolio (or its predecessor) received its initial funding.
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RATES OF RETURN FOR PERIODS ENDING
DECEMBER 31, 1999 SINCE VARIABLE INVESTMENT OPTION
VARIABLE INVESTMENT OPTION INCEPTION (DATE)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Alliance Common Stock 17.40% (1/27/86)
Alliance Money Market 4.91% (1/27/86)
- ----------------------------------------------------------------------------------------------------------------------------------
Unlike the rate of return tables above, the following yield information does not include capital gains and losses that the
Portfolios corresponding to the indicated variable investment options may have experienced.
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED YIELD FOR PERIODS
VARIABLE INVESTMENT OPTION ENDING DECEMBER 31, 1999
- ----------------------------------------------------------------------------------------------------------------------------------
7 DAYS 30 DAYS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance High Yield - 12.30%
Alliance Intermediate Government Securities - 5.02%
Alliance Money Market 4.42% -
Alliance Quality Bond - 5.77%
- ----------------------------------------------------------------------------------------------------------------------------------
The information in the tables above is not a guarantee, a prediction, or necessarily an indication of future performance.
</TABLE>
<PAGE>
BB-1 APPENDIX II: OUR DATA ON MARKET PERFORMANCE
- --------------------------------------------------------------------------------
Appendix II: 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:
- --------------------------------------------------------------------------------
Barron's Money Management Letter
Morningstar's Variable 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
Investment Management Weekly
- --------------------------------------------------------------------------------
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 Incentive Life premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long- or short-term debt securities. 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>
BB-2 APPENDIX II: 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 COMMON GOVERNMENT CORPORATE TERM GOV'T U.S. TREASURY CONSUMER
ENDING 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>
CC-1 APPENDIX III: AN INDEX OF KEY WORDS AND PHRASES
- --------------------------------------------------------------------------------
Appendix III: 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 21
Administrative office 5
age 34
Allocation date 15
alternative death benefit 17
amount at risk 38
anniversary 34
assign; assignment 32
automatic transfer service 22
AXA Advisors, LLC 41
AXA Financial, Inc. 4
basis 28
beneficiary 19
business day 33
Cash Surrender Value 26
Code 27
collateral 24
cost of insurance charge 38
cost of insurance rates 38
customer loyalty credit 39
day 33
death benefit guarantee 14
default 12
dollar cost averaging service 22
enhanced death benefit guarantee 14
EQAccess 5
EQ Advisors Trust 16
EQ Financial Consultants 41
Equitable Life 4
Equitable Access Account 19
face amount 16
grace period 12
guaranteed interest option 16
guarantee premium 13
Guaranteed Interest Account 16
Incentive Life cover
insured person 17
investment funds 16
investment option 15
issue date 34
lapse 12
loan, loan interest 24
modified endowment contract 12
month, year 34
monthly deduction 7
net cash surrender value 26
no-lapse guarantee 13
Option A, B 17
our 2
owner 2
paid up 27
paid up death benefit guarantee 14
partial withdrawal 25
payment option 19
planned periodic premium 12
policy cover
Portfolio cover
premium payments 12
prospectus cover
rebalancing 23
receive 33
restore, restoration 13
rider 19
SEC cover
Separate Account FP 36
state 2
subaccount 36
surrender 26
surrender charge 7
target premium 8
telephone transfers 22
transfers 22
Trust 16
units 21
unit values 21
us 2
variable investment option 16
we 2
withdrawal 25
you, your 2
</TABLE>
<PAGE>
Incentive Life(SM)
A flexible premium variable life
insurance policy
PROSPECTUS DATED MAY 1, 2000
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.
- --------------------------------------------------------------------------------
This prospectus describes many aspects of an Incentive Life policy, but is not
itself a policy. The policy is the actual contract that determines your benefits
and obligations under Incentive 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 INCENTIVE LIFE?
Incentive Life is issued by Equitable Life. It provides life insurance coverage,
plus the opportunity for you to earn a return in our guaranteed interest option
and/or one or more of the following variable investment options:
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Variable investment options:
o EQ/Aggressive Stock(1) o Lazard Small Cap Value
o Alliance Money Market o MFS Growth with Income
o Alliance High Yield o MFS Research
o Alliance Common Stock o MFS Emerging Growth
o Alliance Small Cap Growth Companies
o EQ/Alliance Premier Growth o Morgan Stanley Emerging
o EQ/Alliance Technology(2) Markets Equity
o BT Equity 500 Index o EQ/Putnam Growth & Income
o BT Small Company Index Value
o BT International Equity Index o EQ/Putnam Investors Growth
o Capital Guardian U.S. Equity o EQ/Putnam International
o Capital Guardian Research Equity
o Capital Guardian International
o J.P. Morgan Core Bond(3)
o Lazard Large Cap Value
- --------------------------------------------------------------------------------
</TABLE>
(1) Formerly named "Alliance Aggressive Stock"
(2) Anticipated to become available on or about May 22, 2000. 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.
OTHER CHOICES YOU HAVE. You have considerable flexibility to tailor the policy
to your needs. For example, subject to our rules, you can (1) choose when and
how much you contribute (as "premiums") to your policy, (2) pay certain premium
amounts to guarantee that your insurance coverage will continue for a number of
years, regardless of investment performance, (3) borrow or withdraw amounts you
have accumulated, (4) change the amount of insurance coverage, (5) choose
between two life insurance benefit options, (6) elect to receive an insurance
benefit if the insured person becomes terminally ill, and (7) add or delete
certain optional benefits that we offer by "riders" to your policy.
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 Incentive 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.
72312 EDI
<PAGE>
Contents of this prospectus
- -----
2
- --------------------------------------------------------------------------------
INCENTIVE LIFE
- -----------------------------------------------------------
What is Incentive 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 can pay for and contribute to your policy 12
The minimum amount of premiums you must pay 12
You can guarantee that your policy will not terminate
before a certain date 13
You can elect a "paid up" death benefit guarantee 14
Investment options within your policy 15
About your life insurance benefit 16
You can increase or decrease your insurance coverage 18
Other benefits you can add by rider 19
Your options for receiving policy proceeds 19
Your right to cancel within a certain number of days 20
Variations among Incentive Life policies 20
Other Equitable Life policies 20
- -----------------------------------------------------------
2
DETERMINING YOUR POLICY'S VALUE 21
- -----------------------------------------------------------
Your account value 21
- -----------------------------------------------------------
3
TRANSFERRING YOUR MONEY AMONG OUR
INVESTMENT OPTIONS 22
- -----------------------------------------------------------
Transfers you can make 22
Telephone and EQAccess transfers 22
Our dollar cost averaging service 22
Our asset rebalancing service 23
- -----------------------------------------------------------
- --------------------------------------------------------------------------------
"We," "our" and "us" refers 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 Incentive Life in all states. This prospectus does not offer
Incentive 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
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------
4
ACCESSING YOUR MONEY 24
- -----------------------------------------------------------------------
Borrowing from your policy 24
Making withdrawals from your policy 25
Surrendering your policy for its net cash
surrender value 26
Your option to receive a living benefit 26
- -----------------------------------------------------------------------
5
TAX INFORMATION 27
- -----------------------------------------------------------------------
Basic tax treatment for you and your beneficiary 27
Tax treatment of distributions to you 27
Tax treatment of living benefit proceeds 29
Effect of policy on interest deductions taken by
business entities 29
Requirement that we diversify investments 29
Estate, gift, and generation-skipping taxes 30
Pension and profit-sharing plans 30
Other employee benefit programs 30
ERISA 30
Our taxes 30
When we withhold taxes from distributions 31
Possibility of future tax changes 31
- -----------------------------------------------------------------------
6
MORE INFORMATION ABOUT PROCEDURES
THAT APPLY TO YOUR POLICY 32
- -----------------------------------------------------------------------
Ways to make premium and loan payments 32
Requirements for surrender requests 32
Ways we pay policy proceeds 32
Assigning your policy 32
Dates and prices at which policy events occur 32
Policy issuance 34
Gender-neutral policies 34
- -----------------------------------------------------------------------
7
MORE INFORMATION ABOUT OTHER MATTERS 36
- -----------------------------------------------------------------------
Your voting privileges 36
About our Separate Account FP 36
About our general account 37
You can change your policy's insured person 37
Transfers of your account value 37
Telephone and EQAccess requests 38
Deducting policy charges 38
Customer loyalty credit 39
Suicide and certain misstatements 40
When we pay policy proceeds 40
Changes we can make 40
Reports we will send you 41
Legal proceedings 41
Illustrations of policy benefits 41
SEC registration statement 41
How we market the policies 41
Insurance regulation that applies to Equitable Life 42
Directors and principal officers 43
- -----------------------------------------------------------------------
8
FINANCIAL STATEMENTS OF SEPARATE
ACCOUNT FP AND EQUITABLE LIFE 51
- -----------------------------------------------------------------------
Separate Account FP financial statements A-1
Equitable Life financial statements F-1
- -----------------------------------------------------------------------
APPENDICES
- -----------------------------------------------------------------------
I - Investment performance record AA-1
II - Our data on market performance BB-1
III - An index of key words and phrases CC-1
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
EQ ADVISORS TRUST PROSPECTUS (follows after
page CC-1 of this prospectus, but is not a part of this
prospectus)
- -----------------------------------------------------------------------
<PAGE>
Who is Equitable Life?
- -----
4
- --------------------------------------------------------------------------------
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
$462.7 billion in assets as of December 31, 1999. 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
- --------------------------------------------------------------------------------
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 Client Services
Radio City Station
P.O. Box 808
New York, New York 10101-0808
- -------------------------------------------------------------
BY EXPRESS DELIVERY ONLY:
- -------------------------------------------------------------
at the Street Address for our Administrative Office:
Equitable Life Client Services
135 W. 50th St., 10th Floor
New York, New York 10020
- -------------------------------------------------------------
BY TOLL-FREE PHONE:
- -------------------------------------------------------------
1-888-228-6690
- -------------------------------------------------------------
BY E-MAIL:
- -------------------------------------------------------------
[email protected]
- -------------------------------------------------------------
BY FAX:
- -------------------------------------------------------------
1-212-641-7075
- -------------------------------------------------------------
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 investment options; and
(e) changes in allocation percentages for premiums and deductions.
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
- --------------------------------------------------------------------------------
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 premium payments after the first one to our Administrative Office at
the above addresses; except that you should send any premiums 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
- --------------------------------------------------------------------------------
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>
- ----------------------------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM Premium charge (a) 6% of each premium payment you make up to a certain
AMOUNTS YOU CONTRIBUTE amount(1) and (b) 3% of each premium payment thereafter
TO YOUR POLICY: (which we may increase up to 6%)(2)
- ----------------------------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM Administrative charge(3) (i) For adults (age 18 and older), $20 in each of your
YOUR POLICY'S VALUE EACH policy's first 12 months; or, for children, $10 in each of
MONTH: your policy's first 24 months and (ii) for everyone, $7 in
each subsequent month (which we may increase up
to $10)
------------------------------------------------------------------------------------------------
Cost of insurance charges(3) and Amount varies depending on the specifics of your policy(4)
Optional rider charges
------------------------------------------------------------------------------------------------
Charge if you have elected our $.02 for each $1,000 of your policy's face amount at the
optional enhanced death time the charge is deducted(5)
benefit guarantee
- ----------------------------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM Mortality and expense .60% (effective annual rate) of the value you have in our
YOUR POLICY'S VARIABLE risk charge variable investment options (we may increase this rate up
INVESTMENT PERFORMANCE to .90%)(6)
EACH DAY:
- ----------------------------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM Surrender (turning in) of your A surrender charge that will not exceed the amount set
YOUR ACCOUNT VALUE AT THE policy during its first 15 years forth in your policy(7) (we will also deduct the remaining
TIME OF THE TRANSACTION: amount of surrender charge associated with any face
amount increase, as discussed immediately below)
------------------------------------------------------------------------------------------------
Surrender of your policy during An amount of surrender charge that we will compute on
the first 15 years after you have essentially the same basis as if each such face amount
requested an increase in your increase had been a separate, newly-issued Incentive Life
policy's face amount policy(8)
------------------------------------------------------------------------------------------------
Requested decrease in your A pro rata portion of the full surrender charge that would
policy's face amount apply to a surrender at the time of the decrease
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- -----
8
- --------------------------------------------------------------------------------
1 Up to an amount equal to ten "target premiums." The "target premium" is
actuarially determined for each policy, based on that policy's
characteristics.
2 The Illustrations of Policy Benefits that your financial professional will
provide will show the impact of the actual current and guaranteed maximum
rates of these and any other charges, based on various assumptions. We may
increase this charge higher than 6%, however, as a result of changes in the
tax laws which increase our expenses.
3 Not applicable after the insured person reaches age 100.
4 See "Monthly cost of insurance charge" and "Other benefits you can add by
rider" later in this prospectus.
5 The "face amount" is the basic amount of insurance coverage under your
policy.
6 This charge does not apply to amounts in our guaranteed interest option.
7 Beginning in your policy's ninth year, this amount declines at a constant
rate each month until no surrender charge applies to surrender made after
the policy's 15th year. The initial amount of surrender charge depends on
each policy's specific characteristics. For any policy, the lowest initial
surrender charge per $1,000 of initial face amount would be $2.91, and the
highest initial surrender charge per $1,000 of initial face amount would be
$12.99.
8 This additional surrender charge, however, applies only to the amount (if
any) by which the increase causes the face amount to exceed its highest
previous amount. For these purposes, we disregard any face amount changes
that we make automatically as a result of any change in your death benefit
option.
<PAGE>
- -----
9
- --------------------------------------------------------------------------------
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%
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%
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
- --------------------------------------------------------------------------------
(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 Money Market, Alliance High Yield,
Alliance Common Stock, Alliance Small Cap Growth and EQ/Aggressive Stock
Portfolios 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. 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 Portfolios reflects a decrease effective on May 1, 2000.
(4) Initial seed capital was invested in the EQ/Alliance Premier Growth,
Capital Guardian International, Capital Guardian Research and Capital
Guardian U.S. Equity 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 annualized estimates for 2000. Initial seed
capital will be invested in the EQ/Alliance Technology Portfolio on or
about May 1, 2000.
<PAGE>
Risks you should consider
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HOW WE ALLOCATE CHARGES AMONG YOUR INVESTMENT OPTIONS
In your application for a policy, you tell us from which investment options you
want us to take the policy's monthly deductions as they fall due. You can change
these instructions at any time. If we cannot deduct the charge as your most
current instructions direct, we will allocate the deduction among your
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); or (3) make a charge of up to $25 for each transfer among investment
options that you make.
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, premium payments, 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.
RISKS YOU SHOULD CONSIDER
Some of the principal risks of investing in a policy are as follows:
o If the investment options you choose perform poorly, you could lose some or
all of the premiums you pay.
o If the investment options you choose do not make enough money to pay for
the policy charges, you could have to pay more premiums to keep your policy
from terminating.
o We can increase certain charges without your consent, within limits stated
in your policy.
o You may have to pay a surrender charge if you wish to discontinue some or
all of your insurance coverage under a policy.
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.
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1
Policy features and benefits
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HOW YOU CAN PAY FOR AND CONTRIBUTE TO YOUR POLICY
PREMIUM PAYMENTS. We call the amounts you contribute to your policy "premiums"
or "premium payments." The amount we require as your first premium varies
depending on the specifics of your policy and the insured person. Each
subsequent premium payment must be at least $100, although we can increase this
minimum if we give you advance notice. (Policies on an automatic premium payment
plan may have different minimums.) Otherwise, with a few exceptions mentioned
below, you can make premium payments at any time and in any amount.
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You can generally pay premiums at such times and in such amounts as you like, so
long as you don't exceed certain limits determined by the federal income tax
laws applicable to life insurance.
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LIMITS ON PREMIUM PAYMENTS. The federal tax law definition of "life insurance"
limits your ability to pay certain high levels of premiums (relative to the
amount of your policy's insurance coverage). Also, if your premium payments
exceed certain other amounts specified under the Internal Revenue Code, your
policy will become a "modified endowment contract," which may subject you to
additional taxes and penalties on any distributions from your policy. See "Tax
information" below. We may return any premium payments that would exceed those
limits to you.
You can ask your financial professional to provide you with an illustration of
policy benefits that shows you the amount of premium you can pay, based on
various assumptions, without exceeding these tax law limits. The tax law limits
can change as a result of certain changes you make to your policy. For example,
a reduction in the face amount of your policy may reduce the amount of premiums
that you can pay.
If at any time when your policy's account value is high enough that the
alternative death benefit discussed below would apply, we reserve the right to
limit the amount of any premiums that you pay, unless the insured person
provides us with adequate evidence that he/she continues to meet our
requirements for issuing insurance.
PLANNED PERIODIC PREMIUMS. Page 3 of your policy will specify a "planned
periodic premium." This is the amount that you request us to bill you. However,
payment of these or any other specific amounts of premiums is not mandatory.
Rather, you need to pay only the amount of premiums (if any) necessary to keep
your policy from lapsing and terminating as discussed below.
THE MINIMUM AMOUNT OF PREMIUMS YOU MUST PAY
POLICY "LAPSE" AND TERMINATION. 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 unless
o you have paid sufficient premiums to maintain one of our available
guarantees against termination and your policy is still within the period
of that guarantee (see "You can guarantee that your policy will not
terminate before a certain date" below) or
o you have elected the "paid up" death benefit guarantee and it remains in
effect (see "You can elect a "paid up" death benefit guarantee" below).
("Net cash surrender value" is explained under "Surrendering your policy for its
net cash surrender value" below.)
We will mail a notice to you at your last known address if your policy lapses.
You will have a 61-day grace period to pay at least an amount prescribed in your
policy which would be enough to keep your policy in force for approximately
three months (without regard to investment performance). You may not make any
transfers or request any other policy changes during a grace period. If we do
not receive your payment by the end of the grace period, your policy (and all
riders to the 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.
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Your policy will terminate if you don't either (i) pay enough premiums to pay
the charges we deduct or (ii) maintain in effect one or more of our other
guarantees that can keep your policy from terminating. However, we will first
send you a notice and give you a chance to pay any shortfall.
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You may owe taxes 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 pay at least the amount of premium that we
require. Your policy contains additional information about the minimum amount of
this premium and about the values and terms of the policy after it is restored.
YOU CAN GUARANTEE THAT YOUR POLICY WILL NOT TERMINATE BEFORE A CERTAIN DATE
You can guarantee that your policy will not terminate for a number of years by
paying at least certain amounts of premiums. We call these amounts "guarantee
premiums" and they will be set forth on page 3 of your policy. In most states
you have three options for how long the guarantee will last. One of these
options is discussed below under "Enhanced death benefit guarantee." The other
two guarantee options are as follows:
(1) a guarantee for the first 5 years of your policy (the policy calls this the
"no-lapse guarantee")
or
(2) a guarantee until the insured reaches age 70, but in no case less than 10
years (the policy calls this the "death benefit guarantee").
In some states, these guarantees may be unavailable, limited to shorter periods,
or referred to by different names.
We make no extra charge for either of these two guarantees against policy
termination. However, in order for either of those guarantees to be available,
you must have satisfied the "guarantee premium test" (discussed below) and you
must not have any outstanding policy loans. In this connection, maintaining the
"age 70/10 year" guarantee against policy termination (where available) will
require you to pay more premiums than maintaining only the 5-year guarantee.
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In most states, if you pay at least certain prescribed amounts of premiums, and
have no policy loans, your policy will not terminate for a number of years, even
if the value in your policy becomes insufficient to pay the monthly charges.
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GUARANTEE PREMIUM TEST. If your policy's net cash surrender value is not
sufficient to pay a monthly deduction that has become due, we check to see if
the cumulative amount of premiums that you have paid to date at least equals the
cumulative guarantee premiums due to date for either of the two above-listed
guarantee options that are then available under your policy. If it does, your
policy will not lapse, provided that you have no policy loans outstanding (or
you repay all of such loans before the end of the 61-day grace period mentioned
above) and provided that the period of the corresponding guarantee has not
expired.
When we calculate the cumulative amount of guarantee premiums due for the two
above-listed guarantee options, we compound each amount at a 4% annual interest
rate from its due date through the date of the calculation. (This interest rate
is purely for purposes of determining whether you have satisfied the guarantee
test for an available duration. It does not bear any relation to the returns you
will actually earn or any loan interest you will actually pay.) We use the same
calculation for determining the cumulative amount of premiums paid, beginning
with the date each premium is received. The amount of premiums you must pay to
maintain a guarantee against termination will be increased by the cumulative
amount of any partial
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withdrawals you have taken from your policy (calculated by the same method,
beginning with the date of withdrawal).
ENHANCED DEATH BENEFIT GUARANTEE. On your application for a policy, you may
elect an enhanced death benefit guarantee rider, that will guarantee your policy
against termination for a longer period of time than either of the two guarantee
options described above. If elected, a monthly charge of $.02 per $1,000 of the
policy's face amount is deducted from your account value for this guarantee. To
elect this feature, all of your policy's account value must be allocated to our
variable investment options.
While the enhanced death benefit guarantee is in effect, your policy will not
lapse, even if your net cash surrender value is insufficient to pay a monthly
deduction that has become due, as long as you do not have an outstanding loan
(or you repay the loan within the 61-day grace period). This guarantee is
available for the following periods:
(a) If you have always chosen death benefit Option A, for the life of the
insured person; or
(b) If you have ever selected death benefit Option B (even if you subsequently
changed it to Option A), until the later of the date the insured person
reaches age 80 or the end of the 15th year of the policy.
This option is not available in all states.
If you have elected the enhanced death benefit guarantee, we test on each policy
anniversary to see if the required premium (the enhanced death benefit
"guarantee premium") has been paid. (The enhanced guarantee premium will be set
forth on page 3 of your policy.) The required premium has been paid if the total
of all premiums paid, less all withdrawals, is at least equal to the total of
all enhanced guarantee premiums due to date. (In this comparison, unlike the
test for the shorter duration guarantees discussed above, we do not compound
these amounts using any hypothetical interest rate.)
If the required premium has not been paid as of any policy anniversary, we will
mail you a notice requesting that you send us the shortfall. If we do not
receive this additional premium, the enhanced death benefit guarantee will
terminate. The enhanced death benefit guarantee also will terminate if you
request that we cancel it, or if you allocate any value to our guaranteed
interest option. If the enhanced death benefit guarantee terminates, the related
charge terminates, as well. Once terminated, this guarantee can never be
reinstated or restored.
GUARANTEE PREMIUMS. The amount of the guarantee premiums for each of the
guarantees discussed above is set forth in your policy if that guarantee is
available to you. The guarantee premiums are actuarially determined at policy
issuance and depend on the age and other insurance risk characteristics of the
insured person, as well as the amount of the coverage and additional features
you select. Certain additional benefit riders will cause the guarantee premiums
to increase after policy issue. The guarantee premiums also may change if, for
example, you make policy changes that increase or decrease the face amount of
the policy or a rider, add or eliminate a rider, or if there is a change in the
insured person's risk characteristics. We will send you a new policy page
showing any change in your guarantee premiums. Any change will be prospective
only, and no change will extend a guarantee period beyond its original number of
years.
We will not bill you separately for guarantee premiums. If you want to be
billed, therefore, you must select a planned periodic premium that at least
equals the guarantee premium that you plan to pay. If you wish your bills for
planned periodic premiums to cover your guarantee premiums, please remember to
change your planned periodic premium amount, as necessary, if you take any
action that causes your guarantee premiums to change.
YOU CAN ELECT A "PAID UP" DEATH BENEFIT GUARANTEE
In most states, you may elect to take advantage of our "paid up death benefit
guarantee" at any time after the fourth year of your policy. If you elect the
paid up death benefit guarantee, we may initially reduce your policy's face
amount (see below). Thereafter, your policy will not lapse and the
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death benefit will never be less than the face amount, so long as the guarantee
remains in effect. The guarantee will terminate, however, if (i) at any time
following the election, any outstanding policy loans and accrued loan interest,
together with any then applicable surrender charge, exceed your policy's account
value or if (ii) you request us to terminate the election.
In order to elect the paid up death benefit guarantee:
o you must have death benefit "Option A" in effect (see "About your life
insurance benefit" below);
o you must terminate any riders to your policy that carry additional charges;
o the election must not cause the policy to lose its qualification as life
insurance under the Internal Revenue Code or require a current distribution
from the policy to avoid such disqualification; and
o the election must not reduce the face amount (see below) to less than the
minimum face amount for which we would then issue a policy.
The paid up death benefit guarantee may not be available in all states.
POSSIBLE REDUCTION OF FACE AMOUNT. The face amount of your policy after this
guarantee is elected is the lesser of (a) the face amount immediately before the
election or (b) the policy account value divided by a factor based on the then-
age of the insured person. The factors are set forth in your policy. As a
general matter, the factors change as the insured person ages so that, if your
account value stayed the same, the calculation under clause (b) above would be
lower the longer your policy is outstanding.
If electing the paid up death benefit guarantee causes a reduction in face
amount, we will deduct the same portion of any remaining surrender charge as we
would have deducted if you had requested that decrease directly (rather than
electing the paid up death benefit guarantee). (See "Charges and expenses you
will pay" above.)
OTHER EFFECTS OF THIS GUARANTEE. You generally may continue to pay premiums
after you have elected the paid up death benefit guarantee (subject to the same
limits as before), but premium payments are not required. If the election causes
your face amount to decrease, however, the amount of additional premiums you can
pay, if any, may be reduced. You may continue to make transfers, but you may not
change the death benefit option or add riders that have their own charges while
the paid up death benefit guarantee is in effect.
Partial withdrawals while the paid up death benefit guarantee is in effect will
generally be subject to the same terms and conditions as any other partial
withdrawal (see "Making withdrawals from your policy" below), except that:
o We may decline your request for a partial withdrawal (or any other policy
change) under the circumstances described in the paid up death benefit
guarantee policy endorsement. If this occurs, you may wish to consider
asking us to terminate the paid up death benefit guarantee.
o Partial withdrawals (and any distributions we may be required to make for
tax purposes) will generally reduce your policy's face amount by more than
the amount of the withdrawal.
Election of the paid up death benefit guarantee may cause your policy to become
a modified endowment contract under certain circumstances. See "Tax treatment of
distributions to you" below. You should consult your tax advisor before making
this election.
INVESTMENT OPTIONS WITHIN YOUR POLICY
We will initially put all amounts which you have allocated to variable
investment options into our Alliance Money Market 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 your
premium allocation instructions then in effect. You give such instructions in
your application to purchase a policy. You can change the premium allocation
percentages at any time, but this will not affect any prior allocations. The
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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.
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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 both "EQ/Putnam" options)
Each Portfolio is a part of EQ Advisors Trust. Equitable Life serves as
investment manager of EQ Advisors Trust. As such, Equitable Life oversees the
activities of the above-listed advisers with respect to EQ Advisors Trust and is
responsible for retaining or discontinuing the services of those advisers.
(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.
GUARANTEED INTEREST OPTION. You can also allocate some or all of your policy's
value to our guaranteed interest option. We, in turn, invest such amounts as
part of our general assets. Periodically, we declare a fixed rate of interest
(3% minimum) on amounts you allocate to our guaranteed interest option. (The
guaranteed interest option is part of what your policy and other supplemental
material may refer to as the "Guaranteed Interest Account".)
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We will pay at least 3% annual interest on our guaranteed interest option.
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ABOUT YOUR LIFE INSURANCE BENEFIT
YOUR POLICY'S FACE AMOUNT. In your application to buy an Incentive Life policy,
you tell us how much insurance coverage you want on the life of the insured
person. We call this the "face amount" of the policy. $50,000 is the smallest
amount of coverage you can request.
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If the insured person dies, we pay a life insurance benefit to the "beneficiary"
you have named. The amount we pay depends on whether you have chosen death
benefit Option A or death benefit Option B.
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YOUR POLICY'S "DEATH BENEFIT" OPTIONS. In your policy application, you also
choose whether the basic amount (or "benefit") we will pay if the insured person
dies is
o Option A - THE POLICY'S FACE AMOUNT on the date of the insured person's
death. The amount of this death benefit doesn't change over time, unless
you take any action that changes the policy's face amount;
or
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o Option B - THE FACE AMOUNT PLUS THE POLICY'S "ACCOUNT VALUE" on the date of
death. Under this option, the amount of death benefit generally changes
from day to day, because many factors (including investment performance,
charges, premium payments and withdrawals) affect your policy's account
value.
Your policy's "account value" is the total amount that at any time is earning
interest for you or being credited with investment gains and losses under your
policy. (Account value is discussed in more detail under "Determining your
policy's value" below.)
Under Option B, your policy's death benefit will tend to be higher than under
Option A. As a result, the monthly insurance charge we deduct will also be
higher, to compensate us for our additional risk.
ALTERNATIVE HIGHER DEATH BENEFIT IN LIMITED CASES. Your policy is designed to
always provide a minimum level of insurance protection relative to your policy's
value, in part to meet the Internal Revenue Code's definition of "life
insurance." Thus, we will automatically pay an alternative death benefit if it
is HIGHER than the basic Option A or Option B death benefit you have selected.
This alternative death benefit is computed by multiplying your policy's account
value on the insured person's date of death by a percentage specified in your
policy. The percentage depends on the insured person's age. Representative
percentages are as follows:
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If the value in your policy is high enough, relative to the face amount, the
life insurance benefit will automatically be greater than the Option A or Option
B death benefit you have selected.
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<TABLE>
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<S> <C> <C> <C> <C> <C> <C>
AGE* 40 45 50 55 60 65
AND UNDER
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% 250% 215% 185% 150% 130% 120%
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70 75-95 99-OVER
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% 115% 105% 101%
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</TABLE>
* For the then-current policy year.
This higher alternative death benefit exposes us to greater insurance risk than
the regular Option A and B death benefits. Because the cost of insurance charges
we make under your policy are based in part on the amount of our risk, you will
pay more cost of insurance charges for any periods during which the higher
alternative death benefit is the operative one.
OTHER ADJUSTMENTS TO DEATH BENEFIT. We will increase the death benefit proceeds
by the amount of any other benefits we owe upon the insured person's death under
any optional riders which are in effect.
We will reduce the death benefit proceeds by the amount of any remaining policy
loans and unpaid loan interest, as well as any amount of monthly charges under
the policy that remain unpaid because the insured person died during a grace
period. We also reduce the death benefit if we have already paid part of it
under a living benefit rider. We reduce it by the amount of the living benefit
payment plus interest. (See "Your option to receive a living benefit" below.)
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You can request a change in your death benefit option any time after second year
of the policy.
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Change of death benefit option. If you change from Option A to B, we
automatically reduce your policy's face amount by an amount equal to your
policy's account value at the time of the change. We may refuse this change if
the policy's face amount would be reduced below our then-current minimum for new
policies. Changes from Option A to Option B are not permitted once the insured
person reaches age 81.
If you change from Option B to A, we automatically increase your policy's face
amount by an amount equal to your policy's account value at the time of the
change.
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If the alternative death benefit discussed above would be in effect at the time
of the change, we will determine the new face amount somewhat differently from
the general procedures described above.
We will not deduct or establish any amount of surrender charge as a result of a
change in death benefit option. Please refer to "Tax information" below, to
learn about certain possible income tax consequences that may result from a
change in death benefit option, including the effect of an increase or decrease
in face amount.
YOU CAN INCREASE OR DECREASE YOUR INSURANCE COVERAGE
If the face amount increase endorsement is issued with your policy, you may
increase the life insurance coverage under your policy by requesting an increase
in your policy's face amount. You can do so any time after the first year of
your policy. You may request a decrease in your policy's face amount any time
after the second year of your policy. The requested increase or decrease must be
at least $10,000. Please refer to "Tax information" for certain possible tax
consequences of changing the face amount.
We can refuse any requested increase or decrease. We will not approve any
increase or decrease if we are at that time being required to waive charges or
pay premiums under any optional disability waiver rider that is part of the
policy. We will also not approve a face amount increase if the insured person
has reached age 81. The following additional conditions also apply:
FACE AMOUNT INCREASES. We treat an increase in face amount in many respects as
if it were the issuance of a new policy. For example, you must submit
satisfactory evidence that the insured person still meets our requirements for
coverage. Also, we establish additional amounts of surrender charge and
guarantee premiums under your policy for the face amount increase, reflecting
the amount of additional coverage.
In most states, you can cancel the face amount increase within 10 days after you
receive a new policy page showing the increase. If you cancel, we will reverse
any charges attributable to the increase and recalculate all values under your
policy to what they would have been had the increase not taken place.
The monthly insurance charge we make for the amount of the increase will be
based on the age and other insurance risk characteristics of the insured person
at the time of the increase. If we refuse a requested face amount increase
because the insured person's risk characteristics have become less favorable, we
may issue the additional coverage as a separate Incentive Life policy with a
different insurance risk classification. In that case, we would waive the
monthly administrative charge that otherwise would apply to that separate
policy.
FACE AMOUNT DECREASES. You may not reduce the face amount below the minimum we
are then requiring for new policies. Nor will we permit a decrease that would
cause your policy to fail the Internal Revenue Code's definition of life
insurance. Guarantee premiums, as well as our monthly deductions for the cost of
insurance coverage, will generally decrease from the time you reduce the face
amount.
If you reduce the face amount during the first 15 years of your policy, or
during the first 15 years after a face amount increase you have requested, we
will deduct all or part of the remaining surrender charge from your policy.
Assuming you have not previously changed the face amount, the amount of
surrender charge we will deduct will be determined by dividing the amount of the
decrease by the initial face amount and multiplying that fraction by the total
amount of surrender charge that still remains applicable to your policy. We
deduct the charge from the same investment options as if it were a part of a
regular monthly deduction under your policy.
In some cases, we may have to make a distribution to you from your policy at the
time of the decrease in order to decrease your policy's face amount. This may be
necessary in order to preserve your policy's status as life insurance under the
Internal Revenue Code. We may also be required to make such a distribution to
you in the future on account of a prior decrease in face amount.
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OTHER BENEFITS YOU CAN ADD BY RIDER
You may be eligible for the following other optional benefits we currently make
available by rider:
o disability waiver benefits
o ten-year term insurance on the insured person or an additional insured
person
o accidental death benefit
o option to purchase additional insurance
o children's term insurance
o cost-of-living rider
Equitable Life or your financial professional can provide you with more
information about these riders. The riders provide additional information, and
we will furnish samples of them to you on request. The maximum amount of any
charge we make for a rider will be set forth in the rider or in the policy
itself. We can, however, add, delete, or modify the riders we are making
available, at any time before they become effective as part of your policy.
The option to purchase additional insurance rider permits you to purchase
additional coverage on the insured person, without evidence of insurability, if
specified events occur.
The cost-of-living rider provides for scheduled automatic face amount increases
that, within limits, reflect increases in the Consumer Price Index. These
automatic face amount increases will result in a prospective increase in your
guarantee premiums and an additional surrender charge, in the same manner as
would any other face amount increase you request.
See also "Tax information" below for certain possible tax consequences of face
amount increases or adding or deleting riders.
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.
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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.
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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
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20
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we pay policy proceeds," below. Our financial professionals will take reasonable
steps to arrange for prompt delivery to the beneficiary.
PAYMENT OPTIONS FOR SURRENDER AND WITHDRAWAL PROCEEDS. You can also choose to
receive all or part of any proceeds from a surrender or 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 premiums paid. 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.
VARIATIONS AMONG INCENTIVE 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 Incentive Life where
special circumstances result in sales or administrative expenses or mortality
risks that are different from those normally associated with Incentive 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.
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2
Determining your policy's value
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YOUR ACCOUNT VALUE
As set forth above, we deduct certain charges from each premium payment you
make. We credit the rest of each premium payment to your policy's "account
value." You instruct us to allocate your account value to one or more of the
policy's 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, (ii) your amounts in our guaranteed interest option, and (iii) 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) and (iii) above as our
"Guaranteed Interest Account.") These amounts are subject to certain charges
discussed in "Charges and expenses you will pay."
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Your account value will be credited with the same returns as are achieved by the
Portfolios (or guaranteed interest option) that you select, but will also be
reduced by the amount of 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, withdrawals and surrenders are made from that option. Similarly, you
"purchase" additional units having the same value as the amount of any premium,
loan repayment, or transfer that you allocate to that option.
The value of each unit will increase or decrease each day, as though 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"in "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.
YOUR POLICY'S VALUE IN OUR GUARANTEED INTEREST OPTION. Your policy's value in
our guaranteed interest option includes: (i) any amounts you have specifically
requested that we allocate to that option and (ii) any "restricted" amounts that
we hold in that option as a result of your election to receive a living benefit
(these restricted amounts may be referred to in your policy as "liened policy
amounts"). See "Your option to receive a living benefit" below. We credit all of
such amounts with interest at rates we declare from time to time. We guarantee
that these rates will not be less than a 3% effective annual rate. The mortality
and expense risk charge mentioned above does not apply to our guaranteed
interest option.
Amounts may be allocated to or removed from your policy's value in our
guaranteed interest option for the same purposes as described above for the
variable investment options. We credit your policy with a number of dollars in
that option that equals any amount that is being allocated to it. Similarly, if
amounts are being removed from your guaranteed interest option for any reason,
we reduce the amount you have credited to that option on a dollar-for-dollar
basis.
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3
Transferring your money among our investment options
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TRANSFERS YOU CAN MAKE
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You can transfer among our variable investment options and into our guaranteed
interest option.
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After your policy's Allocation Date, you can transfer amounts from one
investment option to another. The total of all transfers you make on the same
day must be at least $500; except that you may transfer your entire balance in
an investment option, even if it is less than $500. 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).
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Transfers out of our guaranteed interest option are more limited.
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RESTRICTIONS ON TRANSFER OUT OF THE GUARANTEED INTEREST OPTION. We only permit
you to make one transfer out of our guaranteed interest option during each
policy year. (No such limit applies to transfers out of our variable investment
options.) Also, the maximum transfer from our guaranteed interest option is the
greater of (a) 25% of your then current balance in that option (b) $500, or (c)
the amount (if any) that you transferred out of the guaranteed interest option
during the immediately preceding policy year.
We will not accept a request to transfer out of the guaranteed interest option
unless we receive it within the period beginning 30 days before and ending 60
days after an anniversary of your policy. If we receive the request within that
period, the transfer will occur as of that anniversary or, if later, the date we
receive it.
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 will never apply to a transfer of all of your variable investment
option amounts to our guaranteed investment option, or to any transfer pursuant
to our dollar cost averaging or asset rebalancing service, as 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
1-888-228-6690 (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 Website 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.
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23
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Using the dollar cost averaging service does not guarantee that you will earn a
profit or be protected against losses.
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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.
This 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.
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 in 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.
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4
Accessing your money
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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 amount that we hold on a
"restricted" basis following your receipt of a living benefit payment, as well
as by any other loans (and accrued loan interest) you have outstanding. See
"Your option to receive a living benefit" below.
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You can use policy loans to obtain funds from your policy without surrender
charges or, in most cases, paying current income taxes. However, the borrowed
amount is no longer credited with the investment results of any of our
investment options under the policy.
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When you take a policy loan, we remove an amount equal to the loan from one or
more of your 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 under the same terms and
conditions as apply to amounts supporting our guaranteed interest option, with
several exceptions:
o you cannot make transfers or withdrawals of the collateral;
o we expect to credit different rates of interest to loan collateral than we
credit under our guaranteed interest option;
o we do not count the collateral when we compute our customer loyalty credit;
and
o 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 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
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
investment options in proportion to your value in each.
LOAN INTEREST WE CHARGE. The interest we charge on a policy loan accrues daily
at an adjustable interest rate. We determine the rate at the beginning of each
year of your policy and that rate applies to all policy loans that are
outstanding at any time during the year. The maximum rate is the greater of (a)
4% or (b) the "Monthly Average Corporate" yield published in Moody's Corporate
Bond Yield Averages for the month that ends two months before the interest rate
is set. (If that average is no longer published, we will use another average, as
the policy provides.) In no event, however, will the loan interest rate be
greater than 15%. We will notify you of the current loan interest rate when you
apply for a loan, and will notify you in advance of any rate increase.
Loan interest payments are due on each policy anniversary. If not paid when due,
we automatically add the interest as a new policy loan.
INTEREST THAT WE CREDIT ON LOAN COLLATERAL. Under our current rules, the annual
interest rate we credit on your loan collateral during any of your policy's
first fifteen years will be 1% less than the rate we are then charging you for
policy loan interest, and, beginning in the policy's 16th year, equal to the
loan interest rate. The elimination of the rate differential is not guaranteed.
Accordingly, we have discretion to increase the rate differential for any
period, including under policies that are already outstanding (and may have
outstanding loans). We do guarantee that the annual rate of interest credited on
your loan collateral will never be less than 3% and that the differential will
not exceed 2% (except if tax law changes increase the taxes we pay on policy
loans or loan interest). Because we first offered Incentive Life policies in
1999 the interest rate differential has not yet been eliminated under any
outstanding policies.
We credit interest on your loan collateral daily. On each anniversary of your
policy (or when your policy loans are fully
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25
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repaid) we contribute that interest to your policy's investment options in the
same proportions as if it were a premium payment.
EFFECTS OF POLICY LOANS. A loan can reduce the length of time that your
insurance remains in force, because the amount we set aside as loan collateral
cannot be used to pay charges as they become due. A loan can also cause any paid
up guaranteed death benefit to terminate or may cause any other guarantee
against termination to become unavailable. We will deduct any outstanding policy
loan plus accrued loan interest from your policy's proceeds if you do not pay it
back. Even if 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.
PAYING OFF YOUR LOAN. You can repay all or part of your loan at any time. We
normally assume that payments you send us are premium payments. Therefore, you
must submit instructions with your payment indicating that it is a loan
repayment. If you send us more than all of the loan principal and interest you
owe, we will treat the excess as a premium payment.
When you send us a loan repayment, we will transfer an amount equal to such
repayment from your loan collateral back to the investment options under your
policy. First we will restore any amounts that, before being designated as loan
collateral, had been in the guaranteed interest option under your policy. We
will allocate any additional repayments among investment options as you
instruct; or, if you don't instruct us, in the same proportion as if they were
premium payments.
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,
however, and we have discretion to decline any request. If you do not tell us
from which investment options you wish us to take the withdrawal, 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 withdrawal from all of
your investment options in proportion to your value in each.
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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.
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EFFECT OF PARTIAL WITHDRAWALS ON INSURANCE COVERAGE. If the Option A death
benefit is in effect, a partial withdrawal results in a dollar-for-dollar
automatic reduction in the policy's face amount (and, hence, an equal reduction
in the Option A death benefit). If the paid up death benefit guarantee is in
effect, a partial withdrawal will generally reduce the face amount by more than
the amount of the withdrawal. Face amount reductions that occur automatically as
a result of withdrawals, however, do not result in our deducting any portion of
any then remaining surrender charge. We will not permit a partial withdrawal
that would reduce the face amount below our minimum for new policy issuances at
the time, or that would cause the policy to no longer be treated as life
insurance for federal income tax purposes.
If death benefit Option B is in effect, a partial withdrawal reduces the death
benefit on a dollar-for-dollar basis, but does not affect the face amount.
The result is different, however, during any time when the alternative death
benefit (discussed above) would be higher than the Option A or B death benefit
you have selected. In that case, a partial withdrawal will cause the death
benefit to decrease by more than the amount of the withdrawal, even if the paid
up death benefit guarantee is not then in effect. Please also remember that a
partial withdrawal reduces the amount of your premium payments that counts
toward maintaining our other guarantees against termination, as well.
You should refer to "Tax information" below, for information about possible tax
consequences of partial withdrawals and any associated reduction in policy
benefits.
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A partial withdrawal may 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 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, minus any amount of your account
value that is "restricted" as a result of previously distributed "living
benefits," and minus any surrender charge that then remains applicable. The
surrender charge is described in "Charges and expenses you will pay" above.
Please refer to "Tax information" below for the possible tax consequences of
surrendering your policy.
YOUR OPTION TO RECEIVE A LIVING BENEFIT
Subject to our insurance underwriting guidelines and availability in your state,
your policy will automatically include our living benefit rider. This feature
enables you to receive a portion (generally 75%) of the policy's death benefit
(excluding death benefits payable under certain other policy riders), if the
insured person has a terminal illness (as defined in the rider).
We make no additional charge for the rider. However, if you tell us that you do
not wish to have the living benefit rider added at issue, but you later ask to
add it, we will need to evaluate the insurance risk at that time, and we may
decline to issue the rider.
If you receive a living benefit, the remaining benefits under your policy will
be affected. We will deduct the amount of any living benefit we have paid, plus
interest (as specified in the rider), from the death benefit proceeds that
become payable under the policy if and when the insured person dies.
When we pay a living benefit we automatically transfer a pro-rata portion of
your policy's net cash surrender value to the policy's guaranteed interest
option. This amount, together with the interest you earn thereon, will be
"restricted" - that is, it will not be available for any loans, transfers or
partial withdrawals that you may wish to make. In addition, it may not be used
to satisfy the charges we deduct from your policy's value, and we do not count
it in computing any customer loyalty credit. We will deduct these restricted
amounts from any subsequent surrender proceeds that we pay. (In your policy, we
refer to this as a "lien" we establish against your policy.)
The receipt of a living benefit payment may qualify for exclusion from income
tax. See "Tax information" below. Receipt of a living benefit payment may affect
your eligibility for certain government benefits or entitlements.
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You can arrange to receive a "living benefit" if the insured person becomes
terminally ill.
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5
Tax information
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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 Incentive 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 generally
will 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 STATUS. Your policy will be a "modified
endowment contract" if, at any time during the first seven years of your policy,
you have paid a cumulative amount of premiums that exceeds the cumulative
seven-pay limit. The cumulative seven-pay limit is the amount of premiums that
you would have paid by that time under a similar fixed-benefit insurance policy
that was designed (based on certain assumptions mandated under the Code) to
provide for paid up future benefits after the payment of seven equal annual
premiums. ("Paid up" means that no future premiums would be required.) This is
called the "seven-pay" test.
Whenever there is a "material change" under a policy, the policy will generally
be (a) treated as a new contract for purposes of determining whether the policy
is a modified endowment contract and (b) subjected to a new seven-pay period and
a new seven-pay limit. The new seven-pay limit would be determined taking into
account, under a prescribed formula, the account value of the policy at the time
of such change. A materially changed policy would be considered a modified
endowment contract if it failed to satisfy the new seven-pay limit at any time
during the new seven-pay period. A "material change" for these purposes could
occur as a result of a change in death benefit option, the selection of
additional rider benefits, an increase in your policy's face amount (including
pursuant to our cost-of-living rider), or certain other changes.
If your policy's benefits are reduced during its first seven years (or within
seven years after a material change), the seven-pay limit will be redetermined
based on the reduced level of benefits and applied retroactively for purposes of
the seven-pay test. (Such a reduction in benefits could include, for example, a
requested decrease in face amount, the termination of additional benefits under
a rider or, in some cases, a partial withdrawal.) If the premiums previously
paid are greater than the recalculated (lower) seven-pay limit, the policy will
become a modified endowment contract.
A life insurance policy that you receive in exchange for a modified endowment
contract will also be considered a modified endowment contract.
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In addition to the above premium limits for testing for modified endowment
status, there are overall limits on the amount of premiums you may pay under
your policy in order for it to qualify as life insurance. Changes made to your
policy, for example, a decrease in face amount (including any decrease that may
occur as a result of a partial withdrawal) or other decrease in benefits may
impact the maximum amount of premiums that can be paid, as well as the maximum
amount of account value that may be maintained under the policy. In some cases,
this may cause us to take current or future action in order to assure that your
policy continues to qualify as life insurance, including distribution of amounts
to you that may be includible as income. See "Changes we can make" below.
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 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 premiums you have paid, less the amount of any previous distributions from
your policy that were not taxable.) During the first 15 years, however, the
proceeds from a partial withdrawal could 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.
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 this
purpose include a loan (including any increase in the loan amount to pay
interest on an existing loan or an assignment or a pledge to secure a loan) or
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 is similar to the basis described above for
other policies, except that it 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 (excluding certain qualified plans) 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.
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 such) 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
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policy, will be subject to federal income tax and, unless an exception applies,
the 10% penalty tax.
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 in the four preceding paragraphs. 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.
TAX TREATMENT OF LIVING BENEFIT PROCEEDS
Amounts received under an insurance policy on the life of an individual who is
terminally ill, as defined by the tax law, are generally excludable from the
payee's gross income. We believe that the benefits provided under our living
benefit rider meet the tax law's definition of terminally ill and can qualify
for this income tax exclusion. This exclusion does not apply to amounts paid to
someone other than the insured person, however, if the payee has an insurable
interest in the insured person's life only because the insured person is a
director, officer or employee of the payee or by reason of the insured person
being financially interested in any trade or business carried on by the payee.
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 face amount that you request, 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
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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 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.
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.
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
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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 not a 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 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 change in
interpretation. Any changes in federal, state, local or foreign tax law or
interpretations could have a retroactive effect both on our taxes and on 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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More information about procedures that apply to your policy
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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. Premiums or loan payments 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 accept third-party checks payable
to someone other than Equitable Life and endorsed over to Equitable Life only
(1) as a direct payment from a qualified retirement plan or (2) if it is made
out to a trustee who owns the policy and endorses the entire check (without any
refund) as a payment to the policy.
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.
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, withdrawal 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. Further, 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. 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.
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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 YOU MAKE. The following are reflected in your policy as of the date we
receive them:
o premium payments received after the policy's investment start date
(discussed below)
o loan repayments and interest payments
REQUESTS YOU MAKE. The following transactions occur as of the date we receive
your request:
o withdrawals
o tax withholding elections
o face amount decreases that result from a withdrawal
o changes of allocation percentages for premium payments or monthly
deductions
o surrenders
o changes of beneficiary
o transfers from a variable investment option to the guaranteed interest
option
o changes in form of death benefit payment
o loans
o transfers among variable investment options
o assignments
o termination of paid up death benefit guarantee
The following transactions occur on your policy's next monthly anniversary that
coincides with or follows the date we approve your request:
o changes in face amount
o election of paid up death benefit guarantee
o changes in death benefit option
o changes of insured person
o termination of enhanced death benefit guarantee
o restoration of terminated policies
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 before 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
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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.
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 surrender or partial
withdrawal request after the insured person has died. Also, all insurance
coverage ends on the date as of which we process any request for a 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.
o If you submit the full minimum initial premium to your financial
professional at the time you sign the application, and we issue the policy
as it was applied for, then the register date will be the later of (a) the
date you signed part I of the policy application or (b) the date a medical
professional signed part II of the policy application.
o If we do not receive your full minimum initial premium at our
Administrative Office before the issue date or, if we issue the policy on a
different basis than you applied for, the register date will 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.
We may also permit an earlier than customary register date (a) for
employer-sponsored cases, to accommodate a common register date for all
employees or (b) to provide a younger age at issue. (A younger age at issue
reduces the monthly charges that we deduct under a policy.) The charges and
deductions commence as of the register date, even when we have permitted an
early register date. We may also permit policyowners to delay a register date
(up to three months) in employer-sponsored cases.
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). Generally, this is the register date, or, if later, the date we receive
your full minimum initial premium at our Administrative Office.
COMMENCEMENT OF INSURANCE COVERAGE. You must give the full minimum initial
premium to your financial professional on or before the day 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 payment and delivery are
completed and (2) the information in the application continues to be true and
complete, without material change, as of the time of such payment. If you submit
the full minimum initial 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, 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 to
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be the same for males and females. In addition, employers and employee
organizations should consider, in consultation with counsel, the impact of Title
VII of the Civil Rights Act of 1964 on the purchase of Incentive Life in
connection with an employment-related insurance or benefit plan. In a 1983
decision, the United States Supreme Court held that, under Title VII, optional
annuity benefits under a deferred compensation plan could not vary on the basis
of sex.
There will be no distinctions based on sex in the cost of insurance rates for
Incentive Life policies sold in Montana. We will also make such gender-neutral
policies available on request in connection with certain employee benefit plans.
Cost of insurance rates applicable to a gender-neutral policy will not be
greater than the comparable male rates under a gender specific Incentive Life
policy.
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7
More information about other matters
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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 Incentive 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 Incentive 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 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 Incentive Life policies and, more specifically, the guaranteed
interest option). 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).
Because of applicable exemptions and exclusions, we have not registered
interests in the general account under the Securities Act of 1933 or registered
the general account as an investment company with the SEC. Accordingly, neither
the general account, the guaranteed interest option, nor any interests therein,
are subject to regulation under those acts. The staff of the SEC has not
reviewed the portions of this prospectus that relate to the general account and
the guaranteed interest option. The disclosure, however, may be subject to
certain provisions of the federal securities law relating to the accuracy and
completeness of statements made in prospectuses.
We declare the rate of interest periodically, but it will not be less than 3%.
We credit and compound the interest daily at an effective annual rate that
equals the declared rate. The rates we are at any time declaring on outstanding
policies may differ from the rates we are then declaring for newly issued
policies.
YOU CAN CHANGE YOUR POLICY'S INSURED PERSON
After the policy's second year, we will permit you to request that a new insured
person replace the existing one. This requires that you provide us with adequate
evidence that the proposed new insured person meets our requirements for
insurance. Other requirements are outlined in your policy.
Upon making this change, the monthly insurance charges we deduct and prospective
guarantee premiums will be based on the new insured person's insurance risk
characteristics. The change of insured person will not, however, affect the
surrender charge computation for the amount of coverage that is then in force.
Substituting the insured person is a taxable event and may, depending upon
individual circumstances, have other tax consequences as well. For example, the
change could cause the policy to be a "modified endowment contract" or to fail
the Internal Revenue Code's definition of "life insurance," unless we also
distribute certain amounts to you from the policy. See "Tax information" above.
You should consult your tax advisor prior to substituting the insured person. As
a condition to substituting the insured person we may require you to sign a form
acknowledging the potential tax consequences. In no event, however, will we
permit a change that causes your policy to fail the definition of life
insurance.
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 the request does not comply with our transfer limitations, or where you
request transfer of an amount greater than that currently allocated to an
investment option.
Similarly, 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 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
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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 between
investment options 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 1-888-228-6690 (toll free) from a touch tone phone to make the
following additional types of requests:
o policy loans
o changes of premium 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 confirmation letter by first class mail.
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 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 that is then applicable to
your policy by the amount we have at risk under your policy. Our amount at risk
(also described in your policy as "net amount at risk")
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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. A greater amount at risk, or a higher cost of insurance
rate, will result in a higher monthly charge.
As a general rule, the cost of insurance rate increases each year that you own
your policy. This happens automatically because of the insured person's
increasing age.
Our cost of insurance rates are guaranteed not to exceed those that will be
specified in your policy. For most insured persons at most ages, our current
rates are lower than those maximums. Therefore, we have the ability to raise
these rates up to the guaranteed maximum at any time. The guaranteed maximum
cost of insurance rates for gender neutral Incentive Life policies are based on
the 1980 Commissioner's Standard Ordinary SB Smoker and NB Non-Smoker Mortality
Table. For all other policies, the guaranteed maximum cost of insurance rates
are based on the 1980 Commissioner's Standard Ordinary Male and Female Smoker
and Non-Smoker Mortality Tables.
Our cost of insurance rates will generally be lower (except in Montana and in
connection with certain employee benefit plans) if the insured person is a
female than if a male. They also will generally be lower for non-tobacco users
than tobacco users and lower for persons that have other highly favorable health
characteristics, as compared to those that do not. On the other hand, insured
persons who present particular health, occupational or avocational risks may be
charged higher cost of insurance rates and other additional charges as specified
in their policies. In addition, the current rates also vary depending on the
duration of the policy (i.e., the length of time since the policy was issued).
We offer lower rates for non-tobacco users only if they are at least age 18. You
may ask us to review a younger insured person's tobacco habits following the
policy anniversary on which such person is age 18.
DATE OF MONTHLY DEDUCTIONS. We make the regular monthly deductions as of the
first day of each month of the policy.
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., the administrative charge, cost of insurance
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. Similarly, the premium charge is designed primarily
to defray sales and tax expenses we incur that are based on premium payments.
CUSTOMER LOYALTY CREDIT
We provide a customer loyalty credit for policies that have been outstanding for
more than six years. This is added to the account value each month. The dollar
amount of the credit is a percentage of the total amount you then have in our
investment options (not including any value we are holding as collateral for any
policy loans or for a living benefit payment). The percentage credit is
currently at an annual rate of .60% beginning in the policy's seventh year. This
credit is not guaranteed, however. Because we first offered Incentive Life in
1999, no credit has yet been attained under any outstanding policy.
<PAGE>
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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 (and certain rider benefits), as described in the
policy (or rider).
WHEN WE PAY POLICY PROCEEDS
GENERAL. We will generally pay any death benefit, surrender, withdrawal, or loan
within seven days after we receive the request and any other required items. In
the case of a death benefit, if we do not have information about the desired
manner of payment within 60 days after the date we receive notification of the
insured person's death (and other required items), we will pay the proceeds as a
single sum, normally within seven days thereafter.
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 GUARANTEED INTEREST OPTION PROCEEDS. We also have the right to defer
payment or transfers of amounts out of our guaranteed interest option for up to
six months. If we delay more than 30 days in paying you such amounts, we will
pay interest of at least 3% per year from the date we receive your request.
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 or any rider 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 or rider. 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 Incentive Life from one 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.
<PAGE>
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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 investment
option, you may do so.
We may make any changes in the policy or its riders, require additional premium
payments, or make distributions from the policy to the extent we deem necessary
to ensure that your policy qualifies or continues to 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 insurance risk characteristics of the insured
person under your policy and such factors as the face amount, death benefit
option, premium payment amounts, 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 Incentive 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 Incentive 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 Incentive 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
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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: 50% of the amount of the premium you pay in your
policy's first year up to a certain amount, plus 3% of all other premiums you
pay in your policy's first year, plus 3% of all premiums you pay in the second
through tenth years. We pay comparable commissions on the amount of premiums you
pay that we deem attributable to any face amount increase that you request. 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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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
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
FRANCOISE COLLOC'H
- ----------------------------------------------------------------------------------------------------------------------------------
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 January
New York, NY 10020 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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</TABLE>
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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>
- ----------------------------------------------------------------------------------------------------------------------------------
NORMAN C. FRANCIS
- ----------------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------------
DONALD J. GREENE
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LeBouef, Lamb, Greene & MacRae, L.L.P. Director of Equitable Life (since July 1991). Of Counsel, LeBoeuf, Lamb, Greene &
125 West 55th Street MacRae, L.L.P. (since 1999). Prior thereto, Partner of the firm (1965 to 1999).
New York, NY 10019-4513 Director of AXA Financial (since May 1992).
- ----------------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------------
SBC Warburg Dillon Read LLC Director of Equitable Life (since July 1992); Director of AXA Financial (since July
535 Madison Avenue 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).
- ----------------------------------------------------------------------------------------------------------------------------------
MARY (NINA) HENDERSON
- ----------------------------------------------------------------------------------------------------------------------------------
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).
- ----------------------------------------------------------------------------------------------------------------------------------
W. EDWIN JARMAIN
- ----------------------------------------------------------------------------------------------------------------------------------
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 Company,
Toronto, Ontario M5H 3T9 and AXA Pacific Insurance Company, and Alternate Director, AXA Asia Pacific
Canada Holdings Limited. Chairman (non-executive) and Director, FCA International Ltd.
(January 1994 to May 1998). Director of AXA Financial, Inc. (since July 1992).
- ----------------------------------------------------------------------------------------------------------------------------------
GEORGE T. LOWY
- ----------------------------------------------------------------------------------------------------------------------------------
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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DIRECTORS (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
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 February
75008 Paris, France 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).
- ----------------------------------------------------------------------------------------------------------------------------------
GEORGE J. SELLA, JR.
- ----------------------------------------------------------------------------------------------------------------------------------
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).
- ----------------------------------------------------------------------------------------------------------------------------------
DAVE H. WILLIAMS
- ----------------------------------------------------------------------------------------------------------------------------------
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).
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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OFFICERS - DIRECTORS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
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).
- ----------------------------------------------------------------------------------------------------------------------------------
EDWARD D. MILLER
- ----------------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------------
STANLEY B. TULIN
- ----------------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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OTHER OFFICERS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
LEON B. BILLIS
- ----------------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------------
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).
- ----------------------------------------------------------------------------------------------------------------------------------
HARVEY BLITZ
- ----------------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------------
KEVIN R. BYRNE
- ----------------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------------
JOHN A. CAROSELLI
- ----------------------------------------------------------------------------------------------------------------------------------
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).
- ----------------------------------------------------------------------------------------------------------------------------------
JUDY A. FAUCETT
- ----------------------------------------------------------------------------------------------------------------------------------
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).
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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OTHER OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
ALVIN H. FENICHEL
- ----------------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------------
PAUL J. FLORA
- ----------------------------------------------------------------------------------------------------------------------------------
Senior Vice President and Auditor, Equitable Life. Vice President and Auditor, AXA
Financial.
- ----------------------------------------------------------------------------------------------------------------------------------
ROBERT E. GARBER
- ----------------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------------
DONALD R. KAPLAN
- ----------------------------------------------------------------------------------------------------------------------------------
Senior Vice President (since September 1999), Chief Compliance Officer and
Associate General Counsel, Equitable Life. Previously held other officerships with
Equitable Life.
- ----------------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------------
RICHARD J. MATTEIS
- ----------------------------------------------------------------------------------------------------------------------------------
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).
</TABLE>
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49
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OTHER OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
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).
- ----------------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------------
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>
- -----
50
- --------------------------------------------------------------------------------
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
- -----
51
- --------------------------------------------------------------------------------
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
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>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants....................................... FSA-2
Financial Statements:
Statements of Assets and Liabilities, December 31, 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-16
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants....................................... F-1
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 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, 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
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and Policyowners of Separate Account FP
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of the 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>
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>
Appendix I: Investment performance record
- -----
A-1
- --------------------------------------------------------------------------------
The tables below show performance information for the variable investment
options. The performance shown for each option equals the performance of the
Portfolio corresponding to that option, reduced by the current rate of the
policies' mortality and expense risk charge (.60% annual rate). You can find
more information about the performance of the Portfolios in the EQ Advisors
Trust prospectus attached at the end of this prospectus. The performance figures
on which the tables are based are after deduction of all fees and expenses paid
by the Trust or any of the Portfolios.
For periods prior to October 18, 1999, the "Alliance" Portfolios (other than
EQ/Alliance Premier Growth and EQ/Alliance Technology) were part of The Hudson
River Trust. On October 18, 1999, these Portfolios became corresponding
Portfolios of EQ Advisors Trust. In each case, the performance shown is for the
indicated EQ Advisors Trust Portfolio and any predecessors that it may have had.
In addition, we have adjusted the results for these Portfolios prior to the
dates when the Class IB shares for these Portfolios were available, to reflect
the 12b-1 fees currently imposed. Class IB shares of Alliance Money Market,
Alliance High Yield, Alliance Common Stock and EQ/Aggressive Stock* Portfolios
first became available in EQ Advisors Trust's predecessor on October 2, 1996.
Class IB shares of Alliance Small Cap Growth Portfolio first became available in
the Trust's predecessor on May 1, 1997.
The tables below, however, do not take into account the following additional
charges that we will deduct under your policy: (1) the sales charge that we
deduct from each premium payment you make; (2) the monthly cost of insurance
charge; (3) the surrender charge; (4) any charge for optional rider benefits you
may select or (5) the policies' monthly administrative charge (currently $20 for
your policy's first 12 months and $7 per month thereafter, for issue ages 18 and
older). For more information about these charges, see "Charges and expenses you
will pay" in this prospectus. If we reflected these charges, the performance
shown below would be reduced. We have not done so, however, because the actual
impact of these charges on a particular policy varies considerably based on such
factors as the insurance risk characteristics of the insured person; the face
amount and other options you select for your policy; the amount and timing of
your premium payments; and whether you make withdrawals, take policy loans, or
surrender your policy. In order to better understand how the charges we have
omitted from the below tables will affect your policy's value, you should refer
to your Illustrations of Policy Benefits that your financial professional will
provide. You can request Equitable Life or your financial professional to
provide you with such illustrations at any time, whether before or after you
purchase a policy.
In a few cases, the return information shown in the first table below includes a
period of time prior to when Separate Account FP first offered a corresponding
variable investment option under any form of variable life insurance policy.
Therefore, the second table below provides additional performance information
from the date that those investment options actually received initial funding.
- ---------------------
* Previously "Alliance Aggressive Stock"
<PAGE>
- -----
A-2
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN AFTER DEDUCTION OF MORTALITY AND EXPENSE RISK
CHARGE FOR PERIODS ENDING DECEMBER 31, 1999*
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
SINCE PORTFOLIO
INCEPTION
VARIABLE INVESTMENT OPTION 1 YR. 3 YRS. 5 YRS. 10 YRS. (DATE**)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EQ/Aggressive Stock 17.83% 8.83% 15.35% 15.71% 16.92% (1/27/86)
Alliance Money Market 4.10% 4.35% 4.47% 4.29% 6.06% (7/13/81)
Alliance High Yield (4.16)% 1.92% 8.92% 9.30% 8.44% (1/2/87)
Alliance Common Stock 24.13% 26.89% 26.97% 17.59% 15.76% (1/13/76)
Alliance Small Cap Growth 26.86% -- -- -- 16.95% (5/1/97)
BT Equity 500 Index 19.58% -- -- -- 21.96% (12/31/97)
BT Small Company Index 20.00% -- -- -- 7.95% (12/31/97)
BT International Equity Index 26.70% -- -- -- 22.98% (12/31/97)
J.P. Morgan Core Bond (2.19)% -- -- -- 2.96% (12/31/97)
Lazard Large Cap Value 2.91% -- -- -- 10.82% (12/31/97)
Lazard Small Cap Value 1.13% -- -- -- (3.40)% (12/31/97)
MFS Growth with Income 8.06% -- -- -- 8.06% (12/31/98)
MFS Research 22.38% -- -- -- 23.20% (5/1/97)
MFS Emerging Growth Companies 72.63% -- -- -- 47.38% (5/1/97)
Morgan Stanley Emerging Markets Equity 94.57% -- -- -- 5.07% (8/20/97)
EQ/Putnam Growth & Income Value (1.95)% -- -- -- 9.46% (5/1/97)
EQ/Putnam Investors Growth 29.48% -- -- -- 33.87% (5/1/97)
EQ/Putnam International Equity 59.29% -- -- -- 31.21% (5/1/97)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* No performance information is shown for EQ/Alliance Technology, as this
Portfolio had not received its initial funding prior to December 31, 1999.
Additionally, no performance information is shown for EQ/Alliance Premier
Growth, Capital Guardian U.S. Equity, Capital Guardian Research or Capital
Guardian International, as those Portfolios became available after December
31, 1998. The inception date for these portfolios is April 30, 1999.
** The inception date shown is the date that the relevant Portfolio (or its
predecessor) received its initial funding.
<PAGE>
- -----
A-3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AVERAGE ANNUAL RATES OF RETURN FOR PERIODS ENDING
DECEMBER 31, 1999 SINCE VARIABLE INVESTMENT OPTION
VARIABLE INVESTMENT OPTION INCEPTION (DATE)
- -------------------------------------------------------------------------------------
<S> <C>
Alliance Money Market 4.91% (1/27/86)
Alliance Common Stock 17.40% (1/27/86)
- -------------------------------------------------------------------------------------
</TABLE>
Unlike the rate of return tables above, the following yield information does not
include capital gains and losses that the Portfolios corresponding to the
indicated variable investment options may have experienced.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
ANNUALIZED YIELD FOR PERIODS
VARIABLE INVESTMENT OPTION ENDING DECEMBER 31, 1999
- -----------------------------------------------------------------------------
7 DAYS 30 DAYS
- -----------------------------------------------------------------------------
<S> <C> <C>
Alliance Money Market 4.42% --
Alliance High Yield -- 12.30%
- -----------------------------------------------------------------------------
</TABLE>
The information in the tables above is not a guarantee, a prediction, or
necessarily an indication of future performance.
<PAGE>
Appendix II: Our data on market performance
- -----
B-1
- --------------------------------------------------------------------------------
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 MONEY MANAGEMENT LETTER
MORNINGSTAR'S VARIABLE 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
INVESTMENT MANAGEMENT WEEKLY
- -----------------------------------------------------------------------
</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 Incentive Life premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long- or short-term debt securities. 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>
- -----
B-2
- --------------------------------------------------------------------------------
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 COMMON GOVERNMENT CORPORATE TERM GOV'T U.S. TREASURY CONSUMER
ENDING 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 III: An index of key words and phrases
- -----
C-1
- --------------------------------------------------------------------------------
This index should help you locate more information on the terms used in this
prospectus.
<TABLE>
<CAPTION>
PAGE
<S> <C>
account value 21
Administrative Office 5
age 34
Allocation Date 15
alternative death benefit 17
amount at risk 38
anniversary 34
assign; assignment 32
automatic transfer service 22
AXA Financial, Inc. 4
basis 28
beneficiary 19
business day 33
Cash Surrender Value 26
Code 27
collateral 24
cost of insurance charge 38
cost of insurance rates 38
customer loyalty credit 39
day 33
death benefit guarantee 14
default 12
dollar cost averaging service 22
enhanced death benefit guarantee 14
EQAccess 5
EQ Advisors Trust 16
EQ Financial Consultants 16
Equitable Distributors 41
Equitable Life 4
Equitable Access Account 19
face amount 16
grace period 12
guarantee premium 13
guaranteed interest option 16
Guaranteed Interest Account 16
Incentive Life cover
insured person 17
Investment Funds 16
investment option 15
issue date 34
lapse 12
loan, loan interest 24
modified endowment contract 12
month, year 34
monthly deduction 7
net cash surrender value 26
no-lapse guarantee 13
Option A, B 17
our 2
owner 2
paid up 27
paid up death benefit guarantee 14
partial withdrawal 25
payment option 19
planned periodic premium 12
policy cover
Portfolio cover
premium charge 7
premium payments 12
prospectus cover
rebalancing 23
receive 33
restore, restoration 13
rider 19
SEC cover
Separate Account FP 36
state 2
subaccount 36
surrender 26
surrender charge 7
target premium 8
telephone transfer 22
transfers 22
Trust 16
units 21
unit values 21
us 2
variable investment option 16
we 2
withdrawal 25
you, your 2
</TABLE>
<PAGE>
INCENTIVE LIFE(SM)
A FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE POLICY
PROSPECTUS DATED MAY 1, 2000
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.
- --------------------------------------------------------------------------------
This prospectus describes many aspects of an Incentive Life policy, but is not
itself a policy. The policy is the actual contract that determines your benefits
and obligations under Incentive 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 INCENTIVE LIFE?
Incentive Life is issued by Equitable Life. It provides life insurance coverage,
plus the opportunity for you to earn a return in our guaranteed interest option
and/or one or more of the following variable investment options:
- --------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS:
- --------------------------------------------------------------------------------
o EQ/Aggressive Stock(1) o Lazard Small Cap Value
o Alliance Money Market o Mercury Basic Value Equity(4)
o Alliance High Yield o Mercury World Strategy(5)
o Alliance Common Stock o MFS Growth with Income
o Alliance Small Cap Growth o MFS Research
o EQ/Alliance Premier Growth o MFS Emerging Growth
o EQ/Alliance Technology(2) Companies
o BT Equity 500 Index o Morgan Stanley Emerging
o BT Small Company Index Markets Equity
o BT International Equity Index o EQ/Putnam Growth & Income
o Capital Guardian U.S. Equity Value
o Capital Guardian Research o EQ/Putnam Investors Growth
o Capital Guardian International o EQ/Putnam International
o EQ/Evergreen Equity
o EQ/Evergreen Foundation
o J.P. Morgan Core Bond(3)
o Lazard Large Cap Value
- --------------------------------------------------------------------------------
(1) Formerly named "Alliance Aggressive Stock"
(2) Anticipated to become available on or about May 22, 2000. 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.
OTHER CHOICES YOU HAVE. You have considerable flexibility to tailor the policy
to your needs. For example, subject to our rules, you can (1) choose when and
how much you contribute (as "premiums") to your policy, (2) pay certain premium
amounts to guarantee that your insurance coverage will continue for a number of
years, regardless of investment performance, (3) borrow or withdraw amounts you
have accumulated, (4) change the amount of insurance coverage, (5) choose
between two life insurance benefit options, (6) elect to receive an insurance
benefit if the insured person becomes terminally ill, and (7) add or delete
certain optional benefits that we offer by "riders" to your policy.
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 Incentive 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.
72100 MLF
<PAGE>
CONTENTS OF THIS PROSPECTUS
2
- --------------------------------------------------------------------------------
<TABLE>
INCENTIVE LIFE
- --------------------------------------------------------------------------------
<S> <C>
What is Incentive 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 can pay for and contribute to your policy 12
The minimum amount of premiums you must pay 12
You can guarantee that your policy will not terminate before a certain date 13
You can elect a "paid up" death benefit guarantee 14
Investment options within your policy 15
About your life insurance benefit 16
You can increase or decrease your insurance coverage 18
Other benefits you can add by rider 19
Your options for receiving policy proceeds 19
Your right to cancel within a certain number of days 20
Variations among Incentive Life policies 20
Other Equitable Life policies 20
- --------------------------------------------------------------------------------
2 DETERMINING YOUR POLICY'S VALUE 21
- --------------------------------------------------------------------------------
Your account value 21
- --------------------------------------------------------------------------------
3 TRANSFERRING YOUR MONEY AMONG OUR INVESTMENT OPTIONS 22
- --------------------------------------------------------------------------------
Transfers you can make 22
Telephone and EQAccess transfers 22
Our dollar cost averaging service 22
Our asset rebalancing service 23
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
"We," "our" and "us" refers 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 Incentive Life in all states. This prospectus does not offer
Incentive 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
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
4 ACCESSING YOUR MONEY 24
- --------------------------------------------------------------------------------
Borrowing from your policy 24
Making withdrawals from your policy 25
Surrendering your policy for its net cash surrender value 26
Your option to receive a living benefit 26
- --------------------------------------------------------------------------------
5 TAX INFORMATION 27
- --------------------------------------------------------------------------------
Basic tax treatment for you and your beneficiary 27
Tax treatment of distributions to you 27
Tax treatment of living benefit proceeds 29
Effect of policy on interest deductions taken by business entities 29
Requirement that we diversify investments 29
Estate, gift, and generation-skipping taxes 30
Pension and profit-sharing plans 30
Other employee benefit programs 30
ERISA 30
Our taxes 30
When we withhold taxes from distributions 31
Possibility of future tax changes 31
- --------------------------------------------------------------------------------
6 MORE INFORMATION ABOUT PROCEDURES THAT APPLY TO YOUR POLICY 32
- --------------------------------------------------------------------------------
Ways to make premium and loan payments 32
Requirements for surrender requests 32
Ways we pay policy proceeds 32
Assigning your policy 32
Dates and prices at which policy events occur 32
Policy issuance 34
Gender-neutral policies 34
- --------------------------------------------------------------------------------
7 MORE INFORMATION ABOUT OTHER MATTERS 36
- --------------------------------------------------------------------------------
Your voting privileges 36
About our Separate Account FP 36
About our general account 37
You can change your policy's insured person 37
Transfers of your account value 37
Telephone and EQAccess requests 38
Deducting policy charges 38
Customer loyalty credit 39
Suicide and certain misstatements 40
When we pay policy proceeds 40
Changes we can make 40
Reports we will send you 41
Legal proceedings 41
Illustrations of policy benefits 41
SEC registration statement 41
How we market the policies 41
Insurance regulation that applies to Equitable Life 42
Directors and principal officers 43
- --------------------------------------------------------------------------------
8 FINANCIAL STATEMENTS OF SEPARATE ACCOUNT FP AND EQUITABLE LIFE 50
- --------------------------------------------------------------------------------
Separate Account FP financial statements FSA-1
Equitable Life financial statements F-1
- --------------------------------------------------------------------------------
APPENDICES
- --------------------------------------------------------------------------------
I - Investment performance record A-1
II - Our data on market performance B-1
III - An index of key words and phrases C-1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EQ ADVISORS TRUST PROSPECTUS (follows after page C-1 of this prospectus, but
is not a part of this prospectus)
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
WHO IS EQUITABLE LIFE?
4
- --------------------------------------------------------------------------------
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
$462.7 billion in assets as of December 31, 1999. 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
- --------------------------------------------------------------------------------
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 Client Services
Radio City Station
P.O. Box 808
New York, New York 10101-0808
- --------------------------------------------------------------------------------
BY EXPRESS DELIVERY ONLY:
- --------------------------------------------------------------------------------
at the Street Address for our Administrative Office:
Equitable Life Client Services
135 W. 50th St., 10th Floor
New York, New York 10020
- --------------------------------------------------------------------------------
BY TOLL-FREE PHONE:
- --------------------------------------------------------------------------------
1-888-228-6690
- --------------------------------------------------------------------------------
BY E-MAIL:
- --------------------------------------------------------------------------------
[email protected]
- --------------------------------------------------------------------------------
BY FAX:
- --------------------------------------------------------------------------------
1-212-641-7075
- --------------------------------------------------------------------------------
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 investment options; and
(e) changes in allocation percentages for premiums and deductions.
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
- --------------------------------------------------------------------------------
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 premium payments after the first one to our Administrative Office at
the above addresses; except that you should send any premiums 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
- --------------------------------------------------------------------------------
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>
CHARGES WE DEDUCT FROM Premium charge (a) 6% of each premium payment you make up to a certain
AMOUNTS YOU CONTRIBUTE amount(1) and (b) 3% of each premium payment thereafter
TO YOUR POLICY: (which we may increase up to 6%)2
- ----------------------------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM Administrative charge(3) (i) For adults (age 18 and older), $20 in each of your
YOUR POLICY'S VALUE EACH policy's first 12 months; or, for children, $10 in each of
MONTH: your policy's first 24 months and (ii) for everyone, $7 in
each subsequent month (which we may increase up
to $10)
------------------------------------------------------------------------------------------------
Cost of insurance charges(3) and Amount varies depending on the specifics of your policy(4)
Optional rider charges
------------------------------------------------------------------------------------------------
Charge if you have elected our $.02 for each $1,000 of your policy's face amount at the
optional enhanced death time the charge is deducted(5)
benefit guarantee
- ----------------------------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM Mortality and expense .60% (effective annual rate) of the value you have in our
YOUR POLICY'S VARIABLE risk charge variable investment options (we may increase this rate up
INVESTMENT PERFORMANCE to .90%)(6)
EACH DAY:
- ----------------------------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM Surrender (turning in) of your A surrender charge that will not exceed the amount set
YOUR ACCOUNT VALUE AT THE policy during its first 15 years forth in your policy(7) (we will also deduct the remaining
TIME OF THE TRANSACTION: amount of surrender charge associated with any face
amount increase, as discussed immediately below)
------------------------------------------------------------------------------------------------
Surrender of your policy during An amount of surrender charge that we will compute on
the first 15 years after you have essentially the same basis as if each such face amount
requested an increase in your increase had been a separate, newly-issued Incentive Life
policy's face amount policy(8)
------------------------------------------------------------------------------------------------
Requested decrease in your A pro rata portion of the full surrender charge that would
policy's face amount apply to a surrender at the time of the decrease
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
8
- --------------------------------------------------------------------------------
(1) Up to an amount equal to ten "target premiums." The "target premium" is
actuarially determined for each policy, based on that policy's
characteristics.
(2) The Illustrations of Policy Benefits that your financial professional will
provide will show the impact of the actual current and guaranteed maximum
rates of these and any other charges, based on various assumptions. We may
increase this charge higher than 6%, however, as a result of changes in the
tax laws which increase our expenses.
(3) Not applicable after the insured person reaches age 100.
(4) See "Monthly cost of insurance charge" and "Other benefits you can add by
rider" later in this prospectus.
(5) The "face amount" is the basic amount of insurance coverage under your
policy.
(6) This charge does not apply to amounts in our guaranteed interest option.
(7) Beginning in your policy's ninth year, this amount declines at a constant
rate each month until no surrender charge applies to surrender made after
the policy's 15th year. The initial amount of surrender charge depends on
each policy's specific characteristics. For any policy, the lowest initial
surrender charge per $1,000 of initial face amount would be $2.91, and the
highest initial surrender charge per $1,000 of initial face amount would be
$12.99.
(8) This additional surrender charge, however, applies only to the amount (if
any) by which the increase causes the face amount to exceed its highest
previous amount. For these purposes, we disregard any face amount changes
that we make automatically as a result of any change in your death benefit
option.
<PAGE>
9
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
(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 Money Market, Alliance High Yield, Alliance
Common Stock, Alliance Small Cap Growth and EQ/Aggressive Stock Portfolios
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. 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 International, Capital Guardian Research and Capital Guardian U.S.
Equity 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 annualized estimates for 2000. Initial seed
capital will be invested in the EQ/Alliance Technology Portfolio on or about
May 1, 2000.
<PAGE>
RISKS YOU SHOULD CONSIDER
11
- --------------------------------------------------------------------------------
HOW WE ALLOCATE CHARGES AMONG YOUR INVESTMENT OPTIONS
In your application for a policy, you tell us from which investment options you
want us to take the policy's monthly deductions as they fall due. You can change
these instructions at any time. If we cannot deduct the charge as your most
current instructions direct, we will allocate the deduction among your
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); or (3) make a charge of up to $25 for each transfer among investment
options that you make.
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, premium payments, 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.
RISKS YOU SHOULD CONSIDER
Some of the principal risks of investing in a policy are as follows:
o If the investment options you choose perform poorly, you could lose some or
all of the premiums you pay.
o If the investment options you choose do not make enough money to pay for the
policy charges, you could have to pay more premiums to keep your policy from
terminating.
o We can increase certain charges without your consent, within limits stated
in your policy.
o You may have to pay a surrender charge if you wish to discontinue some or
all of your insurance coverage under a policy.
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
- --------------------------------------------------------------------------------
HOW YOU CAN PAY FOR AND CONTRIBUTE TO YOUR POLICY
PREMIUM PAYMENTS. We call the amounts you contribute to your policy "premiums"
or "premium payments." The amount we require as your first premium varies
depending on the specifics of your policy and the insured person. Each
subsequent premium payment must be at least $100, although we can increase this
minimum if we give you advance notice. (Policies on an automatic premium payment
plan may have different minimums.) Otherwise, with a few exceptions mentioned
below, you can make premium payments at any time and in any amount.
- --------------------------------------------------------------------------------
You can generally pay premiums at such times and in such amounts as you like, so
long as you don't exceed certain limits determined by the federal income tax
laws applicable to life insurance.
- --------------------------------------------------------------------------------
LIMITS ON PREMIUM PAYMENTS. The federal tax law definition of "life insurance"
limits your ability to pay certain high levels of premiums (relative to the
amount of your policy's insurance coverage). Also, if your premium payments
exceed certain other amounts specified under the Internal Revenue Code, your
policy will become a "modified endowment contract," which may subject you to
additional taxes and penalties on any distributions from your policy. See "Tax
information" below. We may return any premium payments that would exceed those
limits to you.
You can ask your financial professional to provide you with an illustration of
policy benefits that shows you the amount of premium you can pay, based on
various assumptions, without exceeding these tax law limits. The tax law limits
can change as a result of certain changes you make to your policy. For example,
a reduction in the face amount of your policy may reduce the amount of premiums
that you can pay.
If at any time when your policy's account value is high enough that the
alternative death benefit discussed below would apply, we reserve the right to
limit the amount of any premiums that you pay, unless the insured person
provides us with adequate evidence that he/she continues to meet our
requirements for issuing insurance.
PLANNED PERIODIC PREMIUMS. Page 3 of your policy will specify a "planned
periodic premium." This is the amount that you request us to bill you. However,
payment of these or any other specific amounts of premiums is not mandatory.
Rather, you need to pay only the amount of premiums (if any) necessary to keep
your policy from lapsing and terminating as discussed below.
THE MINIMUM AMOUNT OF PREMIUMS YOU MUST PAY
POLICY "LAPSE" AND TERMINATION. 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 unless
o you have paid sufficient premiums to maintain one of our available
guarantees against termination and your policy is still within the period of
that guarantee (see "You can guarantee that your policy will not terminate
before a certain date" below) or
o you have elected the "paid up" death benefit guarantee and it remains in
effect (see "You can elect a "paid up" death benefit guarantee" below).
("Net cash surrender value" is explained under "Surrendering your policy for its
net cash surrender value" below.)
We will mail a notice to you at your last known address if your policy lapses.
You will have a 61-day grace period to pay at least an amount prescribed in your
policy which would be enough to keep your policy in force for approximately
three months (without regard to investment performance). You may not make any
transfers or request any other policy changes during a grace period. If we do
not receive your payment by the end of the grace period, your policy (and all
riders to the 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.
<PAGE>
13
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Your policy will terminate if you don't either (i) pay enough premiums to pay
the charges we deduct or (ii) maintain in effect one or more of our other
guarantees that can keep your policy from terminating. However, we will first
send you a notice and give you a chance to pay any shortfall.
- --------------------------------------------------------------------------------
You may owe taxes 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 pay at least the amount of premium that we
require. Your policy contains additional information about the minimum amount of
this premium and about the values and terms of the policy after it is restored.
YOU CAN GUARANTEE THAT YOUR POLICY WILL NOT TERMINATE BEFORE A CERTAIN DATE
You can guarantee that your policy will not terminate for a number of years by
paying at least certain amounts of premiums. We call these amounts "guarantee
premiums" and they will be set forth on page 3 of your policy. In most states
you have three options for how long the guarantee will last. One of these
options is discussed below under "Enhanced death benefit guarantee." The other
two guarantee options are as follows:
(1) a guarantee for the first 5 years of your policy (the policy calls this the
"no-lapse guarantee")
or
(2) a guarantee until the insured reaches age 70, but in no case less than 10
years (the policy calls this the "death benefit guarantee").
In some states, these guarantees may be unavailable, limited to shorter periods,
or referred to by different names.
We make no extra charge for either of these two guarantees against policy
termination. However, in order for either of those guarantees to be available,
you must have satisfied the "guarantee premium test" (discussed below) and you
must not have any outstanding policy loans. In this connection, maintaining the
"age 70/10 year" guarantee against policy termination (where available) will
require you to pay more premiums than maintaining only the 5-year guarantee.
- --------------------------------------------------------------------------------
In most states, if you pay at least certain prescribed amounts of premiums, and
have no policy loans, your policy will not terminate for a number of years, even
if the value in your policy becomes insufficient to pay the monthly charges.
- --------------------------------------------------------------------------------
GUARANTEE PREMIUM TEST. If your policy's net cash surrender value is not
sufficient to pay a monthly deduction that has become due, we check to see if
the cumulative amount of premiums that you have paid to date at least equals the
cumulative guarantee premiums due to date for either of the two above-listed
guarantee options that are then available under your policy. If it does, your
policy will not lapse, provided that you have no policy loans outstanding (or
you repay all of such loans before the end of the 61-day grace period mentioned
above) and provided that the period of the corresponding guarantee has not
expired.
When we calculate the cumulative amount of guarantee premiums due for the two
above-listed guarantee options, we compound each amount at a 4% annual interest
rate from its due date through the date of the calculation. (This interest rate
is purely for purposes of determining whether you have satisfied the guarantee
test for an available duration. It does not bear any relation to the returns you
will actually earn or any loan interest you will actually pay.) We use the same
calculation for determining the cumulative amount of premiums paid, beginning
with the date each premium is received. The amount of premiums you must pay to
maintain a guarantee against termination will be increased by the cumulative
amount of any partial
<PAGE>
14
- --------------------------------------------------------------------------------
withdrawals you have taken from your policy (calculated by the same method,
beginning with the date of withdrawal).
ENHANCED DEATH BENEFIT GUARANTEE. On your application for a policy, you may
elect an enhanced death benefit guarantee rider, that will guarantee your policy
against termination for a longer period of time than either of the two guarantee
options described above. If elected, a monthly charge of $.02 per $1,000 of the
policy's face amount is deducted from your account value for this guarantee. To
elect this feature, all of your policy's account value must be allocated to our
variable investment options.
While the enhanced death benefit guarantee is in effect, your policy will not
lapse, even if your net cash surrender value is insufficient to pay a monthly
deduction that has become due, as long as you do not have an outstanding loan
(or you repay the loan within the 61-day grace period). This guarantee is
available for the following periods:
(a) If you have always chosen death benefit Option A, for the life of the
insured person; or
(b) If you have ever selected death benefit Option B (even if you subsequently
changed it to Option A), until the later of the date the insured person
reaches age 80 or the end of the 15th year of the policy.
This option is not available in all states.
If you have elected the enhanced death benefit guarantee, we test on each policy
anniversary to see if the required premium (the enhanced death benefit
"guarantee premium") has been paid. (The enhanced guarantee premium will be set
forth on page 3 of your policy.) The required premium has been paid if the total
of all premiums paid, less all withdrawals, is at least equal to the total of
all enhanced guarantee premiums due to date. (In this comparison, unlike the
test for the shorter duration guarantees discussed above, we do not compound
these amounts using any hypothetical interest rate.)
If the required premium has not been paid as of any policy anniversary, we will
mail you a notice requesting that you send us the shortfall. If we do not
receive this additional premium, the enhanced death benefit guarantee will
terminate. The enhanced death benefit guarantee also will terminate if you
request that we cancel it, or if you allocate any value to our guaranteed
interest option. If the enhanced death benefit guarantee terminates, the related
charge terminates, as well. Once terminated, this guarantee can never be
reinstated or restored.
GUARANTEE PREMIUMS. The amount of the guarantee premiums for each of the
guarantees discussed above is set forth in your policy if that guarantee is
available to you. The guarantee premiums are actuarially determined at policy
issuance and depend on the age and other insurance risk characteristics of the
insured person, as well as the amount of the coverage and additional features
you select. Certain additional benefit riders will cause the guarantee premiums
to increase after policy issue. The guarantee premiums also may change if, for
example, you make policy changes that increase or decrease the face amount of
the policy or a rider, add or eliminate a rider, or if there is a change in the
insured person's risk characteristics. We will send you a new policy page
showing any change in your guarantee premiums. Any change will be prospective
only, and no change will extend a guarantee period beyond its original number of
years.
We will not bill you separately for guarantee premiums. If you want to be
billed, therefore, you must select a planned periodic premium that at least
equals the guarantee premium that you plan to pay. If you wish your bills for
planned periodic premiums to cover your guarantee premiums, please remember to
change your planned periodic premium amount, as necessary, if you take any
action that causes your guarantee premiums to change.
YOU CAN ELECT A "PAID UP" DEATH BENEFIT GUARANTEE
In most states, you may elect to take advantage of our "paid up death benefit
guarantee" at any time after the fourth year of your policy. If you elect the
paid up death benefit guarantee, we may initially reduce your policy's face
amount (see below). Thereafter, your policy will not lapse and the
<PAGE>
15
- --------------------------------------------------------------------------------
death benefit will never be less than the face amount, so long as the guarantee
remains in effect. The guarantee will terminate, however, if (i) at any time
following the election, any outstanding policy loans and accrued loan interest,
together with any then applicable surrender charge, exceed your policy's account
value or if (ii) you request us to terminate the election.
In order to elect the paid up death benefit guarantee:
o you must have death benefit "Option A" in effect (see "About your life
insurance benefit" below);
o you must terminate any riders to your policy that carry additional charges;
o the election must not cause the policy to lose its qualification as life
insurance under the Internal Revenue Code or require a current distribution
from the policy to avoid such disqualification; and
o the election must not reduce the face amount (see below) to less than the
minimum face amount for which we would then issue a policy.
The paid up death benefit guarantee may not be available in all states.
POSSIBLE REDUCTION OF FACE AMOUNT. The face amount of your policy after this
guarantee is elected is the lesser of (a) the face amount immediately before the
election or (b) the policy account value divided by a factor based on the then
age of the insured person. The factors are set forth in your policy. As a
general matter, the factors change as the insured person ages so that, if your
account value stayed the same, the calculation under clause (b) above would be
lower the longer your policy is outstanding.
If electing the paid up death benefit guarantee causes a reduction in face
amount, we will deduct the same portion of any remaining surrender charge as we
would have deducted if you had requested that decrease directly (rather than
electing the paid up death benefit guarantee). (See "Charges and expenses you
will pay" above.)
OTHER EFFECTS OF THIS GUARANTEE. You generally may continue to pay premiums
after you have elected the paid up death benefit guarantee (subject to the same
limits as before), but premium payments are not required. If the election causes
your face amount to decrease, however, the amount of additional premiums you can
pay, if any, may be reduced. You may continue to make transfers, but you may not
change the death benefit option or add riders that have their own charges while
the paid up death benefit guarantee is in effect.
Partial withdrawals while the paid up death benefit guarantee is in effect will
generally be subject to the same terms and conditions as any other partial
withdrawal (see "Making withdrawals from your policy" below), except that:
o We may decline your request for a partial withdrawal (or any other policy
change) under the circumstances described in the paid up death benefit
guarantee policy endorsement. If this occurs, you may wish to consider
asking us to terminate the paid up death benefit guarantee.
o Partial withdrawals (and any distributions we may be required to make for
tax purposes) will generally reduce your policy's face amount by more than
the amount of the withdrawal.
Election of the paid up death benefit guarantee may cause your policy to become
a modified endowment contract under certain circumstances. See "Tax treatment of
distributions to you" below. You should consult your tax advisor before making
this election.
INVESTMENT OPTIONS WITHIN YOUR POLICY
We will initially put all amounts which your have allocated to variable
investment options into our Alliance Money Market 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 your
premium allocation instructions then in effect. You give such instructions in
your application to purchase a policy. You can change the premium allocation
percentages at any time, but this will not affect any prior allocations. The
<PAGE>
16
- --------------------------------------------------------------------------------
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 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 both "EQ/Putnam" options)
Each Portfolio is a part of EQ Advisors Trust. Equitable Life serves as
investment manager of EQ Advisors Trust. As such, Equitable Life oversees the
activities of the above-listed advisers with respect to EQ Advisors Trust and is
responsible for retaining or discontinuing the services of those advisers.
(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.
GUARANTEED INTEREST OPTION. You can also allocate some or all of your policy's
value to our guaranteed interest option. We, in turn, invest such amounts as
part of our general assets. Periodically, we declare a fixed rate of interest
(3% minimum) on amounts you allocate to our guaranteed interest option. (The
guaranteed interest option is part of what your policy and other supplemental
material may refer to as the "Guaranteed Interest Account".)
- --------------------------------------------------------------------------------
We will pay at least 3% annual interest on our guaranteed interest option.
- -----------------------------------------------------------------------------
ABOUT YOUR LIFE INSURANCE BENEFIT
YOUR POLICY'S FACE AMOUNT. In your application to buy an Incentive Life policy,
you tell us how much insurance coverage you want on the life of the insured
person. We call this the "face amount" of the policy. $50,000 is the smallest
amount of coverage you can request.
- --------------------------------------------------------------------------------
If the insured person dies, we pay a life insurance benefit to the "beneficiary"
you have named. The amount we pay depends on whether you have chosen death
benefit Option A or death benefit Option B.
- --------------------------------------------------------------------------------
YOUR POLICY'S "DEATH BENEFIT" OPTIONS. In your policy application, you also
choose whether the basic amount (or "benefit") we will pay if the insured person
dies is
<PAGE>
17
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o Option A - THE POLICY'S FACE AMOUNT on the date of the insured person's
death. The amount of this death benefit doesn't change over time, unless you
take any action that changes the policy's face amount;
or
o Option B - THE FACE AMOUNT PLUS THE POLICY'S "ACCOUNT VALUE" on the date of
death. Under this option, the amount of death benefit generally changes from
day to day, because many factors (including investment performance, charges,
premium payments and withdrawals) affect your policy's account value.
Your policy's "account value" is the total amount that at any time is earning
interest for you or being credited with investment gains and losses under your
policy. (Account value is discussed in more detail under "Determining your
policy's value" below.)
Under Option B, your policy's death benefit will tend to be higher than under
Option A. As a result, the monthly insurance charge we deduct will also be
higher, to compensate us for our additional risk.
ALTERNATIVE HIGHER DEATH BENEFIT IN LIMITED CASES. Your policy is designed to
always provide a minimum level of insurance protection relative to your policy's
value, in part to meet the Internal Revenue Code's definition of "life
insurance." Thus, we will automatically pay an alternative death benefit if it
is HIGHER than the basic Option A or Option B death benefit you have selected.
This alternative death benefit is computed by multiplying your policy's account
value on the insured person's date of death by a percentage specified in your
policy. The percentage depends on the insured person's age. Representative
percentages are as follows:
- --------------------------------------------------------------------------------
If the value in your policy is high enough, relative to the face amount, the
life insurance benefit will automatically be greater than the Option A or Option
B death benefit you have selected.
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<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
AGE* 40 45 50 55 60 65
AND UNDER
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% 250% 215% 185% 150% 130% 120%
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70 75-95 99-OVER
- --------------------------------------------------------------------------------
% 115% 105% 101%
- --------------------------------------------------------------------------------
* For the then-current policy year.
</TABLE>
This higher alternative death benefit exposes us to greater insurance risk than
the regular Option A and B death benefits. Because the cost of insurance charges
we make under your policy are based in part on the amount of our risk, you will
pay more cost of insurance charges for any periods during which the higher
alternative death benefit is the operative one.
OTHER ADJUSTMENTS TO DEATH BENEFIT. We will increase the death benefit proceeds
by the amount of any other benefits we owe upon the insured person's death under
any optional riders which are in effect.
We will reduce the death benefit proceeds by the amount of any remaining policy
loans and unpaid loan interest, as well as any amount of monthly charges under
the policy that remain unpaid because the insured person died during a grace
period. We also reduce the death benefit if we have already paid part of it
under a living benefit rider. We reduce it by the amount of the living benefit
payment plus interest. (See "Your option to receive a living benefit" below.)
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You can request a change in your death benefit option any time after the second
year of the policy.
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CHANGE OF DEATH BENEFIT OPTION. If you change from Option A to B, we
automatically reduce your policy's face amount by an amount equal to your
policy's account value at the time of the change. We may refuse this change if
the policy's face amount would be reduced below our then current minimum for new
policies. Changes from Option A to Option B are not permitted once the insured
person reaches age 81.
If you change from Option B to A, we automatically increase your policy's face
amount by an amount equal to your policy's account value at the time of the
change.
<PAGE>
18
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If the alternative death benefit discussed above would be in effect at the time
of the change, we will determine the new face amount somewhat differently from
the general procedures described above.
We will not deduct or establish any amount of surrender charge as a result of a
change in death benefit option. Please refer to "Tax information" below, to
learn about certain possible income tax consequences that may result from a
change in death benefit option, including the effect of an increase or decrease
in face amount.
YOU CAN INCREASE OR DECREASE YOUR INSURANCE COVERAGE
If the face amount increase endorsement is issued with your policy, you may
increase the life insurance coverage under your policy by requesting an increase
in your policy's face amount. You can do so any time after the first year of
your policy. You may request a decrease in your policy's face amount any time
after the second year of your policy. The requested increase or decrease must be
at least $10,000. Please refer to "Tax information" for certain possible tax
consequences of changing the face amount.
We can refuse any requested increase or decrease. We will not approve any
increase or decrease if we are at that time being required to waive charges or
pay premiums under any optional disability waiver rider that is part of the
policy. We will also not approve a face amount increase if the insured person
has reached age 81. The following additional conditions also apply:
FACE AMOUNT INCREASES. We treat an increase in face amount in many respects as
if it were the issuance of a new policy. For example, you must submit
satisfactory evidence that the insured person still meets our requirements for
coverage. Also, we establish additional amounts of surrender charge and
guarantee premiums under your policy for the face amount increase, reflecting
the amount of additional coverage.
In most states, you can cancel the face amount increase within 10 days after you
receive a new policy page showing the increase. If you cancel, we will reverse
any charges attributable to the increase and recalculate all values under your
policy to what they would have been had the increase not taken place.
The monthly insurance charge we make for the amount of the increase will be
based on the age and other insurance risk characteristics of the insured person
at the time of the increase. If we refuse a requested face amount increase
because the insured person's risk characteristics have become less favorable, we
may issue the additional coverage as a separate Incentive Life policy with a
different insurance risk classification. In that case, we would waive the
monthly administrative charge that otherwise would apply to that separate
policy.
FACE AMOUNT DECREASES. You may not reduce the face amount below the minimum we
are then requiring for new policies. Nor will we permit a decrease that would
cause your policy to fail the Internal Revenue Code's definition of life
insurance. Guarantee premiums, as well as our monthly deductions for the cost of
insurance coverage, will generally decrease from the time you reduce the face
amount.
If you reduce the face amount during the first 15 years of your policy, or
during the first 15 years after a face amount increase you have requested, we
will deduct all or part of the remaining surrender charge from your policy.
Assuming you have not previously changed the face amount, the amount of
surrender charge we will deduct will be determined by dividing the amount of the
decrease by the initial face amount and multiplying that fraction by the total
amount of surrender charge that still remains applicable to your policy. We
deduct the charge from the same investment options as if it were a part of a
regular monthly deduction under your policy.
In some cases, we may have to make a distribution to you from your policy at the
time of the decrease in order to decrease your policy's face amount. This may be
necessary in order to preserve your policy's status as life insurance under the
Internal Revenue Code. We may also be required to make such a distribution to
you in the future on account of a prior decrease in face amount.
<PAGE>
19
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OTHER BENEFITS YOU CAN ADD BY RIDER
You may be eligible for the following other optional benefits we currently make
available by rider:
o disability waiver benefits
o ten-year term insurance on the insured person or an additional insured
person
o accidental death benefit
o option to purchase additional insurance
o children's term insurance
o cost-of-living rider
Equitable Life or your financial professional can provide you with more
information about these riders. The riders provide additional information, and
we will furnish samples of them to you on request. The maximum amount of any
charge we make for a rider will be set forth in the rider or in the policy
itself. We can, however, add, delete, or modify the riders we are making
available, at any time before they become effective as part of your policy.
The option to purchase additional insurance rider permits you to purchase
additional coverage on the insured person, without evidence of insurability, if
specified events occur.
The cost-of-living rider provides for scheduled automatic face amount increases
that, within limits, reflect increases in the Consumer Price Index. These
automatic face amount increases will result in a prospective increase in your
guarantee premiums and an additional surrender charge, in the same manner as
would any other face amount increase you request.
See also "Tax information" below for certain possible tax consequences of face
amount increases or adding or deleting riders.
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
<PAGE>
20
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we pay policy proceeds," below. Our financial professionals will take reasonable
steps to arrange for prompt delivery to the beneficiary.
Payment options for surrender and withdrawal proceeds. You can also choose to
receive all or part of any proceeds from a surrender or 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 premiums paid. 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.
VARIATIONS AMONG INCENTIVE 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 Incentive Life where
special circumstances result in sales or administrative expenses or mortality
risks that are different from those normally associated with Incentive 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
21
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YOUR ACCOUNT VALUE
As set forth above, we deduct certain charges from each premium payment you
make. We credit the rest of each premium payment to your policy's "account
value." You instruct us to allocate your account value to one or more of the
policy's 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, (ii) your amounts in our guaranteed interest option, and (iii) 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) and (iii) above as our
"Guaranteed Interest Account.") These amounts are subject to certain charges
discussed in "Charges and expenses you will pay."
- --------------------------------------------------------------------------------
Your account value will be credited with the same returns as are achieved by the
Portfolios (or guaranteed interest option) that you select, but will also be
reduced by the amount of charges we deduct under the policy.
- --------------------------------------------------------------------------------
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, withdrawals and surrenders are made from that option. Similarly, you
"purchase" additional units having the same value as the amount of any premium,
loan repayment, or transfer that you allocate to that option.
The value of each unit will increase or decrease each day, as though 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"in "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.
YOUR POLICY'S VALUE IN OUR GUARANTEED INTEREST OPTION. Your policy's value in
our guaranteed interest option includes: (i) any amounts you have specifically
requested that we allocate to that option and (ii) any "restricted" amounts that
we hold in that option as a result of your election to receive a living benefit
(these restricted amounts may be referred to in your policy as "liened policy
amounts"). See "Your option to receive a living benefit" below. We credit all of
such amounts with interest at rates we declare from time to time. We guarantee
that these rates will not be less than a 3% effective annual rate. The mortality
and expense risk charge mentioned above does not apply to our guaranteed
interest option.
Amounts may be allocated to or removed from your policy's value in our
guaranteed interest option for the same purposes as described above for the
variable investment options. We credit your policy with a number of dollars in
that option that equals any amount that is being allocated to it. Similarly, if
amounts are being removed from your guaranteed interest option for any reason,
we reduce the amount you have credited to that option on a dollar-for-dollar
basis.
<PAGE>
3 TRANSFERRING YOUR MONEY AMONG OUR INVESTMENT OPTIONS
22
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TRANSFERS YOU CAN MAKE
- --------------------------------------------------------------------------------
You can transfer among our variable investment options and into our guaranteed
interest option.
- --------------------------------------------------------------------------------
After your policy's Allocation Date, you can transfer amounts from one
investment option to another. The total of all transfers you make on the same
day must be at least $500; except that you may transfer your entire balance in
an investment option, even if it is less than $500. 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).
- --------------------------------------------------------------------------------
Transfers out of our guaranteed interest option are more limited.
- --------------------------------------------------------------------------------
RESTRICTIONS ON TRANSFER OUT OF THE GUARANTEED INTEREST OPTION. We only permit
you to make one transfer out of our guaranteed interest option during each
policy year. (No such limit applies to transfers out of our variable investment
options.) Also, the maximum transfer from our guaranteed interest option is the
greater of (a) 25% of your then current balance in that option (b) $500, or (c)
the amount (if any) that you transferred out of the guaranteed interest option
during the immediately preceding policy year.
We will not accept a request to transfer out of the guaranteed interest option
unless we receive it within the period beginning 30 days before and ending 60
days after an anniversary of your policy. If we receive the request within that
period, the transfer will occur as of that anniversary or, if later, the date we
receive it.
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 will never apply to a transfer of all of your variable investment
option amounts to our guaranteed investment option, or to any transfer pursuant
to our dollar cost averaging or asset rebalancing service, as 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
1-888-228-6690 (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 Website 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.
<PAGE>
23
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- --------------------------------------------------------------------------------
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.
This 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.
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 in 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
24
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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 amount that we hold on a
"restricted" basis following your receipt of a living benefit payment, as well
as by any other loans (and accrued loan interest) you have outstanding. See
"Your option to receive a living benefit" below.
- --------------------------------------------------------------------------------
You can use policy loans to obtain funds from your policy without surrender
charges or, in most cases, paying current income taxes. However, the borrowed
amount is no longer credited with the investment results of any of our
investment options under the policy.
- --------------------------------------------------------------------------------
When you take a policy loan, we remove an amount equal to the loan from one or
more of your 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 under the same terms and
conditions as apply to amounts supporting our guaranteed interest option, with
several exceptions:
o you cannot make transfers or withdrawals of the collateral;
o we expect to credit different rates of interest to loan collateral than we
credit under our guaranteed interest option;
o we do not count the collateral when we compute our customer loyalty credit;
and
o 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 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
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
investment options in proportion to your value in each.
LOAN INTEREST WE CHARGE. The interest we charge on a policy loan accrues daily
at an adjustable interest rate. We determine the rate at the beginning of each
year of your policy and that rate applies to all policy loans that are
outstanding at any time during the year. The maximum rate is the greater of (a)
4% or (b) the "Monthly Average Corporate" yield published in Moody's Corporate
Bond Yield Averages for the month that ends two months before the interest rate
is set. (If that average is no longer published, we will use another average, as
the policy provides.) In no event, however, will the loan interest rate be
greater than 15%. We will notify you of the current loan interest rate when you
apply for a loan, and will notify you in advance of any rate increase.
Loan interest payments are due on each policy anniversary. If not paid when due,
we automatically add the interest as a new policy loan.
INTEREST THAT WE CREDIT ON LOAN COLLATERAL. Under our current rules, the annual
interest rate we credit on your loan collateral during any of your policy's
first fifteen years will be 1% less than the rate we are then charging you for
policy loan interest, and, beginning in the policy's 16th year, equal to the
loan interest rate. The elimination of the rate differential is not guaranteed.
Accordingly, we have discretion to increase the rate differential for any
period, including under policies that are already outstanding (and may have
outstanding loans). We do guarantee that the annual rate of interest credited on
your loan collateral will never be less than 3% and that the differential will
not exceed 2% (except if tax law changes increase the taxes we pay on policy
loans or loan interest). Because we first offered Incentive Life policies in
1999 the interest rate differential has not yet been eliminated under any
outstanding policies.
We credit interest on your loan collateral daily. On each anniversary of your
policy (or when your policy loans are fully
<PAGE>
25
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repaid) we contribute that interest to your policy's investment options in the
same proportions as if it were a premium payment.
EFFECTS OF POLICY LOANS. A loan can reduce the length of time that your
insurance remains in force, because the amount we set aside as loan collateral
cannot be used to pay charges as they become due. A loan can also cause any paid
up guaranteed death benefit to terminate or may cause any other guarantee
against termination to become unavailable. We will deduct any outstanding policy
loan plus accrued loan interest from your policy's proceeds if you do not pay it
back. Even if 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.
PAYING OFF YOUR LOAN. You can repay all or part of your loan at any time. We
normally assume that payments you send us are premium payments. Therefore, you
must submit instructions with your payment indicating that it is a loan
repayment. If you send us more than all of the loan principal and interest you
owe, we will treat the excess as a premium payment.
When you send us a loan repayment, we will transfer an amount equal to such
repayment from your loan collateral back to the investment options under your
policy. First we will restore any amounts that, before being designated as loan
collateral, had been in the guaranteed interest option under your policy. We
will allocate any additional repayments among investment options as you
instruct; or, if you don't instruct us, in the same proportion as if they were
premium payments.
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,
however, and we have discretion to decline any request. If you do not tell us
from which investment options you wish us to take the withdrawal, 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 withdrawal from all of
your investment options in proportion to your value in each.
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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.
- --------------------------------------------------------------------------------
EFFECT OF PARTIAL WITHDRAWALS ON INSURANCE COVERAGE. If the Option A death
benefit is in effect, a partial withdrawal results in a dollar-for-dollar
automatic reduction in the policy's face amount (and, hence, an equal reduction
in the Option A death benefit). If the paid up death benefit guarantee is in
effect, a partial withdrawal will generally reduce the face amount by more than
the amount of the withdrawal. Face amount reductions that occur automatically as
a result of withdrawals, however, do not result in our deducting any portion of
any then remaining surrender charge. We will not permit a partial withdrawal
that would reduce the face amount below our minimum for new policy issuances at
the time, or that would cause the policy to no longer be treated as life
insurance for federal income tax purposes.
If death benefit Option B is in effect, a partial withdrawal reduces the death
benefit on a dollar for dollar basis, but does not affect the face amount.
The result is different, however, during any time when the alternative death
benefit (discussed above) would be higher than the Option A or B death benefit
you have selected. In that case, a partial withdrawal will cause the death
benefit to decrease by more than the amount of the withdrawal, even if the paid
up death benefit guarantee is not then in effect. Please also remember that a
partial withdrawal reduces the amount of your premium payments that counts
toward maintaining our other guarantees against termination, as well.
You should refer to "Tax information" below, for information about possible tax
consequences of partial withdrawals and any associated reduction in policy
benefits.
<PAGE>
26
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A partial withdrawal may 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 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, minus any amount of your account
value that is "restricted" as a result of previously distributed "living
benefits," and minus any surrender charge that then remains applicable. The
surrender charge is described in "Charges and expenses you will pay" above.
Please refer to "Tax information" below for the possible tax consequences of
surrendering your policy.
YOUR OPTION TO RECEIVE A LIVING BENEFIT
Subject to our insurance underwriting guidelines and availability in your state,
your policy will automatically include our living benefit rider. This feature
enables you to receive a portion (generally 75%) of the policy's death benefit
(excluding death benefits payable under certain other policy riders), if the
insured person has a terminal illness (as defined in the rider).
We make no additional charge for the rider. However, if you tell us that you do
not wish to have the living benefit rider added at issue, but you later ask to
add it, we will need to evaluate the insurance risk at that time, and we may
decline to issue the rider.
If you receive a living benefit, the remaining benefits under your policy will
be affected. We will deduct the amount of any living benefit we have paid, plus
interest (as specified in the rider), from the death benefit proceeds that
become payable under the policy if and when the insured person dies.
When we pay a living benefit we automatically transfer a pro-rata portion of
your policy's net cash surrender value to the policy's guaranteed interest
option. This amount, together with the interest you earn thereon, will be
"restricted" - that is, it will not be available for any loans, transfers or
partial withdrawals that you may wish to make. In addition, it may not be used
to satisfy the charges we deduct from your policy's value, and we do not count
it in computing any customer loyalty credit. We will deduct these restricted
amounts from any subsequent surrender proceeds that we pay. (In your policy, we
refer to this as a "lien" we establish against your policy.)
The receipt of a living benefit payment may qualify for exclusion from income
tax. See "Tax information" below. Receipt of a living benefit payment may affect
your eligibility for certain government benefits or entitlements.
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You can arrange to receive a "living benefit" if the insured person becomes
terminally ill.
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5 TAX INFORMATION
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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 Incentive 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 generally
will 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 STATUS. Your policy will be a "modified
endowment contract" if, at any time during the first seven years of your policy,
you have paid a cumulative amount of premiums that exceeds the cumulative
seven-pay limit. The cumulative seven-pay limit is the amount of premiums that
you would have paid by that time under a similar fixed-benefit insurance policy
that was designed (based on certain assumptions mandated under the Code) to
provide for paid up future benefits after the payment of seven equal annual
premiums. ("Paid up" means that no future premiums would be required.) This is
called the "seven-pay" test.
Whenever there is a "material change" under a policy, the policy will generally
be (a) treated as a new contract for purposes of determining whether the policy
is a modified endowment contract and (b) subjected to a new seven-pay period and
a new seven-pay limit. The new seven-pay limit would be determined taking into
account, under a prescribed formula, the account value of the policy at the time
of such change. A materially changed policy would be considered a modified
endowment contract if it failed to satisfy the new seven-pay limit at any time
during the new seven-pay period. A "material change" for these purposes could
occur as a result of a change in death benefit option, the selection of
additional rider benefits, an increase in your policy's face amount (including
pursuant to our cost-of-living rider), or certain other changes.
If your policy's benefits are reduced during its first seven years (or within
seven years after a material change), the seven-pay limit will be redetermined
based on the reduced level of benefits and applied retroactively for purposes of
the seven-pay test. (Such a reduction in benefits could include, for example, a
requested decrease in face amount, the termination of additional benefits under
a rider or, in some cases, a partial withdrawal.) If the premiums previously
paid are greater than the recalculated (lower) seven-pay limit, the policy will
become a modified endowment contract.
A life insurance policy that you receive in exchange for a modified endowment
contract will also be considered a modified endowment contract.
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In addition to the above premium limits for testing for modified endowment
status, there are overall limits on the amount of premiums you may pay under
your policy in order for it to qualify as life insurance. Changes made to your
policy, for example, a decrease in face amount (including any decrease that may
occur as a result of a partial withdrawal) or other decrease in benefits may
impact the maximum amount of premiums that can be paid, as well as the maximum
amount of account value that may be maintained under the policy. In some cases,
this may cause us to take current or future action in order to assure that your
policy continues to qualify as life insurance, including distribution of amounts
to you that may be includible as income. See "Changes we can make" below.
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 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 premiums you have paid, less the amount of any previous distributions from
your policy that were not taxable.) During the first 15 years, however, the
proceeds from a partial withdrawal could 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.
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 this
purpose include a loan (including any increase in the loan amount to pay
interest on an existing loan or an assignment or a pledge to secure a loan) or
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 is similar to the basis described above for
other policies, except that it 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 (excluding certain qualified plans) 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.
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 such) 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
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policy, will be subject to federal income tax and, unless an exception applies,
the 10% penalty tax.
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 in the four preceding paragraphs. 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.
TAX TREATMENT OF LIVING BENEFIT PROCEEDS
Amounts received under an insurance policy on the life of an individual who is
terminally ill, as defined by the tax law, are generally excludable from the
payee's gross income. We believe that the benefits provided under our living
benefit rider meet the tax law's definition of terminally ill and can qualify
for this income tax exclusion. This exclusion does not apply to amounts paid to
someone other than the insured person, however, if the payee has an insurable
interest in the insured person's life only because the insured person is a
director, officer or employee of the payee or by reason of the insured person
being financially interested in any trade or business carried on by the payee.
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 face amount that you request, 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
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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 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.
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.
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
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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 not a 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 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 change in
interpretation. Any changes in federal, state, local or foreign tax law or
interpretations could have a retroactive effect both on our taxes and on 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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6 MORE INFORMATION ABOUT PROCEDURES THAT APPLY TO YOUR POLICY
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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. Premiums or loan payments 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 accept third-party checks payable
to someone other than Equitable Life and endorsed over to Equitable Life only
(1) as a direct payment from a qualified retirement plan or (2) if it is made
out to a trustee who owns the policy and endorses the entire check (without any
refund) as a payment to the policy.
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.
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, withdrawal 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. Further, 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. 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.
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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 YOU MAKE. The following are reflected in your policy as of the date we
receive them:
o premium payments received after the policy's investment start date
(discussed below)
o loan repayments and interest payments
REQUESTS YOU MAKE. The following transactions occur as of the date we receive
your request:
o withdrawals
o tax withholding elections
o face amount decreases that result from a withdrawal
o changes of allocation percentages for premium payments or monthly deductions
o surrenders
o changes of beneficiary
o transfers from a variable investment option to the guaranteed interest
option
o changes in form of death benefit payment
o loans
o transfers among variable investment options
o assignments
o termination of paid up death benefit guarantee
The following transactions occur on your policy's next monthly anniversary that
coincides with or follows the date we approve your request:
o changes in face amount
o election of paid up death benefit guarantee
o changes in death benefit option
o changes of insured person
o termination of enhanced death benefit guarantee
o restoration of terminated policies
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 before 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
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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.
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 surrender or partial
withdrawal request after the insured person has died. Also, all insurance
coverage ends on the date as of which we process any request for a 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.
o If you submit the full minimum initial premium to your financial
professional at the time you sign the application, and we issue the policy
as it was applied for, then the register date will be the later of (a) the
date you signed part I of the policy application or (b) the date a medical
professional signed part II of the policy application.
o If we do not receive your full minimum initial premium at our Administrative
Office before the issue date or, if we issue the policy on a different basis
than you applied for, the register date will 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.
We may also permit an earlier than customary register date (a) for
employer-sponsored cases, to accommodate a common register date for all
employees or (b) to provide a younger age at issue. (A younger age at issue
reduces the monthly charges that we deduct under a policy.) The charges and
deductions commence as of the register date, even when we have permitted an
early register date. We may also permit policyowners to delay a register date
(up to three months) in employer-sponsored cases.
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). Generally, this is the register date, or, if later, the date we receive
your full minimum initial premium at our Administrative Office.
COMMENCEMENT OF INSURANCE COVERAGE. You must give the full minimum initial
premium to your financial professional on or before the day 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 payment and delivery are
completed and (2) the information in the application continues to be true and
complete, without material change, as of the time of such payment. If you submit
the full minimum initial 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, 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 to
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be the same for males and females. In addition, employers and employee
organizations should consider, in consultation with counsel, the impact of Title
VII of the Civil Rights Act of 1964 on the purchase of Incentive Life in
connection with an employment-related insurance or benefit plan. In a 1983
decision, the United States Supreme Court held that, under Title VII, optional
annuity benefits under a deferred compensation plan could not vary on the basis
of sex.
There will be no distinctions based on sex in the cost of insurance rates for
Incentive Life policies sold in Montana. We will also make such gender-neutral
policies available on request in connection with certain employee benefit plans.
Cost of insurance rates applicable to a gender-neutral policy will not be
greater than the comparable male rates under a gender specific Incentive Life
policy.
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7 MORE INFORMATION ABOUT OTHER MATTERS
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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 Incentive 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 Incentive 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 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 Incentive Life policies and, more specifically, the guaranteed
interest option). 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).
Because of applicable exemptions and exclusions, we have not registered
interests in the general account under the Securities Act of 1933 or registered
the general account as an investment company with the SEC. Accordingly, neither
the general account, the guaranteed interest option, nor any interests therein,
are subject to regulation under those acts. The staff of the SEC has not
reviewed the portions of this prospectus that relate to the general account and
the guaranteed interest option. The disclosure, however, may be subject to
certain provisions of the federal securities law relating to the accuracy and
completeness of statements made in prospectuses.
We declare the rate of interest periodically, but it will not be less than 3%.
We credit and compound the interest daily at an effective annual rate that
equals the declared rate. The rates we are at any time declaring on outstanding
policies may differ from the rates we are then declaring for newly issued
policies.
YOU CAN CHANGE YOUR POLICY'S INSURED PERSON
After the policy's second year, we will permit you to request that a new insured
person replace the existing one. This requires that you provide us with adequate
evidence that the proposed new insured person meets our requirements for
insurance. Other requirements are outlined in your policy.
Upon making this change, the monthly insurance charges we deduct and prospective
guarantee premiums will be based on the new insured person's insurance risk
characteristics. The change of insured person will not, however, affect the
surrender charge computation for the amount of coverage that is then in force.
Substituting the insured person is a taxable event and may, depending upon
individual circumstances, have other tax consequences as well. For example, the
change could cause the policy to be a "modified endowment contract" or to fail
the Internal Revenue Code's definition of "life insurance," unless we also
distribute certain amounts to you from the policy. See "Tax information" above.
You should consult your tax advisor prior to substituting the insured person. As
a condition to substituting the insured person we may require you to sign a form
acknowledging the potential tax consequences. In no event, however, will we
permit a change that causes your policy to fail the definition of life
insurance.
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 the request does not comply with our transfer limitations, or where you
request transfer of an amount greater than that currently allocated to an
investment option.
Similarly, 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 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
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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 between
investment options 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 1-888-228-6690 (toll free) from a touch tone phone to make the
following additional types of requests:
o policy loans
o changes of premium 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 confirmation letter by first class mail.
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 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 that is then applicable to
your policy by the amount we have at risk under your policy. Our amount at risk
(also described in your policy as "net amount at risk")
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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. A greater amount at risk, or a higher cost of insurance
rate, will result in a higher monthly charge.
As a general rule, the cost of insurance rate increases each year that you own
your policy. This happens automatically because of the insured person's
increasing age.
Our cost of insurance rates are guaranteed not to exceed those that will be
specified in your policy. For most insured persons at most ages, our current
rates are lower than those maximums. Therefore, we have the ability to raise
these rates up to the guaranteed maximum at any time. The guaranteed maximum
cost of insurance rates for gender neutral Incentive Life policies are based on
the 1980 Commissioner's Standard Ordinary SB Smoker and NB Non-Smoker Mortality
Table. For all other policies, the guaranteed maximum cost of insurance rates
are based on the 1980 Commissioner's Standard Ordinary Male and Female Smoker
and Non-Smoker Mortality Tables.
Our cost of insurance rates will generally be lower (except in Montana and in
connection with certain employee benefit plans) if the insured person is a
female than if a male. They also will generally be lower for non-tobacco users
than tobacco users and lower for persons that have other highly favorable health
characteristics, as compared to those that do not. On the other hand, insured
persons who present particular health, occupational or avocational risks may be
charged higher cost of insurance rates and other additional charges as specified
in their policies. In addition, the current rates also vary depending on the
duration of the policy (i.e., the length of time since the policy was issued).
We offer lower rates for non-tobacco users only if they are at least age 18. You
may ask us to review a younger insured person's tobacco habits following the
policy anniversary on which such person is age 18.
DATE OF MONTHLY DEDUCTIONS. We make the regular monthly deductions as of the
first day of each month of the policy.
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., the administrative charge, cost of insurance
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. Similarly, the premium charge is designed primarily
to defray sales and tax expenses we incur that are based on premium payments.
CUSTOMER LOYALTY CREDIT
We provide a customer loyalty credit for policies that have been outstanding for
more than six years. This is added to the account value each month. The dollar
amount of the credit is a percentage of the total amount you then have in our
investment options (not including any value we are holding as collateral for any
policy loans or for a living benefit payment). The percentage credit is
currently at an annual rate of .60% beginning in the policy's seventh year. This
credit is not guaranteed, however. Because we first offered Incentive Life in
1999, no credit has yet been attained under any outstanding policy.
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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 (and certain rider benefits), as described in the
policy (or rider).
WHEN WE PAY POLICY PROCEEDS
GENERAL. We will generally pay any death benefit, surrender, withdrawal, or loan
within seven days after we receive the request and any other required items. In
the case of a death benefit, if we do not have information about the desired
manner of payment within 60 days after the date we receive notification of the
insured person's death (and other required items), we will pay the proceeds as a
single sum, normally within seven days thereafter.
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 GUARANTEED INTEREST OPTION PROCEEDS. We also have the right to defer
payment or transfers of amounts out of our guaranteed interest option for up to
six months. If we delay more than 30 days in paying you such amounts, we will
pay interest of at least 3% per year from the date we receive your request.
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 or any rider 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 or rider. 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 Incentive Life from one 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.
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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 investment
option, you may do so.
We may make any changes in the policy or its riders, require additional premium
payments, or make distributions from the policy to the extent we deem necessary
to ensure that your policy qualifies or continues to 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 insurance risk characteristics of the insured
person under your policy and such factors as the face amount, death benefit
option, premium payment amounts, 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 Incentive 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 Incentive 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 Incentive 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
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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: 50% of the amount of the premium you pay in your
policy's first year up to a certain amount, plus 3% of all other premiums you
pay in your policy's first year, plus 3% of all premiums you pay in the second
through tenth years. We pay comparable commissions on the amount of premiums you
pay that we deem attributable to any face amount increase that you request. 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.
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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
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
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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 January
New York, NY 10020 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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DIRECTORS (CONTINUED)
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NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
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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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DONALD J. GREENE
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LeBouef, Lamb, Greene & MacRae, L.L.P. Director of Equitable Life (since July 1991). Of Counsel, LeBoeuf, Lamb, Greene &
125 West 55th Street MacRae, L.L.P. (since 1999). Prior thereto, Partner of the firm (1965 to 1999).
New York, NY 10019-4513 Director of AXA Financial (since May 1992).
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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 July
535 Madison Avenue 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 Company,
Toronto, Ontario M5H 3T9 and AXA Pacific Insurance Company, and Alternate Director, AXA Asia Pacific
Canada 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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DIRECTORS (CONTINUED)
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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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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 February
75008 Paris, France 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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OFFICERS - DIRECTORS
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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
- ------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------
STANLEY B. TULIN
- ------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
47
- ------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------
LEON B. BILLIS
- ------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------
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).
- ------------------------------------------------------------------------------------------------------------------------------
HARVEY BLITZ
- ------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------
KEVIN R. BYRNE
- ------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------
JOHN A. CAROSELLI
- ------------------------------------------------------------------------------------------------------------------------------
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).
- ------------------------------------------------------------------------------------------------------------------------------
JUDY A. FAUCETT
- ------------------------------------------------------------------------------------------------------------------------------
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).
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
48
- ------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------
ALVIN H. FENICHEL
- ------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------
PAUL J. FLORA
- ------------------------------------------------------------------------------------------------------------------------------
Senior Vice President and Auditor, Equitable Life. Vice President and Auditor, AXA
Financial.
- ------------------------------------------------------------------------------------------------------------------------------
ROBERT E. GARBER
- ------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------
DONALD R. KAPLAN
- ------------------------------------------------------------------------------------------------------------------------------
Senior Vice President (since September 1999), Chief Compliance Officer and
Associate General Counsel, Equitable Life. Previously held other officerships with
Equitable Life.
- ------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------
RICHARD J. MATTEIS
- ------------------------------------------------------------------------------------------------------------------------------
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).
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
49
- ------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------
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).
- ------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------------
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>
<TABLE>
<CAPTION>
50
- ------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------
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
51
- --------------------------------------------------------------------------------
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 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>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
<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
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants.................................................................................. F-1
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 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, 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
</TABLE>
+ Formerly known as Equitable Variable Life Insurance Company
Separate Account FP.
FSA-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and Policyowners of Separate Account FP
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of the 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>
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>
APPENDIX I: INVESTMENT PERFORMANCE RECORD
A-1
- --------------------------------------------------------------------------------
The tables below show performance information for the variable investment
options. The performance shown for each option equals the performance of the
Portfolio corresponding to that option, reduced by the current rate of the
policies' mortality and expense risk charge (.60% annual rate). You can find
more information about the performance of the Portfolios in the EQ Advisors
Trust prospectus attached at the end of this prospectus. The performance figures
on which the tables are based are after deduction of all fees and expenses paid
by the Trust or any of the Portfolios.
For periods prior to October 18, 1999, the "Alliance" Portfolios (other than
EQ/Alliance Premier Growth and EQ/Alliance Technology) were part of The Hudson
River Trust. On October 18, 1999, these Portfolios became corresponding
Portfolios of EQ Advisors Trust. In each case, the performance shown is for the
indicated EQ Advisors Trust Portfolio and any predecessors that it may have had.
In addition, we have adjusted the results for these Portfolios prior to the
dates when the Class IB shares for these Portfolios were available, to reflect
the 12b-1 fees currently imposed. Class IB shares of Alliance Money Market,
Alliance High Yield, Alliance Common Stock and EQ/Aggressive Stock* Portfolios
first became available in EQ Advisors Trust's predecessor on October 2, 1996.
Class IB shares of Alliance Small Cap Growth Portfolio first became available in
the Trust's predecessor on May 1, 1997.
The tables below, however, do not take into account the following additional
charges that we will deduct under your policy: (1) the sales charge that we
deduct from each premium payment you make; (2) the monthly cost of insurance
charge; (3) the surrender charge; (4) any charge for optional rider benefits you
may select or (5) the policies' monthly administrative charge (currently $20 for
your policy's first 12 months and $7 per month thereafter, for issue ages 18 and
older). For more information about these charges, see "Charges and expenses you
will pay" in this prospectus. If we reflected these charges, the performance
shown below would be reduced. We have not done so, however, because the actual
impact of these charges on a particular policy varies considerably based on such
factors as the insurance risk characteristics of the insured person; the face
amount and other options you select for your policy; the amount and timing of
your premium payments; and whether you make withdrawals, take policy loans, or
surrender your policy. In order to better understand how the charges we have
omitted from the below tables will affect your policy's value, you should refer
to your Illustrations of Policy Benefits that your financial professional will
provide. You can request Equitable Life or your financial professional to
provide you with such illustrations at any time, whether before or after you
purchase a policy.
In a few cases, the return information shown in the first table below includes a
period of time prior to when Separate Account FP first offered a corresponding
variable investment option under any form of variable life insurance policy.
Therefore, the second table below provides additional performance information
from the date that those investment options actually received initial funding.
- ---------------------
* Previously "Alliance Aggressive Stock"
<PAGE>
A-2
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL RATE OF RETURN
AFTER DEDUCTION OF MORTALITY AND EXPENSE
RISK CHARGE FOR PERIODS ENDING
DECEMBER 31, 1999*
- ------------------------------------------------------------------------------------------------------------
Since Portfolio
Inception
Variable Investment Option 1 yr. 3 yrs. 5 yrs. 10 yrs. (Date**)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EQ/Aggressive Stock 17.83% 8.83% 15.35% 15.71% 16.92% (1/27/86)
Alliance Money Market 4.10% 4.35% 4.47% 4.29% 6.06% (7/13/81)
Alliance High Yield (4.16)% 1.92% 8.92% 9.30% 8.44% (1/2/87)
Alliance Common Stock 24.13% 26.89% 26.97% 17.59% 15.76% (1/13/76)
Alliance Small Cap Growth 26.86% - - - 16.95% (5/1/97)
BT Equity 500 Index 19.58% - - - 21.96% (12/31/97)
BT Small Company Index 20.00% - - - 7.95% (12/31/97)
BT International Equity Index 26.70% - - - 22.98% (12/31/97)
EQ/Evergreen 9.06% - - - 9.06% (12/31/98)
EQ/Evergreen Foundation 6.72% - - - 6.72% (12/31/98)
J.P. Morgan Core Bond (2.19)% - - - 2.96% (12/31/97)
Lazard Large Cap Value 2.91% - - - 10.82% (12/31/97)
Lazard Small Cap Value 1.13% - - - (3.40)% (12/31/97)
Mercury Basic Value Equity 18.23% - - - 17.23% (5/1/97)
Mercury World Strategy 20.62% - - - 11.45% (5/1/97)
MFS Growth with Income 8.06% - - - 8.06% (12/31/98)
MFS Research 22.38% - - - 23.20% (5/1/97)
MFS Emerging Growth Companies 72.63% - - - 47.38% (5/1/97)
Morgan Stanley Emerging Markets Equity 94.57% - - - 5.07% (8/20/97)
EQ/Putnam Growth & Income Value (1.95)% - - - 9.46% (5/1/97)
EQ/Putnam Investors Growth 29.48% - - - 33.87% (5/1/97)
EQ/Putnam International Equity 59.29% - - - 31.21% (5/1/97)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* No performance information is shown for EQ/Alliance Technology, as this
Portfolio had not received its initial funding prior to December 31, 1999.
Additionally, no performance information is shown for EQ/Alliance Premier
Growth, Capital Guardian U.S. Equity, Capital Guardian Research or Capital
Guardian International, as those Portfolios became available after December
31, 1998. The inception date for these portfolios is April 30, 1999.
** The inception date shown is the date that the relevant Portfolio (or its
predecessor) received its initial funding.
<PAGE>
A-3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Rates of Return For Periods Ending
December 31, 1999 Since Variable Investment Option
Variable Investment Option Inception (Date)
- --------------------------------------------------------------------------------
<S> <C>
Alliance Money Market 4.91% (1/27/86)
Alliance Common Stock 17.40% (1/27/86)
- --------------------------------------------------------------------------------
</TABLE>
Unlike the rate of return tables above, the following yield information does not
include capital gains and losses that the Portfolios corresponding to the
indicated variable investment options may have experienced.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Annualized Yield For Periods
Variable Investment Option Ending December 31, 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
7 DAYS 30 DAYS
- --------------------------------------------------------------------------------
Alliance Money Market 4.42% -
Alliance High Yield - 12.30%
- --------------------------------------------------------------------------------
</TABLE>
The information in the tables above is not a guarantee, a prediction, or
necessarily an indication of future performance.
<PAGE>
APPENDIX II: OUR DATA ON MARKET PERFORMANCE
B-1
- --------------------------------------------------------------------------------
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:
- --------------------------------------------------------------------------------
Barron's Money Management Letter
Morningstar's Variable 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
Investment Management Weekly
- --------------------------------------------------------------------------------
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 Incentive Life premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long- or short-term debt securities. 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>
B-2
- --------------------------------------------------------------------------------
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 COMMON GOVERNMENT CORPORATE TERM GOV'T U.S. TREASURY CONSUMER
ENDING 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 III: AN INDEX OF KEY WORDS AND PHRASES
C-1
- --------------------------------------------------------------------------------
This index should help you locate more information on the terms used in this
prospectus.
<TABLE>
<CAPTION>
PAGE
<S> <C>
account value 21
Administrative Office 5
age 34
Allocation Date 15
alternative death benefit 17
amount at risk 38
anniversary 34
assign; assignment 32
automatic transfer service 22
AXA Financial, Inc. 4
basis 28
beneficiary 19
business day 33
Cash Surrender Value 26
Code 27
collateral 24
cost of insurance charge 38
cost of insurance rates 38
customer loyalty credit 39
day 33
death benefit guarantee 14
default 12
dollar cost averaging service 22
enhanced death benefit guarantee 14
EQAccess 5
EQ Advisors Trust 16
EQ Financial Consultants 16
Equitable Distributors 41
Equitable Life 4
Equitable Access Account 19
face amount 16
grace period 12
guarantee premium 13
guaranteed interest option 16
Guaranteed Interest Account 16
Incentive Life cover
insured person 17
Investment Funds 16
investment option 15
issue date 34
lapse 12
loan, loan interest 24
modified endowment contract 12
month, year 34
monthly deduction 7
net cash surrender value 26
no-lapse guarantee 13
Option A, B 17
our 2
owner 2
paid up 27
paid up death benefit guarantee 14
partial withdrawal 25
payment option 19
planned periodic premium 12
policy cover
Portfolio cover
premium charge 7
premium payments 12
prospectus cover
rebalancing 23
receive 33
restore, restoration 13
rider 19
SEC cover
Separate Account FP 36
state 2
subaccount 36
surrender 26
surrender charge 7
target premium 8
telephone transfer 22
transfers 22
Trust 16
units 21
unit values 21
us 2
variable investment option 16
we 2
withdrawal 25
you, your 2
</TABLE>
<PAGE>
INCENTIVE LIFE PLUS(R)
A flexible 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 MAY 1, 2000
- --------------------------------------------------------------------------------
This prospectus describes many aspects of an Incentive Life Plus policy, but
is not itself a policy. The policy is the actual contract that determines your
benefits and obligations under Incentive Life Plus. 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 INCENTIVE LIFE PLUS?
Incentive Life Plus is issued by Equitable Life. It provides life insurance
coverage, plus the opportunity for you to earn a return in our guaranteed
interest option and/or one or more of the following variable investment
options:
<TABLE>
<S> <C>
VARIABLE INVESTMENT OPTIONS
- -------------------------------------------------------------------------
FIXED INCOME
- -------------------------------------------------------------------------
o Alliance High Yield o Alliance Money Market
o Alliance Intermediate o Alliance Quality Bond
Government Securities
- -------------------------------------------------------------------------
DOMESTIC STOCKS
- -------------------------------------------------------------------------
o EQ/Aggressive Stock(1) o EQ/Evergreen
o Alliance Common Stock o MFS Emerging Growth
o Alliance Equity Index Companies
o Alliance Growth and Income o MFS Growth with Income
o EQ/Alliance Premier Growth o MFS Research
o Alliance Small Cap Growth o Mercury Basic Value Equity(3)
o EQ/Alliance Technology(2) o EQ/Putnam Growth & Income
o Capital Guardian Research Value
o Capital Guardian U.S. Equity o T. Rowe Price Equity Income
o Warburg Pincus Small Company
Value
- -------------------------------------------------------------------------
INTERNATIONAL STOCKS
- -------------------------------------------------------------------------
o Alliance Global o Morgan Stanley Emerging
o Alliance International Markets Equity
o T. Rowe Price International
Stock
- -------------------------------------------------------------------------
BALANCED/HYBRID
- -------------------------------------------------------------------------
o Alliance Conservative Investors o Mercury World Strategy(5)
o Alliance Growth Investors o EQ/Putnam Balanced
o EQ/Balanced(4)
o EQ/Evergreen Foundation
- -------------------------------------------------------------------------
</TABLE>
(1) Formerly named "Alliance Aggressive Stock"
(2) Anticipated to become available on or about May 22, 2000. This option may
not be available in California.
(3) Formerly named "Merrill Lynch Basic Value Equity"
(4) Formerly named "Alliance Balanced"
(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.
OTHER CHOICES YOU HAVE. You have considerable flexibility to tailor the policy
to your needs. For example, subject to our rules, you can (1) choose when and
how much you contribute (as "premiums") to your policy, (2) pay certain
premium amounts to guarantee that your insurance coverage will continue for a
number of years, regardless of investment performance, (3) borrow or withdraw
amounts you have accumulated, (4) change the amount of insurance coverage, (5)
choose between two life insurance benefit options, (6) elect to receive an
insurance benefit if the insured person becomes terminally ill, and (7) add or
delete certain optional benefits that we offer by "riders" to your policy.
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 Incentive Life Plus 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.
72108R
<PAGE>
CONTENTS OF THIS PROSPECTUS
- ----------------
2
- --------------------------------------------------------------------------------
CONTENTS OF THIS PROSPECTUS
INCENTIVE LIFE PLUS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
<S> <C>
What is Incentive Life Plus? Cover
Who is Equitable Life? 4
How to reach us 5
Charges and expenses you will pay 7
Risks you should consider 12
1
- ----------------------------------------------------------------
POLICY FEATURES AND BENEFITS 13
- ----------------------------------------------------------------
How you can pay for and contribute to your policy 13
The minimum amount of premiums you must pay 13
Investment options within your policy 15
About your life insurance benefit 16
You can increase or decrease your insurance coverage 17
Effect of face amount changes on certain subsequent
charges 18
Other benefits you can add by rider 19
Your options for receiving policy proceeds 20
Your right to cancel within a certain number of days 20
Variations among Incentive Life Plus policies 20
Other Equitable Life policies 21
2
- ----------------------------------------------------------------
DETERMINING YOUR POLICY'S VALUE 22
- ----------------------------------------------------------------
Your account value 22
3
- ----------------------------------------------------------------
TRANSFERRING YOUR MONEY AMONG OUR
INVESTMENT OPTIONS 23
- ----------------------------------------------------------------
Transfers you can make 23
Telephone and EQAccess transfers 23
Our dollar cost averaging service 23
Our asset rebalancing service 24
- ---------------------------------------------------------------
</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.
Incentive Life Plus is available in all states. This prospectus does not offer
Incentive Life Plus 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>
<CAPTION>
<S>
<C>
4
- -----------------------------------------------------------------------
ACCESSING YOUR MONEY 25
- -----------------------------------------------------------------------
Borrowing from your policy 25
Making withdrawals from your policy 26
Surrendering your policy for its net cash surrender value 26
When the insured person reaches age 100 ("Maturity") 27
Your option to receive a living benefit 27
5
- -----------------------------------------------------------------------
TAX INFORMATION 28
- -----------------------------------------------------------------------
Basic tax treatment for you and your beneficiary 28
Tax treatment of distributions to you 28
Tax treatment of living benefit proceeds 30
Effect of policy on interest deductions taken by business
entities 30
Requirement that we diversify investments 30
Estate, gift, and generation-skipping taxes 31
Pension and profit-sharing plans 31
Other employee benefit programs 31
ERISA 31
Our taxes 31
When we withhold taxes from distributions 32
Possibility of future tax changes 32
6
- -----------------------------------------------------------------------
MORE INFORMATION ABOUT PROCEDURES
THAT APPLY TO YOUR POLICY 33
- -----------------------------------------------------------------------
Ways to make premium and loan payments 33
Requirements for surrender requests 33
Ways we pay policy proceeds 33
Assigning your policy 33
Dates and prices at which policy events occur 33
Policy issuance 35
Gender-neutral policies 35
- -----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
7
- -----------------------------------------------------------------------
MORE INFORMATION ABOUT OTHER MATTERS 37
- -----------------------------------------------------------------------
Your voting privileges 37
About our Separate Account FP 37
About our General Account 38
You can change your policy's insured person 38
Transfers of your account value 38
Telephone and EQAccess requests 39
Deducting policy charges 39
Suicide and certain misstatements 41
When we pay policy proceeds 41
Changes we can make 42
Reports we will send you 42
Legal proceedings 42
Illustrations of policy benefits 43
SEC registration statement 43
How we market the policies 43
Insurance regulation that applies to Equitable Life 43
Directors and principal officers 45
8
- -----------------------------------------------------------------------
FINANCIAL STATEMENTS OF SEPARATE
ACCOUNT FP AND EQUITABLE LIFE 53
- -----------------------------------------------------------------------
Separate Account FP financial statements A-1
Equitable Life financial statements F-1
- -----------------------------------------------------------------------
9
- -----------------------------------------------------------------------
APPENDICES
- -----------------------------------------------------------------------
I - Investment performance record AA-1
II - Our data on market performance BB-1
III - An index of key words and phrases CC-1
- -----------------------------------------------------------------------
EQ ADVISORS TRUST PROSPECTUS (follows after page
CC-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
$462.7 billion in assets as of December 31, 1999. 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:
P.O. Box 1047
Charlotte, North Carolina 28201-1047
- -----------------------------------------------------------
BY EXPRESS DELIVERY ONLY:
- -----------------------------------------------------------
at the Street Address for our Administrative Office:
Equitable Life - National Operations Center
10840 Ballantyne Commons Parkway
Charlotte, North Carolina 28277
- -----------------------------------------------------------
BY TOLL-FREE PHONE:
- -----------------------------------------------------------
1-888-855-5100 (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 E-MAIL:
- -----------------------------------------------------------
[email protected]
- -----------------------------------------------------------
BY FAX:
- -----------------------------------------------------------
1-704-540-9714
- -----------------------------------------------------------
BY INTERNET:
- -----------------------------------------------------------
Our Web site (www.equitable.com) can also provide
information; some of the forms listed below are available
for you to print out through our Web site by clicking on
"Contact Us." You can also 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 investment options; and
(e) changes in allocation percentages for premiums and deductions.
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 request.
The proper person to sign forms, notices and requests would normally be the
owner or any other person that our
<PAGE>
- ----------------
6
- --------------------------------------------------------------------------------
WHO IS EQUITABLE LIFE?
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.
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 premium payments after the first one to our Administrative Office at
the above addresses; except that you should send any premiums 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>
<CAPTION>
<S> <C> <C>
CHARGES WE DEDUCT FROM Sales charge A percentage of each premium payment you make,
AMOUNTS YOU CONTRIBUTE We intend (but do not depending on your policy's face amount(2), as follows:
TO YOUR POLICY: guarantee) to stop deducting
this charge once premiums paid ----------------------------------------------------
equal a certain amount.(1) FACE AMOUNT PERCENT OF
OF POLICY PREMIUM
----------------------------------------------------
$50,000-$99,999.......................... 6%
$100,000-$499,999........................ 4%
$500,000 and over........................ 3%
-------------------------------------------------------------------------------------
Charge for taxes Currently ranges from 0.50% to 5% (Virgin Islands)
- ----------------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM Administrative charge A dollar amount that depends on your policy's face
YOUR POLICY'S VALUE EACH amount, as follows:
MONTH:
-------------------------------------------------------------
MONTHLY CHARGE
-------------------------------------------------------------
MONTHS MONTHS
FACE AMOUNT OF POLICY 1-12 13-24 THEREAFTER
-------------------------------------------------------------
$50,000-$99,999........ $ 30(3) $ 30(3) $ 8(5)
$100,000-$499,999...... 55(4) 6(5) 6(5)
$500,000 and over...... 25 6(5) 6(5)
-------------------------------------------------------------------------------------
Cost of insurance Amount varies depending on the specifics of your policy(6)
charges and optional
rider charges
-------------------------------------------------------------------------------------
Death benefit $.01 for each $1,000 of the face amount of your policy and
guarantee charge any yearly renewable term rider on the insured person at
the time of the deduction. We deduct this charge only
during any death benefit guarantee period under
your policy.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- ----------------
8
- --------------------------------------------------------------------------------
CHARGES AND EXPENSES YOU WILL PAY
<TABLE>
<CAPTION>
<S> <C> <C>
CHARGES WE DEDUCT FROM Mortality and expense risk .60% (effective annual rate) of the value you have in our
YOUR POLICY'S INVESTMENT charge variable investment options (we may increase this rate up
PERFORMANCE EACH DAY: to .90%)7
- ---------------------------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM Surrender (turning in) of your A "premium surrender charge" equal to the smaller of (a)
YOUR ACCOUNT VALUE AT THE policy during its first 15 years 66% of one "target premium"(8) (or less for surrenders after
TIME OF THE TRANSACTION: the ninth year)(9) or (b) a percentage(10) of all premium
payments you make in the first 15 years of your policy.
If you surrender your policy An "administrative surrender charge" equal to a dollar
during its first 8 years, we also amount per $1,000 of initial face amount (subject to a
deduct the following charge $3,000 maximum for the charge). The dollar amount per
$1,000 depends on the insured person's age at policy
issuance, as follows:
-----------------------------------------------------------
ISSUE AGE
-------------------------------------
0-34 35-44 45-49 50-54 55 AND OVER
-------------------------------------
Dollars Per $1,000 $2 $3 $4 $5 $6
For surrenders after the third policy
year, however, this charge begins to
decline at a constant rate each month
until it is zero after the eighth year.
(We will also deduct the remaining
amounts of premium and administrative
surrender charges associated with any
face amount increase, as discussed
immediately below.)
-----------------------------------------------------------------------------------------------
Surrender of your policy during Amounts of premium and administrative surrender charges
the first 15 years after you have that we will compute on essentially the same basis as if
requested an increase in your each such face amount increase had been a separate,
policy's face amount newly-issued Incentive Life Plus policy.(11)
-----------------------------------------------------------------------------------------------
Requested decrease in your A pro-rata portion of the full premium and administrative
policy's face amount surrender charges that would apply to a surrender at the
time of the decrease.
-----------------------------------------------------------------------------------------------
Change of your policy's insured $100
person
-----------------------------------------------------------------------------------------------
Election to add "living benefit" $100
rider after policy issue
-----------------------------------------------------------------------------------------------
Exercise of option to receive a Up to $250
"living benefit"
-----------------------------------------------------------------------------------------------
Transfers among investment $0 for each of the first 12 transfers per year (which we
options may increase up to $25) and $25 for each additional
transfer in the same year(12)
------------------------------------------------------------------------------------------------
Partial withdrawal $25 (or, if less, 2% of the withdrawal)
------------------------------------------------------------------------------------------------
Increase in your policy's face $1.50 for each $1,000 of the increase (but not more than
amount $240 in total)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- ----------------
9
- --------------------------------------------------------------------------------
CHARGES AND EXPENSES YOU WILL PAY
(1) The amount of premiums beyond which we intend to stop deducting the sales
charge depends on the specifics of your policy. For no policy will it be
higher than $1,689.70 per $1,000 of the policy's initial face amount or
lower than $31.20 per $1,000.
(2) The "face amount" is the basic amount of insurance coverage under your
policy.
(3) $20, if the insured person is age 29 or less at policy issuance.
(4) $40, if the insured person is age 29 or less at policy issuance.
(5) We may increase this charge to not more than $10.
(6) See "Monthly cost of insurance charge" and "Other benefits you can add by
rider" later in this prospectus. The Illustrations of Policy Benefits that
your financial professional will provide will show the impact of the actual
current and guaranteed maximum rates of these and any other charges, based
on various assumptions.
(7) This charge does not apply to amounts in our guaranteed interest option.
For policies issued in New York, this charge is deducted monthly as a
percentage of your account value.
(8) The "target premium" is actuarially determined for each policy, based on
that policy's particular characteristics.
(9) Beginning in your policy's tenth year, this amount declines at a constant
rate each month until no surrender charge applies to surrenders made after
the policy's 15th year. The maximum amount of surrender charge under
clause (a) will be set forth in your policy. The lowest maximum initial
surrender charge under clause (a) for any policy would be $1.25 for each
$1,000 of initial face amount and the highest maximum initial surrender
charge under clause (a) for any policy would be $30.95 per $1,000.
(10) The percentage depends on when you pay the premiums and your policy's
highest face amount:
<TABLE>
<CAPTION>
POLICY'S HIGHEST FACE AMOUNT TO DATE
------------------------------------
$50,000- $100,000- $500,000
99,999 499,999 AND OVER
- ------------------------------------------------------------------------- ---------- ----------- ---------
<S> <C> <C> <C>
For Premiums Paid in Year 1, up to One SEC Guideline Annual Premium 24% 26% 27%
For All Additional Premiums Paid in Years 1-15 ..................... 3% 5% 6%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The SEC guideline annual premium is the level amount that would be payable
each year based on certain assumptions defined by the SEC.
(11) These additional surrender charges, however, apply only to the amount (if
any) by which the increase causes the face amount to exceed its highest
previous amount. For these purposes, we disregard any face amount changes
that we make automatically as a result of any change in your death benefit
option. To calculate the amount of any additional surrender charge, we
consider a portion of any premiums you pay at or after the time of the
increase to have been paid for the increase. We do this in the manner
prescribed by SEC regulations for such premium allocations.
(12) No charge, however, would ever apply to a transfer of all of your variable
investment option amounts to our guaranteed interest option, or to any
transfer pursuant to our dollar cost averaging service or asset
rebalancing service, as discussed later in this prospectus.
<PAGE>
- ----------------
10
- --------------------------------------------------------------------------------
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, except as noted below. 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>
- --------------------------------------------------------------------------------------------------------------------------------
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% - 0.04% 0.64% - 0.64%
- --------------------------------------------------------------------------------------------------------------------------------
EQ/Balanced 0.57% - 0.05% 0.62% - 0.62%
- --------------------------------------------------------------------------------------------------------------------------------
Alliance Common Stock 0.46% - 0.04% 0.50% - 0.50%
- --------------------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors 0.60% - 0.07% 0.67% - 0.67%
- --------------------------------------------------------------------------------------------------------------------------------
Alliance Equity Index 0.25% - 0.05% 0.30% - 0.30%
- --------------------------------------------------------------------------------------------------------------------------------
Alliance Global 0.73% - 0.09% 0.82% - 0.82%
- --------------------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income 0.59% - 0.05% 0.64% - 0.64%
- --------------------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors 0.57% - 0.05% 0.62% - 0.62%
- --------------------------------------------------------------------------------------------------------------------------------
Alliance High Yield 0.60% - 0.05% 0.65% - 0.65%
- --------------------------------------------------------------------------------------------------------------------------------
Alliance Intermediate Government Securities 0.50% - 0.07% 0.57% - 0.57%
- --------------------------------------------------------------------------------------------------------------------------------
Alliance International 0.85% - 0.20% 1.05% - 1.05%
- --------------------------------------------------------------------------------------------------------------------------------
Alliance Money Market 0.34% - 0.05% 0.39% - 0.39%
- --------------------------------------------------------------------------------------------------------------------------------
EQ/Alliance Premier Growth(4) 0.90% 0.25% 0.23% 1.38% 0.23% 1.15%
- --------------------------------------------------------------------------------------------------------------------------------
Alliance Quality Bond 0.53% - 0.05% 0.58% - 0.58%
- --------------------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth(5) 0.75% - 0.07% 0.82% - 0.82%
- --------------------------------------------------------------------------------------------------------------------------------
EQ/Alliance Technology(6) 0.90% 0.25% 0.10% 1.25% 0.10% 1.15%
- --------------------------------------------------------------------------------------------------------------------------------
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%
- --------------------------------------------------------------------------------------------------------------------------------
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 Balanced 0.60% 0.25% 0.28% 1.13% 0.23% 0.90%
- --------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value 0.60% 0.25% 0.16% 1.01% 0.06% 0.95%
- --------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income 0.60% 0.25% 0.21% 1.06% 0.11% 0.95%
- --------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock 0.85% 0.25% 0.30% 1.40% 0.15% 1.25%
- --------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value 0.75% 0.25% 0.24% 1.24% 0.14% 1.10%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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11
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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 Balanced, EQ/Putnam Growth & Income Value,
Warburg Pincus Small Company Value and T. Rowe Price International Stock
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 . 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 MFS Emerging Growth Companies, MFS Growth with Income, MFS
Research, Mercury Basic Value Equity, EQ/Putnam Growth & Income Value, T.
Rowe Price Equity Income, T. Rowe Price International Stock and Warburg
Pincus Small Company Value Portfolios reflect an increase effective on May
1, 2000. The expense limitation for the EQ/Evergreen Portfolio reflects a
decrease effective on May 1, 2000.
(4) Initial seed capital was invested in the EQ/Alliance Premier Growth,
Capital Guardian Research and Capital Guardian U.S. Equity Portfolios on
April 30, 1999; thus, Other Expenses for the 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 annualized estimates for 2000. Initial seed
capital will be invested in the EQ/Alliance Technology Portfolio on or
about May 1, 2000.
<PAGE>
RISKS YOU SHOULD CONSIDER
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12
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HOW WE ALLOCATE CHARGES AMONG YOUR
INVESTMENT OPTIONS
In your application for a policy, you tell us from which investment options
you want us to take the policy's monthly deductions as they fall due. You can
change these instructions at any time. If we cannot deduct the charge as your
most current instructions direct, we will allocate the deduction among your
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) or (2) make a charge for
any illustration of how your policy's values could change over time, if you
request more than one illustration in the same year.
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, premium payments, 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.
RISKS YOU SHOULD CONSIDER
Some of the principal risks of investing in a policy are as follows:
o If the investment options you choose perform poorly, you could lose some or
all of the premiums you pay.
o If the investment options you choose do not make enough money to pay for
the policy charges, you could have to pay more premiums to keep your
policy from terminating.
o We can increase certain charges without your consent, within limits stated
in your policy.
o You may have to pay a surrender charge if you wish to discontinue some or
all of your insurance coverage under a policy.
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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13
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POLICY FEATURES AND BENEFITS
HOW YOU CAN PAY FOR AND CONTRIBUTE TO
YOUR POLICY
Premium payments. We call the amounts you contribute to your policy "premiums"
or "premium payments." The amount we require as your first premium varies
depending on the specifics of your policy and the insured person. Each
subsequent premium payment must be at least $100, although we can increase
this minimum if we give you advance notice. (Policies issued in some states or
on an automatic premium payment plan may have different minimums.) Otherwise,
with a few exceptions mentioned below, you can make premium payments at any
time and in any amount.
-----------------------------------------------------------------------------
You can generally pay premiums at such times and in such amounts as you like,
so long as (i) you pay enough to prevent your policy from lapsing and (ii) you
don't exceed certain limits determined by the federal income tax laws
applicable to life insurance.
-----------------------------------------------------------------------------
LIMITS ON PREMIUM PAYMENTS. The federal tax law definition of "life insurance"
limits your ability to pay certain high levels of premiums (relative to the
amount of your policy's insurance coverage). Also, if your premium payments
exceed certain other amounts specified under the Internal Revenue Code, your
policy will become a "modified endowment contract," which may subject you to
additional taxes and penalties on any distributions from your policy. See "Tax
information" below. We may return any premium payments that would exceed those
limits to you.
You can ask your financial professional to provide you with an Illustration of
Policy Benefits that shows you the amount of premium you can pay, based on
various assumptions, without exceeding these tax law limits. The tax law
limits can change as a result of certain changes you make to your policy. For
example, a reduction in the face amount of your policy may reduce the amount
of premiums that you can pay.
If at any time your policy's account value is high enough that the alternative
death benefit discussed below would apply, we reserve the right to limit the
amount of any premiums that you pay, unless the insured person provides us
with adequate evidence that he/she continues to meet our requirements for
issuing insurance. The requirement for such evidence, however, would apply
only to the amount of premiums you pay in any year of your policy that exceeds
your annual specified premium. Specified premiums are discussed below.
PLANNED PERIODIC PREMIUMS. Page 3 of your policy will specify a "planned
periodic premium." This is the amount that you request us to bill you.
However, payment of these or any other specific amounts of premiums is not
mandatory. You need to pay only enough premiums to ensure (i) that your policy
has enough "net cash surrender value" to cover your policy's monthly charges
as they fall due or (ii) that your death benefit guarantee (discussed below)
remains in effect. ("Net cash surrender value" is explained under
"Surrendering your policy for its net cash surrender value" below.)
THE MINIMUM AMOUNT OF PREMIUMS YOU MUST PAY
POLICY "LAPSE" AND TERMINATION. Your policy will lapse (also referred to in
your policy as "default") if it does not have enough net cash surrender value
to pay the monthly charges when due and the death benefit guarantee is not
then in effect. We will mail a notice to you at your last known address if
your policy lapses. You will have a 61-day grace period to pay at least an
amount prescribed in your policy, which would be enough to keep your policy in
force for approximately three months (without regard to investment
performance). You may not make any transfers or request any other policy
changes during a grace period. If we do not receive your payment by the end of
the grace period, your policy (and all riders to the 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.
<PAGE>
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14
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POLICY FEATURES AND BENEFITS
-----------------------------------------------------------------------------
Your policy will terminate if you don't pay enough premiums to pay the charges
we deduct, unless the death benefit guarantee is in effect. However, we will
first send you a notice and give you a chance to pay any shortfall.
-----------------------------------------------------------------------------
You may owe taxes 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 pay at least the amount of
premium that we require. Your policy contains additional information about the
minimum amount of this premium and about the values and terms of the policy
after it is restored.
DEATH BENEFIT GUARANTEE AND SPECIFIED PREMIUMS. Page 3 of your policy will
show a "specified premium." Payment of the specified premium is not required.
However, we measure the actual premiums you have paid against the specified
premiums to see if the death benefit guarantee provision will prevent a policy
from lapsing. For more detail about how we do this, see "Death benefit
guarantee test" below. The death benefit guarantee provision will not prevent
your policy from lapsing if you have an outstanding policy loan.
-----------------------------------------------------------------------------
In most states, if you pay at least certain prescribed amounts of premiums,
and have no policy loans, your policy will not lapse for a number of years,
even if the value in your policy becomes insufficient to pay the monthly
charges.
-----------------------------------------------------------------------------
The death benefit guarantee provision lasts for the following periods:
o If you select death benefit Option A, and never change it to death benefit
Option B, then the death benefit guarantee provision lasts until your
policy matures.
o If, at any time, you select death benefit Option B, then the death benefit
guarantee provision lasts until the insured person reaches age 80, or, if
longer, for the first 15 years of your policy. (If the death benefit first
changes to Option B after this time period, the death benefit guarantee
will terminate immediately.)
See "About your life insurance benefit" below regarding your death benefit
options.
If your policy is issued with a yearly renewable term rider on the insured
person, the length of time the death benefit guarantee lasts may be shorter.
See "Other benefits you can add by rider" below.
In some states, including New York and New Jersey, your policy will refer to a
"no-lapse guarantee" instead of the death benefit guarantee. The no-lapse
guarantee provision will work in the same manner as the death benefit
guarantee provision, except that it will only last for the first three years
of your policy. The guarantee and guarantee period applicable to your policy
will appear on page 3 of your policy. Also, the policy will refer to the
premium for such three-year guarantee as a "no-lapse guarantee premium"
instead of a specified premium.
If you want to be billed for your specified premium, you should select that
option in your application for a policy. Your planned periodic premium will
then be your specified premium.
DEATH BENEFIT GUARANTEE TEST. If your policy's net cash surrender value is not
sufficient to pay a monthly deduction that has become due, we check to see if
the cumulative amount of premiums that you have paid to date at least equals
the cumulative specified premiums due to date. So long as at least this amount
has been paid (and you have no policy loan outstanding), your policy will not
lapse.
When we calculate the cumulative amount of specified premiums due, we compound
each amount at a 4% annual interest rate from the due date through the date of
the calculation. (This interest rate is purely for purposes of determining
whether you have satisfied the death benefit guarantee test. It does not bear
any relation to the returns
<PAGE>
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15
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POLICY FEATURES AND BENEFITS
you will actually earn or any loan interest you will actually pay.) We use the
same calculation for determining the cumulative amount of premiums paid,
beginning with the date each premium is received. The amount of premiums you
must pay to maintain the death benefit guarantee will be increased by the
cumulative amount of any partial withdrawals you have taken from your policy
(calculated by the same method, beginning with the date of withdrawal).
The amount of the specified premium set forth in your policy is actuarially
determined at policy issuance and depends on the age and other insurance risk
characteristics of the insured person, as well as the amount of the coverage
and additional features you select. Certain additional benefit riders will
cause the specified premiums to increase each year. The specified premiums may
also change if you make policy changes that increase or decrease the face
amount of the policy or a rider, add or eliminate a rider, or if there is a
change in the insured person's risk characteristics. We will send you a new
policy page showing any change in your specified premium. Any change will be
prospective only, and no change will extend the death benefit guarantee period
beyond its original number of years.
INVESTMENT OPTIONS WITHIN YOUR POLICY
We will initially put all amounts which you have allocated to variable
investment options into our Alliance Money Market 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 your premium allocation instructions then in effect. You give such
instructions in your application to purchase a policy. You can change the
premium allocation percentages at any time, but this will not affect any prior
allocations. 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 and
EQ/Balanced)
o Capital Guardian Trust Company (for the "Capital Guardian" options;
also, jointly advises EQ/Balanced)
o Evergreen Asset Management Corp. (for the "EQ/Evergreen" options)
o Jennison Associates LLC (jointly advises EQ/Balanced)
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 Prudential Investments Fund Management LLC (jointly advises EQ/Balanced)
o Putnam Investment Management, Inc. (for both "EQ/Putnam" options)
o T. Rowe Price Associates, Inc. and Rowe Price-Fleming International, Inc.
(for both "T. Rowe Price" options)
o Warburg Pincus Asset Management, Inc. (for the "Warburg Pincus" option)
Each Portfolio is a part of EQ Advisors Trust. Equitable Life serves as
investment manager of EQ Advisors Trust. As such, 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
<PAGE>
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16
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POLICY FEATURES AND BENEFITS
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.
GUARANTEED INTEREST OPTION. You can also allocate some or all of your policy's
value to our guaranteed interest option. We, in turn, invest such amounts as
part of our general assets. For each year of your policy, we declare a fixed
rate of interest (4% minimum) on amounts you allocate to our guaranteed
interest option. (The guaranteed interest option is part of what your policy
and other supplemental material may refer to this as the "Guaranteed Interest
Account".)
-----------------------------------------------------------------------------
We will pay at least 4% annual interest on our guaranteed interest option.
-----------------------------------------------------------------------------
ABOUT YOUR LIFE INSURANCE BENEFIT
YOUR POLICY'S FACE AMOUNT. In your application to buy an Incentive Life Plus
policy, you tell us how much insurance coverage you want on the life of the
insured person. We call this the "face amount" of the policy. $50,000 is the
smallest amount of coverage you can request.
-----------------------------------------------------------------------------
If the insured person dies, we pay a life insurance benefit to the
"beneficiary" you have named. The amount we pay depends on whether you have
chosen death benefit Option A or death benefit Option B.
-----------------------------------------------------------------------------
YOUR POLICY'S "DEATH BENEFIT" OPTIONS. In your policy application, you also
choose whether the basic amount (or "benefit") we will pay if the insured
person dies is
o Option A - THE POLICY'S FACE AMOUNT on the date of the insured person's
death. The amount of this death benefit doesn't change over time, unless
you take any action that changes the policy's face amount;
- or -
o Option B - THE FACE AMOUNT PLUS THE POLICY'S "ACCOUNT VALUE" on the date of
death. Under this option, the amount of death benefit generally changes
from day to day, because many factors (including investment performance,
charges, premium payments and withdrawals) affect your policy's account
value.
Your policy's "account value" is the total amount that at any time is earning
interest for you or being credited with investment gains and losses under your
policy. (Account value is discussed in more detail under "Determining your
policy's value" below.)
Under Option B, your policy's death benefit will tend to be higher than under
Option A. As a result, the monthly insurance charge we deduct will also be
higher, to compensate us for our additional risk.
ALTERNATIVE HIGHER DEATH BENEFIT IN LIMITED CASES. Your policy is designed to
always provide a minimum level of insurance protection relative to your
policy's account value, in part to meet the Internal Revenue Code's definition
of "life insurance." Thus, we will automatically pay an alternative death
benefit if it is HIGHER than the basic Option A or Option B death benefit you
have selected. This alternative death benefit is computed by multiplying your
policy's account value on the insured person's date of death by a percentage
specified in your policy. The percentage depends on the insured person's age.
Representative percentages are as follows:
-----------------------------------------------------------------------------
If the value in your policy is high enough, relative to the face amount, the
life insurance benefit will automatically be greater than the Option A or
Option B death benefit you have selected.
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AGE* 40 45 50 55 60 65
OR UNDER
% 250% 215% 185% 150% 130% 120%
70 75-95 100
% 115% 105% 100%
- ------------------------------------------------------------------------
</TABLE>
* For the then-current policy year.
This higher alternative death benefit exposes us to greater insurance risk
than the regular Option A and B death benefit. Because the cost of insurance
charges we make under your policy are based in part on the amount of our
<PAGE>
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17
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POLICY FEATURES AND BENEFITS
risk, you will pay more cost of insurance charges for any periods during which
the higher alternative death benefit is the operative one.
OTHER ADJUSTMENTS TO DEATH BENEFIT. We will increase the death benefit
proceeds by the amount of any other benefits we owe upon the insured person's
death under any optional riders which are in effect.
We will reduce the death benefit proceeds by the amount of any remaining
policy loans and unpaid loan interest, as well as any amount of monthly
charges under the policy that remain unpaid because the insured person died
during a grace period. We also reduce the death benefit if we have already
paid part of it under a living benefit rider. We reduce it by the amount of
the living benefit payment plus accrued interest. See "Your option to receive
a living benefit" below.
-----------------------------------------------------------------------------
You can request a change in your death benefit option any time after the
second year of the policy.
-----------------------------------------------------------------------------
CHANGE OF DEATH BENEFIT OPTION. If you change from Option A to B, we
automatically reduce your policy's face amount by an amount equal to your
policy's account value at the time of the change. We may refuse this change if
the policy's face amount would be reduced below our then current minimum for
new policies. Also, we may require you to provide us with satisfactory
evidence that the insured person remains insurable at the time of this change.
This change may shorten the length of time your death benefit guarantee
remains in effect. See "Death benefit guarantee and specified premiums" above.
If you change from Option B to A, we automatically increase your policy's face
amount by an amount equal to your policy's account value at the time of the
change.
If the alternative death benefit discussed above is in effect at the time of a
change, we will determine the new face amount somewhat differently from the
general procedures described above.
We will not deduct or establish any additional amount of surrender charge,
sales charge or monthly administrative charge as a result of a change in death
benefit option. Please refer to "Tax information" below, to learn about
certain possible income tax consequences that may result from a change in
death benefit option, including the effect of an increase or decrease in face
amount.
YOU CAN INCREASE OR DECREASE YOUR INSURANCE COVERAGE
You may increase the life insurance coverage under your policy by requesting
an increase in your policy's face amount. You can do so any time after the
first year of your policy. You may request a decrease in your policy's face
amount any time after the second year of your policy. The requested increase
or decrease must be at least $10,000. Please refer to "Tax information" for
certain possible tax consequences of changing the face amount.
We can refuse any requested increase or decrease. We will not approve any
increase or decrease if we are at that time being required to waive charges or
pay premiums under any optional disability waiver rider that is part of the
policy. We also will not approve an increase if the insured person has reached
age 81. The following additional conditions also apply:
FACE AMOUNT INCREASES. We treat an increase in face amount in many respects as
if it were the issuance of a new policy. For example, you must submit
satisfactory evidence that the insured person still meets our requirements for
coverage. Also, we establish additional amounts of sales and surrender charges
and specified premium under your policy for the face amount increase; these
amounts are generally the same as they would be if we were issuing the same
amount of additional coverage as a new policy, except as discussed below under
"Effect of face amount changes on certain subsequent charges."
In most states, you can cancel the face amount increase within 10 days after
you receive a new policy page showing the increase. If you cancel, we will
reverse any charges attributable to the increase and recalculate all values
under your policy to what they would have been had the increase not taken
place.
<PAGE>
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POLICY FEATURES AND BENEFITS
The monthly insurance charge we make for the amount of the increase will be
based on the age and other insurance risk characteristics of the insured
person at the time of the increase. If we refuse a requested face amount
increase because the insured person's risk characteristics have become less
favorable, we may issue the additional coverage as a separate Incentive Life
Plus policy with a different insurance risk classification. In that case, we
would waive the monthly administrative charge that otherwise would apply to
that separate policy.
FACE AMOUNT DECREASES. You may not reduce the face amount below the minimum we
are then requiring for new policies. Nor will we permit a decrease that would
cause your policy to fail the Internal Revenue Code's definition of life
insurance. The amounts of your specified premiums, the monthly deductions for
the cost of insurance coverage and any death benefit guarantee charge will
generally decrease from the time you reduce the face amount. See also "Effect
of face amount changes on certain subsequent charges" below.
If you reduce the face amount during the first 15 years of your policy, or
during the first 15 years after a face amount increase you have requested, we
will deduct all or part of the remaining surrender charges from your policy.
Assuming you have not previously changed the face amount, the amount of
surrender charges we will deduct will be determined by dividing the amount of
the decrease by the initial face amount and multiplying that fraction by the
total amount of surrender charges that still remains applicable to your
policy. We deduct the charges from the same investment options as if they were
a part of a regular monthly deduction under your policy.
In some cases, we may have to make a distribution to you from your policy at
the time of the decrease in order to decrease your policy's face amount. This
may be necessary in order to preserve your policy's status as life insurance
under the Internal Revenue Code. We may also be required to make such a
distribution to you in the future, on account of a prior decrease in face
amount.
EFFECT OF FACE AMOUNT CHANGES ON CERTAIN SUBSEQUENT CHARGES
The policy's sales charge and premium surrender charge are calculated as a
percentage of certain premiums you pay. As set forth under "Charges and
expenses you will pay" above, the percentage rate that applies to a particular
premium payment depends on the face amount of the policy. For this purpose we
use the highest face amount that your policy has had at any time prior to the
date the premium is received.
Therefore, if you request an increase in your policy's face amount that is
sufficiently large, it can (1) cause any sales charge for subsequent premiums
to be smaller than it would otherwise be and (2) cause any premium surrender
charge on such subsequent premiums to be larger. Any such changes would apply
to all subsequent premiums and not merely those that, for other purposes, we
attribute to the increase.
The amount of the monthly administrative charge under the policy also depends
on the policy's face amount. See "Charges and expenses you will pay." A face
amount increase that you request after the first two policy years may, if
sufficiently large, result in a decrease in the monthly administrative charge;
and a face amount decrease that you request or that is caused by a partial
withdrawal could result in an increase in that charge.
We will not, however, adjust the monthly administrative charge, sales charge
or premium surrender charge solely as a result of a face amount change that
occurs automatically as a result of a change of death benefit option that you
request.
Our cost of insurance rates also depend on how large the face amount is at the
time we deduct the charge. See "Monthly cost of insurance charge" below. For
this purpose, however, we will take account of all face amount increases and
decreases, whatever their cause. Therefore, any face amount increase may, if
sufficiently large, cause your cost of insurance rates to go down and,
similarly, a decrease in face amount may cause your cost of insurance rates to
go up.
<PAGE>
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POLICY FEATURES AND BENEFITS
OTHER BENEFITS YOU CAN ADD BY RIDER
You may be eligible for the following other optional benefits we currently
make available by rider:
o disability waiver benefits
o term insurance on an additional insured person
o accidental death benefit
o children's term insurance
o option to purchase additional insurance
o yearly renewable and other term insurance on the insured person
o first-to-die term insurance
o designated insured option rider
Equitable Life or your financial professional can provide you with more
information about these riders. The riders provide additional information, and
we will furnish samples of them to you on request. The maximum amount of any
charge we make for a rider will be set forth in the rider or in the policy
itself. We can, however, add, delete, or modify the riders we are making
available, at any time before they become effective as part of your policy.
The designated insured option rider permits you, upon the death of the insured
person, to purchase insurance on the life of a "designated insured person"
without evidence of insurability.
The option to purchase additional insurance rider permits you to purchase
additional coverage on the insured person, without evidence of insurability,
if specified events occur.
Term insurance riders on the insured person allow you to purchase additional
coverage. Choosing coverage under a term insurance rider on the insured person
in lieu of coverage under this Incentive Life Plus policy will reduce your
total charges and increase your account value on a current charge basis. The
more term coverage you elect, the greater will be the amount of the reduction
in charges and increase in account value, on a current charge basis. Also,
term coverage does not have surrender charges. However, if the alternative
death benefit becomes applicable under the Incentive Life Plus policy (see
"Alternative higher death benefit in limited cases" above) or if term
insurance charges increase, the combination coverage may ultimately become
more costly and have lower account values than under the policy alone.
Generally, the greater proportion of term coverage you elect, the greater the
likelihood that the alternative death benefit will apply. There also may be
age restrictions on renewals of term riders. Also, the living benefit rider
discussed below does not apply to any term insurance coverage. The amount of
the specified premium will be affected by the term rider coverage. Your
financial professional can provide further information and policy
illustrations showing how the term riders can affect your policy values under
different assumptions.
If your policy is issued with a yearly renewable term rider on the insured
person ("YRT rider") in any state other than Massachusetts, the duration of
the death benefit guarantee may be shorter than the period shown above under
"Death benefit guarantee and specified premiums." The following table sets
forth the length of time the death benefit guarantee will last if you have
your policy issued with a YRT rider. The death benefit guarantee period
depends on the proportion that the face amount of the YRT rider bears to the
total combined (YRT rider plus base policy) face amount, as determined at
policy issuance. Changes in face amount or deleting or changing the YRT rider
will not affect this period.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
DEATH BENEFIT
% OF YRT FACE GUARANTEE PERIOD IF GUARANTEE PERIOD IF
AMOUNT TO TOTAL ALWAYS DEATH BENEFIT EVER DEATH BENEFIT
COMBINED FACE AMOUNT OPTION A OPTION B
- -------------------------------------------------------------------------
<S> <C> <C>
Less than 25% To age 75 (1) (or 30 To age 75 (or 15
policy years, if policy years, if
longer(2)) longer)
- -------------------------------------------------------------------------
25% to less than 50% To age 65 (or 20 To age 65 (or 15
policy years, if policy years, if
longer) longer)
- -------------------------------------------------------------------------
50% to less than 75% To age 55 (or 10 To age 55 (or 10
policy years, if policy years, if
longer) longer)
- -------------------------------------------------------------------------
75% and greater 3 policy years 3 policy years
- -------------------------------------------------------------------------
</TABLE>
- ---------------------
(1) In this table, ages refer to the age of the insured person.
(2) In no event will the guarantee period extend beyond the policy's
maturity.
<PAGE>
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20
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POLICY FEATURES AND BENEFITS
The first-to-die rider is yearly renewable term insurance that insures two
lives and pays a death benefit upon the first death.
See also "Tax information" below for certain possible tax consequences of
adding or deleting riders.
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.
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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.
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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, WITHDRAWAL AND MATURITY PROCEEDS. You can also
choose to receive all or part of any proceeds from a surrender or withdrawal
from your policy, or upon policy maturity, 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 premiums paid. 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.
VARIATIONS AMONG INCENTIVE LIFE PLUS 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 Incentive Life
Plus where special circumstances result in sales or administrative expenses or
mortality risks that are different from those normally associated with
Incentive Life
<PAGE>
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21
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POLICY FEATURES AND BENEFITS
Plus. 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
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22
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DETERMINING YOUR POLICY'S VALUE
YOUR ACCOUNT VALUE
As set forth above, we deduct certain charges from each premium payment you
make. We credit the rest of each premium payment to your policy's "account
value." You instruct us to allocate your account value to one or more of the
policy's 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, (ii) your amounts in our guaranteed interest option, and (iii) 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) and (iii) above
as our "Guaranteed Interest Account".) These amounts are subject to certain
charges discussed in "Charges and expenses you will pay."
-----------------------------------------------------------------------------
Your account value will be credited with the same returns as are achieved by
the Portfolios (or guaranteed interest option) that you select, but will also
be reduced by the amount of charges we deduct under the policy.
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YOUR POLICY'S VALUE IN OUR VARIABLE INVESTMENT OPTIONS. The 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, withdrawals and surrenders are made from that option. Similarly,
you "purchase" additional units having the same value as the amount of any
premium, loan repayment, or transfer that you allocate to that option.
The value of your units will increase or decrease each day, as though 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" in "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.
YOUR POLICY'S VALUE IN OUR GUARANTEED INTEREST OPTION. Your policy's value in
our guaranteed interest option includes: (i) any amounts you have specifically
requested that we allocate to that option and (ii) any "restricted" amounts
that we hold in that option as a result of your election to receive a living
benefit (these amounts may be referred to in your policy as "liened policy
amounts"). See "Your option to receive a living benefit" below. We credit all
of such amounts with interest at rates we declare. We guarantee that these
rates will not be less than a 4% effective annual rate. The mortality and
expense risk charge mentioned above does not apply to our guaranteed interest
option.
Amounts may be allocated to or removed from your policy's value in our
guaranteed interest option for the same purposes as described above for the
variable investment options. We credit your policy with a number of dollars in
that option that equals any amount that is being allocated to it. Similarly,
if amounts are being removed from your guaranteed interest option for any
reason, we reduce the amount you have credited to that option on a
dollar-for-dollar basis.
<PAGE>
3
TRANSFERRING YOUR MONEY AMONG OUR INVESTMENT OPTIONS
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23
- --------------------------------------------------------------------------------
TRANSFERRING YOUR MONEY AMONG OUR INVESTMENT OPTIONS
TRANSFERS YOU CAN MAKE
- --------------------------------------------------------------------------------
You can transfer among our variable investment options and into our guaranteed
interest option.
- --------------------------------------------------------------------------------
After your policy's Allocation Date, you can transfer amounts from one
investment option to another. The total of all transfers you make on the same
day must be at least $500; except that you may transfer your entire balance in
an investment option, even if it is less than $500. 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).
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Transfers out of our guaranteed interest option are more limited.
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RESTRICTIONS ON TRANSFER OUT OF THE GUARANTEED INTEREST OPTION. We only permit
you to make one transfer out of our guaranteed interest option during each
policy year. (No such limit applies to transfers out of our variable
investment options.) Also, the maximum transfer from our guaranteed interest
option is the greater of (a) 25% of your then current balance in that option,
(b) $500, or (c) the amount (if any) that you transferred out of the
guaranteed interest option during the immediately preceding policy year.
We will not accept a request to transfer out of the guaranteed interest option
unless we receive it within the period beginning 30 days before and ending 60
days after an anniversary of your policy. If we receive the request within
that period, the transfer will occur as of that anniversary or, if later, the
date we receive it.
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
<PAGE>
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24
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TRANSFERRING YOUR MONEY AMONG OUR INVESTMENT OPTIONS
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. Note:
Transfers made using our dollar cost averaging service do not count toward the
twelve free transfers you may otherwise make each year.
This 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.
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
- ----------------
25
- --------------------------------------------------------------------------------
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 amount that we hold
on a "restricted" basis following your receipt of a living benefit payment, as
well as by any other loans (and accrued loan interest) you have outstanding.
See "Your option to receive a living benefit" below. Each new loan you request
must be at least $500.
-----------------------------------------------------------------------------
You can use policy loans to obtain funds from your policy without surrender
charges or, in most cases, paying current income tax. However, the borrowed
amount is no longer credited with the investment results of any of our
investment options under the policy.
-----------------------------------------------------------------------------
When you take a policy loan, we remove an amount equal to the loan from one or
more of your 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 under the same terms and
conditions as apply to amounts supporting our guaranteed interest option, with
several exceptions:
o you cannot make transfers or withdrawals of the collateral;
o we expect to credit different rates of interest to loan collateral than we
credit under our guaranteed interest option;
o we do not count the collateral when we compute any reduction in cost of
insurance charges (described under "Monthly cost of insurance charge"
below); and
o 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 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
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 investment options in proportion to your value in each.
LOAN INTEREST WE CHARGE. The interest we charge on a policy loan accrues daily
at an adjustable interest rate. We determine the rate at the beginning of each
year of your policy, and that rate applies to all policy loans that are
outstanding at any time during the year. The maximum rate is the greater of
(a) 5% or (b) the "Monthly Average Corporate" yield published in Moody's
Corporate Bond Yield Averages for the month that ends two months before the
interest rate is set. (If that average is no longer published, we will use
another average, as the policy provides.) We will notify you of the current
loan interest rate when you apply for a loan, and will notify you in advance
of any rate increase.
Loan interest payments are due on each policy anniversary. If not paid when
due, we automatically add the interest as a new policy loan.
INTEREST THAT WE CREDIT ON LOAN COLLATERAL. Under our current rules, the
annual interest rate we credit on your loan collateral during any of your
policy's first fifteen years will be 1% less than the rate we are then
charging you for policy loan interest, and, beginning in the policy's 16th
year, 1/4% less than the loan interest rate. The rate differentials are not
guaranteed. Accordingly, we have discretion to increase the rate differential
for any period, including under policies that are already outstanding (and may
have outstanding loans). We do guarantee that the annual rate of interest
credited on your loan collateral will never be less than 4% and that the
differential will not exceed 2% (except if tax law changes increase the taxes
we pay on policy loans or loan interest). Because Incentive Life Plus was
first offered only in 1995, no such reduction in the interest rate
differential has yet been attained under any outstanding policy.
We credit interest on your loan collateral daily. On each anniversary of your
policy (or when your policy loans are fully
<PAGE>
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26
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ACCESSING YOUR MONEY
repaid) we contribute that interest to your policy's investment options in the
same proportions as if it were a premium payment.
EFFECTS OF POLICY LOANS. A loan can reduce the length of time that your
insurance remains in force, because the amount we set aside as loan collateral
cannot be used to pay charges as they become due. A loan will also prevent
your policy's death benefit guarantee from keeping the policy in force. We
will deduct any outstanding policy loan plus accrued loan interest from your
policy's proceeds if you do not pay it back. Even if a loan is not taxable
when made, it may later become taxable, for example, upon termination,
surrender or maturity. See "Tax information" below for a discussion of the tax
consequences of policy loans.
PAYING OFF YOUR LOAN. You can repay all or part of your loan at any time. We
normally assume that payments you send us are premium payments. Therefore, you
must submit instructions with your payment indicating that it is a loan
repayment. If you send us more than all of the loan principal and interest you
owe, we will treat the excess as a premium payment.
When you send us a loan repayment, we will transfer an amount equal to such
repayment from your loan collateral back to the investment options under your
policy. First we will restore any amounts that, before being designated as
loan collateral, had been in the guaranteed interest option under your policy.
We will allocate any additional repayments among investment options as you
instruct; or, if you don't instruct us, in the same proportion as if they were
premium payments.
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,
however, and we have discretion to decline any request. If you do not tell us
from which investment options you wish us to take the withdrawal, 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 withdrawal from all of
your 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.
-----------------------------------------------------------------------------
EFFECT OF PARTIAL WITHDRAWALS ON INSURANCE COVERAGE. If the Option A death
benefit is in effect, a partial withdrawal results in a dollar-for-dollar
automatic reduction in the policy's face amount (and, hence, an equal
reduction in the Option A death benefit). We will not permit a partial
withdrawal that would reduce the face amount below our minimum for new policy
issuances at the time, or that would cause the policy to no longer be treated
as life insurance for federal income tax purposes. If death benefit Option B
is in effect, a partial withdrawal also reduces the death benefit on a dollar
for dollar basis, but does not affect the face amount.
The result is different, however, during any time when the alternative death
benefit (discussed above) would be higher than the Option A or B death benefit
you have selected. In that case, a partial withdrawal will cause the death
benefit to decrease by more than the amount of the withdrawal. Please also
remember that a partial withdrawal reduces the amount of your premium payments
that count toward maintaining the policy's death benefit guarantee. Regardless
of whether it reduces the face amount, a partial withdrawal you request does
not result in any change in, or deduction of, any sales or surrender charges.
You should refer to "Tax information" below, for information about possible
tax consequences of partial withdrawals and any associated reduction in policy
benefits.
SURRENDERING YOUR POLICY FOR ITS NET CASH SURRENDER VALUE
You can 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, minus any amount of your
account
<PAGE>
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27
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ACCESSING YOUR MONEY
value that is "restricted" as a result of previously distributed "living
benefits," and minus any surrender charges that then remain applicable. The
surrender charges are described in "Charges and expenses you will pay" above.
Please refer to "Tax information" below for the possible tax consequences of
surrendering your policy.
WHEN THE INSURED PERSON REACHES AGE 100 ("MATURITY")
If the insured person is still living on the policy anniversary closest to his
or her 100th birthday, we will pay you the policy's account value on that
date, reduced by any outstanding loans, by unpaid loan interest, and by any
amounts of the account value that are "restricted" as a result of previously
distributed "living benefits." The policy will then terminate. See "Tax
information" below for the tax consequences of maturity.
YOUR OPTION TO RECEIVE A LIVING BENEFIT
Subject to our insurance underwriting guidelines and availability in your
state, your policy will automatically include our living benefit rider. This
feature enables you to receive a portion (generally 75%) of the policy's death
benefit (excluding death benefits payable under certain other policy riders),
if the insured person has a terminal illness (as defined in the rider). We
make no additional charge for the rider, but we will deduct a one-time
administrative charge of up to $250 from any living benefit we pay.
If you tell us that you do not wish to have the living benefit rider added at
issue, but you later ask to add it, there will be a $100 administrative
charge. Also, we will need to evaluate the insurance risk at that time, and we
may decline to issue the rider.
If you receive a living benefit, the remaining benefits under your policy will
be affected. We will deduct the amount of any living benefit we have paid,
plus interest (as specified in the rider), from the death benefit proceeds
that become payable under the policy when the insured person dies.
When we pay a living benefit we automatically transfer a pro rata portion of
your policy's net cash surrender value to the policy's guaranteed interest
option. This amount, together with the interest you earn thereon, will be
"restricted" - that is, it will not be available for any loans, transfers or
partial withdrawals that you may wish to make. We will deduct these restricted
amounts from any subsequent surrender or maturity proceeds that we pay. (In
your policy, we refer to this as a "lien" we establish against your policy.)
The receipt of a living benefit payment may qualify for exclusion from income
tax. See "Tax information" below. Receipt of a living benefit payment may
affect your eligibility for certain government benefits or entitlements.
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You can arrange to receive a "living benefit" if the insured person becomes
terminally ill.
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<PAGE>
5
TAX INFORMATION
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28
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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 Incentive Life Plus 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 STATUS. Your policy will be a
"modified endowment contract" if, at any time during the first seven years of
your policy, you have paid a cumulative amount of premiums that exceeds the
cumulative seven-pay limit. The cumulative seven-pay limit is the amount of
premiums that you would have paid by that time under a similar fixed-benefit
insurance policy that was designed (based on certain assumptions mandated
under the Code) to provide for paid up future benefits after the payment of
seven equal annual premiums. ("Paid up" means that no future premiums would be
required.) This is called the "seven-pay" test.
Whenever there is a "material change" under a policy, the policy will
generally be (a) treated as a new contract for purposes of determining whether
the policy is a modified endowment contract and (b) subjected to a new
seven-pay period and a new seven-pay limit. The new seven-pay limit would be
determined taking into account, under a prescribed formula, the account value
of the policy at the time of such change. A materially changed policy would be
considered a modified endowment contract if it failed to satisfy the new
seven-pay limit at any time during the new seven-pay period. A "material
change" for these purposes could occur as a result of a change in death
benefit option, the selection of additional rider benefits, an increase in
your policy's face amount, or certain other changes.
If your policy's benefits are reduced during its first seven years (or within
seven years after a material change), the seven-pay limit will be redetermined
based on the reduced level of benefits and applied retroactively for purposes
of the seven-pay test. (Such a reduction in benefits could include, for
example, a requested decrease in face amount, the termination of additional
benefits under a rider or, in some cases, a partial withdrawal.) If the
premiums previously paid are greater than the recalculated (lower) seven-pay
limit, the policy will become a modified endowment contract.
A life insurance policy that you receive in exchange for a modified endowment
contract will also be considered a modified endowment contract.
In addition to the above premium limits for testing for modified endowment
status, there are overall limits on the amount of premiums you may pay under
your policy in order
<PAGE>
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29
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TAX INFORMATION
for it to qualify as life insurance. Changes made to your policy, for example,
a decrease in face amount (including any decrease that may occur as a result
of a partial withdrawal) or other decrease in benefits may impact the maximum
amount of premiums that can be paid as well as the maximum amount of account
value that may be maintained under the policy. In some cases, this may cause
us to take current or future action in order to assure that your policy
continues to qualify as life insurance, including distribution of amounts to
you that may be includable as income. See "Changes we can make" below.
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 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 premiums you have paid, less the amount of any previous distributions from
your policy that were not taxable.) During the first 15 years, however, the
proceeds from a partial withdrawal could be subject to federal income tax,
under a complex formula, to the extent that your account value exceeds your
basis.
On the maturity date or 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.
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 this
purpose include a loan (including any increase in the loan amount to pay
interest on an existing loan or an assignment or a pledge to secure a loan) or
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 is similar to the basis described above for
other policies, except that it 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 (excluding certain qualified plans) 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.
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 such) and
could be subject to tax, including the 10% penalty tax, as described above. In
addition, on the maturity date and upon a full surrender, any excess of the
proceeds we pay (including any amounts we use to
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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.
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 in the four preceding paragraphs. 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.
TAX TREATMENT OF LIVING BENEFIT PROCEEDS
Amounts received under an insurance policy on the life of an individual who is
terminally ill, as defined by the tax law, are generally excludable from the
payee's gross income. We believe that the benefits provided under our living
benefit rider meet the tax law's definition of terminally ill and can qualify
for this income tax exclusion. This exclusion does not apply to amounts paid
to someone other than the insured person, however, if the payee has an
insurable interest in the insured person's life only because the insured
person is a director, officer or employee of the payee or by reason of the
insured person being financially interested in any trade or business carried
on by the payee.
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 face amount that you request, 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
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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 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.
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 advisor for specific
information, especially where benefits are passing to younger generations.
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
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incurred; for example, a charge to the separate account for income taxes
incurred by us that are allocable to the policies.
We may have to pay state, local or other taxes (in addition to applicable
taxes based on premiums). At present, these taxes are not substantial. If they
increase, charges may be made for such taxes when they are attributable to our
separate account or 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 not a 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 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 change of interpretation. Any changes in federal, state, local or
foreign tax law or interpretations could have a retroactive effect both on our
taxes and on 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. Premiums or loan payments 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 accept third-party checks
payable to someone other than Equitable Life and endorsed over to Equitable
Life only (1) as a direct payment from a qualified retirement plan or (2) if
it is made out to a trustee who owns the policy and endorses the entire check
(without any refund) as a payment to the policy.
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.
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, withdrawal 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. Further, 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. 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.
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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 YOU MAKE. The following are reflected in your policy as of the date
we receive them:
o premium payments received after the policy's investment start date
(discussed below)
o loan repayments and interest payments
REQUESTS YOU MAKE. The following transactions occur as
of the date we receive your request:
o withdrawals
o tax withholding elections
o face amount decreases that result from a withdrawal
o changes of allocation percentages for premium payments or monthly
deductions
o surrenders
o changes of beneficiary
o transfers from a variable investment option to the guaranteed interest
option
o changes in form of death benefit payment
o loans
o transfers among variable investment options
o assignments
The following transactions occur on your policy's next monthly anniversary
that coincides with or follows the date we approve your request:
o changes in face amount
o changes of insured person
o changes in death benefit option
o restoration of lapsed policies
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 before 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.
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
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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 surrender or partial
withdrawal request after the insured person has died. Also, all insurance
coverage ends on the date as of which we process any request for a 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.
o If you submit the full initial premium to your financial professional at
the time you sign the application, and we issue the policy as it was
applied for, then the register date will be the later of (a) the date you
signed part I of the policy application or (b) the date a medical
professional signed part II of the policy application.
o If we do not receive your full initial premium at our Administrative Office
before the issue date or, if we issue the policy on a different basis than
you applied for, the register date will 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.
We may also permit an earlier than customary register date (a) for
employer-sponsored cases, to accommodate a common register date for all
employees or (b) to provide a younger age at issue. (A younger age at issue
reduces the monthly charges that we deduct under a policy.) The charges and
deductions commence as of the register date, even when we have permitted an
early register date. We may also permit policyowners to delay a register date
(up to three months) in employer-sponsored cases.
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). Generally, this is the register date, or, if later, the date we receive
your full initial premium at our Administrative Office.
COMMENCEMENT OF INSURANCE COVERAGE. You must give the full initial premium to
your financial professional on or before the day 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 payment and delivery are completed and
(2) the information in the application continues to be true and complete,
without material change, as of the time of such payment. If you submit the
full initial 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, 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 to 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 to be the same for males and females. In
addition, employers and employee organizations should consider, in
consultation with counsel, the impact of Title VII of the Civil Rights Act of
1964 on the purchase of Incentive Life Plus in connection with an
employment-related insurance or benefit plan. In a 1983 decision, the United
States Supreme Court held that,
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under Title VII, optional annuity benefits under a deferred compensation plan
could not vary on the basis of sex.
There will be no distinctions based on sex in the cost of insurance rates for
Incentive Life Plus policies sold in Montana. We will also make such
gender-neutral policies available on request in connection with certain
employee benefit plans. Cost of insurance rates applicable to a gender-neutral
policy will not be greater than the comparable male rates under a gender
specific Incentive Life Plus 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 Incentive Life Plus
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 Incentive Life Plus invests solely in either class IA or IB shares
issued by the corresponding Portfolio. For each "Alliance" Portfolio (other
than EQ/Alliance Premier Growth and EQ/Alliance Technology), these are class
IA shares; and for all other Portfolios these are class IB shares. 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 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
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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 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 Incentive Life Plus policies and, more specifically, the guaranteed
interest option). 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).
Because of applicable exemptions and exclusions, we have not registered
interests in the general account under the Securities Act of 1933 or
registered the general account as an investment company with the SEC.
Accordingly, neither the general account, the guaranteed interest option, nor
any interests therein, are subject to regulation under those acts. The staff
of the SEC has not reviewed the portions of this prospectus that relate to the
general account and the guaranteed interest option. The disclosure, however,
may be subject to certain provisions of the federal securities law relating to
the accuracy and completeness of statements made in prospectuses.
We declare the rate of interest for each year of your policy at the beginning
of that year, but it will not be less than 4%. We credit and compound the
interest daily at an effective annual rate that equals the declared rate for
the year. The rates we are at any time declaring on outstanding policies may
differ from the rates we are then declaring for newly issued policies.
YOU CAN CHANGE YOUR POLICY'S INSURED PERSON
After the policy's second year, we will permit you to request that a new
insured person replace the existing one. This requires that you provide us
with adequate evidence that the proposed new insured person meets our
requirements for insurance. Other requirements are outlined in your policy.
Upon making this change, the monthly insurance charges we deduct and
prospective specified premiums will be based on the new insured person's
insurance risk characteristics. The change of insured person will not,
however, affect the surrender charge computation for the amount of coverage
that is then in force.
Substituting the insured person is a taxable event and may, depending upon
individual circumstances, have other tax consequences as well. For example,
the change could cause the policy to be a "modified endowment contract" or to
fail the Internal Revenue Code's definition of "life insurance," unless we
also distribute certain amounts to you from the policy. See "Tax information"
above. You should consult your tax advisor prior to substituting the insured
person. As a condition to substituting the insured person we may require you
to sign a form acknowledging the potential tax consequences. In no event,
however, will we permit a change that causes your policy to fail the
definition of life insurance.
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 the request does not comply with our transfer limitations, or
where you request transfer of an amount greater than that currently allocated
to an investment option.
Similarly, 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 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
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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 address
o changes of premium allocation percentages (anticipated to be available
through EQAccess by the end of 2000)
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 confirmation letter by first class mail.
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 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 transactions 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
CHARGE FOR TAXES. This charge is designed to approximate certain taxes imposed
upon us, such as premium taxes in your state. This charge may be increased or
decreased to
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reflect any changes in our taxes. In addition, if an insured person changes
his or her residence, you should notify us to change our records so that the
charge will reflect the new jurisdiction. Any change will take effect on the
next policy anniversary, if received at least 60 days prior to the policy
anniversary. You cannot deduct our charge to you as state or local taxes on
your federal income tax return.
SALES CHARGE. Currently, we deduct the sales charge from each premium payment
you make, until the cumulative premiums you have paid equal ten times the
"sales load target premium." The sales load target premium is actuarially
determined for each policy, based on that policy's particular characteristics,
and is generally less than or equal to 75% of the annual premium you would
have to pay for a comparable whole life policy, calculated at 4% interest and
guaranteed maximum cost of insurance and expense charges. The sales load
target premium is different from the "target premium" used to determine the
premium surrender charge. We reserve the right, however, to deduct the sales
charge from every premium payment.
MONTHLY COST OF INSURANCE CHARGE. The monthly cost of insurance charge is
determined by multiplying the cost of insurance rate that is then applicable
to your policy by the amount we have at risk under your policy. 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 (not including any term rider coverage on the
insured person) and (b) the then total account value under the policy. A
greater amount at risk, or a higher cost of insurance rate, will result in a
higher monthly charge.
As a general rule, the cost of insurance rate increases each year that you own
your policy. This happens automatically because of the insured person's
increasing age. However, for policies that have been outstanding for more than
nine years, we reduce the current monthly insurance charge (or, for New York
policies, the mortality and expense risk charge). The dollar amount by which
we reduce each month's charge is a percentage of the total amount you then
have in our investment options (not including any value we are holding as
collateral for any policy loans). The percentage reduction begins at an annual
rate of .05% for the policy's tenth year and increases gradually in each
subsequent year, until it is equal to an annual rate of .65% in the 25th and
all subsequent years. These charge reductions are not guaranteed, however.
Because Incentive Life Plus was first offered only in 1995, no such reduction
has yet been attained under any outstanding policy.
Our cost of insurance rates are guaranteed not to exceed those that will be
specified in your policy. For most insured persons at most ages, our current
rates are lower than those maximums. Therefore, we have the ability to raise
these rates (including by reducing or eliminating the current monthly charge
reduction that otherwise would begin in the tenth year) up to the guaranteed
maximum at any time. The guaranteed maximum cost of insurance rates for gender
neutral Incentive Life Plus policies are based on the 1980 Commissioner's
Standard Ordinary SB Smoker and NB Non-Smoker Mortality Table. For all other
policies, the guaranteed maximum cost of insurance rates are based on the 1980
Commissioner's Standard Ordinary Male and Female Smoker and Non-Smoker
Mortality Tables.
Our cost of insurance rates will generally be lower (except in Montana and in
connection with certain employee benefit plans) if the insured person is a
female than if a male. They also will generally be lower for non-tobacco users
than tobacco users and lower for persons that have other favorable health
characteristics, as compared to those that do not. On the other hand, insured
persons who present particular health, occupational or avocational risks may
be charged higher cost of insurance rates and other additional charges as
specified in their policies.
In addition, the current rates also vary depending on the duration of the
policy (i.e., the length of time since the policy was issued).
We offer lower rates for non-tobacco users only if they are at least age 20.
You may ask us to review a younger insured person's tobacco habits following
the policy anniversary on which such person is age 20.
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Our current cost of insurance rates are generally highest if your policy's
face amount at the time of the charge is less than $100,000 and lowest if your
face amount is $200,000 or more.
DEATH BENEFIT GUARANTEE CHARGE. We deduct this charge even if you do not
currently pay enough premiums to satisfy the death benefit guarantee test. See
"Death benefit guarantee test" above. We will not deduct this charge in states
where the death benefit guarantee is not available.
DATE OF MONTHLY DEDUCTIONS. We make the regular monthly deductions as of the
first day of each month of the policy.
SURRENDER CHARGES. If you surrender your policy during its first 15 years, we
deduct from your account value a "premium surrender charge." Additionally, if
you surrender your policy during its first eight years, we deduct an
"administrative surrender charge." In this prospectus, we use the term
"surrender charges" to refer to both types of charges.
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., the administrative charge, cost of
insurance 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
premium 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. Similarly, the
sales charge is designed primarily to defray sales expenses we incur that are
based on premium payments.
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 (and certain rider benefits), as
described in the policy (or rider).
WHEN WE PAY POLICY PROCEEDS
GENERAL. We will generally pay any death benefit, surrender, withdrawal, or
loan within seven days after we receive the request and any other required
items. We pay maturity proceeds within seven days after the maturity date.
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 GUARANTEED INTEREST OPTION PROCEEDS. We also have the right to defer
payment or transfers of amounts out of our guaranteed interest option for up
to six months. If we delay more than 30 days in paying you such amounts, we
will pay interest of at least 3% per year from the date we receive your
request.
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;
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(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 or any rider 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 or rider. 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 Incentive Life Plus from one 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 advisors 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
investment option, you may do so.
We may make any changes in the policy or its riders, require additional
premium payments, or make distributions from the policy to the extent we deem
necessary to ensure that your policy qualifies or continues to 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.
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 the Separate Account, nor would any of these
proceedings be likely to have a material adverse effect upon
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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 insurance risk characteristics of the insured
person under your policy and such factors as the face amount, death benefit
option, premium payment amounts, 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 Incentive Life Plus 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 Incentive Life Plus) and
variable annuity contracts through AXA Advisors, LLC ("AXA Advisors"), the
successor to EQ Financial Consultants, Inc. and an affiliate of Equitable
Life. The Investment Company Act of 1940, therefore, classifies AXA Advisors
as the "principal underwriter" of those policies and contracts. AXA Advisors
also serves as a principal underwriter of EQ Advisors Trust and, prior to
September 1999, AXA Advisors' predecessor was the manager of EQ Advisors
Trust. AXA Advisors' address is 1290 Avenue of the Americas, New York, NY
10104. AXA Advisors is registered with the SEC as a broker-dealer and is a
member of the National Association of Securities Dealers, Inc. In 1998 and
1999, AXA Advisors was paid a fee of $325,380, annually, for its services as
principal underwriter of our policies.
We sell Incentive Life Plus through financial professionals who are licensed
insurance agents and are also registered representatives of AXA Advisors. The
financial professional who sells you this policy receives sales commissions
from Equitable Life. The commissions don't cost you anything above the charges
and expenses already discussed elsewhere in this prospectus. Generally, the
agents will receive maximum commissions of: 50% of the premiums you pay in
your policy's first year up to a certain amount, plus 6% of the premiums you
pay in the second through the tenth years up to a certain amount, plus 3% of
all other premiums you pay in any year. We pay comparable commissions on the
amount of premiums you pay that we deem attributable to any face amount
increase that you request. The agent may be required to return to us any
commissions on premiums that we have refunded to a policyowner. Use of a term
rider on the insured person instead of an equal amount of coverage under the
base policy generally reduces commissions.
We also sell the policies through financial professionals who are licensed
independent insurance brokers and are also registered representatives either
of AXA Advisors or of another SEC registered broker-dealer. The commissions
for independent brokers will be no more than those for agents. The commissions
will be paid through the registered broker-dealer and may be subject to our
above-noted return policy if premiums are refunded.
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
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we are financially sound. Such regulation, however, does not guarantee or
provide absolute assurance of our soundness.
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DIRECTORS AND PRINCIPAL OFFICERS
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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
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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 January
New York, NY 10020 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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DIRECTORS (CONTINUED)
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<S> <C>
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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DONALD J. GREENE
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LeBouef, Lamb, Greene & MacRae, L.L.P. Director of Equitable Life (since July 1991). Of Counsel, LeBoeuf, Lamb, Greene &
125 West 55th Street MacRae, L.L.P. (since 1999). Prior thereto, Partner of the firm (1965 to 1999).
New York, NY 10019-4513 Director of AXA Financial (since May 1992).
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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 July
535 Madison Avenue 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 Company,
Toronto, Ontario M5H 3T9 and AXA Pacific Insurance Company, and Alternate Director, AXA Asia Pacific
Canada 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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DIRECTORS (CONTINUED)
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<S> <C>
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 February
75008 Paris, France 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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OFFICERS - DIRECTORS
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<S> <C>
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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OTHER OFFICERS
<TABLE>
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<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
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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).
- ----------------------------------------------------------------------------------------------------------------------------
HARVEY BLITZ
- ----------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------
KEVIN R. BYRNE
- ----------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------
JOHN A. CAROSELLI
- ----------------------------------------------------------------------------------------------------------------------------
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).
- ----------------------------------------------------------------------------------------------------------------------------
JUDY A. FAUCETT
- ----------------------------------------------------------------------------------------------------------------------------
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).
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- ----------------
50
- --------------------------------------------------------------------------------
DIRECTORS AND PRINCIPAL OFFICERS
OTHER OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS ADDRESS BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ALVIN H. FENICHEL
- ----------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------
PAUL J. FLORA
- ----------------------------------------------------------------------------------------------------------------------------
Senior Vice President and Auditor, Equitable Life. Vice President and Auditor, AXA
Financial.
- ----------------------------------------------------------------------------------------------------------------------------
ROBERT E. GARBER
- ----------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------
DONALD R. KAPLAN
- ----------------------------------------------------------------------------------------------------------------------------
Senior Vice President (since September 1999), Chief Compliance Officer and
Associate General Counsel, Equitable Life. Previously held other officerships with
Equitable Life.
- ----------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------
RICHARD J. MATTEIS
- ----------------------------------------------------------------------------------------------------------------------------
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).
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- ----------------
51
- --------------------------------------------------------------------------------
DIRECTORS AND PRINCIPAL OFFICERS
OTHER OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
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).
- ----------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------
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>
- ----------------
52
- --------------------------------------------------------------------------------
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
- ----------------
53
- --------------------------------------------------------------------------------
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
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>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
INDEX TO FINANCIAL STATEMENTS
<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-15
Notes to Financial Statements...................................................................... FSA-24
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants..................................................................... F-1
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 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, 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
+ Formerly known as Equitable Variable Life Insurance Company Separate Account FP.
</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 Intermediate Government Securities, Alliance Money
Market, Alliance Quality Bond, Alliance High Yield, Alliance Common Stock,
Alliance Equity Index, Alliance Growth & Income, 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, T. Rowe Price Equity Income, Alliance Global, Alliance International,
Morgan Stanley Emerging Markets Equity, T. Rowe Price International Stock,
Alliance Aggressive Stock, Alliance Small Cap Growth, EQ/Evergreen, MFS Emerging
Growth Companies, Warburg Pincus Small Company Value, Alliance Balanced,
Alliance Conservative Investors, Alliance Growth Investors, EQ/Evergreen
Foundation, EQ/Putnam Balanced and Merrill Lynch World Strategy ("EQ Advisors
Trust Variable Investment Options"), 30 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>
FIXED INCOME OPTIONS: EQUITY OPTIONS:
------------------------------------------------------ ----------------------------
ALLIANCE
INTERMEDIATE ALLIANCE ALLIANCE ALLIANCE
GOVERNMENT MONEY ALLIANCE HIGH COMMON ALLIANCE
SECURITIES MARKET QUALITY BOND YIELD STOCK EQUITY INDEX
------------ ------------ ------------ ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 80,139,159................. $78,746,672
342,765,909................. $344,082,723
246,885,528................. $233,631,434
177,773,173................. $149,030,820
3,081,451,600................. $3,783,859,850
621,830,916................. $850,584,523
205,101,089.................
46,147,852.................
182,262.................
494,512.................
38,508,013.................
391,533.................
Receivable for Trust shares sold.......... 58,836 -- -- 5,046 -- --
Receivable for policy-related
transactions.......................... 68,831 4,909,455 434,709 798,616 15,840,922 2,266,891
----------- ------------ ------------ ------------ -------------- ------------
Total Assets.............................. $78,874,339 $348,992,178 $234,066,143 $149,834,482 $3,799,700,772 $852,851,414
----------- ------------ ------------ ------------ -------------- ------------
LIABILITIES
Payable for Trust shares purchased........ $ -- $ 4,563,801 $ 161,711 $ -- $ 19,831,580 $ 2,546,878
Payable for policy-related
transactions.......................... -- -- -- -- -- --
----------- ------------ ------------ ------------ -------------- ------------
Total Liabilities......................... -- 4,563,801 161,711 -- 19,831,580 2,546,878
----------- ------------ ------------ ------------ -------------- ------------
NET ASSETS................................ $78,874,339 $344,428,377 $233,904,432 $149,834,482 $3,779,869,192 $850,304,536
=========== ============ ============ ============ ============== ============
Amount retained by Equitable Life
in Separate Account FP (Note 4)....... $ 945,030 $ 16,198 $ 1,326,200 $ 1,280 $ 80,914 $ 121,396
Net Assets Attributable
to Contractowners..................... 77,929,309 344,412,179 232,578,232 149,833,202 3,779,788,278 850,183,140
----------- ------------ ------------ ------------ -------------- ------------
NET ASSETS................................ $78,874,339 $344,428,377 $233,904,432 $149,834,482 $3,779,869,192 $850,304,536
=========== ============ ============ ============ ============== ============
<CAPTION>
EQUITY OPTIONS:
--------------------------------------------------------------------
EQ/ CAPITAL MERRILL MFS
ALLIANCE ALLIANCE CAPITAL GUARDIAN LYNCH GROWTH
GROWTH PREMIER GUARDIAN U.S. BASIC VALUE WITH
& INCOME GROWTH RESEARCH EQUITY EQUITY INCOME
----------- ----------- -------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 80,139,159.................
342,765,909.................
246,885,528.................
177,773,173.................
3,081,451,600.................
621,830,916.................
205,101,089................. $232,271,328
46,147,852................. $51,216,559
182,262................. $193,355
494,512................. $511,837
38,508,013................. $39,778,636
391,533................. $412,169
Receivable for Trust shares sold.......... 160,367 -- -- -- -- --
Receivable for policy-related
transactions.......................... -- 283,944 24,204 -- 23,002 8,035
------------ ----------- -------- -------- ----------- --------
Total Assets.............................. $232,431,695 $51,500,503 $217,559 $511,837 $39,801,638 $420,204
------------ ----------- -------- -------- ----------- --------
LIABILITIES
Payable for Trust shares purchased........ $ -- $ 283,146 $ 24,204 $ -- $ 11,329 $ 4,490
Payable for policy-related
transactions.......................... 112,046 -- -- -- -- --
------------ ----------- -------- -------- ----------- --------
Total Liabilities......................... 112,046 283,146 24,204 -- 11,329 4,490
------------ ----------- -------- -------- ----------- --------
NET ASSETS................................ $232,319,649 $51,217,357 $193,355 $511,837 $39,790,309 $415,714
============ =========== ======== ======== =========== ========
Amount retained by Equitable Life
in Separate Account FP (Note 4)....... $ 434,457 $ 3,545 $ 219 $ 387 $ 81,800 $ 3,570
Net Assets Attributable
to Contractowners..................... 231,885,192 51,213,812 193,136 511,450 39,708,509 412,144
------------ ----------- -------- -------- ----------- --------
NET ASSETS................................ $232,319,649 $51,217,357 $193,355 $511,837 $39,790,309 $415,714
============ =========== ======== ======== =========== ========
</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>
EQUITY OPTIONS (CONCLUDED):
-----------------------------------------------------------------------------
MORGAN
EQ/PUTNAM T. ROWE STANLEY
GROWTH & PRICE EMERGING
MFS INCOME EQUITY ALLIANCE ALLIANCE MARKETS
RESEARCH VALUE INCOME GLOBAL INTERNATIONAL EQUITY
----------- ----------- ----------- ------------ ------------- -----------
<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
54,114,065..................... $53,161,413
552,424,363..................... $724,986,725
51,584,951..................... $76,876,125
29,914,338..................... $40,958,925
43,913,498.....................
892,630,699.....................
46,097,819.....................
27,230.....................
160,950,031.....................
38,188,722.....................
Receivable for Trust shares sold.............. 252,705 -- -- -- -- --
Receivable for policy-related
transactions.............................. -- 82,740 194,627 1,126,946 92,708 82,278
----------- ----------- ----------- ------------ ----------- -----------
Total Assets.................................. $48,850,291 $21,863,477 $53,356,040 $726,113,671 $76,968,833 $41,041,203
----------- ----------- ----------- ------------ ----------- -----------
LIABILITIES
Payable for Trust shares purchased............ $ -- $ 69,698 $ 154,373 $ 1,211,437 $ 87,078 $ 350,654
Payable for policy-related
transactions.............................. 212,939 -- -- -- -- --
----------- ----------- ----------- ------------ ----------- -----------
Total Liabilities............................. 212,939 69,698 154,373 1,211,437 87,078 350,654
----------- ----------- ----------- ------------ ----------- -----------
NET ASSETS................................... $48,637,352 $21,793,779 $53,201,667 $724,902,234 $76,881,755 $40,690,549
=========== =========== =========== ============ =========== ===========
Amount retained by Equitable Life
in Separate Account FP (Note 4)........... $ 142,291 $ 69,602 $ 126,030 $ 3,388 $ 964,072 $ 1,767,601
Net Assets Attributable
to Policyowners........................... 48,495,061 21,724,177 53,075,637 724,898,846 75,917,683 38,922,948
----------- ----------- ----------- ------------ ----------- -----------
NET ASSETS.................................... $48,637,352 $21,793,779 $53,201,667 $724,902,234 $76,881,755 $40,690,549
=========== =========== =========== ============ =========== ===========
<CAPTION>
EQUITY OPTIONS (CONCLUDED):
----------------------------------------------------------------------------
WARBURG
T. ROWE MFS PINCUS
PRICE ALLIANCE ALLIANCE EMERGING SMALL
INTERNATIONAL AGGRESSIVE SMALL CAP EQ/ GROWTH COMPANY
STOCK STOCK GROWTH EVERGREEN COMPANIES VALUE
------------- -------------- ----------- --------- ------------ -----------
<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.....................
23,253,533.....................
54,114,065.....................
552,424,363.....................
51,584,951.....................
29,914,338.....................
43,913,498..................... $53,258,879
892,630,699..................... $1,051,440,590
46,097,819..................... $70,174,096
27,230..................... $28,680
160,950,031..................... $238,027,993
38,188,722..................... $35,893,840
Receivable for Trust shares sold.............. -- 2,154,914 22,666,998 -- -- 71,466
Receivable for policy-related
transactions.............................. 57,539 -- -- -- 1,271,988 --
----------- -------------- ----------- ------- ------------ -----------
Total Assets.................................. $53,316,418 $1,053,595,504 $92,841,094 $28,680 $239,299,981 $35,965,306
----------- -------------- ----------- ------- ------------ -----------
LIABILITIES
Payable for Trust shares purchased............ $ 2,392 $ -- $ -- $ -- $ 1,116,940 $ --
Payable for policy-related
transactions.............................. -- 1,550,441 22,460,673 -- -- 17,093
----------- -------------- ----------- ------- ------------ -----------
Total Liabilities............................. 2,392 1,550,441 22,460,673 -- 1,116,940 17,093
----------- -------------- ----------- ------- ------------ -----------
NET ASSETS................................... $53,314,026 $1,052,045,063 $70,380,421 $28,680 $238,183,041 $35,948,213
=========== ============== =========== ======= ============ ===========
Amount retained by Equitable Life
in Separate Account FP (Note 4)........... $ 178,040 $ 3,855 $ 527,774 $ 18 $ 386,768 $ 164,967
Net Assets Attributable
to Policyowners........................... 53,135,986 1,052,041,208 69,852,647 28,662 237,796,273 35,783,246
----------- -------------- ----------- ------- ------------ -----------
NET ASSETS.................................... $53,314,026 $1,052,045,063 $70,380,421 $28,680 $238,183,041 $35,948,213
=========== ============== =========== ======= ============ ===========
</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>
ASSET ALLOCATION OPTIONS:
------------------------------------------------------------------------------------
MERRILL
ALLIANCE ALLIANCE EQ/ EQ/ LYNCH
ALLIANCE CONSERVATIVE GROWTH EVERGREEN PUTNAM WORLD
BALANCED INVESTORS INVESTORS FOUNDATION BALANCED STRATEGY
------------ ------------ -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $453,630,311..................... $546,866,262
194,380,806..................... $217,969,178
928,527,892..................... $1,216,541,911
2,749..................... $ 2,848
8,911,255..................... $8,418,996
4,518,718..................... $5,372,189
Receivable for Trust shares sold.............. -- 15,822 -- -- -- --
Receivable for policy-related
transactions.............................. -- 115,963 703,914 -- 16,607 1,267
------------ ------------ -------------- ------- ---------- ----------
Total Assets.................................. $546,866,262 $218,100,963 $1,217,245,825 $ 2,848 $8,435,603 $5,373,456
------------ ------------ -------------- ------- ---------- ----------
LIABILITIES
Payable for Trust shares purchased............ $ 31,321 $ -- $ 353,476 $ -- $ 4,500 $ 1,232
Payable for policy-related
transactions.............................. 123,383 -- -- -- -- --
------------ ------------ -------------- ------- ---------- ----------
Total Liabilities............................. 154,704 -- 353,476 -- 4,500 1,232
------------ ------------ -------------- ------- ---------- ----------
NET ASSETS.................................... $546,711,558 $218,100,963 $1,216,892,349 $ 2,848 $8,431,103 $5,372,224
============ ============ ============== ======= ========== ==========
Amount retained by Equitable Life
in Separate Account FP (Note 4)........... $ 1,088,939 $ 521,116 $ 924,554 $ 2 $ 70,099 $ 494,770
Net Assets Attributable
to Contractowners......................... 545,622,619 217,579,847 1,215,967,795 2,846 8,361,004 4,877,454
------------ ------------ -------------- ------- ---------- ----------
NET ASSETS.................................... $546,711,558 $218,100,963 $1,216,892,349 $ 2,848 $8,431,103 $5,372,224
============ ============ ============== ======= ========== ==========
</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>
FIXED INCOME OPTIONS:
-------------------------------------------------------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES ALLIANCE MONEY MARKET
---------------------------------- ------------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 4,049,521 $3,477,938 $2,914,613 $13,943,193 $10,719,684 $9,754,675
Expenses (Note 3):
Mortality and expense
risk charges..................... 378,916 350,536 282,422 1,613,234 1,204,220 1,101,168
----------- ---------- ---------- ----------- ----------- ----------
NET INVESTMENT INCOME..................... 3,670,605 3,127,402 2,632,191 12,329,959 9,515,464 8,653,507
----------- ---------- ---------- ----------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (194,507) 60,260 (95,509) 517,935 (161,314) (513,800)
Realized gain distribution
from the Trust................... -- -- -- 10,344 7,750 13,435
----------- ---------- ---------- ----------- ----------- ----------
NET REALIZED GAIN (LOSS).................. (194,507) 60,260 (95,509) 528,279 (153,564) (500,365)
----------- ---------- ---------- ----------- ----------- ----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............... 2,391,062 868,053 (141,479) 1,536,450 804,349 24,023
End of period..................... (1,392,487) 2,391,062 868,053 1,316,815 1,536,450 804,349
----------- ---------- ---------- ----------- ----------- ----------
Change in unrealized appreciation
(depreciation) during the period..... (3,783,549) 1,523,009 1,009,532 (219,635) 732,101 780,326
----------- ---------- ---------- ----------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ (3,978,056) 1,583,269 914,023 308,644 578,537 279,961
----------- ---------- ---------- ----------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ (307,451) $4,710,671 $3,546,214 $12,638,603 $10,094,001 $8,933,468
=========== ========== ========== =========== =========== ==========
<CAPTION>
FIXED INCOME OPTIONS:
----------------------------------------
ALLIANCE QUALITY BOND
---------------------------------------
1999 1998 1997
------------ ----------- -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 12,542,857 $10,317,238 $ 8,869,740
Expenses (Note 3):
Mortality and expense
risk charges..................... 1,329,147 1,106,136 845,069
------------ ----------- -----------
NET INVESTMENT INCOME..................... 11,213,710 9,211,102 8,024,671
------------ ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (1,493,664) 34,937 (504,580)
Realized gain distribution
from the Trust................... 870,458 4,596,907 --
------------ ----------- -----------
NET REALIZED GAIN (LOSS).................. (623,206) 4,631,844 (504,580)
------------ ----------- -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............... 3,367,697 2,395,718 (1,961,822)
End of period..................... (13,254,094) 3,367,697 2,395,718
------------ ----------- -----------
Change in unrealized appreciation
(depreciation) during the period..... (16,621,791) 971,979 4,357,540
------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ (17,244,997) 5,603,823 3,852,960
------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ (6,031,287) $14,814,925 $11,877,631
============ =========== ===========
</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>
FIXED INCOME OPTIONS (CONCLUDED): EQUITY OPTIONS:
--------------------------------------- ----------------------------------------
ALLIANCE HIGH YIELD ALLIANCE COMMON STOCK
--------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
------------ ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 17,378,455 $ 18,449,747 $12,918,934 $ 20,107,533 $ 15,939,680 $ 10,668,337
Expenses (Note 3):
Mortality and expense
risk charges..................... 889,065 1,007,106 789,982 19,069,959 14,600,706 11,435,936
------------ ------------ ----------- ------------ ------------ ------------
NET INVESTMENT INCOME..................... 16,489,390 17,442,641 12,128,952 1,037,574 1,338,974 (767,599)
------------ ------------ ----------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (15,192,553) (2,344,392) 936,554 221,690,581 169,109,310 53,841,049
Realized gain distribution
from the Trust................... 161,999 3,396,523 6,365,633 497,324,765 353,834,250 164,814,473
------------ ------------ ----------- ------------ ------------ ------------
NET REALIZED GAIN (LOSS).................. (15,030,554) 1,052,131 7,302,187 719,015,346 522,943,560 218,655,522
------------ ------------ ----------- ------------ ------------ ------------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ (20,898,855) 8,622,836 5,664,824 689,309,204 567,231,009 294,432,897
End of period.................. (28,742,353) (20,898,854) 8,622,836 702,408,250 689,309,204 567,231,009
------------ ------------ ----------- ------------ ------------ ------------
Change in unrealized appreciation
(depreciation) during the period..... (7,843,498) (29,521,690) 2,958,012 13,099,046 122,078,195 272,798,112
------------ ------------ ----------- ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ (22,874,052) (28,469,559) 10,260,199 732,114,392 645,021,755 491,453,634
------------ ------------ ----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ (6,384,662) $(11,026,918) $22,389,151 $733,151,966 $646,360,729 $490,686,035
============ ============ =========== ============ ============ ============
<CAPTION>
EQUITY OPTIONS:
---------------------------------------
ALLIANCE EQUITY INDEX
---------------------------------------
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 7,575,355 $ 3,958,217 $ 2,610,223
Expenses (Note 3):
Mortality and expense
risk charges..................... 3,729,959 1,862,376 977,620
------------ ------------ -----------
NET INVESTMENT INCOME..................... 3,845,396 2,095,841 1,632,603
------------ ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 21,008,249 5,460,381 (414,497)
Realized gain distribution
from the Trust................... 6,196,508 128,151 850,437
------------ ------------ -----------
NET REALIZED GAIN (LOSS).................. 27,204,757 5,588,532 435,940
------------ ------------ -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 136,665,316 63,055,426 21,448,224
End of period.................. 228,753,607 136,665,316 63,055,426
------------ ------------ -----------
Change in unrealized appreciation
(depreciation) during the period..... 92,088,291 73,609,890 41,607,202
------------ ------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 119,293,048 79,198,422 42,043,142
------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $123,138,444 $ 81,294,263 $43,675,745
============ ============ ===========
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-7
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------------------------------
CAPITAL
EQ/ALLIANCE CAPITAL GUARDIAN
PREMIER GUARDIAN U.S.
ALLIANCE GROWTH & INCOME GROWTH (C) RESEARCH (d) EQUITY (d)
--------------------------------------- ----------- ------------ ----------
1999 1998 1997 1999 1999 1999
----------- ----------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 530,384 $ 415,436 $ 636,335 $ 30,540 $ 280 $ 1,159
Expenses (Note 3):
Mortality and expense
risk charges..................... 1,048,745 668,795 358,997 63,730 209 378
----------- ----------- ----------- ---------- ------- -------
NET INVESTMENT INCOME..................... (518,361) (253,359) 277,338 (33,190) 71 781
----------- ----------- ----------- ---------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 730,688 7,289,936 530,421 83,605 2,810 451
Realized gain distribution
from the Trust................... 20,855,872 12,146,928 5,006,247 106,890 27 1,508
----------- ----------- ----------- ---------- ------- -------
NET REALIZED GAIN (LOSS).................. 21,586,560 19,436,864 5,536,668 190,495 2,837 1,959
----------- ----------- ----------- ---------- ------- -------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 16,240,511 13,021,603 5,074,338 -- -- --
End of period.................. 27,170,239 16,240,511 13,021,603 5,068,707 11,093 17,325
----------- ----------- ----------- ---------- ------- -------
Change in unrealized appreciation
(depreciation) during the period..... 10,929,728 3,218,908 7,947,265 5,068,707 11,093 17,325
----------- ----------- ----------- ---------- ------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 32,516,288 22,655,772 13,483,933 5,259,202 13,930 19,284
----------- ----------- ----------- ---------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $31,997,927 $22,402,413 $13,761,271 $5,226,012 $14,001 $20,065
=========== =========== =========== ========== ======= =======
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------------
MERRILL LYNCH
BASIC VALUE EQUITY (A)
------------------------------------------
1999 1998 1997
---------- --------- --------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 468,257 $ 192,441 $ 35,810
Expenses (Note 3):
Mortality and expense
risk charges..................... 153,456 66,427 9,349
---------- --------- --------
NET INVESTMENT INCOME..................... 314,801 126,014 26,461
---------- --------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 426,168 207,032 6,656
Realized gain distribution
from the Trust................... 1,963,197 667,083 33,738
---------- --------- --------
NET REALIZED GAIN (LOSS).................. 2,389,365 874,115 40,394
---------- --------- --------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ (91,959) 135,003 --
End of period.................. 1,270,622 (91,959) 135,003
---------- --------- --------
Change in unrealized appreciation
(depreciation) during the period..... 1,362,581 (226,962) 135,003
---------- --------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 3,751,946 647,153 175,397
---------- --------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $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-8
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------------------------------
MFS
GROWTH
WITH EQ/PUTNAM
INCOME (C) MFS RESEARCH (A) GROWTH & INCOME VALUE (A)
---------- --------------------------------- ---------------------------------
1999 1999 1998 1997 1999 1998 1997
---------- ----------- ---------- -------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 1,268 $ 52,831 $ 71,137 $ 20,442 $ 278,910 $ 143,999 $ 33,273
Expenses (Note 3):
Mortality and expense
risk charges..................... 431 208,639 86,044 13,127 110,374 56,995 9,655
------- ----------- ---------- -------- ----------- ---------- --------
NET INVESTMENT INCOME..................... 837 (155,808) (14,907) 7,315 168,536 87,004 23,618
------- ----------- ---------- -------- ----------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (227) 995,232 494,412 6,989 276,186 209,398 1,078
Realized gain distribution
from the Trust................... -- 1,086,222 -- 81,156 1,499,307 130,047 27,226
------- ----------- ---------- -------- ----------- ---------- --------
NET REALIZED GAIN (LOSS).................. (227) 2,081,454 494,412 88,145 1,775,493 339,445 28,304
------- ----------- ---------- -------- ----------- ---------- --------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ -- 3,313,063 249,382 -- 1,160,602 269,561 --
End of period.................. 20,637 10,033,987 3,313,063 249,382 (1,472,796) 1,160,602 269,561
------- ----------- ---------- -------- ----------- ---------- --------
Change in unrealized appreciation
(depreciation) during the period..... 20,637 6,720,924 3,063,681 249,382 (2,633,398) 891,041 269,561
------- ----------- ---------- -------- ----------- ---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 20,410 8,802,378 3,558,093 337,527 (857,905) 1,230,486 297,865
------- ----------- ---------- -------- ----------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $21,247 $ 8,646,570 $3,543,186 $344,842 $ (689,369) $1,317,490 $321,483
======= =========== ========== ======== =========== ========== ========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------
T. ROWE PRICE EQUITY INCOME (A)
------------------------------------
1999 1998 1997
------------ ---------- ----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 998,227 $ 722,954 $ 145,613
Expenses (Note 3):
Mortality and expense
risk charges..................... 272,123 173,802 29,706
----------- ---------- ----------
NET INVESTMENT INCOME..................... 726,104 549,152 115,907
----------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 655,822 341,473 56,634
Realized gain distribution
from the Trust................... 2,081,914 930,853 53,840
----------- ---------- ----------
NET REALIZED GAIN (LOSS).................. 2,737,736 1,272,326 110,474
----------- ---------- ----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 1,585,616 1,073,548 --
End of period.................. (952,652) 1,585,616 1,073,548
----------- ---------- ----------
Change in unrealized appreciation
(depreciation) during the period..... (2,538,268) 512,068 1,073,548
----------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 199,468 1,784,394 1,184,022
----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ 925,572 $2,333,546 $1,299,929
=========== ========== ==========
</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-9
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-----------------------------------------------------------------------------------
ALLIANCE GLOBAL ALLIANCE INTERNATIONAL
--------------------------------------- --------------------------------------
1999 1998 1997 1999 1998 1997
------------ ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 561,424 $ 5,636,672 $ 8,803,070 $ -- $ 996,913 $ 1,386,732
Expenses (Note 3):
Mortality and expense
risk charges..................... 3,438,444 2,777,697 2,805,310 321,035 289,066 297,278
------------ ----------- ------------ ----------- ----------- -----------
NET INVESTMENT INCOME..................... (2,877,020) 2,858,975 5,997,760 (321,035) 707,847 1,089,454
------------ ----------- ------------ ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 67,795,783 17,406,382 30,411,238 1,164,532 (3,606,669) (57,635)
Realized gain distribution
from the Trust................... 44,485,709 33,241,409 26,426,403 1,299,989 10,663 2,325,403
------------ ----------- ------------ ----------- ----------- -----------
NET REALIZED GAIN (LOSS).................. 112,281,492 50,647,791 56,837,641 2,464,521 (3,596,006) 2,267,768
------------ ----------- ------------ ----------- ----------- -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 83,560,503 46,113,189 58,618,054 5,502,451 (2,793,834) 1,857,793
End of period.................. 172,562,362 83,560,503 46,113,189 25,291,174 5,502,451 (2,793,834)
------------ ----------- ------------ ----------- ----------- -----------
Change in unrealized appreciation
(depreciation) during the period..... 89,001,859 37,447,314 (12,504,865) 19,788,723 8,296,285 (4,651,627)
------------ ----------- ------------ ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 201,283,351 88,095,105 44,332,776 22,253,244 4,700,279 (2,383,859)
------------ ----------- ------------ ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $198,406,331 $90,954,080 $ 50,330,536 $21,932,209 $ 5,408,126 $(1,294,405)
============ =========== ============ =========== =========== ===========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------
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-10
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-----------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK (A) ALLIANCE AGGRESSIVE STOCK
-------------------------------------- ------------------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 192,580 $ 258,382 $ 2,393 $ 3,163,286 $ 4,461,389 $ 1,311,613
Expenses (Note 3):
Mortality and expense
risk charges..................... 200,684 119,672 26,332 5,481,701 5,581,296 5,299,127
----------- ---------- --------- ------------ ------------ ------------
NET INVESTMENT INCOME..................... (8,104) 138,710 (23,939) (2,318,415) (1,119,907) (3,987,514)
----------- ---------- --------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 4,626,661 354,551 (50,331) (27,888,194) (39,688,312) 28,217,939
Realized gain distribution
from the Trust................... 583,215 268 -- 61,642,419 46,528,461 79,729,154
----------- ---------- --------- ------------ ------------ ------------
NET REALIZED GAIN (LOSS).................. 5,209,876 354,819 (50,331) 33,754,225 6,840,149 107,947,093
----------- ---------- --------- ------------ ------------ ------------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 1,603,083 (820,718) -- 26,715,214 32,695,620 46,617,235
End of period.................. 9,345,381 1,603,083 (820,718) 158,809,890 26,715,214 32,695,620
----------- ---------- --------- ------------ ------------ ------------
Change in unrealized appreciation
(depreciation) during the period..... 7,742,298 2,423,801 (820,718) 132,094,676 (5,980,406) (13,921,615)
----------- ---------- --------- ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 12,952,174 2,778,620 (871,049) 165,848,901 859,743 94,025,478
----------- ---------- --------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $12,944,070 $2,917,330 $(894,988) $163,530,486 $ (260,164) $ 90,037,964
=========== ========== ========= ============ ============ ============
<CAPTION>
EQUITY OPTIONS (CONTINUED)
-------------------------------------
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
=========== =========== =========
</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-11
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONCLUDED):
--------------------------------------------------------------------------------------
EQ/ MFS EMERGING WARBURG PINCUS
EVERGREEN (C) GROWTH COMPANIES (A) SMALL COMPANY VALUE (A)
------------- ---------------------------------- -----------------------------------
1999 1999 1998 1997 1999 1998 1997
------------- ----------- ----------- -------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 99 $ -- $ 969 $ 24,358 $ 67,108 $ 171,716 $ 21,651
Expenses (Note 3):
Mortality and expense
risk charges..................... 18 640,976 157,484 18,835 180,999 168,543 44,889
------ ----------- ----------- -------- ----------- ----------- ---------
NET INVESTMENT INCOME..................... 81 (640,976) (156,515) 5,523 (113,891) 3,173 (23,238)
------ ----------- ----------- -------- ----------- ----------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 20 13,577,250 4,270,964 161,034 (1,591,217) (142,969) 29,803
Realized gain distribution
from the Trust................... -- 3,969,879 -- 296,998 -- -- 110,391
------ ----------- ----------- -------- ----------- ----------- ---------
NET REALIZED GAIN (LOSS).................. 20 17,547,129 4,270,964 458,032 (1,591,217) (142,969) 140,194
------ ----------- ----------- -------- ----------- ----------- ---------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ -- 6,996,177 171,320 -- (4,215,341) (228,709) --
End of period.................. 1,450 77,077,961 6,996,177 171,320 (2,294,882) (4,215,340) (228,709)
------ ----------- ----------- -------- ----------- ----------- ---------
Change in unrealized appreciation
(depreciation) during the period..... 1,450 70,081,784 6,824,857 171,320 1,920,459 (3,986,631) (228,709)
------ ----------- ----------- -------- ----------- ----------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 1,470 87,628,913 11,095,821 629,352 329,242 (4,129,600) (88,515)
------ ----------- ----------- -------- ----------- ----------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $1,551 $86,987,937 $10,939,306 $634,875 $ 215,351 $(4,126,427) $(111,753)
====== =========== =========== ======== =========== =========== =========
</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 OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION OPTIONS:
------------------------------------------------------------------------------
ALLIANCE BALANCED ALLIANCE CONSERVATIVE INVESTORS
------------------------------------- -------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $14,371,360 $12,467,646 $13,756,520 $ 7,166,906 $ 7,360,794 $ 7,217,860
Expenses (Note 3):
Mortality and expense
risk charges..................... 3,107,759 2,765,767 2,544,300 1,244,722 1,136,634 1,066,078
----------- ----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME..................... 11,263,601 9,701,879 11,212,220 5,922,184 6,224,160 6,151,782
----------- ----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 9,085,444 2,733,445 5,910,524 2,045,436 1,432,988 818,458
Realized gain distribution
from the Trust................... 50,638,464 41,525,872 21,117,088 9,007,765 10,768,916 5,486,742
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED GAIN (LOSS).................. 59,723,908 44,259,317 27,027,612 11,053,201 12,201,904 6,305,200
----------- ----------- ----------- ----------- ----------- -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 81,344,863 60,878,286 42,382,824 21,507,963 16,228,145 7,700,135
End of period.................. 93,235,951 81,344,863 60,878,286 23,588,372 21,507,963 16,228,145
----------- ----------- ----------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation) during the period..... 11,891,088 20,466,577 18,495,462 2,080,409 5,279,818 8,528,010
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 71,614,996 64,725,894 45,523,074 13,133,610 17,481,722 14,833,210
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $82,878,597 $74,427,773 $56,735,294 $19,055,794 $23,705,882 $20,984,992
=========== =========== =========== =========== =========== ===========
<CAPTION>
ASSET ALLOCATION OPTIONS:
------------------------------------------
ALLIANCE GROWTH INVESTORS
------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 17,092,741 $ 18,252,039 $ 19,280,574
Expenses (Note 3):
Mortality and expense
risk charges..................... 6,207,073 5,194,905 4,570,289
------------ ------------ ------------
NET INVESTMENT INCOME..................... 10,885,668 13,057,134 14,710,285
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 15,284,978 7,745,162 10,531,767
Realized gain distribution
from the Trust................... 104,658,738 78,060,201 42,780,443
------------ ------------ ------------
NET REALIZED GAIN (LOSS).................. 119,943,716 85,805,363 53,312,210
------------ ------------ ------------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 167,705,597 115,056,641 67,150,693
End of period.................. 288,014,018 167,705,600 115,056,641
------------ ------------ ------------
Change in unrealized appreciation
(depreciation) during the period..... 120,308,421 52,648,959 47,905,948
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 240,252,137 138,454,322 101,218,158
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $251,137,805 $151,511,456 $115,928,443
============ ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ 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 OPERATIONS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION OPTIONS (CONCLUDED):
-------------------------------------------------------------------------------
EQ/EVERGREEN MERRILL LYNCH
FOUNDATION (C) EQ/PUTNAM BALANCED WORLD STRATEGY (A)
-------------- ------------------------------- ----------------------------
1999 1999 1998 1997 1999 1998 1997
------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust........... $ 31 $ 42,372 $111,099 $ 46,468 $ 41,786 $ 36,750 $ 17,124
Expenses (Note 3):
Mortality and expense
risk charges...................... 2 39,416 18,744 2,741 18,905 12,469 2,678
------- --------- -------- -------- -------- -------- --------
NET INVESTMENT INCOME...................... 29 2,956 92,355 43,727 22,881 24,281 14,446
------- --------- -------- -------- -------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments.................... 302 185,026 348,952 561 197,727 19,432 (3,626)
Realized gain distribution
from the Trust.................... -- 447,013 71,044 31,119 67,733 -- 38,995
------- --------- -------- -------- -------- -------- --------
NET REALIZED GAIN (LOSS)................... 302 632,039 419,996 31,680 265,460 19,432 35,369
------- --------- -------- -------- -------- -------- --------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............. -- 259,883 270,232 -- 187,734 (37,926) --
End of period................... (1,505) (492,259) 259,882 270,232 853,470 187,734 (37,926)
------- --------- -------- -------- -------- -------- --------
Change in unrealized appreciation
(depreciation) during the period...... (1,505) (752,142) (10,350) 270,232 665,736 225,660 (37,926)
------- --------- -------- -------- -------- -------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS......................... (1,203) (120,103) 409,646 301,912 931,196 245,092 (2,557)
------- --------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.............. $(1,174) $(117,147) $502,001 $345,639 $954,077 $269,373 $ 11,889
======= ========= ======== ======== ======== ======== ========
</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
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FIXED INCOME OPTIONS:
------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES ALLIANCE MONEY MARKET
------------------------------------- ------------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 3,670,605 $ 3,127,402 $ 2,632,191 $ 12,329,959 $ 9,515,464 $ 8,653,507
Net realized gain (loss).............. (194,507) 60,260 (95,509) 528,279 (153,564) (500,365)
Change in unrealized appreciation
(depreciation) on investments..... (3,783,549) 1,523,009 1,009,532 (219,635) 732,101 780,326
----------- ----------- ----------- ------------ ------------- -------------
Net increase (decrease) in net assets
from operations................... (307,451) 4,710,671 3,546,214 12,638,603 10,094,001 8,933,468
----------- ----------- ----------- ------------ ------------- -------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 16,691,635 11,828,290 8,749,531 231,007,033 229,608,273 234,059,930
Benefits and other policy-related
transactions (Note 3)............. (8,904,461) (9,081,050) (5,971,751) (63,463,349) (41,370,215) (40,687,124)
Net transfers among funds and
guaranteed interest account....... (3,762,164) 9,141,659 7,704,724 (91,919,848) (128,607,686) (259,049,840)
----------- ----------- ----------- ------------ ------------- -------------
Net increase (decrease) in net assets
from policy-related transactions.. 4,025,010 11,888,899 10,482,504 75,623,836 59,630,372 (65,677,034)
----------- ----------- ----------- ------------ ------------- -------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... 184,108 (335,126) 13,307 1,075,796 (387,161) 46,036
----------- ----------- ----------- ------------ ------------- -------------
INCREASE (DECREASE) IN NET ASSETS ........ 3,901,667 16,264,444 14,042,025 89,338,235 69,337,212 (56,697,530)
NET ASSETS
BEGINNING OF PERIOD................... 74,972,672 58,708,229 44,666,204 255,090,142 185,752,930 242,450,460
----------- ----------- ----------- ------------ ------------- -------------
NET ASSETS
END OF PERIOD......................... $78,874,339 $74,972,673 $58,708,229 $344,428,377 $ 255,090,142 $ 185,752,930
=========== =========== =========== ============ ============= =============
<CAPTION>
FIXED INCOME OPTIONS:
-----------------------------------------
ALLIANCE QUALITY BOND
-----------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 11,213,710 $ 9,211,102 $ 8,024,671
Net realized gain (loss).............. (623,206) 4,631,844 (504,580)
Change in unrealized appreciation
(depreciation) on investments..... (16,621,791) 971,979 4,357,540
------------ ------------ ------------
Net increase (decrease) in net assets
from operations................... (6,031,287) 14,814,925 11,877,631
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 19,416,861 14,952,560 8,423,097
Benefits and other policy-related
transactions (Note 3)............. (9,082,840) (5,388,113) (3,002,993)
Net transfers among funds and
guaranteed interest account....... 1,195,276 49,220,715 12,678,032
------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions.. 11,529,297 58,785,162 18,098,136
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (553,219) (402,883) 38,587
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS ........ 4,944,791 73,197,204 30,014,354
NET ASSETS
BEGINNING OF PERIOD................... 228,959,641 155,762,437 125,748,083
------------ ------------ ------------
NET ASSETS
END OF PERIOD......................... $233,904,432 $228,959,641 $155,762,437
============ ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ 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 (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FIXED INCOME OPTIONS (CONCLUDED):
-----------------------------------------
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>
EQUITY OPTIONS:
----------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK ALLIANCE EQUITY INDEX
---------------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
-------------- -------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 1,037,574 $ 1,338,974 $ (767,599) $ 3,845,396 $ 2,095,841 $ 1,632,603
Net realized gain (loss).............. 719,015,346 522,943,560 218,655,522 27,204,757 5,588,532 435,940
Change in unrealized appreciation
(depreciation) on investments..... 13,099,046 122,078,195 272,798,112 92,088,291 73,609,890 41,607,202
-------------- -------------- -------------- ------------ ------------ ------------
Net increase (decrease) in net assets
from operations................... 733,151,966 646,360,729 490,686,035 123,138,444 81,294,263 43,675,745
-------------- -------------- -------------- ------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 361,261,385 322,874,015 282,279,826 123,310,198 82,390,480 53,262,239
Benefits and other policy-related
transactions (Note 3)............. (302,304,428) (250,079,870) (199,662,183) (60,880,027) (34,756,406) (18,975,147)
Net transfers among funds and
guaranteed interest account....... 49,877,173 24,136,275 56,849,823 222,120,321 74,806,928 67,867,827
-------------- -------------- -------------- ------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions.. 108,834,130 96,930,420 139,467,466 284,550,492 122,441,002 102,154,919
-------------- -------------- -------------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (5,343,344) (2,780,348) 516,970 (1,148,745) (430,965) 54,423
-------------- -------------- -------------- ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS......... 836,642,752 740,510,801 630,670,471 406,540,191 203,304,300 145,885,087
NET ASSETS
BEGINNING OF PERIOD................... 2,943,226,440 2,202,715,639 1,572,045,168 443,764,345 240,460,045 94,574,958
-------------- -------------- -------------- ------------ ------------ ------------
NET ASSETS
END OF PERIOD......................... $3,779,869,192 $2,943,226,440 $2,202,715,639 $850,304,536 $443,764,345 $240,460,045
============== ============== ============== ============ ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ 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+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------------------------------
CAPITAL
EQ/ALLIANCE CAPITAL GUARDIAN
PREMIER GUARDIAN U.S.
ALLIANCE GROWTH & INCOME GROWTH (C) RESEARCH (D) EQUITY (D)
--------------------------------------- ----------- ------------ ----------
1999 1998 1997 1999 1999 1999
------------ ------------ ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ (518,361) $ (253,359) $ 277,338 $ (33,190) $ 71 $ 781
Net realized gain (loss).............. 21,586,560 19,436,864 5,536,668 190,495 2,837 1,959
Change in unrealized appreciation
(depreciation) on investments..... 10,929,728 3,218,908 7,947,265 5,068,707 11,093 17,325
------------ ------------ ----------- ----------- -------- --------
Net increase (decrease) in net assets
from operations................... 31,997,927 22,402,413 13,761,271 5,226,012 14,001 20,065
------------ ------------ ----------- ----------- -------- --------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 43,151,141 30,251,270 17,923,903 6,362,938 63,883 115,934
Benefits and other policy-related
transactions (Note 3)............. (19,321,951) (12,461,722) (6,498,823) (1,028,342) (503) (15,128)
Net transfers among funds and
guaranteed interest account....... 25,186,273 23,343,531 25,301,886 40,652,847 115,765 390,588
------------ ------------ ----------- ----------- -------- --------
Net increase (decrease) in net assets
from policy-related transactions.. 49,015,463 41,133,079 36,726,966 45,987,443 179,145 491,394
------------ ------------ ----------- ----------- -------- --------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (144,843) (617,058) 19,921 3,902 209 378
------------ ------------ ----------- ----------- -------- --------
INCREASE (DECREASE) IN NET ASSETS......... 80,868,547 62,918,434 50,508,158 51,217,357 193,355 511,837
NET ASSETS
BEGINNING OF PERIOD................... 151,451,102 88,532,668 38,024,510 -- -- --
------------ ------------ ----------- ----------- -------- --------
NET ASSETS
END OF PERIOD......................... $232,319,649 $151,451,102 $88,532,668 $51,217,357 $193,355 $511,837
============ ============ =========== =========== ======== ========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------
MERRILL LYNCH
BASIC VALUE EQUITY (A)
--------------------------------------
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 314,801 $ 126,014 $ 26,461
Net realized gain (loss).............. 2,389,365 874,115 40,394
Change in unrealized appreciation
(depreciation) on investments..... 1,362,581 (226,962) 135,003
----------- ----------- ----------
Net increase (decrease) in net assets
from operations................... 4,066,747 773,167 201,858
----------- ----------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 10,931,366 6,388,355 1,097,822
Benefits and other policy-related
transactions (Note 3)............. (3,171,744) (1,430,414) (135,034)
Net transfers among funds and
guaranteed interest account....... 7,845,599 8,794,685 4,661,128
----------- ----------- ----------
Net increase (decrease) in net assets
from policy-related transactions.. 15,605,221 13,752,626 5,623,916
----------- ----------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (43,053) (1,392,853) 1,202,680
----------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS......... 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......................... $39,790,309 $20,161,394 $7,028,454
=========== =========== ==========
</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-17
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------------------------------
MFS
GROWTH
WITH
INCOME (C) MFS RESEARCH (A)
--------------- ----------------------------------------------
1999 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......................... 0 28,021,980 9,752,859 0
-------- ----------- ----------- ----------
NET ASSETS
END OF PERIOD............................... $415,714 $48,637,352 $28,021,980 $9,752,859
======== =========== =========== ==========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------
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 0
----------- ----------- ----------
NET ASSETS
END OF PERIOD................................ $21,793,779 $16,743,255 $7,059,068
=========== =========== ==========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-----------------------------------------------------
T. ROWE PRICE EQUITY INCOME (A)
-----------------------------------------------------
1999 1998 1997
------------- -------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income........................ $ 726,104 $ 549,152 $ 115,907
Net realized gain (loss)..................... 2,737,736 1,272,326 110,474
Change in unrealized appreciation
(depreciation) on investments............ (2,538,268) 512,068 1,073,548
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.......................... 925,572 2,333,546 1,299,929
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)........................ 14,411,461 11,367,975 2,540,460
Benefits and other policy-related
transactions (Note 3).................... (5,261,454) (4,190,748) (351,660)
Net transfers among funds and
guaranteed interest account.............. (470,263) 16,615,531 14,259,773
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions......... 8,679,744 23,792,758 16,448,573
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)................. (93,180) (1,149,701) 1,308,426
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS................ 9,512,136 24,632,603 19,056,928
NET ASSETS
BEGINNING OF PERIOD.......................... 43,689,531 19,056,928 0
----------- ----------- -----------
NET ASSETS
END OF PERIOD................................ $53,201,667 $43,689,531 $19,056,928
=========== =========== ===========
</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-18
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------------------------
ALLIANCE GLOBAL
--------------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (2,877,020) $ 2,858,975 $ 5,997,760
Net realized gain (loss)............... 112,281,492 50,647,791 56,837,641
Change in unrealized appreciation
(depreciation) on investments...... 89,001,859 37,447,314 (12,504,865)
------------ ------------ ------------
Net increase (decrease) in net assets
from operations.................... 198,406,331 90,954,080 50,330,536
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 71,950,825 78,722,218 85,714,413
Benefits and other policy-related
transactions (Note 3).............. (63,170,211) (52,796,664) (48,793,564)
Net transfers among funds and
guaranteed interest account........ (8,015,060) (21,919,102) (89,131,113)
------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions... 765,554 4,006,452 (52,210,264)
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... 23,216 (854,897) 103,777
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS.......... 199,195,101 94,105,635 (1,775,951)
NET ASSETS
BEGINNING OF PERIOD.................... 525,707,133 431,601,498 433,377,449
------------ ------------ ------------
NET ASSETS
END OF PERIOD.......................... $724,902,234 $525,707,133 $431,601,498
============= ============ ============
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-------------------------------------------------------
MORGAN STANLEY
ALLIANCE INTERNATIONAL
-------------------------------------------------------
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (321,035) $ 707,847 $ 1,089,454
Net realized gain (loss)............... 2,464,521 (3,596,006) 2,267,768
Change in unrealized appreciation
(depreciation) on investments...... 19,788,723 8,296,285 (4,651,627)
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.................... 21,932,209 5,408,126 (1,294,405)
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 11,367,096 13,567,993 14,198,839
Benefits and other policy-related
transactions (Note 3).............. (6,261,836) (5,406,284) (4,716,765)
Net transfers among funds and
guaranteed interest account........ (5,340,816) (4,357,456) (3,886,303)
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions... (235,556) 3,804,253 5,595,771
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... (49,840) (109,052) 11,328
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS.......... 21,646,813 9,103,327 4,312,694
NET ASSETS
BEGINNING OF PERIOD.................... 55,234,942 46,131,615 41,818,921
----------- ----------- -----------
END OF PERIOD.......................... $76,881,755 $55,234,942 $46,131,615
=========== =========== ===========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-------------------------------------------------------
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 0
----------- ----------- ----------
NET ASSETS
END OF PERIOD.......................... $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-19
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK (A)
--------------------------------------------------------
1999 1998 1997
----------- ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (8,104) $ 138,710 $ (23,939)
Net realized gain (loss)............... 5,209,876 354,819 (50,331)
Change in unrealized appreciation
(depreciation) on investments...... 7,742,298 2,423,801 (820,718)
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.................... 12,944,070 2,917,330 (894,988)
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 10,327,110 7,881,587 2,268,440
Benefits and other policy-related
transactions (Note 3).............. (3,787,076) (2,527,577) (295,221)
Net transfers among funds and
guaranteed interest account........ 3,167,992 8,401,386 12,953,165
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions... 9,708,026 13,755,396 14,926,384
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... 1,577 (4,050,846) 4,007,078
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS.......... 22,653,673 12,621,880 18,038,474
NET ASSETS
BEGINNING OF PERIOD.................... 30,660,353 18,038,474 --
----------- ----------- -----------
NET ASSETS
END OF PERIOD.......................... $53,314,026 $30,660,353 $18,038,474
=========== =========== ===========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------
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
============== ============ ============
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------------------------
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
=========== =========== ===========
</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-20
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONCLUDED):
------------------------------------------------------------------
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>
EQUITY OPTIONS (CONCLUDED):
-------------------------------------------------
WARBURG PINCUS
SMALL COMPANY VALUE (A)
-------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (113,891) $ 3,173 $ (23,238)
Net realized gain (loss)............... (1,591,217) (142,969) 140,194
Change in unrealized appreciation
(depreciation) on investments...... 1,920,459 (3,986,631) (228,709)
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.................... 215,351 (4,126,427) (111,753)
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 11,009,658 13,378,658 4,397,634
Benefits and other policy-related
transactions (Note 3).............. (4,607,292) (4,042,103) (608,891)
Net transfers among funds and
guaranteed interest account........ (7,372,698) 7,112,708 20,737,304
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions... (970,332) 16,449,263 24,526,047
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... (23,731) (622,058) 611,853
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS.......... (778,712) 11,700,778 25,026,147
NET ASSETS
BEGINNING OF PERIOD.................... 36,726,925 25,026,147 --
----------- ----------- -----------
NET ASSETS
END OF PERIOD.......................... $35,948,213 $36,726,925 $25,026,147
=========== =========== ===========
</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-21
<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>
ASSET ALLOCATION OPTIONS:
----------------------------------------------------
ALLIANCE BALANCED
----------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................... $ 11,263,601 $ 9,701,879 $ 11,212,220
Net realized gain (loss)...................... 59,723,908 44,259,317 27,027,612
Change in unrealized appreciation
(depreciation) on investments............. 11,891,088 20,466,577 18,495,462
------------ ------------ ------------
Net increase (decrease) in net assets
from operations........................... 82,878,597 74,427,773 56,735,294
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)......................... 45,762,044 46,234,769 48,722,966
Benefits and other policy-related
transactions (Note 3)..................... (55,698,939) (48,368,610) (48,611,396)
Net transfers among funds and
guaranteed interest account............... (25,094,055) (4,765,223) (55,377,177)
------------ ------------ ------------
Net increase (decrease) in net assets
from policy related-transactions.......... (35,030,950) (6,899,064) (55,265,607)
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............... 34,900 (601,644) 106,438
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS................. 47,882,547 66,927,065 1,576,125
NET ASSETS
BEGINNING OF PERIOD........................... 498,829,011 431,901,946 430,325,821
------------ ------------ ------------
NET ASSETS
END OF PERIOD................................. $546,711,558 $498,829,011 $431,901,946
============ ============ ============
<CAPTION>
ASSET ALLOCATION OPTIONS:
----------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS
----------------------------------------------------------
1999 1998 1997
------------ ------------ -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................... $ 5,922,184 $ 6,224,160 $ 6,151,782
Net realized gain (loss)...................... 11,053,201 12,201,904 6,305,200
Change in unrealized appreciation
(depreciation) on investments............. 2,080,409 5,279,818 8,528,010
------------ ------------ ------------
Net increase (decrease) in net assets
from operations........................... 19,055,794 23,705,882 20,984,992
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)......................... 27,333,794 26,438,125 30,425,833
Benefits and other policy-related
transactions (Note 3)..................... (25,964,810) (23,690,706) (24,998,155)
Net transfers among funds and
guaranteed interest account............... (4,292,515) (6,267,736) (18,978,233)
------------ ------------ ------------
Net increase (decrease) in net assets
from policy related-transactions.......... (2,923,531) (3,520,317) (13,550,555)
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............... (195,000) (365,872) 44,115
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS................. 15,937,263 19,819,693 7,478,552
NET ASSETS
BEGINNING OF PERIOD........................... 202,163,700 182,344,007 174,865,455
------------ ------------ ------------
NET ASSETS
END OF PERIOD................................. $218,100,963 $202,163,700 $182,344,007
============= ============ ============
<CAPTION>
ASSET ALLOCATION OPTIONS:
----------------------------------------------------------
ALLIANCE GROWTH INVESTORS
----------------------------------------------------------
1999 1998 1997
-------------- ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................... $ 10,885,668 $ 13,057,134 $ 14,710,285
Net realized gain (loss)...................... 119,943,716 85,805,363 53,312,210
Change in unrealized appreciation
(depreciation) on investments............. 120,308,421 52,648,959 47,905,948
-------------- ------------ ------------
Net increase (decrease) in net assets
from operations........................... 251,137,805 151,511,456 115,928,443
-------------- ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)......................... 118,892,312 128,264,748 139,280,509
Benefits and other policy-related
transactions (Note 3)..................... (114,804,492) (99,015,298) (95,656,635)
Net transfers among funds and
guaranteed interest account............... (15,949,611) (25,554,600) (35,207,298)
-------------- ------------ ------------
Net increase (decrease) in net assets
from policy related-transactions.......... (11,861,791) 3,694,850 8,416,576
-------------- ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............... (471,570) (418,319) 194,270
-------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS................. 238,804,444 154,787,987 124,539,289
NET ASSETS
BEGINNING OF PERIOD........................... 978,087,905 823,299,918 698,760,629
-------------- ------------ ------------
NET ASSETS
END OF PERIOD................................. $1,216,892,349 $978,087,905 $823,299,918
============== ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-22
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION OPTIONS (CONCLUDED):
---------------------------------------------------------------------
EQ/EVERGREEN
FOUNDATION (C) EQ/PUTNAM BALANCED
-------------- -------------------------------------------------
1999 1999 1998 1997
-------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................... $ 29 $ 2,956 $ 92,355 $ 243,727
Net realized gain (loss)................ 302 632,039 419,996 31,680
Change in unrealized appreciation
(depreciation) on investments....... (1,505) (752,142) (10,350) 270,232
------- ---------- ----------- ----------
Net increase (decrease) in net assets
from operations..................... (1,174) (117,147) 502,001 345,639
------- ---------- ----------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................... 93 2,976,182 1,733,126 213,829
Benefits and oth`er policy-related
transactions (Note 3)............... (53) (738,901) (429,944) (60,092)
Net transfers among funds and
guaranteed interest account......... 2,377 381,163 2,537,998 1,458,185
------- ---------- ----------- ----------
Net increase (decrease) in net assets
from policy related-transactions.... 2,417 2,618,444 3,841,180 1,611,922
------- ---------- ----------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)......... 1,605 (79,687) (2,292,055) 2,000,806
------- ---------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS........... 2,848 2,421,610 2,051,126 3,958,367
NET ASSETS
BEGINNING OF PERIOD..................... -- 6,009,493 3,958,367 --
------- ---------- ----------- ----------
NET ASSETS
END OF PERIOD........................... $ 2,848 $8,431,103 $ 6,009,493 $ 3,958,367
======= ========== =========== ===========
<CAPTION>
ASSET ALLOCATION OPTIONS (CONCLUDED):
-----------------------------------------------
MERRILL LYNCH
WORLD STRATEGY (A)
-----------------------------------------------
1999 1998 1997
------------- ---------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income...................... $ 22,881 $ 24,281 $ 14,446
Net realized gain (loss)................... 265,460 19,432 35,369
Change in unrealized appreciation
(depreciation) on investments.......... 665,736 225,660 (37,926)
---------- ---------- ----------
Net increase (decrease) in net assets
from operations........................ 954,077 269,373 11,889
---------- ---------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)...................... 1,304,821 1,050,984 334,133
Benefits and oth`er policy-related
transactions (Note 3).................. (511,416) (294,100) (41,646)
Net transfers among funds and
guaranteed interest account............ (504,202) 1,271,852 1,374,499
---------- ---------- ----------
Net increase (decrease) in net assets
from policy related-transactions....... 289,203 2,028,736 1,666,986
---------- ---------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............ (999,768) (849,043) 2,000,771
---------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS.............. 243,512 1,449,066 3,679,646
NET ASSETS
BEGINNING OF PERIOD........................ 5,128,712 3,679,646 --
----------- ----------- ----------
NET ASSETS
END OF PERIOD.............................. $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-23
<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 variable investment options:
FIXED INCOME OPTIONS:
Domestic Fixed Income:
o Alliance Intermediate Government Securities
o Alliance Money Market
o Alliance Quality Bond
Aggressive Fixed Income:
o Alliance High Yield
EQUITY OPTIONS:
Domestic Equity:
o Alliance Common Stock
o Alliance Equity Index
o Alliance Growth & Income
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 T. Rowe Price Equity Income
International Equity:
o Alliance Global
o Alliance International
o Morgan Stanley Emerging Markets Equity
o T. Rowe Price International Stock
Aggressive Equity:
o Alliance Aggressive Stock
o Alliance Small Cap Growth
o EQ/Evergreen
o MFS Emerging Growth Companies
o Warburg Pincus Small Company Value
ASSET ALLOCATION OPTIONS:
o Alliance Balanced
o Alliance Conservative Investors
o Alliance Growth Investors
o EQ/Evergreen Foundation
o EQ/Putnam Balanced
o Merrill Lynch World Strategy
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-24
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (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 Incentive Life, Incentive Life 2000,
Incentive Life Plus(SM), IL Protector(SM) and IL COLI, flexible premium
variable life insurance policies, Champion 2000, modified premium variable
whole life insurance policies; Survivorship 2000, Survivorship Incentive
Life, flexible premium joint survivorship variable life insurance policies;
and SP-Flex, variable life insurance policies with additional premium option
(collectively, the "Policies"). The Incentive Life 2000, Champion 2000 and
Survivorship 2000 policies are herein referred to as the "Series 2000
Policies." Incentive Life Plus(SM) policies offered with a prospectus dated
on or after September 15, 1995, are referred to as Incentive Life Plus(SM)
Second Series. Incentive Life Plus policies issued with a prior prospectus
are referred to as Incentive Life Plus Original Series. Incentive Life
policies sold during 1999 and thereafter ("Incentive Life sales 1999 and
after") reflect an investment in Class IB of the Alliance portfolios and are
different from Incentive Life products (see Note 6).
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.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-25
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 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>
FIXED INCOME OPTIONS:
Alliance Intermediate Government Securities $ (194,809) $ (685,662) $ --
Alliance Money Market (531,900) (1,591,380) --
Alliance Quality Bond (1,882,364) (1,509,018) --
Alliance High Yield 1,254,634 (1,839,368) --
</TABLE>
+ Formerly known as Equitable Variable Life Insurance Company Separate
Account FP.
FSA-26
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 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>
EQUITY OPTIONS:
Alliance Common Stock $(24,309,506) $(17,381,053) $ --
Alliance Equity Index (4,878,705) (2,293,340) --
Alliance Growth & Income (1,193,588) (1,285,852) --
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
T. Rowe Price Equity Income (365,303) (1,667,503) 1,300,000
Alliance Global (3,414,228) (3,632,595) --
Alliance International (370,877) (398,118) --
Morgan Stanley Emerging Markets Equity (2,019,694) (21,425) 4,000,000
T. Rowe Price International Stock (194,106) (4,170,518) 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
Warburg Pincus Small Company Value (204,730) (790,600) 600,000
ASSET ALLOCATION OPTIONS:
Alliance Balanced $(3,060,971) $(3,367,411) $ --
Alliance Conservative Investors (1,439,722) (1,502,507) --
Alliance Growth Investors (6,678,645) (5,613,223) --
EQ/Evergreen Foundation -- -- --
EQ/Putnam Balanced (119,105) (2,310,799) 2,000,000
Merrill Lynch World Strategy (1,018,674) (861,511) 2,000,000
</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.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-27
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
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, Incentive Life 2000, Incentive Life Plus Second
Series and Champion 2000 policyowners are different than those attributable
to Survivorship 2000, Incentive Life Plus Original Series, IL Protector, IL
COLI, and to SP-Flex policyowners because asset charges are deducted at
different rates under each policy (see Note 3). The Separate Account rates
of return attributable to Incentive Life Sales 1999 and after, Survivorship
Incentive Life and Survivorship 2000 for the Alliance Money Market, Alliance
Intermediate Government Securities, Alliance Quality Bond, Alliance High
Yield, Alliance Growth & Income, Alliance Equity Index, Alliance Common
Stock, Alliance Global, Alliance International, Alliance Aggressive,
Alliance Small Cap Growth, Alliance Conservative Investors, Alliance
Balanced, Alliance Growth Investors are different from other products in the
same variable investment option because distribution fees of 0.25% of the
average daily assets of the variable investment option are deducted (see
Note 1).
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-28
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
INCENTIVE LIFE,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
APRIL 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
ALLIANCE INTERMEDIATE ------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES 1999 1998 1997 1996 1995 1994 1993 1992 1991
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 0.02% 7.74% 7.29% 3.78% 13.33% (4.37)% 10.58% 5.60% 12.26%
Net return........................ (0.46)% 7.10% 6.65% 3.15% 12.65% (4.95)% 9.88% 4.96% 11.60%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ---------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 4.96% 5.34% 5.42% 5.33% 5.74% 4.02% 3.00% 3.56% 6.18% 8.24%
Net return........................ 4.35% 4.71% 4.79% 4.70% 5.11% 3.39% 2.35% 2.94% 5.55% 7.59%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------------- -----------------
ALLIANCE QUALITY BOND 1999 1998 1997 1996 1995 1994 1993
- --------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... (2.00)% 8.69% 9.14% 5.36% 17.02% (5.10)% (0.51)%
Net return........................ (2.59)% 8.03% 8.49% 4.73% 16.32% (5.67)% (0.66)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... (3.35)% (5.15)% 18.47% 22.89% 19.92% (2.79)% 23.15% 12.31% 24.46% (1.12)%
Net return........................ (3.93)% (5.72)% 17.76% 22.14% 19.20% (3.37)% 22.41% 11.64% 23.72% (1.71)%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 25.19% 29.39% 29.40% 24.28% 32.45% (2.14)% 24.84% 3.22% 37.88% (8.12)%
Net return........................ 24.44% 28.61% 28.44% 23.53% 31.66% (2.73)% 24.08% 2.60% 37.06% (8.67)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30 (A)
YEARS ENDED DECEMBER 31, TO DECEMBER 31,
----------------------------------------------- -----------------
ALLIANCE EQUITY INDEX 1999 1998 1997 1996 1995 1994
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return...................... 20.38% 28.07% 32.58% 22.39% 36.48% 1.08%
Net return........................ 19.66% 27.30% 31.77% 21.65% 35.66% 0.58%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------------- -----------------
ALLIANCE GROWTH & INCOME 1999 1998 1997 1996 1995 1994 1993
- ------------------------ ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 18.66% 20.86% 26.90% 20.09% 24.07% (0.58)% (0.25)%
Net return........................ 17.95% 20.14% 25.99% 19.36% 23.33% (1.17)% (0.41)%
</TABLE>
- -------------------
+ 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
variable investment option. The gross return and net return reflects
performance for the periods indicated, and 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 reflects 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-29
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
EQUITY OPTIONS (CONTINUED):
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%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
Gross return...................... 19.00% 11.59% 16.99%
Net return........................ 18.23% 10.91% 16.55%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return...................... 8.76%
Net return........................ 8.06%
MAY 1 (A) to
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MFS RESEARCH 1999 1998 1997
- -------------- ---- ---- ----
Gross return...................... 23.12% 24.11% 16.07%
Net return........................ 22.38% 23.36% 15.59%
MAY 1 (A) to
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999 1998 1997
- ------------------------------- ---- ---- ----
Gross return...................... (1.27)% 12.75% 16.23%
Net return........................ (1.95)% 12.14% 15.75%
- -------------------
+ 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
variable investment option. The gross return and net return reflects
performance for the periods indicated, and 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 reflects 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-30
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
EQUITY OPTIONS (CONTINUED):
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
T. ROWE PRICE EQUITY INCOME 1999 1998 1997
- --------------------------- ---- ---- ----
Gross return...................... 3.54% 9.11% 22.11%
Net return........................ 2.93% 8.42% 21.64%
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 38.53% 21.80% 11.66% 14.60% 18.81% 5.23% 32.09% (0.50)% 30.55% (6.07)%
Net return........................ 37.70% 21.07% 10.88% 13.91% 18.11% 4.60% 31.33% (1.10)% 29.77% (6.63)%
</TABLE>
<TABLE>
<CAPTION>
APRIL 3 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------- -----------------
ALLIANCE INTERNATIONAL 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return...................... 37.31% 10.57% (2.98)% 9.82% 11.29%
Net return........................ 36.96% 9.90% (3.63)% 9.15% 10.79%
</TABLE>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
MORGAN STANLEY EMERGING ----------------------------- ---------------
MARKETS EQUITY 1999 1998 1997
- -------------- ---- ---- ----
Gross return...................... 95.82% (27.10)% (20.16)%
Net return........................ 94.57% (27.46)% (20.37)%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
T. ROWE PRICE INTERNATIONAL
STOCK 1999 1998 1997
- --------------------------- ---- ---- ----
Gross return...................... 31.92% 13.68% (1.49)%
Net return........................ 31.08% 13.01% (1.90)%
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 18.84% 0.29% 10.94% 22.20% 31.63% (3.81)% 16.77% (3.16)% 86.86% 8.17%
Net return........................ 18.13% (0.31)% 10.14% 21.46% 30.85% (4.39)% 16.05% (3.74)% 85.75% 7.51%
</TABLE>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
Gross return...................... 27.75% (4.28)% 26.74%
Net return........................ 27.14% (4.85)% 26.18%
- -------------------
+ 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-31
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
EQUITY OPTIONS (CONCLUDED):
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return...................... 9.70%
Net return........................ 9.06%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
Gross return...................... 73.62% 34.57% 22.42%
Net return........................ 72.63% 33.71% 21.95%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
WARBURG PINCUS
SMALL COMPANY VALUE 1999 1998 1997
- ------------------- ---- ---- ----
Gross return...................... 1.80% (10.02)% 19.15%
Net return........................ 1.19% (10.55)% 18.65%
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 17.79% 18.11% 15.06% 11.68% 19.75% (8.02)% 12.28% (2.84)% 41.26% 0.24 %
Net return........................ 17.09% 17.40% 14.30% 11.00% 19.03% (8.57)% 11.64% (3.42)% 40.42% (0.36)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE
INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 10.14% 13.88% 13.25% 5.21% 20.40% (4.10)% 10.76% 5.72% 19.87% 6.37%
Net return........................ 9.48% 13.20% 12.55% 4.57% 19.68% (4.67)% 10.15% 5.09% 19.16% 5.73%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 26.58% 19.13% 16.87% 12.61% 26.37% (3.15)% 15.26% 4.90% 48.89% 10.66%
Net return........................ 25.82% 18.41% 16.07% 11.93% 25.62% (3.73)% 14.58% 4.27% 48.01% 10.00%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return..................... 7.38%
Net return....................... 6.72%
- -------------------
+ 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-32
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
ASSET ALLOCATION OPTIONS (CONCLUDED):
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
Gross return...................... 0.01% 11.92% 14.38%
Net return........................ (0.56)% 11.14% 14.02%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MERRILL LYNCH WORLD STRATEGY 1999 1998 1997
- ---------------------------- ---- ---- ----
Gross return...................... 21.35% 6.81% 4.70%
Net return........................ 20.62% 6.18% 4.29%
- -------------------
+ 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-33
<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 SALES 1999 AND AFTER
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
FIXED INCOME OPTIONS:
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES 1999
- ---------------------- ----
Gross return...................... (0.23)%
Net return........................ 0.32%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE MONEY MARKET 1999
- --------------------- ----
Gross return...................... 4.71%
Net return........................ 4.10%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE QUALITY BOND 1999
- --------------------- ----
Gross return...................... (2.25)%
Net return........................ (0.95)%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE HIGH YIELD 1999
- ------------------ ----
Gross return...................... (3.58)%
Net return........................ (4.16)%
EQUITY OPTIONS:
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE COMMON STOCK 1999
- --------------------- ----
Gross return...................... 24.88%
Net return........................ 24.13%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE EQUITY INDEX 1999
- --------------------- ----
Gross return...................... 20.08%
Net return........................ 9.66%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE GROWTH & INCOME 1999
- ------------------------ ----
Gross return...................... 18.37%
Net return........................ 6.33%
- -------------------
+ 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-34
<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 SALES 1999 AND AFTER,
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
EQUITY OPTIONS (CONTINUED):
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%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MERRILL LYNCH BASIC VALUE EQUITY 1999
- -------------------------------- ----
Gross return...................... 19.00%
Net return........................ 18.23%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return...................... 8.76%
Net return........................ 8.06%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS RESEARCH 1999
- ------------ ----
Gross return...................... 23.12%
Net return........................ 22.38%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999
- ------------------------------- ----
Gross return...................... (1.27)%
Net return........................ (1.95)%
- -------------------
+ 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-35
<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 SALES 1999 AND AFTER
- -----------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
EQUITY OPTIONS (CONTINUED):
JUNE 4 (B) TO
DECEMBER 31,
--------------
T. ROWE PRICE EQUITY INCOME 1999
- --------------------------- ----
Gross return........................... 3.54%
Net return............................. 2.93%
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE GLOBAL 1999
- --------------- ----
Gross return........................... 38.17%
Net return............................. 27.23%
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE INTERNATIONAL 1999
- --------------------- ----
Gross return........................... 36.90%
Net return............................. 34.41%
JUNE 4 (B) TO
DECEMBER 31,
--------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999
- -------------------------------------- ----
Gross return........................... 95.82%
Net return............................. 94.57%
JUNE 4 (B) TO
DECEMBER 31,
--------------
T. ROWE PRICE INTERNATIONAL STOCK 1999
- --------------------------------- ----
Gross return........................... 31.92%
Net return............................. 31.08%
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE AGGRESSIVE STOCK 1999
- ------------------------- ----
Gross return........................... 18.55%
Net return............................. 17.83%
- -------------------
+ 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-36
<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 SALES 1999 AND AFTER,
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
EQUITY OPTIONS (CONCLUDED):
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE SMALL CAP GROWTH 1999
- ------------------------- ----
Gross return........................... 27.46%
Net return............................. 26.86%
JUNE 4 (B) TO
DECEMBER 31,
--------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return........................... 9.70%
Net return............................. 9.06%
JUNE 4 (B) TO
DECEMBER 31,
--------------
MFS EMERGING GROWTH COMPANIES 1999
- ----------------------------- ----
Gross return........................... 73.62%
Net return............................. 72.63%
JUNE 4 (B) TO
DECEMBER 31,
--------------
WARBURG PINCUS SMALL COMPANY VALUE 1999
- ---------------------------------- ----
Gross return........................... 1.80%
Net return............................. 1.19%
- -------------------
+ 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-37
<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 SALES 1999 AND AFTER,
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
ASSET ALLOCATION OPTIONS:
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE BALANCED 1999
- ----------------- ----
Gross return...................... 17.50%
Net return........................ 10.98%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE CONSERVATIVE INVESTORS 1999
- ------------------------------- ----
Gross return...................... 9.87%
Net return........................ 5.79%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE GROWTH INVESTORS 1999
- ------------------------- ----
Gross return...................... 26.27%
Net return........................ 15.36%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return...................... 7.38%
Net return........................ 6.72%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/PUTNAM BALANCED 1999
- -------------------- ----
Gross return...................... 0.01%
Net return........................ (0.56)%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MERRILL LYNCH WORLD STRATEGY 1999
- ---------------------------- ----
Gross return...................... 21.35%
Net return........................ 20.62%
- -------------------
+ 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-38
<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
- -----------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- -----------------
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 0.02% 7.74% 7.29% 3.78% 13.33% (4.37)% 10.58% 0.90%
Net return.................................... (0.76)% 6.78% 6.33% 2.84% 12.31% (5.23)% 9.55% 0.56%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- -----------------
ALLIANCE MONEY MARKET 1999 1998 1997 1996 1995 1994 1993 1992
- --------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 4.96% 5.34% 5.42% 5.33% 5.74% 4.02% 3.00% 1.11%
Net return.................................... 4.04% 4.39% 4.47% 4.38% 4.80% 3.08% 2.04% 0.77%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- -----------------
ALLIANCE QUALITY BOND 1999 1998 1997 1996 1995 1994 1993
- --------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. (2.00)% 8.69% 9.14% 5.36% 17.02% (5.10)% (0.51)%
Net return.................................... (2.88)% 7.71% 8.16% 4.41% 15.97% (5.95)% (0.73)%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE HIGH YIELD 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. (3.35)% (5.15)% 18.47% 22.89% 19.92% (2.79)% 23.15% 1.84%
Net return.................................... (4.22)% (6.00)% 17.40% 21.77% 18.84% (3.66)% 22.04% 1.50%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- -----------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995 1994 1993 1992
- ---------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 25.19% 29.39% 29.40% 24.28% 32.45% (2.14)% 24.84% 5.28%
Net return.................................... 24.07% 28.22% 28.06% 23.15% 31.26% (3.02)% 23.70% 4.93%
</TABLE>
<TABLE>
<CAPTION>
MARCH 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------------ -----------------
ALLIANCE EQUITY INDEX 1999 1998 1997 1996 1995 1994
- -------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.................................. 20.38% 28.07% 32.58% 22.39% 36.48% 1.08%
Net return.................................... 19.30% 26.92% 31.38% 21.28% 35.26% 0.33%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- -----------------
ALLIANCE GROWTH & INCOME 1999 1998 1997 1996 1995 1994 1993
- ------------------------ ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 18.66% 20.86% 26.90% 20.09% 24.07% (0.58)% (0.25)%
Net return.................................... 17.60% 19.78% 25.61% 19.00% 22.96% (1.47)% (0.48)%
</TABLE>
- -------------------
+ 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-39
<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
- -----------------
EQUITY OPTIONS (CONTINUED):
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%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 19.00% 11.59% 16.99%
Net return.................................... 17.87% 10.58% 16.32%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return.................................. 8.76%
Net return.................................... 7.74%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MFS RESEARCH 1999 1998 1997
- ------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 23.12% 24.11% 16.07%
Net return.................................... 22.01% 22.99% 15.36%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999 1998 1997
- ------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. (1.27)% 12.75% 16.23%
Net return.................................... (2.25)% 11.81% 15.52%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
T. ROWE PRICE EQUITY INCOME FUND 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 3.54% 9.11% 22.11%
Net return.................................... 2.62% 8.09% 21.40%
</TABLE>
- -------------------
+ 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-40
<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
- -----------------
EQUITY OPTIONS (CONTINUED):
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------------- ----------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995 1994 1993 1992
- --------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return................................. 38.53% 21.80% 11.66% 14.60% 18.81% 5.23% 32.09% 4.87%
Net return................................... 37.28% 20.70% 10.54% 13.56% 17.75% 4.29% 30.93% 44.52%
</TABLE>
<TABLE>
<CAPTION>
APRIL 3 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------- ----------------
ALLIANCE
INTERNATIONAL 1999 1998 1997 1996 1995
- ------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return................................. 37.31% 10.57% (2.98)% 9.82% 11.29%
Net return................................... 36.55% 9.57% (3.93)% 8.82% 10.55%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------- ---------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999 1998 1997
- -------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 95.82% (27.10)% (20.16)%
Net return.................................... 93.98% (27.68)% (20.46)%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ ------------
T. ROWE PRICE INTERNATIONAL STOCK 1999 1998 1997
- --------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 31.92% 13.68% (1.49)%
Net return.................................... 30.68% 12.67% (2.10)%
</TABLE>
<TABLE>
<CAPTION>
MARCH 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- --------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 18.84% 0.29% 10.94% 22.20% 31.63% (3.81)% 16.77% 11.49%
Net return.................................... 17.77% (0.62)% 9.81% 21.09% 30.46% (4.68)% 15.70% 11.11%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 27.75% (4.28)% 26.74%
Net return.................................... 26.76% (5.14)% 25.92%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return.................................. 9.70%
Net return.................................... 8.73%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 73.62% 34.57% 22.42%
Net return.................................... 72.11% 33.31% 21.70%
</TABLE>
- -------------------
+ 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-41
<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
- -----------------
EQUITY OPTIONS (CONCLUDED):
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
WARBURG PINCUS SMALL COMPANY VALUE 1999 1998 1997
- ---------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 1.80% (10.02)% 19.15%
Net return.................................... 0.88% (10.82)% 18.41%
</TABLE>
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995 1994 1993 1992
- ----------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 17.79% 18.11% 15.06% 11.68% 19.75% (8.02)% 12.28% 5.37%
Net return.................................... 16.73% 17.05% 13.96% 10.67% 18.68% (8.84)% 11.30% 5.02%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE CONSERVATIVE INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 10.14% 13.88% 13.25% 5.21% 20.40% (4.10)% 10.76% 1.38%
Net return.................................... 9.15% 12.85% 12.21% 4.26% 19.32% (4.96)% 9.81% 1.04%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE GROWTH INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 26.58% 19.13% 16.87% 12.61% 26.37% (3.15)% 15.26% 6.89%
Net return.................................... 25.44% 18.06% 15.72% 11.59% 25.24% (4.02)% 14.24% 6.53%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
----------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return.................................. 7.38%
Net return.................................... 6.14%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 0.01% 11.92% 14.38%
Net return.................................... (0.86)% 10.81% 13.79%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
MERRILL LYNCH WORLD STRATEGY 1999 1998 1997
- ---------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 21.35% 6.81% 4.70%
Net return.................................... 20.25% 5.86% 4.08%
</TABLE>
- -------------------
+ 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-42
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES 1999 1998 1997 1996 1995
- -------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 0.02% 7.74% 7.29% 3.78% 13.31%
Net return ........................... 0.02% 7.74% 7.29% 3.78% 13.31%
ALLIANCE MONEY MARKET
- ----------------------
Gross return ......................... 4.96% 5.34% 5.42% 5.33% 5.69%
Net return ........................... 4.96% 5.34% 5.42% 5.33% 5.69%
ALLIANCE QUALITY BOND
- ---------------------
Gross return ......................... (2.00)% 8.69% 9.14% 5.36% 17.13%
Net return ........................... (2.00)% 8.69% 9.14% 5.36% 17.13%
ALLIANCE HIGH YIELD
- -------------------
Gross return ......................... (3.35)% (5.15)% 18.47% 22.89% 19.95%
Net return ........................... (3.35)% (5.15)% 18.47% 22.89% 19.95%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995
- --------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 25.19% 29.39% 29.40% 24.28% 33.07%
Net return ........................... 25.19% 29.39% 29.40% 24.28% 33.07%
ALLIANCE EQUITY INDEX
- ---------------------
Gross return ......................... 20.38% 28.07% 32.57% 22.38% 36.53%
Net return ........................... 20.38% 28.07% 32.57% 22.38% 36.53%
ALLIANCE GROWTH & INCOME
- ------------------------
Gross return ......................... 18.66% 20.86% 26.90% 20.09% 24.38%
Net return ........................... 18.66% 20.86% 26.90% 20.09% 24.38%
</TABLE>
JUNE 4 (C) TO
DECEMBER 31,
------------------
EQ/ALLIANCE PREMIER GROWTH 1999
- -------------------------- ----
Gross return ......................... 18.97%
Net return ........................... 19.55%
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no Separate Account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1995 indicated is not an
annualized rate of return.
(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-43
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
EQUITY OPTIONS (CONTINUED):
AUGUST 30 (C) TO
DECEMBER 31,
------------------
CAPITAL GUARDIAN RESEARCH 1999
- ------------------------- ----
Gross return ......................... 7.10%
Net return ........................... 8.04%
CAPITAL GUARDIAN U.S. EQUITY
- ----------------------------
Gross return ......................... 3.76%
Net return ........................... 3.56%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 19.00% 11.59% 17.02%
Net return ........................... 19.00% 11.59% 17.02%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return ......................... 8.76%
Net return ........................... 3.50%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS RESEARCH 1999 1998 1997
- ------------ ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 23.12% 24.11% 16.05%
Net return ........................... 23.12% 24.11% 16.05%
EQ/PUTNAM GROWTH & INCOME VALUE
- -------------------------------
Gross return ......................... (1.27)% 12.75% 14.48%
Net return ........................... (1.27)% 12.75% 14.48%
T. ROWE PRICE EQUITY INCOME
- ---------------------------
Gross return ......................... 3.54% 9.11% 22.13%
Net return ........................... 3.54% 9.11% 22.13%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no Separate Account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1995 indicated is not an
annualized rate of return.
(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-44
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
EQUITY OPTIONS (CONTINUED):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995
- --------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 38.53% 21.80% 11.66% 14.60% 19.38%
Net return ........................... 38.53% 21.80% 11.66% 14.60% 19.38%
</TABLE>
<TABLE>
<CAPTION>
APRIL 30 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
--------------------------------------------------- --------------------------------
ALLIANCE INTERNATIONAL 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 37.31% 10.57% (3.05)% 9.81% 11.29%
Net return ........................... 37.31% 10.57% (3.05)% 9.81% 11.29%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 20 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ----------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999 1998 1997
- -------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 95.82% (27.10)% (20.19)%
Net return ........................... 95.82% (27.10)% (20.19)%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
T. ROWE PRICE INTERNATIONAL STOCK 1999 1998 1997
- --------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 31.92% 13.68% (1.50)%
Net return ........................... 31.92% 13.68% (1.50)%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no separate account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1998 indicated is not an
annualized rate of return.
(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-45
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
EQUITY OPTIONS (CONCLUDED):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995
- ------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 18.84% 0.29% 10.94% 22.20% 33.00%
Net return ........................... 18.84% 0.29% 10.94% 22.20% 33.00%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 20 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ----------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 27.75% (4.28)% 26.69%
Net return ........................... 27.75% (4.28)% 26.69%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return ......................... 9.70%
Net return ........................... 7.10%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 73.62% 34.57% 22.44%
Net return ........................... 73.62% 34.57% 22.44%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
WARBURG PINCUS SMALL COMPANY VALUE 1999 1998 1997
- ---------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 1.80% (10.02)% 19.13%
Net return ........................... 1.80% (10.02)% 19.13%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no separate account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1998 indicated is not an
annualized rate of return.
(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-46
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995
- ----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 17.79% 18.11% 15.06% 11.68% 20.32%
Net return ........................... 17.79% 18.11% 15.06% 11.68% 20.32%
ALLIANCE CONSERVATIVE INVESTORS
- -------------------------------
Gross return ......................... 10.14% 13.88% 13.25% 5.21% 20.59%
Net return ........................... 10.14% 13.88% 13.25% 5.21% 20.59%
ALLIANCE GROWTH INVESTORS
- -------------------------
Gross return ......................... 26.58% 19.13% 16.87%% 12.61% 26.92%
Net return ........................... 27.58% 19.13% 16.87%% 12.61% 26.92%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return ......................... 7.38%
Net return ........................... 6.97%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- --------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 0.01% 11.92% 14.48%
Net return ........................... 0.01% 11.92% 14.48%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MERRILL LYNCH WORLD STRATEGY 1999 1998 1997
- ---------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 21.35% 6.81% 4.71%
Net return ........................... 21.35% 6.81% 4.71%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no separate account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1998 indicated is not an
annualized rate of return.
(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-47
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- ---------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES 1999 1998 1997 1996
- --------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 0.02% 7.74% 7.29% 3.78%
Net return ........................... (0.66)% 6.88% 6.43% 4.49%
ALLIANCE MONEY MARKET
- ---------------------
Gross return ......................... 4.96% 5.34% 5.42% 5.33%
Net return ........................... 4.14% 4.50% 4.57% 2.98%
ALLIANCE QUALITY BOND
- ---------------------
Gross return ......................... (2.00)% 8.69% 9.14% 5.36%
Net return ........................... (2.78)% 7.82% 8.27% 7.86%
ALLIANCE HIGH YIELD
- -------------------
Gross return ......................... (3.35)% (5.15)% 18.47% 22.89%
Net return ........................... (4.13)% (5.91)% 17.52% 13.90%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- ---------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996
- --------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 25.19% 29.39% 29.40% 24.28%
Net return ........................... 24.19% 28.35% 28.18% 17.44%
ALLIANCE EQUITY INDEX
- ---------------------
Gross return ......................... 20.38% 28.07% 32.58% 22.39%
Net return ........................... 19.42% 27.05% 31.51% 16.25%
ALLIANCE GROWTH AND INCOME
- --------------------------
Gross return ......................... 18.66% 20.86% 26.90% 20.09%
Net return ........................... 17.71% 19.90% 25.74% 15.63%
</TABLE>
JUNE 4 (C) TO
DECEMBER 31,
-------------------
EQ/ALLIANCE PREMIER GROWTH 1999
- -------------------------- ----
Gross return ......................... 18.97%
Net return ........................... 18.36%
- -------------------
+ 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-48
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
EQUITY OPTIONS (CONTINUED):
AUGUST 30 (C) TO
DECEMBER 31,
-------------------
CAPITAL GUARDIAN RESEARCH 1999
- ------------------------- ----
Gross return ......................... 7.10%
Net return ........................... 6.53%
AUGUST 30 (C) TO
DECEMBER 31,
-------------------
CAPITAL GUARDIAN U.S. EQUITY 1999
- ---------------------------- ----
Gross return ......................... 3.76%
Net return ........................... 3.28%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- -----------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 19.00% 11.59% 16.99%
Net return ........................... 17.99% 10.69% 16.40%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-------------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return ......................... 8.76%
Net return ........................... 7.85%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS RESEARCH 1999 1998 1997
- ------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 23.12% 24.11% 16.07%
Net return............................ 22.13% 23.11% 15.43%
EQ/PUTNAM GROWTH & INCOME VALUE
- ---------------------------------
Gross return.......................... (1.27)% 12.75% 16.23%
Net return............................ (2.15)% 11.92% 13.87%
T. ROWE PRICE EQUITY INCOME
- ---------------------------
Gross return.......................... 3.54% 9.11% 22.11%
Net return............................ 2.73% 8.20% 21.48%
</TABLE>
- -------------------
+ 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-49
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
EQUITY OPTIONS (CONTINUED):
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------- ----------------
ALLIANCE GLOBAL 1999 1998 1997 1996
- --------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 38.53% 21.80% 11.66% 14.60%
Net return ........................... 37.42% 20.83% 10.65% 6.78%
ALLIANCE INTERNATIONAL
- ----------------------
Gross return ......................... 37.31% 10.57% (2.98)% 9.82%
Net return ........................... 36.68% 9.68% (3.83)% 2.11%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999 1998 1997
- -------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 95.82% (27.10)% (20.16)%
Net return............................ 94.18% (27.60)% (20.43)%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
T. ROWE PRICE INTERNATIONAL STOCK 1999 1998 1997
- --------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 31.92% 13.68% (1.49)%
Net return............................ 30.81% 12.79% (2.03)%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------------------------- ---------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996
- ------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 18.84% 0.29% 10.94% 22.20%
Net return ........................... 17.89% (0.52)% 9.92% 6.22%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 27.75% (4.28)% 26.74%
Net return............................ 26.89% (5.04)% 26.01%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return.......................... 9.70%
Net return............................ 6.81%
- -------------------
+ 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-50
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
EQUITY OPTIONS: (CONCLUDED):
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 73.62% 34.57% 22.42%
Net return............................ 72.28% 33.44% 21.78%
WARBURG PINCUS SMALL COMPANY VALUE
- -----------------------------------
Gross return.......................... 1.80% (10.02)% 19.15%
Net return............................ 0.99% (10.73)% 18.49%
</TABLE>
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
AUGUST 5 (A)
TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- ---------------
ALLIANCE BALANCED 1999 1998 1997 1996
- ----------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 17.79% 18.11% 15.06% 11.68%
Net return ........................... 16.85% 17.17% 14.07% 8.67%
ALLIANCE CONSERVATIVE INVESTORS
- -------------------------------
Gross return ......................... 10.14% 13.88% 13.25% 5.21%
Net return ........................... 9.26% 12.97% 12.32% 7.94%
ALLIANCE GROWTH INVESTORS
- -------------------------
Gross return ......................... 26.58% 19.13% 16.87% 12.61%
Net return ........................... 25.57% 18.18% 15.84% 9.38%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-------------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return.......................... 7.38%
Net return............................ 9.83%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 0.01% 11.92% 14.38%
Net return............................ (0.76)% 10.92% 13.87%
MERRILL LYNCH WORLD STRATEGY
- ----------------------------
Gross return.......................... 21.35% 6.81% 4.70%
Net return............................ 20.37% 5.97% 4.15%
</TABLE>
- -------------------
+ 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-51
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
SP-FLEX
- -------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
APRIL 1 (A) TO
ALLIANCE INTERMEDIATE YEARS ENDED DECEMBER 31, DECEMBER 31,
GOVERNMENT --------------------------------------------------------------------------- -------------------
SECURITIES 1999 1998 1997 1996 1995 1994 1993 1992 1991
- ---------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 0.02% 7.74% 7.29% 3.78% 13.33% (4.37)% 10.58% 5.60% 12.10%
Net return................ (1.65)% 5.82% 5.38% 1.91% 11.31% (6.08)% 8.57% 3.71% 10.59%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 4.96% 5.34% 5.42% 5.33% 5.74% 4.02% 3.00% 3.56% 6.17% 8.24%
Net return................ 3.11% 3.46% 3.54% 3.44% 3.86% 2.17% 1.13% 1.71% 4.29% 6.30%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE QUALITY BOND 1999 1998 1997 1996 1995 1994
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. (2.00)% 8.69% 9.14% 5.36% 17.02% (2.20)%
Net return................ (3.75)% 6.75% 7.19% 3.47% 14.94% (2.35)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. (3.35)% (5.15)% 18.47% 22.89% 19.92% (2.79)% 23.15% 12.31% 24.46% (1.12)%
Net return................ (5.08)% (6.84)% 16.35% 20.68% 17.79% (4.52)% 20.96% 10.30% 22.25% (2.89)%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 25.19% 29.39% 29.40% 24.28% 32.45% (2.14)% 24.84% 3.23% 37.87% (8.12)%
Net return................ 22.96% 27.08% 26.91% 22.04% 30.10% (3.88)% 22.60% 1.38% 35.43% (9.76)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE EQUITY INDEX 1999 1998 1997 1996 1995 1994
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 20.38% 28.07% 32.58% 22.39% 36.48% (2.54)%
Net return................ 18.24% 25.79% 30.21% 20.19% 34.06% (2.69)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE GROWTH & INCOME 1999 1998 1997 1996 1995 1994
- ------------------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 18.66% 20.86% 26.90% 20.09% 24.07% (3.40)%
Net return................ 16.55% 18.71% 24.50% 17.93% 21.87% (3.55)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 38.53% 21.80% 11.66% 14.60% 18.81% 5.23% 32.09% (0.50)% 30.55% (6.07)%
Net return................ 36.06% 19.63% 9.56% 12.54% 16.70% 3.36% 29.77% (2.28)% 28.23% (7.75)%
</TABLE>
- -------------------
+ 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-52
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
DECEMBER 31, 1999
RATES OF RETURN (CONCLUDED):
SP-FLEX
- -------
EQUITY OPTIONS (CONCLUDED):
<TABLE>
<CAPTION>
APRIL 3 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE INTERNATIONAL 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return.............. 37.31% 10.57% (3.05)% 9.82% 11.29%
Net return................ 35.33% 8.60% (4.78)% 7.84% 9.82%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 18.84% 0.29% 10.94% 22.20% 31.63% (3.81)% 16.77% (3.16)% 86.86% 8.17%
Net return................ 16.72% (1.50)% 8.83% 20.00% 29.30% (5.53)% 14.67% (4.89)% 83.54% 6.23%
</TABLE>
ASSET ALLOCATION SERIES:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................. 17.79% 18.11% 15.06% 11.68% 19.75% (8.02)% 12.28% (2.83)% 41.27% 0.24 %
Net return.................... 15.69% 16.01% 12.94% 9.67% 17.62% (9.66)% 10.31% (4.57)% 38.75% (1.56)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
ALLIANCE YEARS ENDED DECEMBER 31 DECEMBER 31,
CONSERVATIVE --------------------------------------------------------------------------- -------------------
INVESTORS 1999 1998 1997 1996 1995 1994
- --------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.................. 10.14% 13.88% 13.25% 5.21% 20.40% (1.83)%
Net return.................... 8.18% 11.85% 11.21% 3.32% 18.26% (1.98)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE GROWTH INVESTORS 1999 1998 1997 1996 1995 1994
- ------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.................. 26.58% 19.13% 16.87% 12.61% 26.37% (3.16)%
Net return.................... 24.33% 17.00% 14.69% 10.58% 24.12% (3.31)%
</TABLE>
- -------------------
+ 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.
- ------------------------------
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-53
<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>
APPENDIX I: INVESTMENT PERFORMANCE RECORD
- ----------------
AA-1
- --------------------------------------------------------------------------------
APPENDIX I: INVESTMENT PERFORMANCE RECORD
The tables below show performance information for the variable investment
options. The performance shown for each option equals the performance of the
Portfolio corresponding to that option, reduced by the current rate of the
policies' mortality and expense risk charge (.60% annual rate). You can find
more information about the performance of the Portfolios in the EQ Advisors
Trust prospectus attached at the end of this prospectus. The performance
figures on which the tables are based are after deduction of all fees and
expenses paid by the Trust or any of the Portfolios.
For periods prior to October 18, 1999, the "Alliance" Portfolios (other than
EQ/Alliance Premier Growth and EQ/Alliance Technology) were part of The Hudson
River Trust. On October 18, 1999, these Portfolios became corresponding
Portfolios of EQ Advisors Trust. In each case, the performance shown is for
the indicated EQ Advisors Trust Portfolio and any predecessors that it may
have had.
The tables below, however, do not take into account the following additional
charges that we will deduct under your policy: (1) the sales charge and the
tax charge that we deduct from each premium payment you make; (2) the monthly
cost of insurance charge; (3) the policies' monthly administrative charge; (4)
the death benefit guarantee charge; (5) the surrender charges; or (6) any
charge for optional rider benefits you may select. For more information about
these charges, see "Charges and expenses you will pay" in this prospectus. If
we reflected these charges, the performance shown below would be reduced. We
have not done so, however, because the actual impact of these charges on a
particular policy varies considerably based on such factors as the insurance
risk characteristics of the insured person; the face amount and other options
you select for your policy; the state of policy issuance; the amount and
timing of your premium payments; and whether you make transfers or
withdrawals, take policy loans, or surrender your policy. In order to better
understand how the charges we have omitted from the below tables will affect
your policy's value, you should refer to your Illustrations of Policy Benefits
that your financial professional will provide. You can request Equitable Life
or your financial professional to provide you with such illustrations at any
time, whether before or after you purchase a policy.
<PAGE>
- ----------------
AA-2
- --------------------------------------------------------------------------------
APPENDIX I: INVESTMENT PERFORMANCE RECORD
AVERAGE ANNUAL RATE OF RETURN AFTER
DEDUCTION OF MORTALITY AND EXPENSE
RISK CHARGE FOR PERIODS ENDING
DECEMBER 31, 1999*
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTION 1 YR. 3 YRS. 5 YRS.
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIXED INCOME
- ------------------------------------------------------------------------------------
Alliance High Yield ............................ (3.93%) 2.17% 9.20%
Alliance Intermediate Government Securities (0.46%) 4.37% 5.73%
Alliance Money Market .......................... 4.35% 4.61% 4.73%
Alliance Quality Bond .......................... (2.59%) 4.52% 6.82%
- ------------------------------------------------------------------------------------
DOMESTIC STOCKS
- ------------------------------------------------------------------------------------
EQ/Aggressive Stock ............................ 18.13% 9.06% 15.57%
Alliance Common Stock .......................... 24.44% 27.15% 27.30%
Alliance Equity Index .......................... 19.66% 26.15% 27.07%
Alliance Growth & Income ....................... 17.95% 21.31% 21.32%
Alliance Small Cap Growth ...................... 27.14% - -
EQ/Evergreen ................................... 9.06% - -
EQ/Putnam Growth & Income Value ................ (1.95%) - -
MFS Emerging Growth Companies .................. 72.63% - -
MFS Growth with Income ......................... 8.06% - -
MFS Research ................................... 22.38% - -
Mercury Basic Value Equity ..................... 18.23% - -
T. Rowe Price Equity Income .................... 2.93% - -
Warburg Pincus Small Company Value ............. 1.19% - -
- ------------------------------------------------------------------------------------
INTERNATIONAL STOCKS
- ------------------------------------------------------------------------------------
Alliance Global ................................ 37.70% 22.72% 19.98%
Alliance International ......................... 36.96% 13.20% -
Morgan Stanley Emerging Markets Equity ......... 94.57% - -
T. Rowe Price International Stock .............. 31.08% - -
- ------------------------------------------------------------------------------------
<CAPTION>
SINCE PORTFOLIO INCEPTION
- -----------------------------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTION 10 YRS. 20 YRS. (DATE**)
- -------------------------------------------------- ---------- ---------- ---------------------------
<S> <C> <C> <C> <C>
FIXED INCOME
- -----------------------------------------------------------------------------------------------------
Alliance High Yield ............................ 9.57% - 8.70% (1/2/87)
Alliance Intermediate Government Securities - - 5.64% (4/1/91)
Alliance Money Market .......................... 4.54% - 6.31% (7/13/81)
Alliance Quality Bond .......................... - - 4.33% (10/1/93)
- -----------------------------------------------------------------------------------------------------
DOMESTIC STOCKS
- -----------------------------------------------------------------------------------------------------
EQ/Aggressive Stock ............................ 15.96% - 17.16% (1/27/86)
Alliance Common Stock .......................... 17.88% 17.68% 16.04% (1/13/76)
Alliance Equity Index .......................... - - 22.89% (3/1/94)
Alliance Growth & Income ....................... - - 16.42% (10/1/93)
Alliance Small Cap Growth ...................... - - 17.18% (5/1/97)
EQ/Evergreen ................................... - - 9.06% (12/31/98)
EQ/Putnam Growth & Income Value ................ - - 9.46% (5/1/97)
MFS Emerging Growth Companies .................. - - 47.38% (5/1/97)
MFS Growth with Income ......................... - - 8.06% (12/31/98)
MFS Research ................................... - - 23.20% (5/1/97)
Mercury Basic Value Equity ..................... - - 17.23% (5/1/97)
T. Rowe Price Equity Income .................... - - 12.14% (5/1/97)
Warburg Pincus Small Company Value ............. - - 2.71% (5/1/97)
- -----------------------------------------------------------------------------------------------------
INTERNATIONAL STOCKS
- -----------------------------------------------------------------------------------------------------
Alliance Global ................................ 15.14% - 13.78% (8/27/87)
Alliance International ......................... - - 12.56% (4/3/95)
Morgan Stanley Emerging Markets Equity ......... - - 5.07% (8/20/97)
T. Rowe Price International Stock .............. - - 15.04% (5/1/97)
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- ----------------
AA-3
- --------------------------------------------------------------------------------
APPENDIX I: INVESTMENT PERFORMANCE RECORD
<TABLE>
<CAPTION>
Since Portfolio Inception
Variable Investment Option 1 yr. 3 yrs. 5 yrs. 10 yrs. 20 yrs. (Date**)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCED/HYBRID INVESTMENT OPTIONS
- --------------------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors ......... 9.48% 11.73% 11.79% 9.27% - 9.34% (10/2/89)
Alliance Growth Investors ............... 25.82% 20.03% 19.45% 16.37% - 16.36% (10/2/89)
EQ/Balanced ............................. 17.09% 16.26% 15.73% 11.09% - 12.40% (1/27/86)
EQ/Evergreen Foundation ................. 6.72% - - - - 6.72% (12/31/98)
EQ/Putnam Balanced ...................... (0.56%) - - - - 9.05% (5/1/97)
Mercury World Strategy .................. 20.62% - - - - 11.45% (5/1/97)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* No performance information is shown for EQ/Alliance Technology as that
Portfolio had not received its initial funding prior to December 31,
1999. Additionally, no performance information is shown for EQ/Alliance
Premier Growth, Capital Guardian Research or Capital Guardian U.S. Equity
as these Portfolios became available after December 31, 1998. The
inception dates for these Portfolios is April 30, 1999.
** The inception date shown is the date that the relevant Portfolio (or its
predecessor) received its initial funding.
In some cases, the return information shown above includes a period of time
prior to when Separate Account FP first offered a corresponding variable
investment option under any form of variable life insurance policy. Therefore,
the below table provides additional performance information from the date that
those investment options actually received initial funding.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTION AVERAGE ANNUAL RATES OF RETURN FOR PERIODS ENDING DECEMBER 31, 1999
SINCE VARIABLE INVESTMENT OPTION INCEPTION (DATE)
- ----------------------------------------------------------------------------------------------------
<S> <C>
Alliance Common Stock 17.69% (1/27/86)
Alliance Money Market 5.17% (1/27/86)
- ----------------------------------------------------------------------------------------------------
</TABLE>
Unlike the rate of return tables above, the following yield information does not
include capital gains and losses that the Portfolios corresponding to the
indicated variable investment options may have experienced.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTION ANNUALIZED YIELD FOR PERIODS
ENDING DECEMBER 31, 1999
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
7 DAYS 30 DAYS
- ----------------------------------------------------------------------------------------------------
Alliance High Yield - 12.59%
Alliance Intermediate Government Securities - 5.28%
Alliance Money Market 4.67% -
Alliance Quality Bond - 6.05%
- ----------------------------------------------------------------------------------------------------
</TABLE>
The information in the tables above is not a guarantee, a prediction, or
necessarily an indication of future performance.
<PAGE>
APPENDIX II: OUR DATA ON MARKET PERFORMANCE
- ----------------
BB-1
- --------------------------------------------------------------------------------
APPENDIX II: 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>
<CAPTION>
<S> <C>
- ---------------------------------------------------------------------
Barron's Money Management Letter
Morningstar's Variable 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 Advisor The Chicago Tribune
Investment Management Weekly
- ---------------------------------------------------------------------
</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 Incentive Life Plus premiums.
Historically, the investment performance of common stocks over the long term
has generally been superior to that of long- or short-term debt securities.
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>
- ----------------
BB-2
- --------------------------------------------------------------------------------
APPENDIX II: 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 COMMON GOVERNMENT CORPORATE TERM GOV'T U.S. TREASURY CONSUMER
ENDING 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 III: AN INDEX OF KEY WORDS AND PHRASES
- ----------------
CC-1
- --------------------------------------------------------------------------------
APPENDIX III: 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 22
Administrative Office 5
administrative surrender charge 8
age 35
Allocation Date 15
alternative death benefit 16
amount at risk 40
anniversary 35
assign; assignment 33
automatic transfer service 24
AXA Advisors, LLC 43
AXA Financial, Inc. 4
basis 29
beneficiary 20
business day 34
Cash Surrender Value 25
Code 28
collateral 25
cost of insurance charge 7, 40
cost of insurance rates 40
day 34
death benefit guarantee 14
default 13
dollar cost averaging service 23
EQAccess 5
EQ Advisors Trust 15
EQ Financial Consultants 43
Equitable Life 4
Equitable Access Account 20
face amount 16
grace period 13
guaranteed interest option 16
Guaranteed Interest Account 16
Incentive Life Plus cover
insured person 16
Investment Funds 15
investment option 15
issue date 35
lapse 13
loan, loan interest 25
<CAPTION>
PAGE
<S> <C>
matures, maturity, maturity date 27
modified endowment contract 13
month, year 35
monthly deduction 7, 41
monthly insurance charge 40
net cash surrender value 26
no-lapse guarantee 14
option A, B 16
our 2
owner 2
partial withdrawal 26
payment option 20
planned periodic premium 13
policy cover
Portfolio cover
premium payments 13
premium surrender charge 8
prospectus cover
rebalancing 24
receive 34
restore, restoration 14
rider 19
SEC cover
Separate Account FP 37
specified premium 14
state 2
subaccount 37
surrender 26
surrender charges 8
target premium 8
telephone transfers 23
transfers 23
Trust 15
units 22
unit values 22
us 2
variable investment option cover
we 2
withdrawal 26
you, your 2
</TABLE>
<PAGE>
The Equitable Life Assurance Society
of the United States
Variable Life Insurance Policies
IL Protector(R)
IL COLI
Incentive Life Plus(R)
Survivorship 2000
Special Offer Policy
Incentive Life 2000
Champion 2000
Incentive Life
PROSPECTUS SUPPLEMENT DATED MAY 1, 2000
- --------------------------------------------------------------------------------
This supplement updates certain information in the most recent prospectus you
received for your Equitable variable life insurance policy listed above, and in
any prior supplements to that prospectus.*
NEW INVESTMENT OPTIONS. Beginning on or about May 22, 2000 you will have a new
variable investment option (Fund) available under your policy:
o EQ/Alliance Technology**
Alliance Capital Management L.P. is the investment advisor for this new
Portfolio of EQ Advisors Trust. See "Investment Portfolios" below, as well as
the EQ Advisors Trust prospectus attached to this supplement, for more
information.
EQUITABLE. The information under the heading "Equitable" in your prospectus is
updated as follows:
EQUITABLE. We are The Equitable Life Assurance Society of the United States
(Equitable or 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
$462.7 billion in assets as of December 31, 1999. 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.
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
- ----------------------
* The dates of such prior prospectuses are listed for your information in
Appendix C to this supplement. You should keep this supplement with your
prospectus and any previous prospectus supplement. We will send you another
copy of any prospectus or supplement, without charge, on written request.
** This option may not be available in California.
Copyright 2000 The Equitable Life Assurance Society of the United States.
All rights reserved. IL Protector(R) and Incentive Life Plus(R) are registered
service marks of The Equitable Life Assurance Society of the United States.
<PAGE>
2
- --------------------------------------------------------------------------------
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:
P.O. Box 1047
Charlotte, North Carolina 28201-1047
- ---------------------------------------------------------
BY EXPRESS DELIVERY ONLY:
- ---------------------------------------------------------
At the Street Address for our Administrative Office:
Equitable Life
National Operations Center
10840 Ballantyne Commons Parkway
Charlotte, N.C. 28277
- ---------------------------------------------------------
BY TOLL-FREE PHONE:
- ---------------------------------------------------------
1-888-855-5100
(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 E-MAIL:
- ---------------------------------------------------------
[email protected]
- ---------------------------------------------------------
BY FAX:
- ---------------------------------------------------------
1-704-540-9714
- ---------------------------------------------------------
BY INTERNET:
- ---------------------------------------------------------
Our Web site (www.equitable.com) can also provide information; some of the forms
listed below are available for you to print out through our Web site by clicking
on "Contact Us." You can also 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
sole 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 among investment options; and
(e) changes in allocation percentages for premiums and deductions.
You can change your allocation 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 Requests" below.
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 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>
3
- --------------------------------------------------------------------------------
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 premium payments after the first one to our Administrative Office at
the above addresses; except that you should send any premiums for which we have
billed you to the address on the billing notice.
TELEPHONE AND EQACCESS REQUESTS. If you are both the sole owner and an insured
person under your policy, you may call 1-888-855-5100 (toll free) from a touch
tone phone to make the following types of requests:
o policy loans
o changes of address
o changes of premium allocation percentages
o transfers among investment options (Funds)
If you are not both an insured person and the owner, you may send 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.
By the end of 2000, we anticipate that you will be able to make transfers among
investment options (Funds) and changes in premium allocation percentages 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 transactions apply to EQAccess transactions.
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.
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 confirmation letter by first class mail.
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 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
<PAGE>
4
- --------------------------------------------------------------------------------
security and/or integrity of our automated systems (see discussion of "Market
timing" below).
Any telephone or Internet transaction request that you make 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 transactions 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.
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.
ASSET REBALANCING. Over time, your relative position in each investment option
may change due to the fluctuation of unit prices, premium payments, monthly
deductions and other transactions. Asset rebalancing, which we introduced last
year, can be useful to you if you wish to maintain a specified asset mix.
The following description replaces the description of our asset rebalancing
service in your prospectus (or supplement):
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.
You may request the asset rebalancing service at any time. You may change your
allocation instructions or discontinue participation in the asset rebalancing
service at any time.
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.
Subsequent periodic rebalancings will occur quarterly, semiannually or annually,
as you have requested.
INVESTMENT PORTFOLIOS. Your policy offers the investment Portfolios listed in
the table below, along with the Guaranteed Interest Account.
<PAGE>
5
- --------------------------------------------------------------------------------
In addition to the other charges we make under your policy, you also bear your
proportionate share of all fees and expenses paid by a Portfolio that
corresponds to any variable investment option (Fund) you are using. The tables
below show the fees and expenses paid by each Portfolio for the year ended
December 31, 1999, except as otherwise noted. 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(4) 0.60% -- 0.04% 0.64% -- 0.64%
- -----------------------------------------------------------------------------------------------------------------------
EQ/Balanced(5) 0.57% -- 0.05% 0.62% -- 0.62%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Common Stock 0.46% -- 0.04% 0.50% -- 0.50%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors 0.60% -- 0.07% 0.67% -- 0.67%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Equity Index 0.25% -- 0.05% 0.30% -- 0.30%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Global 0.73% -- 0.09% 0.82% -- 0.82%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income 0.59% -- 0.05% 0.64% -- 0.64%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors 0.57% -- 0.05% 0.62% -- 0.62%
- -----------------------------------------------------------------------------------------------------------------------
Alliance High Yield 0.60% -- 0.05% 0.65% -- 0.65%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Intermediate Government
Securities 0.50% -- 0.07% 0.57% -- 0.57%
- -----------------------------------------------------------------------------------------------------------------------
Alliance International 0.85% -- 0.20% 1.05% -- 1.05%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Money Market 0.34% -- 0.05% 0.39% -- 0.39%
- -----------------------------------------------------------------------------------------------------------------------
EQ/Alliance Premier Growth(6) 0.90% 0.25% 0.23% 1.38% 0.23% 1.15%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Quality Bond 0.53% -- 0.05% 0.58% -- 0.58%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth(7) 0.75% -- 0.07% 0.82% -- 0.82%
- -----------------------------------------------------------------------------------------------------------------------
EQ/Alliance Technology(8) 0.90% 0.25% 0.10% 1.25% 0.10% 1.15%
- -----------------------------------------------------------------------------------------------------------------------
Capital Guardian Research(6) 0.65% 0.25% 0.47% 1.37% 0.42% 0.95%
- -----------------------------------------------------------------------------------------------------------------------
Capital Guardian U.S. Equity(6) 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%
- -----------------------------------------------------------------------------------------------------------------------
Mercury Basic Value Equity(9) 0.60% 0.25% 0.17% 1.02% 0.07% 0.95%
- -----------------------------------------------------------------------------------------------------------------------
Mercury World Strategy(10) 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 Balanced 0.60% 0.25% 0.28% 1.13% 0.23% 0.90%
- -----------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value 0.60% 0.25% 0.16% 1.01% 0.06% 0.95%
- -----------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income 0.60% 0.25% 0.21% 1.06% 0.11% 0.95%
- -----------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock 0.85% 0.25% 0.30% 1.40% 0.15% 1.25%
- -----------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value 0.75% 0.25% 0.24% 1.24% 0.14% 1.10%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
6
- --------------------------------------------------------------------------------
(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 Balanced, EQ/Putnam Growth & Income Value, Warburg
Pincus Small Company Value and T. Rowe Price International Stock 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. 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 MFS Emerging Growth Companies, MFS Growth with Income, MFS
Research, Mercury Basic Value Equity, EQ/Putnam Growth & Income Value, T.
Rowe Price Equity Income, T. Rowe Price International Stock and Warburg
Pincus Small Company Value Portfolios reflect an increase effective on May
1, 2000. The expense limitation for the EQ/Evergreen Portfolio reflects a
decrease effective on May 1, 2000.
(4) Formerly named "Alliance Aggressive Stock." Effective May 1, 2000,
Massachusetts Financial Services Company joined Alliance Capital Management
L.P. as an investment advisor for this Portfolio.
(5) Formerly named "Alliance Balanced." Effective May 1, 2000, Capital Guardian
Trust Company, Jennisen Associates LLC and Prudential Investments Fund
Management LLC joined Alliance Capital Management L.P. as investment
advisors for this Portfolio.
(6) Initial seed capital was invested in the EQ/Alliance Premier Growth,
Capital Guardian Research and Capital Guardian U.S. Equity Portfolios on
April 30, 1999; thus, Other Expenses for these Portfolios have been
estimated.
(7) 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.
(8) Expenses shown are based on annualized estimates for 2000. Initial seed
capital will be invested in the EQ/Alliance Technology Portfolio on or
about May 1, 2000.
(9) Formerly named "Merrill Lynch Basic Value Equity."
(10) Formerly named "Merrill Lynch World Strategy."
INVESTMENT PERFORMANCE. Footnote 6 to the Separate Account FP financial
statements set forth below contains information about the net return for each
Fund (variable investment option) which commenced operations prior to December
31, 1999. The attached prospectus for EQ Advisors Trust contains rates of return
and other Portfolio performance information for various periods ended December
31, 1999. The changes in the Policy Account value of your policy depend not only
on the performance of the Portfolios, but also on the deductions and charges
under your policy. To obtain the current unit values of the Separate Account
Funds, call (888) 855-5100.
The values reported in footnote 6 for all policies are computed using net rates
of return for the corresponding Portfolios of EQ Advisors Trust. The returns
reported in footnote 6 for each of the policy forms are reduced only by any
mortality and expense risk charge deducted from Separate Account assets.
LONG-TERM MARKET TRENDS. Appendix B to this supplement presents historical
return trends for various types of securities which may be useful for
understanding how different investment strategies may affect long-term results.
<PAGE>
7
- --------------------------------------------------------------------------------
DISTRIBUTION. Because of its activities in distributing our products, AXA
Advisors, LLC (the successor to EQ Financial Consultants, Inc.) is the
"principal underwriter" (as defined in the Investment Company Act of 1940) of
our variable life insurance policies. In 1997, 1998 and 1999 we paid AXA
Advisors a fee of $325,380 annually for its services as such.
ILLUSTRATIONS OF POLICY BENEFITS. For purposes of illustrations of the type set
forth under this caption in your prospectus, the new aggregate expense
assumption for the Portfolios is 0.72% per annum (0.65% per annum for investment
management fees and 0.07% per annum for other expenses). The investment
management fee assumption is the average of the advisory fees payable for each
EQ Advisors Trust Portfolio based on average net assets for 1999. The other
expense assumption is the weighted average of the other expenses (including any
applicable "Rule 12b-1" distribution fees) of the EQ Advisors Trust Portfolios,
based on average net assets for 1999. The tables under this caption in your
prospectus have not been restated to reflect this new Portfolio expense
assumption. For a personalized illustration reflecting the fees and expenses
under your policy, contact your financial professional.
DELETION OF CERTAIN INFORMATION. The following information that appears in your
prospectus is deleted:
o all quotations of investment yield or return that are based on the
historical investment performance of the available Portfolios under
your policy; and all illustrations of policy values based on such
historical performance.
o all information about the Portfolios' investment objectives and policies.
MANAGEMENT. A list of our directors and, to the extent they are responsible for
variable life insurance operations, our principal officers and a brief statement
of their business experience for the past five years is contained in Appendix A
to this supplement.
FINANCIAL STATEMENTS. The financial statements of Separate Account FP as of
December 31, 1999 and for 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 the three years in the period ended December 31, 1999 included in this
prospectus supplement have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements of Equitable Life contained in this prospectus
supplement should be considered only as bearing upon the ability of Equitable
Life to meet its obligations under the policies. They should not be considered
as bearing upon the investment experience of the Funds in the Separate Account.
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
INDEX TO FINANCIAL STATEMENTS
<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-15
Notes to Financial Statements...................................................................... FSA-24
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants..................................................................... F-1
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 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, 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
+ Formerly known as Equitable Variable Life Insurance Company Separate Account FP.
</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 Intermediate Government Securities, Alliance Money
Market, Alliance Quality Bond, Alliance High Yield, Alliance Common Stock,
Alliance Equity Index, Alliance Growth & Income, 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, T. Rowe Price Equity Income, Alliance Global, Alliance International,
Morgan Stanley Emerging Markets Equity, T. Rowe Price International Stock,
Alliance Aggressive Stock, Alliance Small Cap Growth, EQ/Evergreen, MFS Emerging
Growth Companies, Warburg Pincus Small Company Value, Alliance Balanced,
Alliance Conservative Investors, Alliance Growth Investors, EQ/Evergreen
Foundation, EQ/Putnam Balanced and Merrill Lynch World Strategy ("EQ Advisors
Trust Variable Investment Options"), 30 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>
FIXED INCOME OPTIONS: EQUITY OPTIONS:
------------------------------------------------------ ----------------------------
ALLIANCE
INTERMEDIATE ALLIANCE ALLIANCE ALLIANCE
GOVERNMENT MONEY ALLIANCE HIGH COMMON ALLIANCE
SECURITIES MARKET QUALITY BOND YIELD STOCK EQUITY INDEX
------------ ------------ ------------ ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 80,139,159................. $78,746,672
342,765,909................. $344,082,723
246,885,528................. $233,631,434
177,773,173................. $149,030,820
3,081,451,600................. $3,783,859,850
621,830,916................. $850,584,523
205,101,089.................
46,147,852.................
182,262.................
494,512.................
38,508,013.................
391,533.................
Receivable for Trust shares sold.......... 58,836 -- -- 5,046 -- --
Receivable for policy-related
transactions.......................... 68,831 4,909,455 434,709 798,616 15,840,922 2,266,891
----------- ------------ ------------ ------------ -------------- ------------
Total Assets.............................. $78,874,339 $348,992,178 $234,066,143 $149,834,482 $3,799,700,772 $852,851,414
----------- ------------ ------------ ------------ -------------- ------------
LIABILITIES
Payable for Trust shares purchased........ $ -- $ 4,563,801 $ 161,711 $ -- $ 19,831,580 $ 2,546,878
Payable for policy-related
transactions.......................... -- -- -- -- -- --
----------- ------------ ------------ ------------ -------------- ------------
Total Liabilities......................... -- 4,563,801 161,711 -- 19,831,580 2,546,878
----------- ------------ ------------ ------------ -------------- ------------
NET ASSETS................................ $78,874,339 $344,428,377 $233,904,432 $149,834,482 $3,779,869,192 $850,304,536
=========== ============ ============ ============ ============== ============
Amount retained by Equitable Life
in Separate Account FP (Note 4)....... $ 945,030 $ 16,198 $ 1,326,200 $ 1,280 $ 80,914 $ 121,396
Net Assets Attributable
to Contractowners..................... 77,929,309 344,412,179 232,578,232 149,833,202 3,779,788,278 850,183,140
----------- ------------ ------------ ------------ -------------- ------------
NET ASSETS................................ $78,874,339 $344,428,377 $233,904,432 $149,834,482 $3,779,869,192 $850,304,536
=========== ============ ============ ============ ============== ============
<CAPTION>
EQUITY OPTIONS:
--------------------------------------------------------------------
EQ/ CAPITAL MERRILL MFS
ALLIANCE ALLIANCE CAPITAL GUARDIAN LYNCH GROWTH
GROWTH PREMIER GUARDIAN U.S. BASIC VALUE WITH
& INCOME GROWTH RESEARCH EQUITY EQUITY INCOME
----------- ----------- -------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 80,139,159.................
342,765,909.................
246,885,528.................
177,773,173.................
3,081,451,600.................
621,830,916.................
205,101,089................. $232,271,328
46,147,852................. $51,216,559
182,262................. $193,355
494,512................. $511,837
38,508,013................. $39,778,636
391,533................. $412,169
Receivable for Trust shares sold.......... 160,367 -- -- -- -- --
Receivable for policy-related
transactions.......................... -- 283,944 24,204 -- 23,002 8,035
------------ ----------- -------- -------- ----------- --------
Total Assets.............................. $232,431,695 $51,500,503 $217,559 $511,837 $39,801,638 $420,204
------------ ----------- -------- -------- ----------- --------
LIABILITIES
Payable for Trust shares purchased........ $ -- $ 283,146 $ 24,204 $ -- $ 11,329 $ 4,490
Payable for policy-related
transactions.......................... 112,046 -- -- -- -- --
------------ ----------- -------- -------- ----------- --------
Total Liabilities......................... 112,046 283,146 24,204 -- 11,329 4,490
------------ ----------- -------- -------- ----------- --------
NET ASSETS................................ $232,319,649 $51,217,357 $193,355 $511,837 $39,790,309 $415,714
============ =========== ======== ======== =========== ========
Amount retained by Equitable Life
in Separate Account FP (Note 4)....... $ 434,457 $ 3,545 $ 219 $ 387 $ 81,800 $ 3,570
Net Assets Attributable
to Contractowners..................... 231,885,192 51,213,812 193,136 511,450 39,708,509 412,144
------------ ----------- -------- -------- ----------- --------
NET ASSETS................................ $232,319,649 $51,217,357 $193,355 $511,837 $39,790,309 $415,714
============ =========== ======== ======== =========== ========
</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>
EQUITY OPTIONS (CONCLUDED):
-----------------------------------------------------------------------------
MORGAN
EQ/PUTNAM T. ROWE STANLEY
GROWTH & PRICE EMERGING
MFS INCOME EQUITY ALLIANCE ALLIANCE MARKETS
RESEARCH VALUE INCOME GLOBAL INTERNATIONAL EQUITY
----------- ----------- ----------- ------------ ------------- -----------
<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
54,114,065..................... $53,161,413
552,424,363..................... $724,986,725
51,584,951..................... $76,876,125
29,914,338..................... $40,958,925
43,913,498.....................
892,630,699.....................
46,097,819.....................
27,230.....................
160,950,031.....................
38,188,722.....................
Receivable for Trust shares sold.............. 252,705 -- -- -- -- --
Receivable for policy-related
transactions.............................. -- 82,740 194,627 1,126,946 92,708 82,278
----------- ----------- ----------- ------------ ----------- -----------
Total Assets.................................. $48,850,291 $21,863,477 $53,356,040 $726,113,671 $76,968,833 $41,041,203
----------- ----------- ----------- ------------ ----------- -----------
LIABILITIES
Payable for Trust shares purchased............ $ -- $ 69,698 $ 154,373 $ 1,211,437 $ 87,078 $ 350,654
Payable for policy-related
transactions.............................. 212,939 -- -- -- -- --
----------- ----------- ----------- ------------ ----------- -----------
Total Liabilities............................. 212,939 69,698 154,373 1,211,437 87,078 350,654
----------- ----------- ----------- ------------ ----------- -----------
NET ASSETS................................... $48,637,352 $21,793,779 $53,201,667 $724,902,234 $76,881,755 $40,690,549
=========== =========== =========== ============ =========== ===========
Amount retained by Equitable Life
in Separate Account FP (Note 4)........... $ 142,291 $ 69,602 $ 126,030 $ 3,388 $ 964,072 $ 1,767,601
Net Assets Attributable
to Policyowners........................... 48,495,061 21,724,177 53,075,637 724,898,846 75,917,683 38,922,948
----------- ----------- ----------- ------------ ----------- -----------
NET ASSETS.................................... $48,637,352 $21,793,779 $53,201,667 $724,902,234 $76,881,755 $40,690,549
=========== =========== =========== ============ =========== ===========
<CAPTION>
EQUITY OPTIONS (CONCLUDED):
----------------------------------------------------------------------------
WARBURG
T. ROWE MFS PINCUS
PRICE ALLIANCE ALLIANCE EMERGING SMALL
INTERNATIONAL AGGRESSIVE SMALL CAP EQ/ GROWTH COMPANY
STOCK STOCK GROWTH EVERGREEN COMPANIES VALUE
------------- -------------- ----------- --------- ------------ -----------
<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.....................
23,253,533.....................
54,114,065.....................
552,424,363.....................
51,584,951.....................
29,914,338.....................
43,913,498..................... $53,258,879
892,630,699..................... $1,051,440,590
46,097,819..................... $70,174,096
27,230..................... $28,680
160,950,031..................... $238,027,993
38,188,722..................... $35,893,840
Receivable for Trust shares sold.............. -- 2,154,914 22,666,998 -- -- 71,466
Receivable for policy-related
transactions.............................. 57,539 -- -- -- 1,271,988 --
----------- -------------- ----------- ------- ------------ -----------
Total Assets.................................. $53,316,418 $1,053,595,504 $92,841,094 $28,680 $239,299,981 $35,965,306
----------- -------------- ----------- ------- ------------ -----------
LIABILITIES
Payable for Trust shares purchased............ $ 2,392 $ -- $ -- $ -- $ 1,116,940 $ --
Payable for policy-related
transactions.............................. -- 1,550,441 22,460,673 -- -- 17,093
----------- -------------- ----------- ------- ------------ -----------
Total Liabilities............................. 2,392 1,550,441 22,460,673 -- 1,116,940 17,093
----------- -------------- ----------- ------- ------------ -----------
NET ASSETS................................... $53,314,026 $1,052,045,063 $70,380,421 $28,680 $238,183,041 $35,948,213
=========== ============== =========== ======= ============ ===========
Amount retained by Equitable Life
in Separate Account FP (Note 4)........... $ 178,040 $ 3,855 $ 527,774 $ 18 $ 386,768 $ 164,967
Net Assets Attributable
to Policyowners........................... 53,135,986 1,052,041,208 69,852,647 28,662 237,796,273 35,783,246
----------- -------------- ----------- ------- ------------ -----------
NET ASSETS.................................... $53,314,026 $1,052,045,063 $70,380,421 $28,680 $238,183,041 $35,948,213
=========== ============== =========== ======= ============ ===========
</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>
ASSET ALLOCATION OPTIONS:
------------------------------------------------------------------------------------
MERRILL
ALLIANCE ALLIANCE EQ/ EQ/ LYNCH
ALLIANCE CONSERVATIVE GROWTH EVERGREEN PUTNAM WORLD
BALANCED INVESTORS INVESTORS FOUNDATION BALANCED STRATEGY
------------ ------------ -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $453,630,311..................... $546,866,262
194,380,806..................... $217,969,178
928,527,892..................... $1,216,541,911
2,749..................... $ 2,848
8,911,255..................... $8,418,996
4,518,718..................... $5,372,189
Receivable for Trust shares sold.............. -- 15,822 -- -- -- --
Receivable for policy-related
transactions.............................. -- 115,963 703,914 -- 16,607 1,267
------------ ------------ -------------- ------- ---------- ----------
Total Assets.................................. $546,866,262 $218,100,963 $1,217,245,825 $ 2,848 $8,435,603 $5,373,456
------------ ------------ -------------- ------- ---------- ----------
LIABILITIES
Payable for Trust shares purchased............ $ 31,321 $ -- $ 353,476 $ -- $ 4,500 $ 1,232
Payable for policy-related
transactions.............................. 123,383 -- -- -- -- --
------------ ------------ -------------- ------- ---------- ----------
Total Liabilities............................. 154,704 -- 353,476 -- 4,500 1,232
------------ ------------ -------------- ------- ---------- ----------
NET ASSETS.................................... $546,711,558 $218,100,963 $1,216,892,349 $ 2,848 $8,431,103 $5,372,224
============ ============ ============== ======= ========== ==========
Amount retained by Equitable Life
in Separate Account FP (Note 4)........... $ 1,088,939 $ 521,116 $ 924,554 $ 2 $ 70,099 $ 494,770
Net Assets Attributable
to Contractowners......................... 545,622,619 217,579,847 1,215,967,795 2,846 8,361,004 4,877,454
------------ ------------ -------------- ------- ---------- ----------
NET ASSETS.................................... $546,711,558 $218,100,963 $1,216,892,349 $ 2,848 $8,431,103 $5,372,224
============ ============ ============== ======= ========== ==========
</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>
FIXED INCOME OPTIONS:
-------------------------------------------------------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES ALLIANCE MONEY MARKET
---------------------------------- ------------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 4,049,521 $3,477,938 $2,914,613 $13,943,193 $10,719,684 $9,754,675
Expenses (Note 3):
Mortality and expense
risk charges..................... 378,916 350,536 282,422 1,613,234 1,204,220 1,101,168
----------- ---------- ---------- ----------- ----------- ----------
NET INVESTMENT INCOME..................... 3,670,605 3,127,402 2,632,191 12,329,959 9,515,464 8,653,507
----------- ---------- ---------- ----------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (194,507) 60,260 (95,509) 517,935 (161,314) (513,800)
Realized gain distribution
from the Trust................... -- -- -- 10,344 7,750 13,435
----------- ---------- ---------- ----------- ----------- ----------
NET REALIZED GAIN (LOSS).................. (194,507) 60,260 (95,509) 528,279 (153,564) (500,365)
----------- ---------- ---------- ----------- ----------- ----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............... 2,391,062 868,053 (141,479) 1,536,450 804,349 24,023
End of period..................... (1,392,487) 2,391,062 868,053 1,316,815 1,536,450 804,349
----------- ---------- ---------- ----------- ----------- ----------
Change in unrealized appreciation
(depreciation) during the period..... (3,783,549) 1,523,009 1,009,532 (219,635) 732,101 780,326
----------- ---------- ---------- ----------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ (3,978,056) 1,583,269 914,023 308,644 578,537 279,961
----------- ---------- ---------- ----------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ (307,451) $4,710,671 $3,546,214 $12,638,603 $10,094,001 $8,933,468
=========== ========== ========== =========== =========== ==========
<CAPTION>
FIXED INCOME OPTIONS:
----------------------------------------
ALLIANCE QUALITY BOND
---------------------------------------
1999 1998 1997
------------ ----------- -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 12,542,857 $10,317,238 $ 8,869,740
Expenses (Note 3):
Mortality and expense
risk charges..................... 1,329,147 1,106,136 845,069
------------ ----------- -----------
NET INVESTMENT INCOME..................... 11,213,710 9,211,102 8,024,671
------------ ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (1,493,664) 34,937 (504,580)
Realized gain distribution
from the Trust................... 870,458 4,596,907 --
------------ ----------- -----------
NET REALIZED GAIN (LOSS).................. (623,206) 4,631,844 (504,580)
------------ ----------- -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............... 3,367,697 2,395,718 (1,961,822)
End of period..................... (13,254,094) 3,367,697 2,395,718
------------ ----------- -----------
Change in unrealized appreciation
(depreciation) during the period..... (16,621,791) 971,979 4,357,540
------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ (17,244,997) 5,603,823 3,852,960
------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ (6,031,287) $14,814,925 $11,877,631
============ =========== ===========
</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>
FIXED INCOME OPTIONS (CONCLUDED): EQUITY OPTIONS:
--------------------------------------- ----------------------------------------
ALLIANCE HIGH YIELD ALLIANCE COMMON STOCK
--------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
------------ ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 17,378,455 $ 18,449,747 $12,918,934 $ 20,107,533 $ 15,939,680 $ 10,668,337
Expenses (Note 3):
Mortality and expense
risk charges..................... 889,065 1,007,106 789,982 19,069,959 14,600,706 11,435,936
------------ ------------ ----------- ------------ ------------ ------------
NET INVESTMENT INCOME..................... 16,489,390 17,442,641 12,128,952 1,037,574 1,338,974 (767,599)
------------ ------------ ----------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (15,192,553) (2,344,392) 936,554 221,690,581 169,109,310 53,841,049
Realized gain distribution
from the Trust................... 161,999 3,396,523 6,365,633 497,324,765 353,834,250 164,814,473
------------ ------------ ----------- ------------ ------------ ------------
NET REALIZED GAIN (LOSS).................. (15,030,554) 1,052,131 7,302,187 719,015,346 522,943,560 218,655,522
------------ ------------ ----------- ------------ ------------ ------------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ (20,898,855) 8,622,836 5,664,824 689,309,204 567,231,009 294,432,897
End of period.................. (28,742,353) (20,898,854) 8,622,836 702,408,250 689,309,204 567,231,009
------------ ------------ ----------- ------------ ------------ ------------
Change in unrealized appreciation
(depreciation) during the period..... (7,843,498) (29,521,690) 2,958,012 13,099,046 122,078,195 272,798,112
------------ ------------ ----------- ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ (22,874,052) (28,469,559) 10,260,199 732,114,392 645,021,755 491,453,634
------------ ------------ ----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ (6,384,662) $(11,026,918) $22,389,151 $733,151,966 $646,360,729 $490,686,035
============ ============ =========== ============ ============ ============
<CAPTION>
EQUITY OPTIONS:
---------------------------------------
ALLIANCE EQUITY INDEX
---------------------------------------
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 7,575,355 $ 3,958,217 $ 2,610,223
Expenses (Note 3):
Mortality and expense
risk charges..................... 3,729,959 1,862,376 977,620
------------ ------------ -----------
NET INVESTMENT INCOME..................... 3,845,396 2,095,841 1,632,603
------------ ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 21,008,249 5,460,381 (414,497)
Realized gain distribution
from the Trust................... 6,196,508 128,151 850,437
------------ ------------ -----------
NET REALIZED GAIN (LOSS).................. 27,204,757 5,588,532 435,940
------------ ------------ -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 136,665,316 63,055,426 21,448,224
End of period.................. 228,753,607 136,665,316 63,055,426
------------ ------------ -----------
Change in unrealized appreciation
(depreciation) during the period..... 92,088,291 73,609,890 41,607,202
------------ ------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 119,293,048 79,198,422 42,043,142
------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $123,138,444 $ 81,294,263 $43,675,745
============ ============ ===========
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-7
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------------------------------
CAPITAL
EQ/ALLIANCE CAPITAL GUARDIAN
PREMIER GUARDIAN U.S.
ALLIANCE GROWTH & INCOME GROWTH (C) RESEARCH (d) EQUITY (d)
--------------------------------------- ----------- ------------ ----------
1999 1998 1997 1999 1999 1999
----------- ----------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 530,384 $ 415,436 $ 636,335 $ 30,540 $ 280 $ 1,159
Expenses (Note 3):
Mortality and expense
risk charges..................... 1,048,745 668,795 358,997 63,730 209 378
----------- ----------- ----------- ---------- ------- -------
NET INVESTMENT INCOME..................... (518,361) (253,359) 277,338 (33,190) 71 781
----------- ----------- ----------- ---------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 730,688 7,289,936 530,421 83,605 2,810 451
Realized gain distribution
from the Trust................... 20,855,872 12,146,928 5,006,247 106,890 27 1,508
----------- ----------- ----------- ---------- ------- -------
NET REALIZED GAIN (LOSS).................. 21,586,560 19,436,864 5,536,668 190,495 2,837 1,959
----------- ----------- ----------- ---------- ------- -------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 16,240,511 13,021,603 5,074,338 -- -- --
End of period.................. 27,170,239 16,240,511 13,021,603 5,068,707 11,093 17,325
----------- ----------- ----------- ---------- ------- -------
Change in unrealized appreciation
(depreciation) during the period..... 10,929,728 3,218,908 7,947,265 5,068,707 11,093 17,325
----------- ----------- ----------- ---------- ------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 32,516,288 22,655,772 13,483,933 5,259,202 13,930 19,284
----------- ----------- ----------- ---------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $31,997,927 $22,402,413 $13,761,271 $5,226,012 $14,001 $20,065
=========== =========== =========== ========== ======= =======
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------------
MERRILL LYNCH
BASIC VALUE EQUITY (A)
------------------------------------------
1999 1998 1997
---------- --------- --------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 468,257 $ 192,441 $ 35,810
Expenses (Note 3):
Mortality and expense
risk charges..................... 153,456 66,427 9,349
---------- --------- --------
NET INVESTMENT INCOME..................... 314,801 126,014 26,461
---------- --------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 426,168 207,032 6,656
Realized gain distribution
from the Trust................... 1,963,197 667,083 33,738
---------- --------- --------
NET REALIZED GAIN (LOSS).................. 2,389,365 874,115 40,394
---------- --------- --------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ (91,959) 135,003 --
End of period.................. 1,270,622 (91,959) 135,003
---------- --------- --------
Change in unrealized appreciation
(depreciation) during the period..... 1,362,581 (226,962) 135,003
---------- --------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 3,751,946 647,153 175,397
---------- --------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $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-8
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------------------------------
MFS
GROWTH
WITH EQ/PUTNAM
INCOME (C) MFS RESEARCH (A) GROWTH & INCOME VALUE (A)
---------- --------------------------------- ---------------------------------
1999 1999 1998 1997 1999 1998 1997
---------- ----------- ---------- -------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 1,268 $ 52,831 $ 71,137 $ 20,442 $ 278,910 $ 143,999 $ 33,273
Expenses (Note 3):
Mortality and expense
risk charges..................... 431 208,639 86,044 13,127 110,374 56,995 9,655
------- ----------- ---------- -------- ----------- ---------- --------
NET INVESTMENT INCOME..................... 837 (155,808) (14,907) 7,315 168,536 87,004 23,618
------- ----------- ---------- -------- ----------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (227) 995,232 494,412 6,989 276,186 209,398 1,078
Realized gain distribution
from the Trust................... -- 1,086,222 -- 81,156 1,499,307 130,047 27,226
------- ----------- ---------- -------- ----------- ---------- --------
NET REALIZED GAIN (LOSS).................. (227) 2,081,454 494,412 88,145 1,775,493 339,445 28,304
------- ----------- ---------- -------- ----------- ---------- --------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ -- 3,313,063 249,382 -- 1,160,602 269,561 --
End of period.................. 20,637 10,033,987 3,313,063 249,382 (1,472,796) 1,160,602 269,561
------- ----------- ---------- -------- ----------- ---------- --------
Change in unrealized appreciation
(depreciation) during the period..... 20,637 6,720,924 3,063,681 249,382 (2,633,398) 891,041 269,561
------- ----------- ---------- -------- ----------- ---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 20,410 8,802,378 3,558,093 337,527 (857,905) 1,230,486 297,865
------- ----------- ---------- -------- ----------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $21,247 $ 8,646,570 $3,543,186 $344,842 $ (689,369) $1,317,490 $321,483
======= =========== ========== ======== =========== ========== ========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------
T. ROWE PRICE EQUITY INCOME (A)
------------------------------------
1999 1998 1997
------------ ---------- ----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 998,227 $ 722,954 $ 145,613
Expenses (Note 3):
Mortality and expense
risk charges..................... 272,123 173,802 29,706
----------- ---------- ----------
NET INVESTMENT INCOME..................... 726,104 549,152 115,907
----------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 655,822 341,473 56,634
Realized gain distribution
from the Trust................... 2,081,914 930,853 53,840
----------- ---------- ----------
NET REALIZED GAIN (LOSS).................. 2,737,736 1,272,326 110,474
----------- ---------- ----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 1,585,616 1,073,548 --
End of period.................. (952,652) 1,585,616 1,073,548
----------- ---------- ----------
Change in unrealized appreciation
(depreciation) during the period..... (2,538,268) 512,068 1,073,548
----------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 199,468 1,784,394 1,184,022
----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ 925,572 $2,333,546 $1,299,929
=========== ========== ==========
</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-9
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-----------------------------------------------------------------------------------
ALLIANCE GLOBAL ALLIANCE INTERNATIONAL
--------------------------------------- --------------------------------------
1999 1998 1997 1999 1998 1997
------------ ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 561,424 $ 5,636,672 $ 8,803,070 $ -- $ 996,913 $ 1,386,732
Expenses (Note 3):
Mortality and expense
risk charges..................... 3,438,444 2,777,697 2,805,310 321,035 289,066 297,278
------------ ----------- ------------ ----------- ----------- -----------
NET INVESTMENT INCOME..................... (2,877,020) 2,858,975 5,997,760 (321,035) 707,847 1,089,454
------------ ----------- ------------ ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 67,795,783 17,406,382 30,411,238 1,164,532 (3,606,669) (57,635)
Realized gain distribution
from the Trust................... 44,485,709 33,241,409 26,426,403 1,299,989 10,663 2,325,403
------------ ----------- ------------ ----------- ----------- -----------
NET REALIZED GAIN (LOSS).................. 112,281,492 50,647,791 56,837,641 2,464,521 (3,596,006) 2,267,768
------------ ----------- ------------ ----------- ----------- -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 83,560,503 46,113,189 58,618,054 5,502,451 (2,793,834) 1,857,793
End of period.................. 172,562,362 83,560,503 46,113,189 25,291,174 5,502,451 (2,793,834)
------------ ----------- ------------ ----------- ----------- -----------
Change in unrealized appreciation
(depreciation) during the period..... 89,001,859 37,447,314 (12,504,865) 19,788,723 8,296,285 (4,651,627)
------------ ----------- ------------ ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 201,283,351 88,095,105 44,332,776 22,253,244 4,700,279 (2,383,859)
------------ ----------- ------------ ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $198,406,331 $90,954,080 $ 50,330,536 $21,932,209 $ 5,408,126 $(1,294,405)
============ =========== ============ =========== =========== ===========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------
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-10
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-----------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK (A) ALLIANCE AGGRESSIVE STOCK
-------------------------------------- ------------------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 192,580 $ 258,382 $ 2,393 $ 3,163,286 $ 4,461,389 $ 1,311,613
Expenses (Note 3):
Mortality and expense
risk charges..................... 200,684 119,672 26,332 5,481,701 5,581,296 5,299,127
----------- ---------- --------- ------------ ------------ ------------
NET INVESTMENT INCOME..................... (8,104) 138,710 (23,939) (2,318,415) (1,119,907) (3,987,514)
----------- ---------- --------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 4,626,661 354,551 (50,331) (27,888,194) (39,688,312) 28,217,939
Realized gain distribution
from the Trust................... 583,215 268 -- 61,642,419 46,528,461 79,729,154
----------- ---------- --------- ------------ ------------ ------------
NET REALIZED GAIN (LOSS).................. 5,209,876 354,819 (50,331) 33,754,225 6,840,149 107,947,093
----------- ---------- --------- ------------ ------------ ------------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 1,603,083 (820,718) -- 26,715,214 32,695,620 46,617,235
End of period.................. 9,345,381 1,603,083 (820,718) 158,809,890 26,715,214 32,695,620
----------- ---------- --------- ------------ ------------ ------------
Change in unrealized appreciation
(depreciation) during the period..... 7,742,298 2,423,801 (820,718) 132,094,676 (5,980,406) (13,921,615)
----------- ---------- --------- ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 12,952,174 2,778,620 (871,049) 165,848,901 859,743 94,025,478
----------- ---------- --------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $12,944,070 $2,917,330 $(894,988) $163,530,486 $ (260,164) $ 90,037,964
=========== ========== ========= ============ ============ ============
<CAPTION>
EQUITY OPTIONS (CONTINUED)
-------------------------------------
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
=========== =========== =========
</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-11
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONCLUDED):
--------------------------------------------------------------------------------------
EQ/ MFS EMERGING WARBURG PINCUS
EVERGREEN (C) GROWTH COMPANIES (A) SMALL COMPANY VALUE (A)
------------- ---------------------------------- -----------------------------------
1999 1999 1998 1997 1999 1998 1997
------------- ----------- ----------- -------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 99 $ -- $ 969 $ 24,358 $ 67,108 $ 171,716 $ 21,651
Expenses (Note 3):
Mortality and expense
risk charges..................... 18 640,976 157,484 18,835 180,999 168,543 44,889
------ ----------- ----------- -------- ----------- ----------- ---------
NET INVESTMENT INCOME..................... 81 (640,976) (156,515) 5,523 (113,891) 3,173 (23,238)
------ ----------- ----------- -------- ----------- ----------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 20 13,577,250 4,270,964 161,034 (1,591,217) (142,969) 29,803
Realized gain distribution
from the Trust................... -- 3,969,879 -- 296,998 -- -- 110,391
------ ----------- ----------- -------- ----------- ----------- ---------
NET REALIZED GAIN (LOSS).................. 20 17,547,129 4,270,964 458,032 (1,591,217) (142,969) 140,194
------ ----------- ----------- -------- ----------- ----------- ---------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ -- 6,996,177 171,320 -- (4,215,341) (228,709) --
End of period.................. 1,450 77,077,961 6,996,177 171,320 (2,294,882) (4,215,340) (228,709)
------ ----------- ----------- -------- ----------- ----------- ---------
Change in unrealized appreciation
(depreciation) during the period..... 1,450 70,081,784 6,824,857 171,320 1,920,459 (3,986,631) (228,709)
------ ----------- ----------- -------- ----------- ----------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 1,470 87,628,913 11,095,821 629,352 329,242 (4,129,600) (88,515)
------ ----------- ----------- -------- ----------- ----------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $1,551 $86,987,937 $10,939,306 $634,875 $ 215,351 $(4,126,427) $(111,753)
====== =========== =========== ======== =========== =========== =========
</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 OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION OPTIONS:
------------------------------------------------------------------------------
ALLIANCE BALANCED ALLIANCE CONSERVATIVE INVESTORS
------------------------------------- -------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $14,371,360 $12,467,646 $13,756,520 $ 7,166,906 $ 7,360,794 $ 7,217,860
Expenses (Note 3):
Mortality and expense
risk charges..................... 3,107,759 2,765,767 2,544,300 1,244,722 1,136,634 1,066,078
----------- ----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME..................... 11,263,601 9,701,879 11,212,220 5,922,184 6,224,160 6,151,782
----------- ----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 9,085,444 2,733,445 5,910,524 2,045,436 1,432,988 818,458
Realized gain distribution
from the Trust................... 50,638,464 41,525,872 21,117,088 9,007,765 10,768,916 5,486,742
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED GAIN (LOSS).................. 59,723,908 44,259,317 27,027,612 11,053,201 12,201,904 6,305,200
----------- ----------- ----------- ----------- ----------- -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 81,344,863 60,878,286 42,382,824 21,507,963 16,228,145 7,700,135
End of period.................. 93,235,951 81,344,863 60,878,286 23,588,372 21,507,963 16,228,145
----------- ----------- ----------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation) during the period..... 11,891,088 20,466,577 18,495,462 2,080,409 5,279,818 8,528,010
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 71,614,996 64,725,894 45,523,074 13,133,610 17,481,722 14,833,210
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $82,878,597 $74,427,773 $56,735,294 $19,055,794 $23,705,882 $20,984,992
=========== =========== =========== =========== =========== ===========
<CAPTION>
ASSET ALLOCATION OPTIONS:
------------------------------------------
ALLIANCE GROWTH INVESTORS
------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 17,092,741 $ 18,252,039 $ 19,280,574
Expenses (Note 3):
Mortality and expense
risk charges..................... 6,207,073 5,194,905 4,570,289
------------ ------------ ------------
NET INVESTMENT INCOME..................... 10,885,668 13,057,134 14,710,285
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 15,284,978 7,745,162 10,531,767
Realized gain distribution
from the Trust................... 104,658,738 78,060,201 42,780,443
------------ ------------ ------------
NET REALIZED GAIN (LOSS).................. 119,943,716 85,805,363 53,312,210
------------ ------------ ------------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 167,705,597 115,056,641 67,150,693
End of period.................. 288,014,018 167,705,600 115,056,641
------------ ------------ ------------
Change in unrealized appreciation
(depreciation) during the period..... 120,308,421 52,648,959 47,905,948
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 240,252,137 138,454,322 101,218,158
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $251,137,805 $151,511,456 $115,928,443
============ ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ 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 OPERATIONS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION OPTIONS (CONCLUDED):
-------------------------------------------------------------------------------
EQ/EVERGREEN MERRILL LYNCH
FOUNDATION (C) EQ/PUTNAM BALANCED WORLD STRATEGY (A)
-------------- ------------------------------- ----------------------------
1999 1999 1998 1997 1999 1998 1997
------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust........... $ 31 $ 42,372 $111,099 $ 46,468 $ 41,786 $ 36,750 $ 17,124
Expenses (Note 3):
Mortality and expense
risk charges...................... 2 39,416 18,744 2,741 18,905 12,469 2,678
------- --------- -------- -------- -------- -------- --------
NET INVESTMENT INCOME...................... 29 2,956 92,355 43,727 22,881 24,281 14,446
------- --------- -------- -------- -------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments.................... 302 185,026 348,952 561 197,727 19,432 (3,626)
Realized gain distribution
from the Trust.................... -- 447,013 71,044 31,119 67,733 -- 38,995
------- --------- -------- -------- -------- -------- --------
NET REALIZED GAIN (LOSS)................... 302 632,039 419,996 31,680 265,460 19,432 35,369
------- --------- -------- -------- -------- -------- --------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............. -- 259,883 270,232 -- 187,734 (37,926) --
End of period................... (1,505) (492,259) 259,882 270,232 853,470 187,734 (37,926)
------- --------- -------- -------- -------- -------- --------
Change in unrealized appreciation
(depreciation) during the period...... (1,505) (752,142) (10,350) 270,232 665,736 225,660 (37,926)
------- --------- -------- -------- -------- -------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS......................... (1,203) (120,103) 409,646 301,912 931,196 245,092 (2,557)
------- --------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.............. $(1,174) $(117,147) $502,001 $345,639 $954,077 $269,373 $ 11,889
======= ========= ======== ======== ======== ======== ========
</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
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FIXED INCOME OPTIONS:
------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES ALLIANCE MONEY MARKET
------------------------------------- ------------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 3,670,605 $ 3,127,402 $ 2,632,191 $ 12,329,959 $ 9,515,464 $ 8,653,507
Net realized gain (loss).............. (194,507) 60,260 (95,509) 528,279 (153,564) (500,365)
Change in unrealized appreciation
(depreciation) on investments..... (3,783,549) 1,523,009 1,009,532 (219,635) 732,101 780,326
----------- ----------- ----------- ------------ ------------- -------------
Net increase (decrease) in net assets
from operations................... (307,451) 4,710,671 3,546,214 12,638,603 10,094,001 8,933,468
----------- ----------- ----------- ------------ ------------- -------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 16,691,635 11,828,290 8,749,531 231,007,033 229,608,273 234,059,930
Benefits and other policy-related
transactions (Note 3)............. (8,904,461) (9,081,050) (5,971,751) (63,463,349) (41,370,215) (40,687,124)
Net transfers among funds and
guaranteed interest account....... (3,762,164) 9,141,659 7,704,724 (91,919,848) (128,607,686) (259,049,840)
----------- ----------- ----------- ------------ ------------- -------------
Net increase (decrease) in net assets
from policy-related transactions.. 4,025,010 11,888,899 10,482,504 75,623,836 59,630,372 (65,677,034)
----------- ----------- ----------- ------------ ------------- -------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... 184,108 (335,126) 13,307 1,075,796 (387,161) 46,036
----------- ----------- ----------- ------------ ------------- -------------
INCREASE (DECREASE) IN NET ASSETS ........ 3,901,667 16,264,444 14,042,025 89,338,235 69,337,212 (56,697,530)
NET ASSETS
BEGINNING OF PERIOD................... 74,972,672 58,708,229 44,666,204 255,090,142 185,752,930 242,450,460
----------- ----------- ----------- ------------ ------------- -------------
NET ASSETS
END OF PERIOD......................... $78,874,339 $74,972,673 $58,708,229 $344,428,377 $ 255,090,142 $ 185,752,930
=========== =========== =========== ============ ============= =============
<CAPTION>
FIXED INCOME OPTIONS:
-----------------------------------------
ALLIANCE QUALITY BOND
-----------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 11,213,710 $ 9,211,102 $ 8,024,671
Net realized gain (loss).............. (623,206) 4,631,844 (504,580)
Change in unrealized appreciation
(depreciation) on investments..... (16,621,791) 971,979 4,357,540
------------ ------------ ------------
Net increase (decrease) in net assets
from operations................... (6,031,287) 14,814,925 11,877,631
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 19,416,861 14,952,560 8,423,097
Benefits and other policy-related
transactions (Note 3)............. (9,082,840) (5,388,113) (3,002,993)
Net transfers among funds and
guaranteed interest account....... 1,195,276 49,220,715 12,678,032
------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions.. 11,529,297 58,785,162 18,098,136
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (553,219) (402,883) 38,587
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS ........ 4,944,791 73,197,204 30,014,354
NET ASSETS
BEGINNING OF PERIOD................... 228,959,641 155,762,437 125,748,083
------------ ------------ ------------
NET ASSETS
END OF PERIOD......................... $233,904,432 $228,959,641 $155,762,437
============ ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ 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 (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FIXED INCOME OPTIONS (CONCLUDED):
-----------------------------------------
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>
EQUITY OPTIONS:
----------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK ALLIANCE EQUITY INDEX
---------------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
-------------- -------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 1,037,574 $ 1,338,974 $ (767,599) $ 3,845,396 $ 2,095,841 $ 1,632,603
Net realized gain (loss).............. 719,015,346 522,943,560 218,655,522 27,204,757 5,588,532 435,940
Change in unrealized appreciation
(depreciation) on investments..... 13,099,046 122,078,195 272,798,112 92,088,291 73,609,890 41,607,202
-------------- -------------- -------------- ------------ ------------ ------------
Net increase (decrease) in net assets
from operations................... 733,151,966 646,360,729 490,686,035 123,138,444 81,294,263 43,675,745
-------------- -------------- -------------- ------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 361,261,385 322,874,015 282,279,826 123,310,198 82,390,480 53,262,239
Benefits and other policy-related
transactions (Note 3)............. (302,304,428) (250,079,870) (199,662,183) (60,880,027) (34,756,406) (18,975,147)
Net transfers among funds and
guaranteed interest account....... 49,877,173 24,136,275 56,849,823 222,120,321 74,806,928 67,867,827
-------------- -------------- -------------- ------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions.. 108,834,130 96,930,420 139,467,466 284,550,492 122,441,002 102,154,919
-------------- -------------- -------------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (5,343,344) (2,780,348) 516,970 (1,148,745) (430,965) 54,423
-------------- -------------- -------------- ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS......... 836,642,752 740,510,801 630,670,471 406,540,191 203,304,300 145,885,087
NET ASSETS
BEGINNING OF PERIOD................... 2,943,226,440 2,202,715,639 1,572,045,168 443,764,345 240,460,045 94,574,958
-------------- -------------- -------------- ------------ ------------ ------------
NET ASSETS
END OF PERIOD......................... $3,779,869,192 $2,943,226,440 $2,202,715,639 $850,304,536 $443,764,345 $240,460,045
============== ============== ============== ============ ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ 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+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------------------------------
CAPITAL
EQ/ALLIANCE CAPITAL GUARDIAN
PREMIER GUARDIAN U.S.
ALLIANCE GROWTH & INCOME GROWTH (C) RESEARCH (D) EQUITY (D)
--------------------------------------- ----------- ------------ ----------
1999 1998 1997 1999 1999 1999
------------ ------------ ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ (518,361) $ (253,359) $ 277,338 $ (33,190) $ 71 $ 781
Net realized gain (loss).............. 21,586,560 19,436,864 5,536,668 190,495 2,837 1,959
Change in unrealized appreciation
(depreciation) on investments..... 10,929,728 3,218,908 7,947,265 5,068,707 11,093 17,325
------------ ------------ ----------- ----------- -------- --------
Net increase (decrease) in net assets
from operations................... 31,997,927 22,402,413 13,761,271 5,226,012 14,001 20,065
------------ ------------ ----------- ----------- -------- --------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 43,151,141 30,251,270 17,923,903 6,362,938 63,883 115,934
Benefits and other policy-related
transactions (Note 3)............. (19,321,951) (12,461,722) (6,498,823) (1,028,342) (503) (15,128)
Net transfers among funds and
guaranteed interest account....... 25,186,273 23,343,531 25,301,886 40,652,847 115,765 390,588
------------ ------------ ----------- ----------- -------- --------
Net increase (decrease) in net assets
from policy-related transactions.. 49,015,463 41,133,079 36,726,966 45,987,443 179,145 491,394
------------ ------------ ----------- ----------- -------- --------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (144,843) (617,058) 19,921 3,902 209 378
------------ ------------ ----------- ----------- -------- --------
INCREASE (DECREASE) IN NET ASSETS......... 80,868,547 62,918,434 50,508,158 51,217,357 193,355 511,837
NET ASSETS
BEGINNING OF PERIOD................... 151,451,102 88,532,668 38,024,510 -- -- --
------------ ------------ ----------- ----------- -------- --------
NET ASSETS
END OF PERIOD......................... $232,319,649 $151,451,102 $88,532,668 $51,217,357 $193,355 $511,837
============ ============ =========== =========== ======== ========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------
MERRILL LYNCH
BASIC VALUE EQUITY (A)
--------------------------------------
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 314,801 $ 126,014 $ 26,461
Net realized gain (loss).............. 2,389,365 874,115 40,394
Change in unrealized appreciation
(depreciation) on investments..... 1,362,581 (226,962) 135,003
----------- ----------- ----------
Net increase (decrease) in net assets
from operations................... 4,066,747 773,167 201,858
----------- ----------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 10,931,366 6,388,355 1,097,822
Benefits and other policy-related
transactions (Note 3)............. (3,171,744) (1,430,414) (135,034)
Net transfers among funds and
guaranteed interest account....... 7,845,599 8,794,685 4,661,128
----------- ----------- ----------
Net increase (decrease) in net assets
from policy-related transactions.. 15,605,221 13,752,626 5,623,916
----------- ----------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (43,053) (1,392,853) 1,202,680
----------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS......... 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......................... $39,790,309 $20,161,394 $7,028,454
=========== =========== ==========
</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-17
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------------------------------
MFS
GROWTH
WITH
INCOME (C) MFS RESEARCH (A)
--------------- ----------------------------------------------
1999 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......................... 0 28,021,980 9,752,859 0
-------- ----------- ----------- ----------
NET ASSETS
END OF PERIOD............................... $415,714 $48,637,352 $28,021,980 $9,752,859
======== =========== =========== ==========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------
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 0
----------- ----------- ----------
NET ASSETS
END OF PERIOD................................ $21,793,779 $16,743,255 $7,059,068
=========== =========== ==========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-----------------------------------------------------
T. ROWE PRICE EQUITY INCOME (A)
-----------------------------------------------------
1999 1998 1997
------------- -------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income........................ $ 726,104 $ 549,152 $ 115,907
Net realized gain (loss)..................... 2,737,736 1,272,326 110,474
Change in unrealized appreciation
(depreciation) on investments............ (2,538,268) 512,068 1,073,548
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.......................... 925,572 2,333,546 1,299,929
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)........................ 14,411,461 11,367,975 2,540,460
Benefits and other policy-related
transactions (Note 3).................... (5,261,454) (4,190,748) (351,660)
Net transfers among funds and
guaranteed interest account.............. (470,263) 16,615,531 14,259,773
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions......... 8,679,744 23,792,758 16,448,573
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)................. (93,180) (1,149,701) 1,308,426
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS................ 9,512,136 24,632,603 19,056,928
NET ASSETS
BEGINNING OF PERIOD.......................... 43,689,531 19,056,928 0
----------- ----------- -----------
NET ASSETS
END OF PERIOD................................ $53,201,667 $43,689,531 $19,056,928
=========== =========== ===========
</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-18
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------------------------
ALLIANCE GLOBAL
--------------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (2,877,020) $ 2,858,975 $ 5,997,760
Net realized gain (loss)............... 112,281,492 50,647,791 56,837,641
Change in unrealized appreciation
(depreciation) on investments...... 89,001,859 37,447,314 (12,504,865)
------------ ------------ ------------
Net increase (decrease) in net assets
from operations.................... 198,406,331 90,954,080 50,330,536
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 71,950,825 78,722,218 85,714,413
Benefits and other policy-related
transactions (Note 3).............. (63,170,211) (52,796,664) (48,793,564)
Net transfers among funds and
guaranteed interest account........ (8,015,060) (21,919,102) (89,131,113)
------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions... 765,554 4,006,452 (52,210,264)
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... 23,216 (854,897) 103,777
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS.......... 199,195,101 94,105,635 (1,775,951)
NET ASSETS
BEGINNING OF PERIOD.................... 525,707,133 431,601,498 433,377,449
------------ ------------ ------------
NET ASSETS
END OF PERIOD.......................... $724,902,234 $525,707,133 $431,601,498
============= ============ ============
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-------------------------------------------------------
MORGAN STANLEY
ALLIANCE INTERNATIONAL
-------------------------------------------------------
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (321,035) $ 707,847 $ 1,089,454
Net realized gain (loss)............... 2,464,521 (3,596,006) 2,267,768
Change in unrealized appreciation
(depreciation) on investments...... 19,788,723 8,296,285 (4,651,627)
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.................... 21,932,209 5,408,126 (1,294,405)
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 11,367,096 13,567,993 14,198,839
Benefits and other policy-related
transactions (Note 3).............. (6,261,836) (5,406,284) (4,716,765)
Net transfers among funds and
guaranteed interest account........ (5,340,816) (4,357,456) (3,886,303)
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions... (235,556) 3,804,253 5,595,771
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... (49,840) (109,052) 11,328
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS.......... 21,646,813 9,103,327 4,312,694
NET ASSETS
BEGINNING OF PERIOD.................... 55,234,942 46,131,615 41,818,921
----------- ----------- -----------
END OF PERIOD.......................... $76,881,755 $55,234,942 $46,131,615
=========== =========== ===========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-------------------------------------------------------
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 0
----------- ----------- ----------
NET ASSETS
END OF PERIOD.......................... $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-19
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK (A)
--------------------------------------------------------
1999 1998 1997
----------- ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (8,104) $ 138,710 $ (23,939)
Net realized gain (loss)............... 5,209,876 354,819 (50,331)
Change in unrealized appreciation
(depreciation) on investments...... 7,742,298 2,423,801 (820,718)
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.................... 12,944,070 2,917,330 (894,988)
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 10,327,110 7,881,587 2,268,440
Benefits and other policy-related
transactions (Note 3).............. (3,787,076) (2,527,577) (295,221)
Net transfers among funds and
guaranteed interest account........ 3,167,992 8,401,386 12,953,165
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions... 9,708,026 13,755,396 14,926,384
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... 1,577 (4,050,846) 4,007,078
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS.......... 22,653,673 12,621,880 18,038,474
NET ASSETS
BEGINNING OF PERIOD.................... 30,660,353 18,038,474 --
----------- ----------- -----------
NET ASSETS
END OF PERIOD.......................... $53,314,026 $30,660,353 $18,038,474
=========== =========== ===========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------
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
============== ============ ============
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------------------------
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
=========== =========== ===========
</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-20
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONCLUDED):
------------------------------------------------------------------
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>
EQUITY OPTIONS (CONCLUDED):
-------------------------------------------------
WARBURG PINCUS
SMALL COMPANY VALUE (A)
-------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (113,891) $ 3,173 $ (23,238)
Net realized gain (loss)............... (1,591,217) (142,969) 140,194
Change in unrealized appreciation
(depreciation) on investments...... 1,920,459 (3,986,631) (228,709)
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.................... 215,351 (4,126,427) (111,753)
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 11,009,658 13,378,658 4,397,634
Benefits and other policy-related
transactions (Note 3).............. (4,607,292) (4,042,103) (608,891)
Net transfers among funds and
guaranteed interest account........ (7,372,698) 7,112,708 20,737,304
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions... (970,332) 16,449,263 24,526,047
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... (23,731) (622,058) 611,853
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS.......... (778,712) 11,700,778 25,026,147
NET ASSETS
BEGINNING OF PERIOD.................... 36,726,925 25,026,147 --
----------- ----------- -----------
NET ASSETS
END OF PERIOD.......................... $35,948,213 $36,726,925 $25,026,147
=========== =========== ===========
</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-21
<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>
ASSET ALLOCATION OPTIONS:
----------------------------------------------------
ALLIANCE BALANCED
----------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................... $ 11,263,601 $ 9,701,879 $ 11,212,220
Net realized gain (loss)...................... 59,723,908 44,259,317 27,027,612
Change in unrealized appreciation
(depreciation) on investments............. 11,891,088 20,466,577 18,495,462
------------ ------------ ------------
Net increase (decrease) in net assets
from operations........................... 82,878,597 74,427,773 56,735,294
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)......................... 45,762,044 46,234,769 48,722,966
Benefits and other policy-related
transactions (Note 3)..................... (55,698,939) (48,368,610) (48,611,396)
Net transfers among funds and
guaranteed interest account............... (25,094,055) (4,765,223) (55,377,177)
------------ ------------ ------------
Net increase (decrease) in net assets
from policy related-transactions.......... (35,030,950) (6,899,064) (55,265,607)
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............... 34,900 (601,644) 106,438
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS................. 47,882,547 66,927,065 1,576,125
NET ASSETS
BEGINNING OF PERIOD........................... 498,829,011 431,901,946 430,325,821
------------ ------------ ------------
NET ASSETS
END OF PERIOD................................. $546,711,558 $498,829,011 $431,901,946
============ ============ ============
<CAPTION>
ASSET ALLOCATION OPTIONS:
----------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS
----------------------------------------------------------
1999 1998 1997
------------ ------------ -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................... $ 5,922,184 $ 6,224,160 $ 6,151,782
Net realized gain (loss)...................... 11,053,201 12,201,904 6,305,200
Change in unrealized appreciation
(depreciation) on investments............. 2,080,409 5,279,818 8,528,010
------------ ------------ ------------
Net increase (decrease) in net assets
from operations........................... 19,055,794 23,705,882 20,984,992
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)......................... 27,333,794 26,438,125 30,425,833
Benefits and other policy-related
transactions (Note 3)..................... (25,964,810) (23,690,706) (24,998,155)
Net transfers among funds and
guaranteed interest account............... (4,292,515) (6,267,736) (18,978,233)
------------ ------------ ------------
Net increase (decrease) in net assets
from policy related-transactions.......... (2,923,531) (3,520,317) (13,550,555)
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............... (195,000) (365,872) 44,115
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS................. 15,937,263 19,819,693 7,478,552
NET ASSETS
BEGINNING OF PERIOD........................... 202,163,700 182,344,007 174,865,455
------------ ------------ ------------
NET ASSETS
END OF PERIOD................................. $218,100,963 $202,163,700 $182,344,007
============= ============ ============
<CAPTION>
ASSET ALLOCATION OPTIONS:
----------------------------------------------------------
ALLIANCE GROWTH INVESTORS
----------------------------------------------------------
1999 1998 1997
-------------- ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................... $ 10,885,668 $ 13,057,134 $ 14,710,285
Net realized gain (loss)...................... 119,943,716 85,805,363 53,312,210
Change in unrealized appreciation
(depreciation) on investments............. 120,308,421 52,648,959 47,905,948
-------------- ------------ ------------
Net increase (decrease) in net assets
from operations........................... 251,137,805 151,511,456 115,928,443
-------------- ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)......................... 118,892,312 128,264,748 139,280,509
Benefits and other policy-related
transactions (Note 3)..................... (114,804,492) (99,015,298) (95,656,635)
Net transfers among funds and
guaranteed interest account............... (15,949,611) (25,554,600) (35,207,298)
-------------- ------------ ------------
Net increase (decrease) in net assets
from policy related-transactions.......... (11,861,791) 3,694,850 8,416,576
-------------- ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............... (471,570) (418,319) 194,270
-------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS................. 238,804,444 154,787,987 124,539,289
NET ASSETS
BEGINNING OF PERIOD........................... 978,087,905 823,299,918 698,760,629
-------------- ------------ ------------
NET ASSETS
END OF PERIOD................................. $1,216,892,349 $978,087,905 $823,299,918
============== ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-22
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION OPTIONS (CONCLUDED):
---------------------------------------------------------------------
EQ/EVERGREEN
FOUNDATION (C) EQ/PUTNAM BALANCED
-------------- -------------------------------------------------
1999 1999 1998 1997
-------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................... $ 29 $ 2,956 $ 92,355 $ 243,727
Net realized gain (loss)................ 302 632,039 419,996 31,680
Change in unrealized appreciation
(depreciation) on investments....... (1,505) (752,142) (10,350) 270,232
------- ---------- ----------- ----------
Net increase (decrease) in net assets
from operations..................... (1,174) (117,147) 502,001 345,639
------- ---------- ----------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................... 93 2,976,182 1,733,126 213,829
Benefits and oth`er policy-related
transactions (Note 3)............... (53) (738,901) (429,944) (60,092)
Net transfers among funds and
guaranteed interest account......... 2,377 381,163 2,537,998 1,458,185
------- ---------- ----------- ----------
Net increase (decrease) in net assets
from policy related-transactions.... 2,417 2,618,444 3,841,180 1,611,922
------- ---------- ----------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)......... 1,605 (79,687) (2,292,055) 2,000,806
------- ---------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS........... 2,848 2,421,610 2,051,126 3,958,367
NET ASSETS
BEGINNING OF PERIOD..................... -- 6,009,493 3,958,367 --
------- ---------- ----------- ----------
NET ASSETS
END OF PERIOD........................... $ 2,848 $8,431,103 $ 6,009,493 $ 3,958,367
======= ========== =========== ===========
<CAPTION>
ASSET ALLOCATION OPTIONS (CONCLUDED):
-----------------------------------------------
MERRILL LYNCH
WORLD STRATEGY (A)
-----------------------------------------------
1999 1998 1997
------------- ---------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income...................... $ 22,881 $ 24,281 $ 14,446
Net realized gain (loss)................... 265,460 19,432 35,369
Change in unrealized appreciation
(depreciation) on investments.......... 665,736 225,660 (37,926)
---------- ---------- ----------
Net increase (decrease) in net assets
from operations........................ 954,077 269,373 11,889
---------- ---------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)...................... 1,304,821 1,050,984 334,133
Benefits and oth`er policy-related
transactions (Note 3).................. (511,416) (294,100) (41,646)
Net transfers among funds and
guaranteed interest account............ (504,202) 1,271,852 1,374,499
---------- ---------- ----------
Net increase (decrease) in net assets
from policy related-transactions....... 289,203 2,028,736 1,666,986
---------- ---------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............ (999,768) (849,043) 2,000,771
---------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS.............. 243,512 1,449,066 3,679,646
NET ASSETS
BEGINNING OF PERIOD........................ 5,128,712 3,679,646 --
----------- ----------- ----------
NET ASSETS
END OF PERIOD.............................. $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-23
<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 variable investment options:
FIXED INCOME OPTIONS:
Domestic Fixed Income:
o Alliance Intermediate Government Securities
o Alliance Money Market
o Alliance Quality Bond
Aggressive Fixed Income:
o Alliance High Yield
EQUITY OPTIONS:
Domestic Equity:
o Alliance Common Stock
o Alliance Equity Index
o Alliance Growth & Income
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 T. Rowe Price Equity Income
International Equity:
o Alliance Global
o Alliance International
o Morgan Stanley Emerging Markets Equity
o T. Rowe Price International Stock
Aggressive Equity:
o Alliance Aggressive Stock
o Alliance Small Cap Growth
o EQ/Evergreen
o MFS Emerging Growth Companies
o Warburg Pincus Small Company Value
ASSET ALLOCATION OPTIONS:
o Alliance Balanced
o Alliance Conservative Investors
o Alliance Growth Investors
o EQ/Evergreen Foundation
o EQ/Putnam Balanced
o Merrill Lynch World Strategy
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-24
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (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 Incentive Life, Incentive Life 2000,
Incentive Life Plus(SM), IL Protector(SM) and IL COLI, flexible premium
variable life insurance policies, Champion 2000, modified premium variable
whole life insurance policies; Survivorship 2000, Survivorship Incentive
Life, flexible premium joint survivorship variable life insurance policies;
and SP-Flex, variable life insurance policies with additional premium option
(collectively, the "Policies"). The Incentive Life 2000, Champion 2000 and
Survivorship 2000 policies are herein referred to as the "Series 2000
Policies." Incentive Life Plus(SM) policies offered with a prospectus dated
on or after September 15, 1995, are referred to as Incentive Life Plus(SM)
Second Series. Incentive Life Plus policies issued with a prior prospectus
are referred to as Incentive Life Plus Original Series. Incentive Life
policies sold during 1999 and thereafter ("Incentive Life sales 1999 and
after") reflect an investment in Class IB of the Alliance portfolios and are
different from Incentive Life products (see Note 6).
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.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-25
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 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>
FIXED INCOME OPTIONS:
Alliance Intermediate Government Securities $ (194,809) $ (685,662) $ --
Alliance Money Market (531,900) (1,591,380) --
Alliance Quality Bond (1,882,364) (1,509,018) --
Alliance High Yield 1,254,634 (1,839,368) --
</TABLE>
+ Formerly known as Equitable Variable Life Insurance Company Separate
Account FP.
FSA-26
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 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>
EQUITY OPTIONS:
Alliance Common Stock $(24,309,506) $(17,381,053) $ --
Alliance Equity Index (4,878,705) (2,293,340) --
Alliance Growth & Income (1,193,588) (1,285,852) --
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
T. Rowe Price Equity Income (365,303) (1,667,503) 1,300,000
Alliance Global (3,414,228) (3,632,595) --
Alliance International (370,877) (398,118) --
Morgan Stanley Emerging Markets Equity (2,019,694) (21,425) 4,000,000
T. Rowe Price International Stock (194,106) (4,170,518) 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
Warburg Pincus Small Company Value (204,730) (790,600) 600,000
ASSET ALLOCATION OPTIONS:
Alliance Balanced $(3,060,971) $(3,367,411) $ --
Alliance Conservative Investors (1,439,722) (1,502,507) --
Alliance Growth Investors (6,678,645) (5,613,223) --
EQ/Evergreen Foundation -- -- --
EQ/Putnam Balanced (119,105) (2,310,799) 2,000,000
Merrill Lynch World Strategy (1,018,674) (861,511) 2,000,000
</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.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-27
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
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, Incentive Life 2000, Incentive Life Plus Second
Series and Champion 2000 policyowners are different than those attributable
to Survivorship 2000, Incentive Life Plus Original Series, IL Protector, IL
COLI, and to SP-Flex policyowners because asset charges are deducted at
different rates under each policy (see Note 3). The Separate Account rates
of return attributable to Incentive Life Sales 1999 and after, Survivorship
Incentive Life and Survivorship 2000 for the Alliance Money Market, Alliance
Intermediate Government Securities, Alliance Quality Bond, Alliance High
Yield, Alliance Growth & Income, Alliance Equity Index, Alliance Common
Stock, Alliance Global, Alliance International, Alliance Aggressive,
Alliance Small Cap Growth, Alliance Conservative Investors, Alliance
Balanced, Alliance Growth Investors are different from other products in the
same variable investment option because distribution fees of 0.25% of the
average daily assets of the variable investment option are deducted (see
Note 1).
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-28
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
INCENTIVE LIFE,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
APRIL 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
ALLIANCE INTERMEDIATE ------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES 1999 1998 1997 1996 1995 1994 1993 1992 1991
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 0.02% 7.74% 7.29% 3.78% 13.33% (4.37)% 10.58% 5.60% 12.26%
Net return........................ (0.46)% 7.10% 6.65% 3.15% 12.65% (4.95)% 9.88% 4.96% 11.60%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ---------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 4.96% 5.34% 5.42% 5.33% 5.74% 4.02% 3.00% 3.56% 6.18% 8.24%
Net return........................ 4.35% 4.71% 4.79% 4.70% 5.11% 3.39% 2.35% 2.94% 5.55% 7.59%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------------- -----------------
ALLIANCE QUALITY BOND 1999 1998 1997 1996 1995 1994 1993
- --------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... (2.00)% 8.69% 9.14% 5.36% 17.02% (5.10)% (0.51)%
Net return........................ (2.59)% 8.03% 8.49% 4.73% 16.32% (5.67)% (0.66)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... (3.35)% (5.15)% 18.47% 22.89% 19.92% (2.79)% 23.15% 12.31% 24.46% (1.12)%
Net return........................ (3.93)% (5.72)% 17.76% 22.14% 19.20% (3.37)% 22.41% 11.64% 23.72% (1.71)%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 25.19% 29.39% 29.40% 24.28% 32.45% (2.14)% 24.84% 3.22% 37.88% (8.12)%
Net return........................ 24.44% 28.61% 28.44% 23.53% 31.66% (2.73)% 24.08% 2.60% 37.06% (8.67)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30 (A)
YEARS ENDED DECEMBER 31, TO DECEMBER 31,
----------------------------------------------- -----------------
ALLIANCE EQUITY INDEX 1999 1998 1997 1996 1995 1994
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return...................... 20.38% 28.07% 32.58% 22.39% 36.48% 1.08%
Net return........................ 19.66% 27.30% 31.77% 21.65% 35.66% 0.58%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------------- -----------------
ALLIANCE GROWTH & INCOME 1999 1998 1997 1996 1995 1994 1993
- ------------------------ ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 18.66% 20.86% 26.90% 20.09% 24.07% (0.58)% (0.25)%
Net return........................ 17.95% 20.14% 25.99% 19.36% 23.33% (1.17)% (0.41)%
</TABLE>
- -------------------
+ 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
variable investment option. The gross return and net return reflects
performance for the periods indicated, and 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 reflects 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-29
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
EQUITY OPTIONS (CONTINUED):
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%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
Gross return...................... 19.00% 11.59% 16.99%
Net return........................ 18.23% 10.91% 16.55%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return...................... 8.76%
Net return........................ 8.06%
MAY 1 (A) to
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MFS RESEARCH 1999 1998 1997
- -------------- ---- ---- ----
Gross return...................... 23.12% 24.11% 16.07%
Net return........................ 22.38% 23.36% 15.59%
MAY 1 (A) to
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999 1998 1997
- ------------------------------- ---- ---- ----
Gross return...................... (1.27)% 12.75% 16.23%
Net return........................ (1.95)% 12.14% 15.75%
- -------------------
+ 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
variable investment option. The gross return and net return reflects
performance for the periods indicated, and 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 reflects 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-30
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
EQUITY OPTIONS (CONTINUED):
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
T. ROWE PRICE EQUITY INCOME 1999 1998 1997
- --------------------------- ---- ---- ----
Gross return...................... 3.54% 9.11% 22.11%
Net return........................ 2.93% 8.42% 21.64%
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 38.53% 21.80% 11.66% 14.60% 18.81% 5.23% 32.09% (0.50)% 30.55% (6.07)%
Net return........................ 37.70% 21.07% 10.88% 13.91% 18.11% 4.60% 31.33% (1.10)% 29.77% (6.63)%
</TABLE>
<TABLE>
<CAPTION>
APRIL 3 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------- -----------------
ALLIANCE INTERNATIONAL 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return...................... 37.31% 10.57% (2.98)% 9.82% 11.29%
Net return........................ 36.96% 9.90% (3.63)% 9.15% 10.79%
</TABLE>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
MORGAN STANLEY EMERGING ----------------------------- ---------------
MARKETS EQUITY 1999 1998 1997
- -------------- ---- ---- ----
Gross return...................... 95.82% (27.10)% (20.16)%
Net return........................ 94.57% (27.46)% (20.37)%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
T. ROWE PRICE INTERNATIONAL
STOCK 1999 1998 1997
- --------------------------- ---- ---- ----
Gross return...................... 31.92% 13.68% (1.49)%
Net return........................ 31.08% 13.01% (1.90)%
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 18.84% 0.29% 10.94% 22.20% 31.63% (3.81)% 16.77% (3.16)% 86.86% 8.17%
Net return........................ 18.13% (0.31)% 10.14% 21.46% 30.85% (4.39)% 16.05% (3.74)% 85.75% 7.51%
</TABLE>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
Gross return...................... 27.75% (4.28)% 26.74%
Net return........................ 27.14% (4.85)% 26.18%
- -------------------
+ 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-31
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
EQUITY OPTIONS (CONCLUDED):
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return...................... 9.70%
Net return........................ 9.06%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
Gross return...................... 73.62% 34.57% 22.42%
Net return........................ 72.63% 33.71% 21.95%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
WARBURG PINCUS
SMALL COMPANY VALUE 1999 1998 1997
- ------------------- ---- ---- ----
Gross return...................... 1.80% (10.02)% 19.15%
Net return........................ 1.19% (10.55)% 18.65%
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 17.79% 18.11% 15.06% 11.68% 19.75% (8.02)% 12.28% (2.84)% 41.26% 0.24 %
Net return........................ 17.09% 17.40% 14.30% 11.00% 19.03% (8.57)% 11.64% (3.42)% 40.42% (0.36)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE
INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 10.14% 13.88% 13.25% 5.21% 20.40% (4.10)% 10.76% 5.72% 19.87% 6.37%
Net return........................ 9.48% 13.20% 12.55% 4.57% 19.68% (4.67)% 10.15% 5.09% 19.16% 5.73%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 26.58% 19.13% 16.87% 12.61% 26.37% (3.15)% 15.26% 4.90% 48.89% 10.66%
Net return........................ 25.82% 18.41% 16.07% 11.93% 25.62% (3.73)% 14.58% 4.27% 48.01% 10.00%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return..................... 7.38%
Net return....................... 6.72%
- -------------------
+ 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-32
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
ASSET ALLOCATION OPTIONS (CONCLUDED):
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
Gross return...................... 0.01% 11.92% 14.38%
Net return........................ (0.56)% 11.14% 14.02%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MERRILL LYNCH WORLD STRATEGY 1999 1998 1997
- ---------------------------- ---- ---- ----
Gross return...................... 21.35% 6.81% 4.70%
Net return........................ 20.62% 6.18% 4.29%
- -------------------
+ 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-33
<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 SALES 1999 AND AFTER
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
FIXED INCOME OPTIONS:
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES 1999
- ---------------------- ----
Gross return...................... (0.23)%
Net return........................ 0.32%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE MONEY MARKET 1999
- --------------------- ----
Gross return...................... 4.71%
Net return........................ 4.10%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE QUALITY BOND 1999
- --------------------- ----
Gross return...................... (2.25)%
Net return........................ (0.95)%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE HIGH YIELD 1999
- ------------------ ----
Gross return...................... (3.58)%
Net return........................ (4.16)%
EQUITY OPTIONS:
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE COMMON STOCK 1999
- --------------------- ----
Gross return...................... 24.88%
Net return........................ 24.13%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE EQUITY INDEX 1999
- --------------------- ----
Gross return...................... 20.08%
Net return........................ 9.66%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE GROWTH & INCOME 1999
- ------------------------ ----
Gross return...................... 18.37%
Net return........................ 6.33%
- -------------------
+ 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-34
<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 SALES 1999 AND AFTER,
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
EQUITY OPTIONS (CONTINUED):
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%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MERRILL LYNCH BASIC VALUE EQUITY 1999
- -------------------------------- ----
Gross return...................... 19.00%
Net return........................ 18.23%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return...................... 8.76%
Net return........................ 8.06%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS RESEARCH 1999
- ------------ ----
Gross return...................... 23.12%
Net return........................ 22.38%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999
- ------------------------------- ----
Gross return...................... (1.27)%
Net return........................ (1.95)%
- -------------------
+ 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-35
<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 SALES 1999 AND AFTER
- -----------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
EQUITY OPTIONS (CONTINUED):
JUNE 4 (B) TO
DECEMBER 31,
--------------
T. ROWE PRICE EQUITY INCOME 1999
- --------------------------- ----
Gross return........................... 3.54%
Net return............................. 2.93%
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE GLOBAL 1999
- --------------- ----
Gross return........................... 38.17%
Net return............................. 27.23%
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE INTERNATIONAL 1999
- --------------------- ----
Gross return........................... 36.90%
Net return............................. 34.41%
JUNE 4 (B) TO
DECEMBER 31,
--------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999
- -------------------------------------- ----
Gross return........................... 95.82%
Net return............................. 94.57%
JUNE 4 (B) TO
DECEMBER 31,
--------------
T. ROWE PRICE INTERNATIONAL STOCK 1999
- --------------------------------- ----
Gross return........................... 31.92%
Net return............................. 31.08%
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE AGGRESSIVE STOCK 1999
- ------------------------- ----
Gross return........................... 18.55%
Net return............................. 17.83%
- -------------------
+ 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-36
<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 SALES 1999 AND AFTER,
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
EQUITY OPTIONS (CONCLUDED):
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE SMALL CAP GROWTH 1999
- ------------------------- ----
Gross return........................... 27.46%
Net return............................. 26.86%
JUNE 4 (B) TO
DECEMBER 31,
--------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return........................... 9.70%
Net return............................. 9.06%
JUNE 4 (B) TO
DECEMBER 31,
--------------
MFS EMERGING GROWTH COMPANIES 1999
- ----------------------------- ----
Gross return........................... 73.62%
Net return............................. 72.63%
JUNE 4 (B) TO
DECEMBER 31,
--------------
WARBURG PINCUS SMALL COMPANY VALUE 1999
- ---------------------------------- ----
Gross return........................... 1.80%
Net return............................. 1.19%
- -------------------
+ 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-37
<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 SALES 1999 AND AFTER,
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
ASSET ALLOCATION OPTIONS:
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE BALANCED 1999
- ----------------- ----
Gross return...................... 17.50%
Net return........................ 10.98%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE CONSERVATIVE INVESTORS 1999
- ------------------------------- ----
Gross return...................... 9.87%
Net return........................ 5.79%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE GROWTH INVESTORS 1999
- ------------------------- ----
Gross return...................... 26.27%
Net return........................ 15.36%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return...................... 7.38%
Net return........................ 6.72%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/PUTNAM BALANCED 1999
- -------------------- ----
Gross return...................... 0.01%
Net return........................ (0.56)%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MERRILL LYNCH WORLD STRATEGY 1999
- ---------------------------- ----
Gross return...................... 21.35%
Net return........................ 20.62%
- -------------------
+ 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-38
<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
- -----------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- -----------------
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 0.02% 7.74% 7.29% 3.78% 13.33% (4.37)% 10.58% 0.90%
Net return.................................... (0.76)% 6.78% 6.33% 2.84% 12.31% (5.23)% 9.55% 0.56%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- -----------------
ALLIANCE MONEY MARKET 1999 1998 1997 1996 1995 1994 1993 1992
- --------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 4.96% 5.34% 5.42% 5.33% 5.74% 4.02% 3.00% 1.11%
Net return.................................... 4.04% 4.39% 4.47% 4.38% 4.80% 3.08% 2.04% 0.77%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- -----------------
ALLIANCE QUALITY BOND 1999 1998 1997 1996 1995 1994 1993
- --------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. (2.00)% 8.69% 9.14% 5.36% 17.02% (5.10)% (0.51)%
Net return.................................... (2.88)% 7.71% 8.16% 4.41% 15.97% (5.95)% (0.73)%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE HIGH YIELD 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. (3.35)% (5.15)% 18.47% 22.89% 19.92% (2.79)% 23.15% 1.84%
Net return.................................... (4.22)% (6.00)% 17.40% 21.77% 18.84% (3.66)% 22.04% 1.50%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- -----------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995 1994 1993 1992
- ---------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 25.19% 29.39% 29.40% 24.28% 32.45% (2.14)% 24.84% 5.28%
Net return.................................... 24.07% 28.22% 28.06% 23.15% 31.26% (3.02)% 23.70% 4.93%
</TABLE>
<TABLE>
<CAPTION>
MARCH 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------------ -----------------
ALLIANCE EQUITY INDEX 1999 1998 1997 1996 1995 1994
- -------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.................................. 20.38% 28.07% 32.58% 22.39% 36.48% 1.08%
Net return.................................... 19.30% 26.92% 31.38% 21.28% 35.26% 0.33%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- -----------------
ALLIANCE GROWTH & INCOME 1999 1998 1997 1996 1995 1994 1993
- ------------------------ ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 18.66% 20.86% 26.90% 20.09% 24.07% (0.58)% (0.25)%
Net return.................................... 17.60% 19.78% 25.61% 19.00% 22.96% (1.47)% (0.48)%
</TABLE>
- -------------------
+ 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-39
<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
- -----------------
EQUITY OPTIONS (CONTINUED):
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%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 19.00% 11.59% 16.99%
Net return.................................... 17.87% 10.58% 16.32%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return.................................. 8.76%
Net return.................................... 7.74%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MFS RESEARCH 1999 1998 1997
- ------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 23.12% 24.11% 16.07%
Net return.................................... 22.01% 22.99% 15.36%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999 1998 1997
- ------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. (1.27)% 12.75% 16.23%
Net return.................................... (2.25)% 11.81% 15.52%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
T. ROWE PRICE EQUITY INCOME FUND 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 3.54% 9.11% 22.11%
Net return.................................... 2.62% 8.09% 21.40%
</TABLE>
- -------------------
+ 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-40
<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
- -----------------
EQUITY OPTIONS (CONTINUED):
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------------- ----------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995 1994 1993 1992
- --------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return................................. 38.53% 21.80% 11.66% 14.60% 18.81% 5.23% 32.09% 4.87%
Net return................................... 37.28% 20.70% 10.54% 13.56% 17.75% 4.29% 30.93% 44.52%
</TABLE>
<TABLE>
<CAPTION>
APRIL 3 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------- ----------------
ALLIANCE
INTERNATIONAL 1999 1998 1997 1996 1995
- ------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return................................. 37.31% 10.57% (2.98)% 9.82% 11.29%
Net return................................... 36.55% 9.57% (3.93)% 8.82% 10.55%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------- ---------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999 1998 1997
- -------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 95.82% (27.10)% (20.16)%
Net return.................................... 93.98% (27.68)% (20.46)%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ ------------
T. ROWE PRICE INTERNATIONAL STOCK 1999 1998 1997
- --------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 31.92% 13.68% (1.49)%
Net return.................................... 30.68% 12.67% (2.10)%
</TABLE>
<TABLE>
<CAPTION>
MARCH 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- --------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 18.84% 0.29% 10.94% 22.20% 31.63% (3.81)% 16.77% 11.49%
Net return.................................... 17.77% (0.62)% 9.81% 21.09% 30.46% (4.68)% 15.70% 11.11%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 27.75% (4.28)% 26.74%
Net return.................................... 26.76% (5.14)% 25.92%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return.................................. 9.70%
Net return.................................... 8.73%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 73.62% 34.57% 22.42%
Net return.................................... 72.11% 33.31% 21.70%
</TABLE>
- -------------------
+ 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-41
<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
- -----------------
EQUITY OPTIONS (CONCLUDED):
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
WARBURG PINCUS SMALL COMPANY VALUE 1999 1998 1997
- ---------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 1.80% (10.02)% 19.15%
Net return.................................... 0.88% (10.82)% 18.41%
</TABLE>
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995 1994 1993 1992
- ----------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 17.79% 18.11% 15.06% 11.68% 19.75% (8.02)% 12.28% 5.37%
Net return.................................... 16.73% 17.05% 13.96% 10.67% 18.68% (8.84)% 11.30% 5.02%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE CONSERVATIVE INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 10.14% 13.88% 13.25% 5.21% 20.40% (4.10)% 10.76% 1.38%
Net return.................................... 9.15% 12.85% 12.21% 4.26% 19.32% (4.96)% 9.81% 1.04%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE GROWTH INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 26.58% 19.13% 16.87% 12.61% 26.37% (3.15)% 15.26% 6.89%
Net return.................................... 25.44% 18.06% 15.72% 11.59% 25.24% (4.02)% 14.24% 6.53%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
----------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return.................................. 7.38%
Net return.................................... 6.14%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 0.01% 11.92% 14.38%
Net return.................................... (0.86)% 10.81% 13.79%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
MERRILL LYNCH WORLD STRATEGY 1999 1998 1997
- ---------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 21.35% 6.81% 4.70%
Net return.................................... 20.25% 5.86% 4.08%
</TABLE>
- -------------------
+ 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-42
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES 1999 1998 1997 1996 1995
- -------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 0.02% 7.74% 7.29% 3.78% 13.31%
Net return ........................... 0.02% 7.74% 7.29% 3.78% 13.31%
ALLIANCE MONEY MARKET
- ----------------------
Gross return ......................... 4.96% 5.34% 5.42% 5.33% 5.69%
Net return ........................... 4.96% 5.34% 5.42% 5.33% 5.69%
ALLIANCE QUALITY BOND
- ---------------------
Gross return ......................... (2.00)% 8.69% 9.14% 5.36% 17.13%
Net return ........................... (2.00)% 8.69% 9.14% 5.36% 17.13%
ALLIANCE HIGH YIELD
- -------------------
Gross return ......................... (3.35)% (5.15)% 18.47% 22.89% 19.95%
Net return ........................... (3.35)% (5.15)% 18.47% 22.89% 19.95%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995
- --------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 25.19% 29.39% 29.40% 24.28% 33.07%
Net return ........................... 25.19% 29.39% 29.40% 24.28% 33.07%
ALLIANCE EQUITY INDEX
- ---------------------
Gross return ......................... 20.38% 28.07% 32.57% 22.38% 36.53%
Net return ........................... 20.38% 28.07% 32.57% 22.38% 36.53%
ALLIANCE GROWTH & INCOME
- ------------------------
Gross return ......................... 18.66% 20.86% 26.90% 20.09% 24.38%
Net return ........................... 18.66% 20.86% 26.90% 20.09% 24.38%
</TABLE>
JUNE 4 (C) TO
DECEMBER 31,
------------------
EQ/ALLIANCE PREMIER GROWTH 1999
- -------------------------- ----
Gross return ......................... 18.97%
Net return ........................... 19.55%
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no Separate Account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1995 indicated is not an
annualized rate of return.
(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-43
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
EQUITY OPTIONS (CONTINUED):
AUGUST 30 (C) TO
DECEMBER 31,
------------------
CAPITAL GUARDIAN RESEARCH 1999
- ------------------------- ----
Gross return ......................... 7.10%
Net return ........................... 8.04%
CAPITAL GUARDIAN U.S. EQUITY
- ----------------------------
Gross return ......................... 3.76%
Net return ........................... 3.56%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 19.00% 11.59% 17.02%
Net return ........................... 19.00% 11.59% 17.02%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return ......................... 8.76%
Net return ........................... 3.50%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS RESEARCH 1999 1998 1997
- ------------ ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 23.12% 24.11% 16.05%
Net return ........................... 23.12% 24.11% 16.05%
EQ/PUTNAM GROWTH & INCOME VALUE
- -------------------------------
Gross return ......................... (1.27)% 12.75% 14.48%
Net return ........................... (1.27)% 12.75% 14.48%
T. ROWE PRICE EQUITY INCOME
- ---------------------------
Gross return ......................... 3.54% 9.11% 22.13%
Net return ........................... 3.54% 9.11% 22.13%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no Separate Account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1995 indicated is not an
annualized rate of return.
(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-44
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
EQUITY OPTIONS (CONTINUED):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995
- --------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 38.53% 21.80% 11.66% 14.60% 19.38%
Net return ........................... 38.53% 21.80% 11.66% 14.60% 19.38%
</TABLE>
<TABLE>
<CAPTION>
APRIL 30 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
--------------------------------------------------- --------------------------------
ALLIANCE INTERNATIONAL 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 37.31% 10.57% (3.05)% 9.81% 11.29%
Net return ........................... 37.31% 10.57% (3.05)% 9.81% 11.29%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 20 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ----------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999 1998 1997
- -------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 95.82% (27.10)% (20.19)%
Net return ........................... 95.82% (27.10)% (20.19)%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
T. ROWE PRICE INTERNATIONAL STOCK 1999 1998 1997
- --------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 31.92% 13.68% (1.50)%
Net return ........................... 31.92% 13.68% (1.50)%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no separate account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1998 indicated is not an
annualized rate of return.
(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-45
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
EQUITY OPTIONS (CONCLUDED):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995
- ------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 18.84% 0.29% 10.94% 22.20% 33.00%
Net return ........................... 18.84% 0.29% 10.94% 22.20% 33.00%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 20 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ----------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 27.75% (4.28)% 26.69%
Net return ........................... 27.75% (4.28)% 26.69%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return ......................... 9.70%
Net return ........................... 7.10%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 73.62% 34.57% 22.44%
Net return ........................... 73.62% 34.57% 22.44%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
WARBURG PINCUS SMALL COMPANY VALUE 1999 1998 1997
- ---------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 1.80% (10.02)% 19.13%
Net return ........................... 1.80% (10.02)% 19.13%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no separate account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1998 indicated is not an
annualized rate of return.
(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-46
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995
- ----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 17.79% 18.11% 15.06% 11.68% 20.32%
Net return ........................... 17.79% 18.11% 15.06% 11.68% 20.32%
ALLIANCE CONSERVATIVE INVESTORS
- -------------------------------
Gross return ......................... 10.14% 13.88% 13.25% 5.21% 20.59%
Net return ........................... 10.14% 13.88% 13.25% 5.21% 20.59%
ALLIANCE GROWTH INVESTORS
- -------------------------
Gross return ......................... 26.58% 19.13% 16.87%% 12.61% 26.92%
Net return ........................... 27.58% 19.13% 16.87%% 12.61% 26.92%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return ......................... 7.38%
Net return ........................... 6.97%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- --------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 0.01% 11.92% 14.48%
Net return ........................... 0.01% 11.92% 14.48%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MERRILL LYNCH WORLD STRATEGY 1999 1998 1997
- ---------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 21.35% 6.81% 4.71%
Net return ........................... 21.35% 6.81% 4.71%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no separate account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1998 indicated is not an
annualized rate of return.
(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-47
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- ---------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES 1999 1998 1997 1996
- --------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 0.02% 7.74% 7.29% 3.78%
Net return ........................... (0.66)% 6.88% 6.43% 4.49%
ALLIANCE MONEY MARKET
- ---------------------
Gross return ......................... 4.96% 5.34% 5.42% 5.33%
Net return ........................... 4.14% 4.50% 4.57% 2.98%
ALLIANCE QUALITY BOND
- ---------------------
Gross return ......................... (2.00)% 8.69% 9.14% 5.36%
Net return ........................... (2.78)% 7.82% 8.27% 7.86%
ALLIANCE HIGH YIELD
- -------------------
Gross return ......................... (3.35)% (5.15)% 18.47% 22.89%
Net return ........................... (4.13)% (5.91)% 17.52% 13.90%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- ---------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996
- --------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 25.19% 29.39% 29.40% 24.28%
Net return ........................... 24.19% 28.35% 28.18% 17.44%
ALLIANCE EQUITY INDEX
- ---------------------
Gross return ......................... 20.38% 28.07% 32.58% 22.39%
Net return ........................... 19.42% 27.05% 31.51% 16.25%
ALLIANCE GROWTH AND INCOME
- --------------------------
Gross return ......................... 18.66% 20.86% 26.90% 20.09%
Net return ........................... 17.71% 19.90% 25.74% 15.63%
</TABLE>
JUNE 4 (C) TO
DECEMBER 31,
-------------------
EQ/ALLIANCE PREMIER GROWTH 1999
- -------------------------- ----
Gross return ......................... 18.97%
Net return ........................... 18.36%
- -------------------
+ 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-48
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
EQUITY OPTIONS (CONTINUED):
AUGUST 30 (C) TO
DECEMBER 31,
-------------------
CAPITAL GUARDIAN RESEARCH 1999
- ------------------------- ----
Gross return ......................... 7.10%
Net return ........................... 6.53%
AUGUST 30 (C) TO
DECEMBER 31,
-------------------
CAPITAL GUARDIAN U.S. EQUITY 1999
- ---------------------------- ----
Gross return ......................... 3.76%
Net return ........................... 3.28%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- -----------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 19.00% 11.59% 16.99%
Net return ........................... 17.99% 10.69% 16.40%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-------------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return ......................... 8.76%
Net return ........................... 7.85%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS RESEARCH 1999 1998 1997
- ------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 23.12% 24.11% 16.07%
Net return............................ 22.13% 23.11% 15.43%
EQ/PUTNAM GROWTH & INCOME VALUE
- ---------------------------------
Gross return.......................... (1.27)% 12.75% 16.23%
Net return............................ (2.15)% 11.92% 13.87%
T. ROWE PRICE EQUITY INCOME
- ---------------------------
Gross return.......................... 3.54% 9.11% 22.11%
Net return............................ 2.73% 8.20% 21.48%
</TABLE>
- -------------------
+ 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-49
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
EQUITY OPTIONS (CONTINUED):
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------- ----------------
ALLIANCE GLOBAL 1999 1998 1997 1996
- --------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 38.53% 21.80% 11.66% 14.60%
Net return ........................... 37.42% 20.83% 10.65% 6.78%
ALLIANCE INTERNATIONAL
- ----------------------
Gross return ......................... 37.31% 10.57% (2.98)% 9.82%
Net return ........................... 36.68% 9.68% (3.83)% 2.11%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999 1998 1997
- -------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 95.82% (27.10)% (20.16)%
Net return............................ 94.18% (27.60)% (20.43)%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
T. ROWE PRICE INTERNATIONAL STOCK 1999 1998 1997
- --------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 31.92% 13.68% (1.49)%
Net return............................ 30.81% 12.79% (2.03)%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------------------------- ---------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996
- ------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 18.84% 0.29% 10.94% 22.20%
Net return ........................... 17.89% (0.52)% 9.92% 6.22%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 27.75% (4.28)% 26.74%
Net return............................ 26.89% (5.04)% 26.01%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return.......................... 9.70%
Net return............................ 6.81%
- -------------------
+ 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-50
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
EQUITY OPTIONS: (CONCLUDED):
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 73.62% 34.57% 22.42%
Net return............................ 72.28% 33.44% 21.78%
WARBURG PINCUS SMALL COMPANY VALUE
- -----------------------------------
Gross return.......................... 1.80% (10.02)% 19.15%
Net return............................ 0.99% (10.73)% 18.49%
</TABLE>
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
AUGUST 5 (A)
TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- ---------------
ALLIANCE BALANCED 1999 1998 1997 1996
- ----------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 17.79% 18.11% 15.06% 11.68%
Net return ........................... 16.85% 17.17% 14.07% 8.67%
ALLIANCE CONSERVATIVE INVESTORS
- -------------------------------
Gross return ......................... 10.14% 13.88% 13.25% 5.21%
Net return ........................... 9.26% 12.97% 12.32% 7.94%
ALLIANCE GROWTH INVESTORS
- -------------------------
Gross return ......................... 26.58% 19.13% 16.87% 12.61%
Net return ........................... 25.57% 18.18% 15.84% 9.38%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-------------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return.......................... 7.38%
Net return............................ 9.83%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 0.01% 11.92% 14.38%
Net return............................ (0.76)% 10.92% 13.87%
MERRILL LYNCH WORLD STRATEGY
- ----------------------------
Gross return.......................... 21.35% 6.81% 4.70%
Net return............................ 20.37% 5.97% 4.15%
</TABLE>
- -------------------
+ 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-51
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
SP-FLEX
- -------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
APRIL 1 (A) TO
ALLIANCE INTERMEDIATE YEARS ENDED DECEMBER 31, DECEMBER 31,
GOVERNMENT --------------------------------------------------------------------------- -------------------
SECURITIES 1999 1998 1997 1996 1995 1994 1993 1992 1991
- ---------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 0.02% 7.74% 7.29% 3.78% 13.33% (4.37)% 10.58% 5.60% 12.10%
Net return................ (1.65)% 5.82% 5.38% 1.91% 11.31% (6.08)% 8.57% 3.71% 10.59%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 4.96% 5.34% 5.42% 5.33% 5.74% 4.02% 3.00% 3.56% 6.17% 8.24%
Net return................ 3.11% 3.46% 3.54% 3.44% 3.86% 2.17% 1.13% 1.71% 4.29% 6.30%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE QUALITY BOND 1999 1998 1997 1996 1995 1994
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. (2.00)% 8.69% 9.14% 5.36% 17.02% (2.20)%
Net return................ (3.75)% 6.75% 7.19% 3.47% 14.94% (2.35)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. (3.35)% (5.15)% 18.47% 22.89% 19.92% (2.79)% 23.15% 12.31% 24.46% (1.12)%
Net return................ (5.08)% (6.84)% 16.35% 20.68% 17.79% (4.52)% 20.96% 10.30% 22.25% (2.89)%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 25.19% 29.39% 29.40% 24.28% 32.45% (2.14)% 24.84% 3.23% 37.87% (8.12)%
Net return................ 22.96% 27.08% 26.91% 22.04% 30.10% (3.88)% 22.60% 1.38% 35.43% (9.76)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE EQUITY INDEX 1999 1998 1997 1996 1995 1994
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 20.38% 28.07% 32.58% 22.39% 36.48% (2.54)%
Net return................ 18.24% 25.79% 30.21% 20.19% 34.06% (2.69)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE GROWTH & INCOME 1999 1998 1997 1996 1995 1994
- ------------------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 18.66% 20.86% 26.90% 20.09% 24.07% (3.40)%
Net return................ 16.55% 18.71% 24.50% 17.93% 21.87% (3.55)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 38.53% 21.80% 11.66% 14.60% 18.81% 5.23% 32.09% (0.50)% 30.55% (6.07)%
Net return................ 36.06% 19.63% 9.56% 12.54% 16.70% 3.36% 29.77% (2.28)% 28.23% (7.75)%
</TABLE>
- -------------------
+ 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-52
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
DECEMBER 31, 1999
RATES OF RETURN (CONCLUDED):
SP-FLEX
- -------
EQUITY OPTIONS (CONCLUDED):
<TABLE>
<CAPTION>
APRIL 3 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE INTERNATIONAL 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return.............. 37.31% 10.57% (3.05)% 9.82% 11.29%
Net return................ 35.33% 8.60% (4.78)% 7.84% 9.82%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 18.84% 0.29% 10.94% 22.20% 31.63% (3.81)% 16.77% (3.16)% 86.86% 8.17%
Net return................ 16.72% (1.50)% 8.83% 20.00% 29.30% (5.53)% 14.67% (4.89)% 83.54% 6.23%
</TABLE>
ASSET ALLOCATION SERIES:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................. 17.79% 18.11% 15.06% 11.68% 19.75% (8.02)% 12.28% (2.83)% 41.27% 0.24 %
Net return.................... 15.69% 16.01% 12.94% 9.67% 17.62% (9.66)% 10.31% (4.57)% 38.75% (1.56)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
ALLIANCE YEARS ENDED DECEMBER 31 DECEMBER 31,
CONSERVATIVE --------------------------------------------------------------------------- -------------------
INVESTORS 1999 1998 1997 1996 1995 1994
- --------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.................. 10.14% 13.88% 13.25% 5.21% 20.40% (1.83)%
Net return.................... 8.18% 11.85% 11.21% 3.32% 18.26% (1.98)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE GROWTH INVESTORS 1999 1998 1997 1996 1995 1994
- ------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.................. 26.58% 19.13% 16.87% 12.61% 26.37% (3.16)%
Net return.................... 24.33% 17.00% 14.69% 10.58% 24.12% (3.31)%
</TABLE>
- -------------------
+ 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.
- ------------------------------
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-53
<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>
A-1
- --------------------------------------------------------------------------------
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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Francoise Colloc'h Director of Equitable Life (since July 1992). Member of the AXA Management
AXA Board and Group Executive President, Human Resources, Communication and
23 Avenue Matignon Synergies of AXA (since January 2000). Prior thereto, Senior Executive Vice
75008 Paris, France President, AXA (1993-2000). Director or officer of various subsidiaries and
affiliates of the AXA Group.
- ------------------------------------------------------------------------------------------------------------------------
Henri de Castries Director of Equitable Life (since September 1993). Chairman of the Board of
AXA AXA Financial (since April 1998); Vice Chairman (February 1996 to April 1998).
23 Avenue Matignon Vice Chairman of AXA's Management Board (since January 2000). Prior thereto,
75008 Paris, France 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.
- ------------------------------------------------------------------------------------------------------------------------
Joseph L. Dionne Director of Equitable Life (since May 1982). Retired Chairman of The
The McGraw-Hill Companies McGraw-Hill Companies (since January 2000); prior thereto, Chairman (April
1221 Avenue of the Americas 1988 to January 2000) and Chief Executive Officer (April 1983 to April 1998).
New York, NY 10020 Director of The McGraw-Hill Companies, Harris Corporation and Ryder System,
Inc. Director of AXA Financial, Inc. (since May, 1992).
- ------------------------------------------------------------------------------------------------------------------------
Denis Duverne Director of Equitable Life (since February 1998). Executive Vice President,
AXA International (US-UK-Benelux) AXA and member of AXA Executive Board (since
23, Avenue Matignon January, 2000). Director, Alliance (since February 1996) and Donaldson Lufkin
75008 Paris, France & Jenrette ("DLJ")(since February 1997).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
A-2
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Jean-Rene Fourtou Director of Equitable Life (since July 1992). Vice Chairman of the Management
Rhone-Poulenc S.A. Board of Aventis (since December 1999). Prior thereto, Chairman and Chief
25, Quai Paul Doumer Executive Officer of Rhone-Poulenc, S.A. (1986 to December 1999). Member of
92408 Courbevoie Cedex the Supervisory Board of AXA. Director of Schneider S.A., Paribas, and Groupe
France Pernod-Ricard. Member of the Consulting Council of Banque de France.
Director, AXA Financial (since July, 1992).
- ------------------------------------------------------------------------------------------------------------------------
Norman C. Francis Director of Equitable Life (since March 1989). President of Xavier University
Xavier University of Louisiana of Louisiana; Director, First National Bank of Commerce, New Orleans, LA,
7325 Palmetto Street Piccadilly Cafeterias, Inc., and Entergy Corporation.
New Orleans, LA 70125
- ------------------------------------------------------------------------------------------------------------------------
Donald J. Greene Director of Equitable Life (since July 1991). Of Counsel, LeBoeuf, Lamb,
LeBoeuf, Lamb, Greene & MacRae, Greene & MacRae, L.L.P. (since 1999). Prior thereto, Partner of the firm
L.L.P. (1965 to 1999). Director of AXA Financial (since May 1992).
125 West 55th Street
New York, NY 10019-4513
- ------------------------------------------------------------------------------------------------------------------------
John T. Hartley Director of Equitable Life (since August 1987). Currently a Director and
1025 NASA Boulevard retired Chairman and Chief Executive Officer of Harris Corporation (retired
Melbourne, FL 32919 July 1995); previously held other officerships with Harris Corporation.
Director of AXA Financial (since May 1992); Director of the McGraw Hill
Companies.
- ------------------------------------------------------------------------------------------------------------------------
John H.F. Haskell Jr. Director of Equitable Life (since July 1992); Director of AXA Financial
SBC Warburg Dillon Read LLC (since July 1992); Director, Senior Advisor of Warburg Dillon Read LLC (since
535 Madison Avenue 1999); Prior thereto, Managing Director and member of its Board of Directors
New York, NY 10022 (1975-1999); Chairman, Supervisory Board, Dillon Read (France) Gestion (until
1998); Director, Pall Corporation (since November 1998).
- ------------------------------------------------------------------------------------------------------------------------
Mary (Nina) Henderson Director of Equitable Life (since December 1996). Corporate Vice President,
BESTFOODS Core Business Development of Bestfoods (since June 1999). Prior thereto,
International Plaza President, Bestfoods Grocery and Vice President, Bestfoods (formerly CPC
700 Sylvan Avenue International, Inc.)(1997 to 1999). President, Bestfoods Specialty Markets
Englewood Cliffs, NJ 07632-9976 Group (1993 to 1997); Director, Hunt Corporation and PACTIV Corporation.
Director, AXA Financial (since December 1996).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
A-3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
W. Edwin Jarmain Director of Equitable Life (since July 1992). President, Jarmain Group Inc.
Jarmain Group Inc. (since 1979); and officer or director of several affiliated companies.
121 King Street West Director, DLJ (since October 1992), AXA Insurance (Canada), Anglo Canada
Suite 2525 General Insurance Company, and AXA Pacific Insurance Company, and Alternate
Toronto, Ontario M5H 3T9 Director, AXA Asia Pacific Holdings Limited. Chairman (non-executive) and
Canada Director, FCA International Ltd. (January 1994 to May 1998). Director of
AXA Financial, Inc. (since July 1992).
- ------------------------------------------------------------------------------------------------------------------------
George T. Lowy Director of Equitable Life (since July 1992). Partner, Cravath, Swaine &
Cravath, Swaine & Moore Moore. Director, Eramet.
825 Eighth Avenue
New York, NY 10019
- ------------------------------------------------------------------------------------------------------------------------
Didier Pineau-Valencienne Director of Equitable Life (since February 1996). Vice Chairman Credit Suisse
Credit Suisse, First Boston First Boston (since March 1999). Chairman and Chief Executive Officer (1981
64, rue de Miromesnel to February 1999)(now Honorary Chairman) Schneider Electric. Member of the
75008 Paris, France 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).
- ------------------------------------------------------------------------------------------------------------------------
George J. Sella, Jr. Director of Equitable Life (since May 1987). Retired Chairman and Chief
P.O. Box 397 Executive Officer of American Cyanamid Company (retired April 1993);
Newton, NJ 07860 previously held other officerships with American Cyanamid. Director of AXA
Financial (since May 1992) and Coulter Pharmaceutical (since May 1987).
- ------------------------------------------------------------------------------------------------------------------------
Peter J. Tobin Director of Equitable Life (since March 1999); Dean of the Peter J. Tobin
St. John's University College of Business Administration, St. John's University (since August
8000 Utopia Parkway 1998); Chief Financial Officer, Chase Manhattan Corp. (1985 to 1997).
Jamaica, NY 11439
- ------------------------------------------------------------------------------------------------------------------------
Dave H. Williams Director of Equitable Life (since March 1991). Chairman (since 1977) and
Alliance Capital Management former Chief Executive Officer (1977 to January 1999), of Alliance, and
Corporation Chairman or Director of numerous subsidiaries and affiliated companies of
1345 Avenue of the Americas Alliance. Senior Executive Vice President of AXA (since January 1997).
New York, NY 10105 Director of AXA Financial (since May 1992).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
A-4
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OFFICERS-DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
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).
- ------------------------------------------------------------------------------------------------------------------------
Edward D. Miller 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.
- ------------------------------------------------------------------------------------------------------------------------
Stanley B. Tulin 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.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
A-5
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Leon B. Billis 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.
- ------------------------------------------------------------------------------------------------------------------------
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).
- ------------------------------------------------------------------------------------------------------------------------
Harvey Blitz 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.
- ------------------------------------------------------------------------------------------------------------------------
Kevin R. Byrne 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.
- ------------------------------------------------------------------------------------------------------------------------
John A. Caroselli 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).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
A-6
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Judy A. Faucett 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).
- ---------------------------------------------------------------------------------------------------------------------------
Alvin H. Fenichel 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.
- ---------------------------------------------------------------------------------------------------------------------------
Paul J. Flora Senior Vice President and Auditor, Equitable Life. Vice President and
Auditor, AXA Financial.
- ---------------------------------------------------------------------------------------------------------------------------
Robert E. Garber 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.
- ---------------------------------------------------------------------------------------------------------------------------
Donald R. Kaplan Senior Vice President (since September 1999), Chief Compliance Officer
and Associate General Counsel, Equitable Life. Previously held other
officerships with Equitable Life.
- ---------------------------------------------------------------------------------------------------------------------------
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.
- ---------------------------------------------------------------------------------------------------------------------------
Richard J. Matteis 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).
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
A-7
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<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).
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
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>
A-8
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- ---------------------------------------------------------------------------------------------------------------------------
<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>
APPENDIX B
B-1
- --------------------------------------------------------------------------------
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:
Barron's Money Management Letter
Morningstar's Variable Investment Dealers Digest
Annuities/Life National Underwriter
Business Week Pension & Investments
Forbes USA Today
Fortune Investor's Daily
Institutional Investor The New York Times
Money The Wall Street Journal
Kiplinger's Personal Finance The Los Angeles Times
Financial Planning The Chicago Tribune
Investment Advisor
Investment Management Weekly
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
<PAGE>
B-2
- --------------------------------------------------------------------------------
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 policy's premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long- or short-term debt securities. 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. 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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RATES OF RETURN
- --------------------------------------------------------------------------------------------------------------------
FOR THE FOLLOWING LONG-TERM LONG-TERM INTERMEDIATE- U.S.
PERIODS ENDING COMMON GOVERNMENT CORPORATE TERM GOV'T 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 8.03 1.98 2.46 2.08 0.69 0.00
Since 1926
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
B-3
- --------------------------------------------------------------------------------
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>
C-1
- --------------------------------------------------------------------------------
DATES OF PREVIOUS PROSPECTUSES AND SUPPLEMENTS
<TABLE>
<CAPTION>
This supplement updates
the prospectuses dated which relate to our
- ------------------------ -------------------
<S> <C>
July 25, 1996; January 1, 1997; May 1, 1997-99; and
October 18, 1999............................................ IL Protector(R) Policies
December 19, 1994; May 1, 1995-99; September 15, 1995;
January 1, 1997; and October 18, 1999....................... Incentive Life Plus and our IL COLI(1) Policies
November 27, 1991; May 1, 1993-95, 97-98; and
September 15, 1995.......................................... Special Offer Policies(2)
August 18, 1992; May 1, 1993-99; January 1, 1997; and
October 18, 1999............................................ Survivorship 2000 Policies
November 27, 1991 and May 1, 1993-94........................ Incentive Life 2000 and our Champion 2000 Policies
August 29, 1989; February 27, 1991; May 1,
1990, 93-94................................................. Incentive Life Policies
</TABLE>
In addition, you may have also received other updating prospectus supplements.
These supplements are still relevant and you should retain them with your
prospectus.
- -----------------
1 If you have our "IL COLI" policy, this supplement relates to an Incentive
Life Plus prospectus for one of the indicated dates (but not earlier than
September 15, 1995) that you received, together with our IL COLI supplement
dated the same date as that prospectus.
2 If you have our Special Offer Policy, this supplement relates to an
Incentive Life 2000 or Incentive Life Plus prospectus for one of the
indicated dates that you received, together with a related Special Offer
Policy supplement. If the prospectus you received was dated May 1, 1994 or
earlier, it was our Incentive Life 2000 prospectus with a Special Offer
Policy supplement dated November 27, 1991, January 29, 1993, or May 1,
1993-95. If the prospectus you received was dated after May 1, 1994, it was
our Incentive Life Plus prospectus with a Special Offer Policy supplement
dated May 1, 1995-96 or September 15, 1995.
<PAGE>
The Equitable Life Assurance Society
of the United States
Variable Life Insurance Policies
Incentive Life
Survivorship Incentive Life
PROSPECTUS SUPPLEMENT DATED MAY 1, 2000
- --------------------------------------------------------------------------------
This supplement updates certain information in the most recent prospectus you
received for your Equitable variable life insurance policy listed above, and in
any prior supplements to that prospectus.*
NEW INVESTMENT OPTIONS. Beginning on or about May 22, 2000 you will have a new
variable investment option (Fund) available under your policy:
o EQ/Alliance Technology**
Alliance Capital Management L.P. is the investment advisor for this new
Portfolio of EQ Advisors Trust. See "Investment Portfolios" below, as well as
the EQ Advisors Trust prospectus attached to this supplement, for more
information.
EQUITABLE. The information under the heading "Equitable" in your prospectus is
updated as follows:
EQUITABLE. We are The Equitable Life Assurance Society of the United States
(Equitable or 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
$462.7 billion in assets as of December 31, 1999. 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.
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
- -------------------
* The dates of such prior prospectuses are listed for your information in
Appendix C to this supplement. You should keep this supplement with your
prospectus and any previous prospectus supplement. We will send you another
copy of any prospectus or supplement, without charge, on written request.
** This option may not be available in California.
Copyright 2000 The Equitable Life Assurance Society of the United States.
All rights reserved.
<PAGE>
- ------- ----------------------------------------------------------------------
2
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:
P.O. Box 1047
Charlotte, North Carolina 28201-1047
- ---------------------------------------------------------
BY EXPRESS DELIVERY ONLY:
- ---------------------------------------------------------
At the Street Address for our Administrative Office:
Equitable Life
National Operations Center
10840 Ballantyne Commons Parkway
Charlotte, N.C. 28277
- ---------------------------------------------------------
BY TOLL-FREE PHONE:
- ---------------------------------------------------------
1-888-855-5100
(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 E-MAIL:
- ---------------------------------------------------------
[email protected]
- ---------------------------------------------------------
BY FAX:
- ---------------------------------------------------------
1-704-540-9714
- ---------------------------------------------------------
BY INTERNET:
- ---------------------------------------------------------
Our Web site (www.equitable.com) can also provide information; some of the forms
listed below are available for you to print out through our Web site by clicking
on "Contact Us." You can also 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 sole
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 investment options; and
(e) changes in allocation percentages for premiums and deductions.
You can change your allocation 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 Requests" below.
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 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>
- ------------------------------------------------------------------ -------
3
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 premium payments after the first one to our Administrative Office at
the above addresses; except that you should send any premiums for which we have
billed you to the address on the billing notice.
TELEPHONE AND EQACCESS REQUESTS. If you are both the sole owner and an insured
person under your policy, you may call 1-888-855-5100 (toll free) from a touch
tone phone to make the following types of requests:
o policy loans
o changes of address
o changes of premium allocation percentages
o transfers among investment options (Funds)
If you are not both an insured person and the owner, you may send 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.
By the end of 2000, we anticipate that you will be able to make transfers among
investment options (Funds) and changes in premium allocation percentages 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 transactions apply to EQAccess transactions.
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.
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 confirmation letter by first class mail.
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 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
<PAGE>
- ------- ----------------------------------------------------------------------
4
security and/or integrity of our automated systems (see discussion of "Market
timing" below).
Any telephone or Internet transaction request that you make 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 transactions 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.
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.
ASSET REBALANCING. Over time, your relative position in each investment option
may change due to the fluctuation of unit prices, premium payments, monthly
deductions and other transactions. Asset rebalancing, which we introduced last
year, can be useful to you if you wish to maintain a specified asset mix.
The following description replaces the description of our asset rebalancing
service in your prospectus (or supplement):
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.
You may request the asset rebalancing service at any time. You may change your
allocation instructions or discontinue participation in the asset rebalancing
service at any time.
If you request the asset rebalancing service, the first redistribution wll be on
the date you specify or the date we receive your request, if later. Subsequent
periodic rebalancings will occur quarterly, semiannually or annually, as you
have requested.
INVESTMENT PORTFOLIOS. Your policy offers the investment Portfolios listed in
the table below, along with the Guaranteed Interest Account.
<PAGE>
- ------------------------------------------------------------------ -------
5
In addition to the other charges we make under your policy, you also bear your
proportionate share of all fees and expenses paid by a Portfolio that
corresponds to any variable investment option (Fund) you are using. The tables
below show the fees and expenses paid by each Portfolio for the year ended
December 31, 1999, except as otherwise noted. 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(4) 0.60% 0.25% 0.04% 0.89% -- 0.89%
- -----------------------------------------------------------------------------------------------------------------------
EQ/Balanced(5) 0.57% 0.25% 0.05% 0.87% -- 0.87%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Common Stock 0.46% 0.25% 0.04% 0.75% -- 0.75%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors 0.60% 0.25% 0.07% 0.92% -- 0.92%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Equity Index 0.25% 0.25% 0.05% 0.55% -- 0.55%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Global 0.73% 0.25% 0.09% 1.07% -- 1.07%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income 0.59% 0.25% 0.05% 0.89% -- 0.89%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors 0.57% 0.25% 0.05% 0.87% -- 0.87%
- -----------------------------------------------------------------------------------------------------------------------
Alliance High Yield 0.60% 0.25% 0.05% 0.90% -- 0.90%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Intermediate Government
Securities 0.50% 0.25% 0.07% 0.82% -- 0.82%
- -----------------------------------------------------------------------------------------------------------------------
Alliance International 0.85% 0.25% 0.20% 1.30% -- 1.30%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Money Market 0.34% 0.25% 0.05% 0.64% -- 0.64%
- -----------------------------------------------------------------------------------------------------------------------
EQ/Alliance Premier Growth(6) 0.90% 0.25% 0.23% 1.38% 0.23% 1.15%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Quality Bond 0.53% 0.25% 0.05% 0.83% -- 0.83%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth(7) 0.75% 0.25% 0.07% 1.07% -- 1.07%
- -----------------------------------------------------------------------------------------------------------------------
EQ/Alliance Technology(8) 0.90% 0.25% 0.10% 1.25% 0.10% 1.15%
- -----------------------------------------------------------------------------------------------------------------------
Capital Guardian Research(6) 0.65% 0.25% 0.47% 1.37% 0.42% 0.95%
- -----------------------------------------------------------------------------------------------------------------------
Capital Guardian U.S. Equity(6) 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%
- -----------------------------------------------------------------------------------------------------------------------
Mercury Basic Value Equity(9) 0.60% 0.25% 0.17% 1.02% 0.07% 0.95%
- -----------------------------------------------------------------------------------------------------------------------
Mercury World Strategy(10) 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 Balanced 0.60% 0.25% 0.28% 1.13% 0.23% 0.90%
- -----------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value 0.60% 0.25% 0.16% 1.01% 0.06% 0.95%
- -----------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income 0.60% 0.25% 0.21% 1.06% 0.11% 0.95%
- -----------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock 0.85% 0.25% 0.30% 1.40% 0.15% 1.25%
- -----------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value 0.75% 0.25% 0.24% 1.24% 0.14% 1.10%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- ------- ----------------------------------------------------------------------
6
(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 Balanced, EQ/Putnam Growth & Income Value, Warburg
Pincus Small Company Value and T. Rowe Price International Stock 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. 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 MFS Emerging Growth Companies, MFS Growth with Income, MFS
Research, Mercury Basic Value Equity, EQ/Putnam Growth & Income Value, T.
Rowe Price Equity Income, T. Rowe Price International Stock and Warburg
Pincus Small Company Value Portfolios reflect an increase effective on May
1, 2000. The expense limitation for the EQ/Evergreen Portfolio reflects a
decrease effective on May 1, 2000.
(4) Formerly named "Alliance Aggressive Stock." Effective May 1, 2000,
Massachusetts Financial Services Company joined Alliance Capital Management
L.P. as an investment advisor for this Portfolio.
(5) Formerly named "Alliance Balanced." Effective May 1, 2000, Capital Guardian
Trust Company, Jennisen Associates LLC and Prudential Investments Fund
Management LLC joined Alliance Capital Management L.P. as investment
advisors for this Portfolio.
(6) Initial seed capital was invested in the EQ/Alliance Premier Growth,
Capital Guardian Research and Capital Guardian U.S. Equity Portfolios on
April 30, 1999; thus, Other Expenses for these Portfolios have been
estimated.
(7) 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.
(8) Expenses shown are based on annualized estimates for 2000. Initial seed
capital will be invested in the EQ/Alliance Technology Portfolio on or
about May 1, 2000.
(9) Formerly named "Merrill Lynch Basic Value Equity."
(10) Formerly named "Merrill Lynch World Strategy."
INVESTMENT PERFORMANCE. Footnote 6 to the Separate Account FP financial
statements set forth below contains information about the net return for each
Fund (variable investment option) which commenced operations prior to December
31, 1999. The attached prospectus for EQ Advisors Trust contains rates of return
and other Portfolio performance information for various periods ended December
31, 1999. The changes in the Policy Account value of your policy depend not only
on the performance of the Portfolios, but also on the deductions and charges
under your policy. To obtain the current unit values of the Separate Account
Funds, call (888) 855-5100.
The values reported in footnote 6 for all policies are computed using net rates
of return for the corresponding Portfolios of EQ Advisors Trust. The returns
reported in footnote 6 for each of the policy forms are reduced only by any
mortality and expense risk charge deducted from Separate Account assets.
LONG-TERM MARKET TRENDS. Appendix B to this supplement presents historical
return trends for various types of securities which may be useful for
understanding how different investment strategies may affect long-term results.
<PAGE>
- ------------------------------------------------------------------ -------
7
DISTRIBUTION. Because of its activities in distributing our products, AXA
Advisors, LLC (the successor to EQ Financial Consultants, Inc.) is the
"principal underwriter" (as defined in the Investment Company Act of 1940) of
our variable life insurance policies. In 1997, 1998 and 1999 we paid AXA
Advisors a fee of $325,380 annually for its services as such.
ILLUSTRATIONS OF POLICY BENEFITS. For purposes of illustrations of the type set
forth under this caption in your prospectus, the new aggregate expense
assumption for the Portfolios is 0.96% per annum (0.63% per annum for investment
management fees and 0.33% per annum for other expenses). The investment
management fee assumption is the average of the advisory fees payable for each
EQ Advisors Trust Portfolio based on average net assets for 1999. The other
expense assumption is the weighted average of the other expenses (including
"Rule 12b-1" distribution fees) of the EQ Advisors Trust Portfolios, based on
average net assets for 1999. The tables under this caption in your prospectus
have not been restated to reflect this new Portfolio expense assumption. For a
personalized illustration reflecting the fees and expenses under your policy,
contact your financial professional.
DELETION OF CERTAIN INFORMATION. The following information that appears in your
prospectus is deleted:
o all quotations of investment yield or return that are based on the
historical investment performance of the available Portfolios under
your policy; and all illustrations of policy values based on such
historical performance.
o all information about the Portfolios' investment objectives and
policies.
MANAGEMENT. A list of our directors and, to the extent they are responsible for
variable life insurance operations, our principal officers and a brief statement
of their business experience for the past five years is contained in Appendix A
to this supplement.
FINANCIAL STATEMENTS. The financial statements of Separate Account FP as of
December 31, 1999 and for 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 the three years in the period ended December 31, 1999 included in this
prospectus supplement have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements of Equitable Life contained in this prospectus
supplement should be considered only as bearing upon the ability of Equitable
Life to meet its obligations under the policies. They should not be considered
as bearing upon the investment experience of the Funds in the Separate Account.
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
INDEX TO FINANCIAL STATEMENTS
<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-15
Notes to Financial Statements...................................................................... FSA-24
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants..................................................................... F-1
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 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, 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
+ Formerly known as Equitable Variable Life Insurance Company Separate Account FP.
</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 Intermediate Government Securities, Alliance Money
Market, Alliance Quality Bond, Alliance High Yield, Alliance Common Stock,
Alliance Equity Index, Alliance Growth & Income, 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, T. Rowe Price Equity Income, Alliance Global, Alliance International,
Morgan Stanley Emerging Markets Equity, T. Rowe Price International Stock,
Alliance Aggressive Stock, Alliance Small Cap Growth, EQ/Evergreen, MFS Emerging
Growth Companies, Warburg Pincus Small Company Value, Alliance Balanced,
Alliance Conservative Investors, Alliance Growth Investors, EQ/Evergreen
Foundation, EQ/Putnam Balanced and Merrill Lynch World Strategy ("EQ Advisors
Trust Variable Investment Options"), 30 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>
FIXED INCOME OPTIONS: EQUITY OPTIONS:
------------------------------------------------------ ----------------------------
ALLIANCE
INTERMEDIATE ALLIANCE ALLIANCE ALLIANCE
GOVERNMENT MONEY ALLIANCE HIGH COMMON ALLIANCE
SECURITIES MARKET QUALITY BOND YIELD STOCK EQUITY INDEX
------------ ------------ ------------ ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 80,139,159................. $78,746,672
342,765,909................. $344,082,723
246,885,528................. $233,631,434
177,773,173................. $149,030,820
3,081,451,600................. $3,783,859,850
621,830,916................. $850,584,523
205,101,089.................
46,147,852.................
182,262.................
494,512.................
38,508,013.................
391,533.................
Receivable for Trust shares sold.......... 58,836 -- -- 5,046 -- --
Receivable for policy-related
transactions.......................... 68,831 4,909,455 434,709 798,616 15,840,922 2,266,891
----------- ------------ ------------ ------------ -------------- ------------
Total Assets.............................. $78,874,339 $348,992,178 $234,066,143 $149,834,482 $3,799,700,772 $852,851,414
----------- ------------ ------------ ------------ -------------- ------------
LIABILITIES
Payable for Trust shares purchased........ $ -- $ 4,563,801 $ 161,711 $ -- $ 19,831,580 $ 2,546,878
Payable for policy-related
transactions.......................... -- -- -- -- -- --
----------- ------------ ------------ ------------ -------------- ------------
Total Liabilities......................... -- 4,563,801 161,711 -- 19,831,580 2,546,878
----------- ------------ ------------ ------------ -------------- ------------
NET ASSETS................................ $78,874,339 $344,428,377 $233,904,432 $149,834,482 $3,779,869,192 $850,304,536
=========== ============ ============ ============ ============== ============
Amount retained by Equitable Life
in Separate Account FP (Note 4)....... $ 945,030 $ 16,198 $ 1,326,200 $ 1,280 $ 80,914 $ 121,396
Net Assets Attributable
to Contractowners..................... 77,929,309 344,412,179 232,578,232 149,833,202 3,779,788,278 850,183,140
----------- ------------ ------------ ------------ -------------- ------------
NET ASSETS................................ $78,874,339 $344,428,377 $233,904,432 $149,834,482 $3,779,869,192 $850,304,536
=========== ============ ============ ============ ============== ============
<CAPTION>
EQUITY OPTIONS:
--------------------------------------------------------------------
EQ/ CAPITAL MERRILL MFS
ALLIANCE ALLIANCE CAPITAL GUARDIAN LYNCH GROWTH
GROWTH PREMIER GUARDIAN U.S. BASIC VALUE WITH
& INCOME GROWTH RESEARCH EQUITY EQUITY INCOME
----------- ----------- -------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $ 80,139,159.................
342,765,909.................
246,885,528.................
177,773,173.................
3,081,451,600.................
621,830,916.................
205,101,089................. $232,271,328
46,147,852................. $51,216,559
182,262................. $193,355
494,512................. $511,837
38,508,013................. $39,778,636
391,533................. $412,169
Receivable for Trust shares sold.......... 160,367 -- -- -- -- --
Receivable for policy-related
transactions.......................... -- 283,944 24,204 -- 23,002 8,035
------------ ----------- -------- -------- ----------- --------
Total Assets.............................. $232,431,695 $51,500,503 $217,559 $511,837 $39,801,638 $420,204
------------ ----------- -------- -------- ----------- --------
LIABILITIES
Payable for Trust shares purchased........ $ -- $ 283,146 $ 24,204 $ -- $ 11,329 $ 4,490
Payable for policy-related
transactions.......................... 112,046 -- -- -- -- --
------------ ----------- -------- -------- ----------- --------
Total Liabilities......................... 112,046 283,146 24,204 -- 11,329 4,490
------------ ----------- -------- -------- ----------- --------
NET ASSETS................................ $232,319,649 $51,217,357 $193,355 $511,837 $39,790,309 $415,714
============ =========== ======== ======== =========== ========
Amount retained by Equitable Life
in Separate Account FP (Note 4)....... $ 434,457 $ 3,545 $ 219 $ 387 $ 81,800 $ 3,570
Net Assets Attributable
to Contractowners..................... 231,885,192 51,213,812 193,136 511,450 39,708,509 412,144
------------ ----------- -------- -------- ----------- --------
NET ASSETS................................ $232,319,649 $51,217,357 $193,355 $511,837 $39,790,309 $415,714
============ =========== ======== ======== =========== ========
</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>
EQUITY OPTIONS (CONCLUDED):
-----------------------------------------------------------------------------
MORGAN
EQ/PUTNAM T. ROWE STANLEY
GROWTH & PRICE EMERGING
MFS INCOME EQUITY ALLIANCE ALLIANCE MARKETS
RESEARCH VALUE INCOME GLOBAL INTERNATIONAL EQUITY
----------- ----------- ----------- ------------ ------------- -----------
<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
54,114,065..................... $53,161,413
552,424,363..................... $724,986,725
51,584,951..................... $76,876,125
29,914,338..................... $40,958,925
43,913,498.....................
892,630,699.....................
46,097,819.....................
27,230.....................
160,950,031.....................
38,188,722.....................
Receivable for Trust shares sold.............. 252,705 -- -- -- -- --
Receivable for policy-related
transactions.............................. -- 82,740 194,627 1,126,946 92,708 82,278
----------- ----------- ----------- ------------ ----------- -----------
Total Assets.................................. $48,850,291 $21,863,477 $53,356,040 $726,113,671 $76,968,833 $41,041,203
----------- ----------- ----------- ------------ ----------- -----------
LIABILITIES
Payable for Trust shares purchased............ $ -- $ 69,698 $ 154,373 $ 1,211,437 $ 87,078 $ 350,654
Payable for policy-related
transactions.............................. 212,939 -- -- -- -- --
----------- ----------- ----------- ------------ ----------- -----------
Total Liabilities............................. 212,939 69,698 154,373 1,211,437 87,078 350,654
----------- ----------- ----------- ------------ ----------- -----------
NET ASSETS................................... $48,637,352 $21,793,779 $53,201,667 $724,902,234 $76,881,755 $40,690,549
=========== =========== =========== ============ =========== ===========
Amount retained by Equitable Life
in Separate Account FP (Note 4)........... $ 142,291 $ 69,602 $ 126,030 $ 3,388 $ 964,072 $ 1,767,601
Net Assets Attributable
to Policyowners........................... 48,495,061 21,724,177 53,075,637 724,898,846 75,917,683 38,922,948
----------- ----------- ----------- ------------ ----------- -----------
NET ASSETS.................................... $48,637,352 $21,793,779 $53,201,667 $724,902,234 $76,881,755 $40,690,549
=========== =========== =========== ============ =========== ===========
<CAPTION>
EQUITY OPTIONS (CONCLUDED):
----------------------------------------------------------------------------
WARBURG
T. ROWE MFS PINCUS
PRICE ALLIANCE ALLIANCE EMERGING SMALL
INTERNATIONAL AGGRESSIVE SMALL CAP EQ/ GROWTH COMPANY
STOCK STOCK GROWTH EVERGREEN COMPANIES VALUE
------------- -------------- ----------- --------- ------------ -----------
<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.....................
23,253,533.....................
54,114,065.....................
552,424,363.....................
51,584,951.....................
29,914,338.....................
43,913,498..................... $53,258,879
892,630,699..................... $1,051,440,590
46,097,819..................... $70,174,096
27,230..................... $28,680
160,950,031..................... $238,027,993
38,188,722..................... $35,893,840
Receivable for Trust shares sold.............. -- 2,154,914 22,666,998 -- -- 71,466
Receivable for policy-related
transactions.............................. 57,539 -- -- -- 1,271,988 --
----------- -------------- ----------- ------- ------------ -----------
Total Assets.................................. $53,316,418 $1,053,595,504 $92,841,094 $28,680 $239,299,981 $35,965,306
----------- -------------- ----------- ------- ------------ -----------
LIABILITIES
Payable for Trust shares purchased............ $ 2,392 $ -- $ -- $ -- $ 1,116,940 $ --
Payable for policy-related
transactions.............................. -- 1,550,441 22,460,673 -- -- 17,093
----------- -------------- ----------- ------- ------------ -----------
Total Liabilities............................. 2,392 1,550,441 22,460,673 -- 1,116,940 17,093
----------- -------------- ----------- ------- ------------ -----------
NET ASSETS................................... $53,314,026 $1,052,045,063 $70,380,421 $28,680 $238,183,041 $35,948,213
=========== ============== =========== ======= ============ ===========
Amount retained by Equitable Life
in Separate Account FP (Note 4)........... $ 178,040 $ 3,855 $ 527,774 $ 18 $ 386,768 $ 164,967
Net Assets Attributable
to Policyowners........................... 53,135,986 1,052,041,208 69,852,647 28,662 237,796,273 35,783,246
----------- -------------- ----------- ------- ------------ -----------
NET ASSETS.................................... $53,314,026 $1,052,045,063 $70,380,421 $28,680 $238,183,041 $35,948,213
=========== ============== =========== ======= ============ ===========
</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>
ASSET ALLOCATION OPTIONS:
------------------------------------------------------------------------------------
MERRILL
ALLIANCE ALLIANCE EQ/ EQ/ LYNCH
ALLIANCE CONSERVATIVE GROWTH EVERGREEN PUTNAM WORLD
BALANCED INVESTORS INVESTORS FOUNDATION BALANCED STRATEGY
------------ ------------ -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
the Trust -- at market
value (Notes 2 and 6)
Cost: $453,630,311..................... $546,866,262
194,380,806..................... $217,969,178
928,527,892..................... $1,216,541,911
2,749..................... $ 2,848
8,911,255..................... $8,418,996
4,518,718..................... $5,372,189
Receivable for Trust shares sold.............. -- 15,822 -- -- -- --
Receivable for policy-related
transactions.............................. -- 115,963 703,914 -- 16,607 1,267
------------ ------------ -------------- ------- ---------- ----------
Total Assets.................................. $546,866,262 $218,100,963 $1,217,245,825 $ 2,848 $8,435,603 $5,373,456
------------ ------------ -------------- ------- ---------- ----------
LIABILITIES
Payable for Trust shares purchased............ $ 31,321 $ -- $ 353,476 $ -- $ 4,500 $ 1,232
Payable for policy-related
transactions.............................. 123,383 -- -- -- -- --
------------ ------------ -------------- ------- ---------- ----------
Total Liabilities............................. 154,704 -- 353,476 -- 4,500 1,232
------------ ------------ -------------- ------- ---------- ----------
NET ASSETS.................................... $546,711,558 $218,100,963 $1,216,892,349 $ 2,848 $8,431,103 $5,372,224
============ ============ ============== ======= ========== ==========
Amount retained by Equitable Life
in Separate Account FP (Note 4)........... $ 1,088,939 $ 521,116 $ 924,554 $ 2 $ 70,099 $ 494,770
Net Assets Attributable
to Contractowners......................... 545,622,619 217,579,847 1,215,967,795 2,846 8,361,004 4,877,454
------------ ------------ -------------- ------- ---------- ----------
NET ASSETS.................................... $546,711,558 $218,100,963 $1,216,892,349 $ 2,848 $8,431,103 $5,372,224
============ ============ ============== ======= ========== ==========
</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>
FIXED INCOME OPTIONS:
-------------------------------------------------------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES ALLIANCE MONEY MARKET
---------------------------------- ------------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 4,049,521 $3,477,938 $2,914,613 $13,943,193 $10,719,684 $9,754,675
Expenses (Note 3):
Mortality and expense
risk charges..................... 378,916 350,536 282,422 1,613,234 1,204,220 1,101,168
----------- ---------- ---------- ----------- ----------- ----------
NET INVESTMENT INCOME..................... 3,670,605 3,127,402 2,632,191 12,329,959 9,515,464 8,653,507
----------- ---------- ---------- ----------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (194,507) 60,260 (95,509) 517,935 (161,314) (513,800)
Realized gain distribution
from the Trust................... -- -- -- 10,344 7,750 13,435
----------- ---------- ---------- ----------- ----------- ----------
NET REALIZED GAIN (LOSS).................. (194,507) 60,260 (95,509) 528,279 (153,564) (500,365)
----------- ---------- ---------- ----------- ----------- ----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............... 2,391,062 868,053 (141,479) 1,536,450 804,349 24,023
End of period..................... (1,392,487) 2,391,062 868,053 1,316,815 1,536,450 804,349
----------- ---------- ---------- ----------- ----------- ----------
Change in unrealized appreciation
(depreciation) during the period..... (3,783,549) 1,523,009 1,009,532 (219,635) 732,101 780,326
----------- ---------- ---------- ----------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ (3,978,056) 1,583,269 914,023 308,644 578,537 279,961
----------- ---------- ---------- ----------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ (307,451) $4,710,671 $3,546,214 $12,638,603 $10,094,001 $8,933,468
=========== ========== ========== =========== =========== ==========
<CAPTION>
FIXED INCOME OPTIONS:
----------------------------------------
ALLIANCE QUALITY BOND
---------------------------------------
1999 1998 1997
------------ ----------- -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 12,542,857 $10,317,238 $ 8,869,740
Expenses (Note 3):
Mortality and expense
risk charges..................... 1,329,147 1,106,136 845,069
------------ ----------- -----------
NET INVESTMENT INCOME..................... 11,213,710 9,211,102 8,024,671
------------ ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (1,493,664) 34,937 (504,580)
Realized gain distribution
from the Trust................... 870,458 4,596,907 --
------------ ----------- -----------
NET REALIZED GAIN (LOSS).................. (623,206) 4,631,844 (504,580)
------------ ----------- -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............... 3,367,697 2,395,718 (1,961,822)
End of period..................... (13,254,094) 3,367,697 2,395,718
------------ ----------- -----------
Change in unrealized appreciation
(depreciation) during the period..... (16,621,791) 971,979 4,357,540
------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ (17,244,997) 5,603,823 3,852,960
------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ (6,031,287) $14,814,925 $11,877,631
============ =========== ===========
</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>
FIXED INCOME OPTIONS (CONCLUDED): EQUITY OPTIONS:
--------------------------------------- ----------------------------------------
ALLIANCE HIGH YIELD ALLIANCE COMMON STOCK
--------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
------------ ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 17,378,455 $ 18,449,747 $12,918,934 $ 20,107,533 $ 15,939,680 $ 10,668,337
Expenses (Note 3):
Mortality and expense
risk charges..................... 889,065 1,007,106 789,982 19,069,959 14,600,706 11,435,936
------------ ------------ ----------- ------------ ------------ ------------
NET INVESTMENT INCOME..................... 16,489,390 17,442,641 12,128,952 1,037,574 1,338,974 (767,599)
------------ ------------ ----------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (15,192,553) (2,344,392) 936,554 221,690,581 169,109,310 53,841,049
Realized gain distribution
from the Trust................... 161,999 3,396,523 6,365,633 497,324,765 353,834,250 164,814,473
------------ ------------ ----------- ------------ ------------ ------------
NET REALIZED GAIN (LOSS).................. (15,030,554) 1,052,131 7,302,187 719,015,346 522,943,560 218,655,522
------------ ------------ ----------- ------------ ------------ ------------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ (20,898,855) 8,622,836 5,664,824 689,309,204 567,231,009 294,432,897
End of period.................. (28,742,353) (20,898,854) 8,622,836 702,408,250 689,309,204 567,231,009
------------ ------------ ----------- ------------ ------------ ------------
Change in unrealized appreciation
(depreciation) during the period..... (7,843,498) (29,521,690) 2,958,012 13,099,046 122,078,195 272,798,112
------------ ------------ ----------- ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ (22,874,052) (28,469,559) 10,260,199 732,114,392 645,021,755 491,453,634
------------ ------------ ----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ (6,384,662) $(11,026,918) $22,389,151 $733,151,966 $646,360,729 $490,686,035
============ ============ =========== ============ ============ ============
<CAPTION>
EQUITY OPTIONS:
---------------------------------------
ALLIANCE EQUITY INDEX
---------------------------------------
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 7,575,355 $ 3,958,217 $ 2,610,223
Expenses (Note 3):
Mortality and expense
risk charges..................... 3,729,959 1,862,376 977,620
------------ ------------ -----------
NET INVESTMENT INCOME..................... 3,845,396 2,095,841 1,632,603
------------ ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 21,008,249 5,460,381 (414,497)
Realized gain distribution
from the Trust................... 6,196,508 128,151 850,437
------------ ------------ -----------
NET REALIZED GAIN (LOSS).................. 27,204,757 5,588,532 435,940
------------ ------------ -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 136,665,316 63,055,426 21,448,224
End of period.................. 228,753,607 136,665,316 63,055,426
------------ ------------ -----------
Change in unrealized appreciation
(depreciation) during the period..... 92,088,291 73,609,890 41,607,202
------------ ------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 119,293,048 79,198,422 42,043,142
------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $123,138,444 $ 81,294,263 $43,675,745
============ ============ ===========
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-7
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------------------------------
CAPITAL
EQ/ALLIANCE CAPITAL GUARDIAN
PREMIER GUARDIAN U.S.
ALLIANCE GROWTH & INCOME GROWTH (C) RESEARCH (d) EQUITY (d)
--------------------------------------- ----------- ------------ ----------
1999 1998 1997 1999 1999 1999
----------- ----------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 530,384 $ 415,436 $ 636,335 $ 30,540 $ 280 $ 1,159
Expenses (Note 3):
Mortality and expense
risk charges..................... 1,048,745 668,795 358,997 63,730 209 378
----------- ----------- ----------- ---------- ------- -------
NET INVESTMENT INCOME..................... (518,361) (253,359) 277,338 (33,190) 71 781
----------- ----------- ----------- ---------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 730,688 7,289,936 530,421 83,605 2,810 451
Realized gain distribution
from the Trust................... 20,855,872 12,146,928 5,006,247 106,890 27 1,508
----------- ----------- ----------- ---------- ------- -------
NET REALIZED GAIN (LOSS).................. 21,586,560 19,436,864 5,536,668 190,495 2,837 1,959
----------- ----------- ----------- ---------- ------- -------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 16,240,511 13,021,603 5,074,338 -- -- --
End of period.................. 27,170,239 16,240,511 13,021,603 5,068,707 11,093 17,325
----------- ----------- ----------- ---------- ------- -------
Change in unrealized appreciation
(depreciation) during the period..... 10,929,728 3,218,908 7,947,265 5,068,707 11,093 17,325
----------- ----------- ----------- ---------- ------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 32,516,288 22,655,772 13,483,933 5,259,202 13,930 19,284
----------- ----------- ----------- ---------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $31,997,927 $22,402,413 $13,761,271 $5,226,012 $14,001 $20,065
=========== =========== =========== ========== ======= =======
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------------
MERRILL LYNCH
BASIC VALUE EQUITY (A)
------------------------------------------
1999 1998 1997
---------- --------- --------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 468,257 $ 192,441 $ 35,810
Expenses (Note 3):
Mortality and expense
risk charges..................... 153,456 66,427 9,349
---------- --------- --------
NET INVESTMENT INCOME..................... 314,801 126,014 26,461
---------- --------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 426,168 207,032 6,656
Realized gain distribution
from the Trust................... 1,963,197 667,083 33,738
---------- --------- --------
NET REALIZED GAIN (LOSS).................. 2,389,365 874,115 40,394
---------- --------- --------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ (91,959) 135,003 --
End of period.................. 1,270,622 (91,959) 135,003
---------- --------- --------
Change in unrealized appreciation
(depreciation) during the period..... 1,362,581 (226,962) 135,003
---------- --------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 3,751,946 647,153 175,397
---------- --------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $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-8
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------------------------------
MFS
GROWTH
WITH EQ/PUTNAM
INCOME (C) MFS RESEARCH (A) GROWTH & INCOME VALUE (A)
---------- --------------------------------- ---------------------------------
1999 1999 1998 1997 1999 1998 1997
---------- ----------- ---------- -------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 1,268 $ 52,831 $ 71,137 $ 20,442 $ 278,910 $ 143,999 $ 33,273
Expenses (Note 3):
Mortality and expense
risk charges..................... 431 208,639 86,044 13,127 110,374 56,995 9,655
------- ----------- ---------- -------- ----------- ---------- --------
NET INVESTMENT INCOME..................... 837 (155,808) (14,907) 7,315 168,536 87,004 23,618
------- ----------- ---------- -------- ----------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... (227) 995,232 494,412 6,989 276,186 209,398 1,078
Realized gain distribution
from the Trust................... -- 1,086,222 -- 81,156 1,499,307 130,047 27,226
------- ----------- ---------- -------- ----------- ---------- --------
NET REALIZED GAIN (LOSS).................. (227) 2,081,454 494,412 88,145 1,775,493 339,445 28,304
------- ----------- ---------- -------- ----------- ---------- --------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ -- 3,313,063 249,382 -- 1,160,602 269,561 --
End of period.................. 20,637 10,033,987 3,313,063 249,382 (1,472,796) 1,160,602 269,561
------- ----------- ---------- -------- ----------- ---------- --------
Change in unrealized appreciation
(depreciation) during the period..... 20,637 6,720,924 3,063,681 249,382 (2,633,398) 891,041 269,561
------- ----------- ---------- -------- ----------- ---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 20,410 8,802,378 3,558,093 337,527 (857,905) 1,230,486 297,865
------- ----------- ---------- -------- ----------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $21,247 $ 8,646,570 $3,543,186 $344,842 $ (689,369) $1,317,490 $321,483
======= =========== ========== ======== =========== ========== ========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------
T. ROWE PRICE EQUITY INCOME (A)
------------------------------------
1999 1998 1997
------------ ---------- ----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 998,227 $ 722,954 $ 145,613
Expenses (Note 3):
Mortality and expense
risk charges..................... 272,123 173,802 29,706
----------- ---------- ----------
NET INVESTMENT INCOME..................... 726,104 549,152 115,907
----------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 655,822 341,473 56,634
Realized gain distribution
from the Trust................... 2,081,914 930,853 53,840
----------- ---------- ----------
NET REALIZED GAIN (LOSS).................. 2,737,736 1,272,326 110,474
----------- ---------- ----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 1,585,616 1,073,548 --
End of period.................. (952,652) 1,585,616 1,073,548
----------- ---------- ----------
Change in unrealized appreciation
(depreciation) during the period..... (2,538,268) 512,068 1,073,548
----------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 199,468 1,784,394 1,184,022
----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ 925,572 $2,333,546 $1,299,929
=========== ========== ==========
</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-9
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-----------------------------------------------------------------------------------
ALLIANCE GLOBAL ALLIANCE INTERNATIONAL
--------------------------------------- --------------------------------------
1999 1998 1997 1999 1998 1997
------------ ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 561,424 $ 5,636,672 $ 8,803,070 $ -- $ 996,913 $ 1,386,732
Expenses (Note 3):
Mortality and expense
risk charges..................... 3,438,444 2,777,697 2,805,310 321,035 289,066 297,278
------------ ----------- ------------ ----------- ----------- -----------
NET INVESTMENT INCOME..................... (2,877,020) 2,858,975 5,997,760 (321,035) 707,847 1,089,454
------------ ----------- ------------ ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 67,795,783 17,406,382 30,411,238 1,164,532 (3,606,669) (57,635)
Realized gain distribution
from the Trust................... 44,485,709 33,241,409 26,426,403 1,299,989 10,663 2,325,403
------------ ----------- ------------ ----------- ----------- -----------
NET REALIZED GAIN (LOSS).................. 112,281,492 50,647,791 56,837,641 2,464,521 (3,596,006) 2,267,768
------------ ----------- ------------ ----------- ----------- -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 83,560,503 46,113,189 58,618,054 5,502,451 (2,793,834) 1,857,793
End of period.................. 172,562,362 83,560,503 46,113,189 25,291,174 5,502,451 (2,793,834)
------------ ----------- ------------ ----------- ----------- -----------
Change in unrealized appreciation
(depreciation) during the period..... 89,001,859 37,447,314 (12,504,865) 19,788,723 8,296,285 (4,651,627)
------------ ----------- ------------ ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 201,283,351 88,095,105 44,332,776 22,253,244 4,700,279 (2,383,859)
------------ ----------- ------------ ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $198,406,331 $90,954,080 $ 50,330,536 $21,932,209 $ 5,408,126 $(1,294,405)
============ =========== ============ =========== =========== ===========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------
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-10
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-----------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK (A) ALLIANCE AGGRESSIVE STOCK
-------------------------------------- ------------------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 192,580 $ 258,382 $ 2,393 $ 3,163,286 $ 4,461,389 $ 1,311,613
Expenses (Note 3):
Mortality and expense
risk charges..................... 200,684 119,672 26,332 5,481,701 5,581,296 5,299,127
----------- ---------- --------- ------------ ------------ ------------
NET INVESTMENT INCOME..................... (8,104) 138,710 (23,939) (2,318,415) (1,119,907) (3,987,514)
----------- ---------- --------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 4,626,661 354,551 (50,331) (27,888,194) (39,688,312) 28,217,939
Realized gain distribution
from the Trust................... 583,215 268 -- 61,642,419 46,528,461 79,729,154
----------- ---------- --------- ------------ ------------ ------------
NET REALIZED GAIN (LOSS).................. 5,209,876 354,819 (50,331) 33,754,225 6,840,149 107,947,093
----------- ---------- --------- ------------ ------------ ------------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 1,603,083 (820,718) -- 26,715,214 32,695,620 46,617,235
End of period.................. 9,345,381 1,603,083 (820,718) 158,809,890 26,715,214 32,695,620
----------- ---------- --------- ------------ ------------ ------------
Change in unrealized appreciation
(depreciation) during the period..... 7,742,298 2,423,801 (820,718) 132,094,676 (5,980,406) (13,921,615)
----------- ---------- --------- ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 12,952,174 2,778,620 (871,049) 165,848,901 859,743 94,025,478
----------- ---------- --------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $12,944,070 $2,917,330 $(894,988) $163,530,486 $ (260,164) $ 90,037,964
=========== ========== ========= ============ ============ ============
<CAPTION>
EQUITY OPTIONS (CONTINUED)
-------------------------------------
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
=========== =========== =========
</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-11
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONCLUDED):
--------------------------------------------------------------------------------------
EQ/ MFS EMERGING WARBURG PINCUS
EVERGREEN (C) GROWTH COMPANIES (A) SMALL COMPANY VALUE (A)
------------- ---------------------------------- -----------------------------------
1999 1999 1998 1997 1999 1998 1997
------------- ----------- ----------- -------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 99 $ -- $ 969 $ 24,358 $ 67,108 $ 171,716 $ 21,651
Expenses (Note 3):
Mortality and expense
risk charges..................... 18 640,976 157,484 18,835 180,999 168,543 44,889
------ ----------- ----------- -------- ----------- ----------- ---------
NET INVESTMENT INCOME..................... 81 (640,976) (156,515) 5,523 (113,891) 3,173 (23,238)
------ ----------- ----------- -------- ----------- ----------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 20 13,577,250 4,270,964 161,034 (1,591,217) (142,969) 29,803
Realized gain distribution
from the Trust................... -- 3,969,879 -- 296,998 -- -- 110,391
------ ----------- ----------- -------- ----------- ----------- ---------
NET REALIZED GAIN (LOSS).................. 20 17,547,129 4,270,964 458,032 (1,591,217) (142,969) 140,194
------ ----------- ----------- -------- ----------- ----------- ---------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ -- 6,996,177 171,320 -- (4,215,341) (228,709) --
End of period.................. 1,450 77,077,961 6,996,177 171,320 (2,294,882) (4,215,340) (228,709)
------ ----------- ----------- -------- ----------- ----------- ---------
Change in unrealized appreciation
(depreciation) during the period..... 1,450 70,081,784 6,824,857 171,320 1,920,459 (3,986,631) (228,709)
------ ----------- ----------- -------- ----------- ----------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 1,470 87,628,913 11,095,821 629,352 329,242 (4,129,600) (88,515)
------ ----------- ----------- -------- ----------- ----------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $1,551 $86,987,937 $10,939,306 $634,875 $ 215,351 $(4,126,427) $(111,753)
====== =========== =========== ======== =========== =========== =========
</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 OPERATIONS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION OPTIONS:
------------------------------------------------------------------------------
ALLIANCE BALANCED ALLIANCE CONSERVATIVE INVESTORS
------------------------------------- -------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $14,371,360 $12,467,646 $13,756,520 $ 7,166,906 $ 7,360,794 $ 7,217,860
Expenses (Note 3):
Mortality and expense
risk charges..................... 3,107,759 2,765,767 2,544,300 1,244,722 1,136,634 1,066,078
----------- ----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME..................... 11,263,601 9,701,879 11,212,220 5,922,184 6,224,160 6,151,782
----------- ----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 9,085,444 2,733,445 5,910,524 2,045,436 1,432,988 818,458
Realized gain distribution
from the Trust................... 50,638,464 41,525,872 21,117,088 9,007,765 10,768,916 5,486,742
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED GAIN (LOSS).................. 59,723,908 44,259,317 27,027,612 11,053,201 12,201,904 6,305,200
----------- ----------- ----------- ----------- ----------- -----------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 81,344,863 60,878,286 42,382,824 21,507,963 16,228,145 7,700,135
End of period.................. 93,235,951 81,344,863 60,878,286 23,588,372 21,507,963 16,228,145
----------- ----------- ----------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation) during the period..... 11,891,088 20,466,577 18,495,462 2,080,409 5,279,818 8,528,010
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 71,614,996 64,725,894 45,523,074 13,133,610 17,481,722 14,833,210
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $82,878,597 $74,427,773 $56,735,294 $19,055,794 $23,705,882 $20,984,992
=========== =========== =========== =========== =========== ===========
<CAPTION>
ASSET ALLOCATION OPTIONS:
------------------------------------------
ALLIANCE GROWTH INVESTORS
------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust.......... $ 17,092,741 $ 18,252,039 $ 19,280,574
Expenses (Note 3):
Mortality and expense
risk charges..................... 6,207,073 5,194,905 4,570,289
------------ ------------ ------------
NET INVESTMENT INCOME..................... 10,885,668 13,057,134 14,710,285
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments................... 15,284,978 7,745,162 10,531,767
Realized gain distribution
from the Trust................... 104,658,738 78,060,201 42,780,443
------------ ------------ ------------
NET REALIZED GAIN (LOSS).................. 119,943,716 85,805,363 53,312,210
------------ ------------ ------------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............ 167,705,597 115,056,641 67,150,693
End of period.................. 288,014,018 167,705,600 115,056,641
------------ ------------ ------------
Change in unrealized appreciation
(depreciation) during the period..... 120,308,421 52,648,959 47,905,948
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS........................ 240,252,137 138,454,322 101,218,158
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $251,137,805 $151,511,456 $115,928,443
============ ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ 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 OPERATIONS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION OPTIONS (CONCLUDED):
-------------------------------------------------------------------------------
EQ/EVERGREEN MERRILL LYNCH
FOUNDATION (C) EQ/PUTNAM BALANCED WORLD STRATEGY (A)
-------------- ------------------------------- ----------------------------
1999 1999 1998 1997 1999 1998 1997
------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from the Trust........... $ 31 $ 42,372 $111,099 $ 46,468 $ 41,786 $ 36,750 $ 17,124
Expenses (Note 3):
Mortality and expense
risk charges...................... 2 39,416 18,744 2,741 18,905 12,469 2,678
------- --------- -------- -------- -------- -------- --------
NET INVESTMENT INCOME...................... 29 2,956 92,355 43,727 22,881 24,281 14,446
------- --------- -------- -------- -------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss)
on investments.................... 302 185,026 348,952 561 197,727 19,432 (3,626)
Realized gain distribution
from the Trust.................... -- 447,013 71,044 31,119 67,733 -- 38,995
------- --------- -------- -------- -------- -------- --------
NET REALIZED GAIN (LOSS)................... 302 632,039 419,996 31,680 265,460 19,432 35,369
------- --------- -------- -------- -------- -------- --------
Unrealized appreciation
(depreciation) on investments:
Beginning of period............. -- 259,883 270,232 -- 187,734 (37,926) --
End of period................... (1,505) (492,259) 259,882 270,232 853,470 187,734 (37,926)
------- --------- -------- -------- -------- -------- --------
Change in unrealized appreciation
(depreciation) during the period...... (1,505) (752,142) (10,350) 270,232 665,736 225,660 (37,926)
------- --------- -------- -------- -------- -------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS......................... (1,203) (120,103) 409,646 301,912 931,196 245,092 (2,557)
------- --------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.............. $(1,174) $(117,147) $502,001 $345,639 $954,077 $269,373 $ 11,889
======= ========= ======== ======== ======== ======== ========
</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
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FIXED INCOME OPTIONS:
------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES ALLIANCE MONEY MARKET
------------------------------------- ------------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 3,670,605 $ 3,127,402 $ 2,632,191 $ 12,329,959 $ 9,515,464 $ 8,653,507
Net realized gain (loss).............. (194,507) 60,260 (95,509) 528,279 (153,564) (500,365)
Change in unrealized appreciation
(depreciation) on investments..... (3,783,549) 1,523,009 1,009,532 (219,635) 732,101 780,326
----------- ----------- ----------- ------------ ------------- -------------
Net increase (decrease) in net assets
from operations................... (307,451) 4,710,671 3,546,214 12,638,603 10,094,001 8,933,468
----------- ----------- ----------- ------------ ------------- -------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 16,691,635 11,828,290 8,749,531 231,007,033 229,608,273 234,059,930
Benefits and other policy-related
transactions (Note 3)............. (8,904,461) (9,081,050) (5,971,751) (63,463,349) (41,370,215) (40,687,124)
Net transfers among funds and
guaranteed interest account....... (3,762,164) 9,141,659 7,704,724 (91,919,848) (128,607,686) (259,049,840)
----------- ----------- ----------- ------------ ------------- -------------
Net increase (decrease) in net assets
from policy-related transactions.. 4,025,010 11,888,899 10,482,504 75,623,836 59,630,372 (65,677,034)
----------- ----------- ----------- ------------ ------------- -------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... 184,108 (335,126) 13,307 1,075,796 (387,161) 46,036
----------- ----------- ----------- ------------ ------------- -------------
INCREASE (DECREASE) IN NET ASSETS ........ 3,901,667 16,264,444 14,042,025 89,338,235 69,337,212 (56,697,530)
NET ASSETS
BEGINNING OF PERIOD................... 74,972,672 58,708,229 44,666,204 255,090,142 185,752,930 242,450,460
----------- ----------- ----------- ------------ ------------- -------------
NET ASSETS
END OF PERIOD......................... $78,874,339 $74,972,673 $58,708,229 $344,428,377 $ 255,090,142 $ 185,752,930
=========== =========== =========== ============ ============= =============
<CAPTION>
FIXED INCOME OPTIONS:
-----------------------------------------
ALLIANCE QUALITY BOND
-----------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 11,213,710 $ 9,211,102 $ 8,024,671
Net realized gain (loss).............. (623,206) 4,631,844 (504,580)
Change in unrealized appreciation
(depreciation) on investments..... (16,621,791) 971,979 4,357,540
------------ ------------ ------------
Net increase (decrease) in net assets
from operations................... (6,031,287) 14,814,925 11,877,631
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 19,416,861 14,952,560 8,423,097
Benefits and other policy-related
transactions (Note 3)............. (9,082,840) (5,388,113) (3,002,993)
Net transfers among funds and
guaranteed interest account....... 1,195,276 49,220,715 12,678,032
------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions.. 11,529,297 58,785,162 18,098,136
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (553,219) (402,883) 38,587
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS ........ 4,944,791 73,197,204 30,014,354
NET ASSETS
BEGINNING OF PERIOD................... 228,959,641 155,762,437 125,748,083
------------ ------------ ------------
NET ASSETS
END OF PERIOD......................... $233,904,432 $228,959,641 $155,762,437
============ ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ 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 (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FIXED INCOME OPTIONS (CONCLUDED):
-----------------------------------------
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>
EQUITY OPTIONS:
----------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK ALLIANCE EQUITY INDEX
---------------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
-------------- -------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 1,037,574 $ 1,338,974 $ (767,599) $ 3,845,396 $ 2,095,841 $ 1,632,603
Net realized gain (loss).............. 719,015,346 522,943,560 218,655,522 27,204,757 5,588,532 435,940
Change in unrealized appreciation
(depreciation) on investments..... 13,099,046 122,078,195 272,798,112 92,088,291 73,609,890 41,607,202
-------------- -------------- -------------- ------------ ------------ ------------
Net increase (decrease) in net assets
from operations................... 733,151,966 646,360,729 490,686,035 123,138,444 81,294,263 43,675,745
-------------- -------------- -------------- ------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 361,261,385 322,874,015 282,279,826 123,310,198 82,390,480 53,262,239
Benefits and other policy-related
transactions (Note 3)............. (302,304,428) (250,079,870) (199,662,183) (60,880,027) (34,756,406) (18,975,147)
Net transfers among funds and
guaranteed interest account....... 49,877,173 24,136,275 56,849,823 222,120,321 74,806,928 67,867,827
-------------- -------------- -------------- ------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions.. 108,834,130 96,930,420 139,467,466 284,550,492 122,441,002 102,154,919
-------------- -------------- -------------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (5,343,344) (2,780,348) 516,970 (1,148,745) (430,965) 54,423
-------------- -------------- -------------- ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS......... 836,642,752 740,510,801 630,670,471 406,540,191 203,304,300 145,885,087
NET ASSETS
BEGINNING OF PERIOD................... 2,943,226,440 2,202,715,639 1,572,045,168 443,764,345 240,460,045 94,574,958
-------------- -------------- -------------- ------------ ------------ ------------
NET ASSETS
END OF PERIOD......................... $3,779,869,192 $2,943,226,440 $2,202,715,639 $850,304,536 $443,764,345 $240,460,045
============== ============== ============== ============ ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ 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+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------------------------------
CAPITAL
EQ/ALLIANCE CAPITAL GUARDIAN
PREMIER GUARDIAN U.S.
ALLIANCE GROWTH & INCOME GROWTH (C) RESEARCH (D) EQUITY (D)
--------------------------------------- ----------- ------------ ----------
1999 1998 1997 1999 1999 1999
------------ ------------ ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ (518,361) $ (253,359) $ 277,338 $ (33,190) $ 71 $ 781
Net realized gain (loss).............. 21,586,560 19,436,864 5,536,668 190,495 2,837 1,959
Change in unrealized appreciation
(depreciation) on investments..... 10,929,728 3,218,908 7,947,265 5,068,707 11,093 17,325
------------ ------------ ----------- ----------- -------- --------
Net increase (decrease) in net assets
from operations................... 31,997,927 22,402,413 13,761,271 5,226,012 14,001 20,065
------------ ------------ ----------- ----------- -------- --------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 43,151,141 30,251,270 17,923,903 6,362,938 63,883 115,934
Benefits and other policy-related
transactions (Note 3)............. (19,321,951) (12,461,722) (6,498,823) (1,028,342) (503) (15,128)
Net transfers among funds and
guaranteed interest account....... 25,186,273 23,343,531 25,301,886 40,652,847 115,765 390,588
------------ ------------ ----------- ----------- -------- --------
Net increase (decrease) in net assets
from policy-related transactions.. 49,015,463 41,133,079 36,726,966 45,987,443 179,145 491,394
------------ ------------ ----------- ----------- -------- --------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (144,843) (617,058) 19,921 3,902 209 378
------------ ------------ ----------- ----------- -------- --------
INCREASE (DECREASE) IN NET ASSETS......... 80,868,547 62,918,434 50,508,158 51,217,357 193,355 511,837
NET ASSETS
BEGINNING OF PERIOD................... 151,451,102 88,532,668 38,024,510 -- -- --
------------ ------------ ----------- ----------- -------- --------
NET ASSETS
END OF PERIOD......................... $232,319,649 $151,451,102 $88,532,668 $51,217,357 $193,355 $511,837
============ ============ =========== =========== ======== ========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------
MERRILL LYNCH
BASIC VALUE EQUITY (A)
--------------------------------------
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................. $ 314,801 $ 126,014 $ 26,461
Net realized gain (loss).............. 2,389,365 874,115 40,394
Change in unrealized appreciation
(depreciation) on investments..... 1,362,581 (226,962) 135,003
----------- ----------- ----------
Net increase (decrease) in net assets
from operations................... 4,066,747 773,167 201,858
----------- ----------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................. 10,931,366 6,388,355 1,097,822
Benefits and other policy-related
transactions (Note 3)............. (3,171,744) (1,430,414) (135,034)
Net transfers among funds and
guaranteed interest account....... 7,845,599 8,794,685 4,661,128
----------- ----------- ----------
Net increase (decrease) in net assets
from policy-related transactions.. 15,605,221 13,752,626 5,623,916
----------- ----------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4).......... (43,053) (1,392,853) 1,202,680
----------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS......... 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......................... $39,790,309 $20,161,394 $7,028,454
=========== =========== ==========
</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-17
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------------------------------
MFS
GROWTH
WITH
INCOME (C) MFS RESEARCH (A)
--------------- ----------------------------------------------
1999 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......................... 0 28,021,980 9,752,859 0
-------- ----------- ----------- ----------
NET ASSETS
END OF PERIOD............................... $415,714 $48,637,352 $28,021,980 $9,752,859
======== =========== =========== ==========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------
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 0
----------- ----------- ----------
NET ASSETS
END OF PERIOD................................ $21,793,779 $16,743,255 $7,059,068
=========== =========== ==========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-----------------------------------------------------
T. ROWE PRICE EQUITY INCOME (A)
-----------------------------------------------------
1999 1998 1997
------------- -------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income........................ $ 726,104 $ 549,152 $ 115,907
Net realized gain (loss)..................... 2,737,736 1,272,326 110,474
Change in unrealized appreciation
(depreciation) on investments............ (2,538,268) 512,068 1,073,548
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.......................... 925,572 2,333,546 1,299,929
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)........................ 14,411,461 11,367,975 2,540,460
Benefits and other policy-related
transactions (Note 3).................... (5,261,454) (4,190,748) (351,660)
Net transfers among funds and
guaranteed interest account.............. (470,263) 16,615,531 14,259,773
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions......... 8,679,744 23,792,758 16,448,573
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)................. (93,180) (1,149,701) 1,308,426
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS................ 9,512,136 24,632,603 19,056,928
NET ASSETS
BEGINNING OF PERIOD.......................... 43,689,531 19,056,928 0
----------- ----------- -----------
NET ASSETS
END OF PERIOD................................ $53,201,667 $43,689,531 $19,056,928
=========== =========== ===========
</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-18
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------------------------
ALLIANCE GLOBAL
--------------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (2,877,020) $ 2,858,975 $ 5,997,760
Net realized gain (loss)............... 112,281,492 50,647,791 56,837,641
Change in unrealized appreciation
(depreciation) on investments...... 89,001,859 37,447,314 (12,504,865)
------------ ------------ ------------
Net increase (decrease) in net assets
from operations.................... 198,406,331 90,954,080 50,330,536
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 71,950,825 78,722,218 85,714,413
Benefits and other policy-related
transactions (Note 3).............. (63,170,211) (52,796,664) (48,793,564)
Net transfers among funds and
guaranteed interest account........ (8,015,060) (21,919,102) (89,131,113)
------------ ------------ ------------
Net increase (decrease) in net assets
from policy-related transactions... 765,554 4,006,452 (52,210,264)
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... 23,216 (854,897) 103,777
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS.......... 199,195,101 94,105,635 (1,775,951)
NET ASSETS
BEGINNING OF PERIOD.................... 525,707,133 431,601,498 433,377,449
------------ ------------ ------------
NET ASSETS
END OF PERIOD.......................... $724,902,234 $525,707,133 $431,601,498
============= ============ ============
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-------------------------------------------------------
MORGAN STANLEY
ALLIANCE INTERNATIONAL
-------------------------------------------------------
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (321,035) $ 707,847 $ 1,089,454
Net realized gain (loss)............... 2,464,521 (3,596,006) 2,267,768
Change in unrealized appreciation
(depreciation) on investments...... 19,788,723 8,296,285 (4,651,627)
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.................... 21,932,209 5,408,126 (1,294,405)
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 11,367,096 13,567,993 14,198,839
Benefits and other policy-related
transactions (Note 3).............. (6,261,836) (5,406,284) (4,716,765)
Net transfers among funds and
guaranteed interest account........ (5,340,816) (4,357,456) (3,886,303)
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions... (235,556) 3,804,253 5,595,771
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... (49,840) (109,052) 11,328
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS.......... 21,646,813 9,103,327 4,312,694
NET ASSETS
BEGINNING OF PERIOD.................... 55,234,942 46,131,615 41,818,921
----------- ----------- -----------
END OF PERIOD.......................... $76,881,755 $55,234,942 $46,131,615
=========== =========== ===========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
-------------------------------------------------------
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 0
----------- ----------- ----------
NET ASSETS
END OF PERIOD.......................... $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-19
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONTINUED):
--------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK (A)
--------------------------------------------------------
1999 1998 1997
----------- ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (8,104) $ 138,710 $ (23,939)
Net realized gain (loss)............... 5,209,876 354,819 (50,331)
Change in unrealized appreciation
(depreciation) on investments...... 7,742,298 2,423,801 (820,718)
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.................... 12,944,070 2,917,330 (894,988)
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 10,327,110 7,881,587 2,268,440
Benefits and other policy-related
transactions (Note 3).............. (3,787,076) (2,527,577) (295,221)
Net transfers among funds and
guaranteed interest account........ 3,167,992 8,401,386 12,953,165
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions... 9,708,026 13,755,396 14,926,384
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... 1,577 (4,050,846) 4,007,078
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS.......... 22,653,673 12,621,880 18,038,474
NET ASSETS
BEGINNING OF PERIOD.................... 30,660,353 18,038,474 --
----------- ----------- -----------
NET ASSETS
END OF PERIOD.......................... $53,314,026 $30,660,353 $18,038,474
=========== =========== ===========
<CAPTION>
EQUITY OPTIONS (CONTINUED):
---------------------------------------------------------
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
============== ============ ============
<CAPTION>
EQUITY OPTIONS (CONTINUED):
------------------------------------------------------
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
=========== =========== ===========
</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-20
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY OPTIONS (CONCLUDED):
------------------------------------------------------------------
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>
EQUITY OPTIONS (CONCLUDED):
-------------------------------------------------
WARBURG PINCUS
SMALL COMPANY VALUE (A)
-------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.................. $ (113,891) $ 3,173 $ (23,238)
Net realized gain (loss)............... (1,591,217) (142,969) 140,194
Change in unrealized appreciation
(depreciation) on investments...... 1,920,459 (3,986,631) (228,709)
----------- ----------- -----------
Net increase (decrease) in net assets
from operations.................... 215,351 (4,126,427) (111,753)
----------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).................. 11,009,658 13,378,658 4,397,634
Benefits and other policy-related
transactions (Note 3).............. (4,607,292) (4,042,103) (608,891)
Net transfers among funds and
guaranteed interest account........ (7,372,698) 7,112,708 20,737,304
----------- ----------- -----------
Net increase (decrease) in net assets
from policy-related transactions... (970,332) 16,449,263 24,526,047
----------- ----------- -----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT FP (Note 4)........... (23,731) (622,058) 611,853
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS.......... (778,712) 11,700,778 25,026,147
NET ASSETS
BEGINNING OF PERIOD.................... 36,726,925 25,026,147 --
----------- ----------- -----------
NET ASSETS
END OF PERIOD.......................... $35,948,213 $36,726,925 $25,026,147
=========== =========== ===========
</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-21
<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>
ASSET ALLOCATION OPTIONS:
----------------------------------------------------
ALLIANCE BALANCED
----------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................... $ 11,263,601 $ 9,701,879 $ 11,212,220
Net realized gain (loss)...................... 59,723,908 44,259,317 27,027,612
Change in unrealized appreciation
(depreciation) on investments............. 11,891,088 20,466,577 18,495,462
------------ ------------ ------------
Net increase (decrease) in net assets
from operations........................... 82,878,597 74,427,773 56,735,294
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)......................... 45,762,044 46,234,769 48,722,966
Benefits and other policy-related
transactions (Note 3)..................... (55,698,939) (48,368,610) (48,611,396)
Net transfers among funds and
guaranteed interest account............... (25,094,055) (4,765,223) (55,377,177)
------------ ------------ ------------
Net increase (decrease) in net assets
from policy related-transactions.......... (35,030,950) (6,899,064) (55,265,607)
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............... 34,900 (601,644) 106,438
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS................. 47,882,547 66,927,065 1,576,125
NET ASSETS
BEGINNING OF PERIOD........................... 498,829,011 431,901,946 430,325,821
------------ ------------ ------------
NET ASSETS
END OF PERIOD................................. $546,711,558 $498,829,011 $431,901,946
============ ============ ============
<CAPTION>
ASSET ALLOCATION OPTIONS:
----------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS
----------------------------------------------------------
1999 1998 1997
------------ ------------ -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................... $ 5,922,184 $ 6,224,160 $ 6,151,782
Net realized gain (loss)...................... 11,053,201 12,201,904 6,305,200
Change in unrealized appreciation
(depreciation) on investments............. 2,080,409 5,279,818 8,528,010
------------ ------------ ------------
Net increase (decrease) in net assets
from operations........................... 19,055,794 23,705,882 20,984,992
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)......................... 27,333,794 26,438,125 30,425,833
Benefits and other policy-related
transactions (Note 3)..................... (25,964,810) (23,690,706) (24,998,155)
Net transfers among funds and
guaranteed interest account............... (4,292,515) (6,267,736) (18,978,233)
------------ ------------ ------------
Net increase (decrease) in net assets
from policy related-transactions.......... (2,923,531) (3,520,317) (13,550,555)
------------ ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............... (195,000) (365,872) 44,115
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS................. 15,937,263 19,819,693 7,478,552
NET ASSETS
BEGINNING OF PERIOD........................... 202,163,700 182,344,007 174,865,455
------------ ------------ ------------
NET ASSETS
END OF PERIOD................................. $218,100,963 $202,163,700 $182,344,007
============= ============ ============
<CAPTION>
ASSET ALLOCATION OPTIONS:
----------------------------------------------------------
ALLIANCE GROWTH INVESTORS
----------------------------------------------------------
1999 1998 1997
-------------- ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................... $ 10,885,668 $ 13,057,134 $ 14,710,285
Net realized gain (loss)...................... 119,943,716 85,805,363 53,312,210
Change in unrealized appreciation
(depreciation) on investments............. 120,308,421 52,648,959 47,905,948
-------------- ------------ ------------
Net increase (decrease) in net assets
from operations........................... 251,137,805 151,511,456 115,928,443
-------------- ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)......................... 118,892,312 128,264,748 139,280,509
Benefits and other policy-related
transactions (Note 3)..................... (114,804,492) (99,015,298) (95,656,635)
Net transfers among funds and
guaranteed interest account............... (15,949,611) (25,554,600) (35,207,298)
-------------- ------------ ------------
Net increase (decrease) in net assets
from policy related-transactions.......... (11,861,791) 3,694,850 8,416,576
-------------- ------------ ------------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............... (471,570) (418,319) 194,270
-------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS................. 238,804,444 154,787,987 124,539,289
NET ASSETS
BEGINNING OF PERIOD........................... 978,087,905 823,299,918 698,760,629
-------------- ------------ ------------
NET ASSETS
END OF PERIOD................................. $1,216,892,349 $978,087,905 $823,299,918
============== ============ ============
</TABLE>
- ------------------------------
See Notes to Financial Statements.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-22
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION OPTIONS (CONCLUDED):
---------------------------------------------------------------------
EQ/EVERGREEN
FOUNDATION (C) EQ/PUTNAM BALANCED
-------------- -------------------------------------------------
1999 1999 1998 1997
-------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................... $ 29 $ 2,956 $ 92,355 $ 243,727
Net realized gain (loss)................ 302 632,039 419,996 31,680
Change in unrealized appreciation
(depreciation) on investments....... (1,505) (752,142) (10,350) 270,232
------- ---------- ----------- ----------
Net increase (decrease) in net assets
from operations..................... (1,174) (117,147) 502,001 345,639
------- ---------- ----------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................... 93 2,976,182 1,733,126 213,829
Benefits and oth`er policy-related
transactions (Note 3)............... (53) (738,901) (429,944) (60,092)
Net transfers among funds and
guaranteed interest account......... 2,377 381,163 2,537,998 1,458,185
------- ---------- ----------- ----------
Net increase (decrease) in net assets
from policy related-transactions.... 2,417 2,618,444 3,841,180 1,611,922
------- ---------- ----------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)......... 1,605 (79,687) (2,292,055) 2,000,806
------- ---------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS........... 2,848 2,421,610 2,051,126 3,958,367
NET ASSETS
BEGINNING OF PERIOD..................... -- 6,009,493 3,958,367 --
------- ---------- ----------- ----------
NET ASSETS
END OF PERIOD........................... $ 2,848 $8,431,103 $ 6,009,493 $ 3,958,367
======= ========== =========== ===========
<CAPTION>
ASSET ALLOCATION OPTIONS (CONCLUDED):
-----------------------------------------------
MERRILL LYNCH
WORLD STRATEGY (A)
-----------------------------------------------
1999 1998 1997
------------- ---------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income...................... $ 22,881 $ 24,281 $ 14,446
Net realized gain (loss)................... 265,460 19,432 35,369
Change in unrealized appreciation
(depreciation) on investments.......... 665,736 225,660 (37,926)
---------- ---------- ----------
Net increase (decrease) in net assets
from operations........................ 954,077 269,373 11,889
---------- ---------- ----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)...................... 1,304,821 1,050,984 334,133
Benefits and oth`er policy-related
transactions (Note 3).................. (511,416) (294,100) (41,646)
Net transfers among funds and
guaranteed interest account............ (504,202) 1,271,852 1,374,499
---------- ---------- ----------
Net increase (decrease) in net assets
from policy related-transactions....... 289,203 2,028,736 1,666,986
---------- ---------- ----------
NET INCREASE (DECREASE) IN AMOUNT
RETAINED BY EQUITABLE LIFE
IN SEPARATE ACCOUNT FP (Note 4)............ (999,768) (849,043) 2,000,771
---------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS.............. 243,512 1,449,066 3,679,646
NET ASSETS
BEGINNING OF PERIOD........................ 5,128,712 3,679,646 --
----------- ----------- ----------
NET ASSETS
END OF PERIOD.............................. $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-23
<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 variable investment options:
FIXED INCOME OPTIONS:
Domestic Fixed Income:
o Alliance Intermediate Government Securities
o Alliance Money Market
o Alliance Quality Bond
Aggressive Fixed Income:
o Alliance High Yield
EQUITY OPTIONS:
Domestic Equity:
o Alliance Common Stock
o Alliance Equity Index
o Alliance Growth & Income
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 T. Rowe Price Equity Income
International Equity:
o Alliance Global
o Alliance International
o Morgan Stanley Emerging Markets Equity
o T. Rowe Price International Stock
Aggressive Equity:
o Alliance Aggressive Stock
o Alliance Small Cap Growth
o EQ/Evergreen
o MFS Emerging Growth Companies
o Warburg Pincus Small Company Value
ASSET ALLOCATION OPTIONS:
o Alliance Balanced
o Alliance Conservative Investors
o Alliance Growth Investors
o EQ/Evergreen Foundation
o EQ/Putnam Balanced
o Merrill Lynch World Strategy
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-24
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (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 Incentive Life, Incentive Life 2000,
Incentive Life Plus(SM), IL Protector(SM) and IL COLI, flexible premium
variable life insurance policies, Champion 2000, modified premium variable
whole life insurance policies; Survivorship 2000, Survivorship Incentive
Life, flexible premium joint survivorship variable life insurance policies;
and SP-Flex, variable life insurance policies with additional premium option
(collectively, the "Policies"). The Incentive Life 2000, Champion 2000 and
Survivorship 2000 policies are herein referred to as the "Series 2000
Policies." Incentive Life Plus(SM) policies offered with a prospectus dated
on or after September 15, 1995, are referred to as Incentive Life Plus(SM)
Second Series. Incentive Life Plus policies issued with a prior prospectus
are referred to as Incentive Life Plus Original Series. Incentive Life
policies sold during 1999 and thereafter ("Incentive Life sales 1999 and
after") reflect an investment in Class IB of the Alliance portfolios and are
different from Incentive Life products (see Note 6).
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.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-25
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 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>
FIXED INCOME OPTIONS:
Alliance Intermediate Government Securities $ (194,809) $ (685,662) $ --
Alliance Money Market (531,900) (1,591,380) --
Alliance Quality Bond (1,882,364) (1,509,018) --
Alliance High Yield 1,254,634 (1,839,368) --
</TABLE>
+ Formerly known as Equitable Variable Life Insurance Company Separate
Account FP.
FSA-26
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 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>
EQUITY OPTIONS:
Alliance Common Stock $(24,309,506) $(17,381,053) $ --
Alliance Equity Index (4,878,705) (2,293,340) --
Alliance Growth & Income (1,193,588) (1,285,852) --
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
T. Rowe Price Equity Income (365,303) (1,667,503) 1,300,000
Alliance Global (3,414,228) (3,632,595) --
Alliance International (370,877) (398,118) --
Morgan Stanley Emerging Markets Equity (2,019,694) (21,425) 4,000,000
T. Rowe Price International Stock (194,106) (4,170,518) 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
Warburg Pincus Small Company Value (204,730) (790,600) 600,000
ASSET ALLOCATION OPTIONS:
Alliance Balanced $(3,060,971) $(3,367,411) $ --
Alliance Conservative Investors (1,439,722) (1,502,507) --
Alliance Growth Investors (6,678,645) (5,613,223) --
EQ/Evergreen Foundation -- -- --
EQ/Putnam Balanced (119,105) (2,310,799) 2,000,000
Merrill Lynch World Strategy (1,018,674) (861,511) 2,000,000
</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.
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-27
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
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, Incentive Life 2000, Incentive Life Plus Second
Series and Champion 2000 policyowners are different than those attributable
to Survivorship 2000, Incentive Life Plus Original Series, IL Protector, IL
COLI, and to SP-Flex policyowners because asset charges are deducted at
different rates under each policy (see Note 3). The Separate Account rates
of return attributable to Incentive Life Sales 1999 and after, Survivorship
Incentive Life and Survivorship 2000 for the Alliance Money Market, Alliance
Intermediate Government Securities, Alliance Quality Bond, Alliance High
Yield, Alliance Growth & Income, Alliance Equity Index, Alliance Common
Stock, Alliance Global, Alliance International, Alliance Aggressive,
Alliance Small Cap Growth, Alliance Conservative Investors, Alliance
Balanced, Alliance Growth Investors are different from other products in the
same variable investment option because distribution fees of 0.25% of the
average daily assets of the variable investment option are deducted (see
Note 1).
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-28
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
INCENTIVE LIFE,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
APRIL 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
ALLIANCE INTERMEDIATE ------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES 1999 1998 1997 1996 1995 1994 1993 1992 1991
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 0.02% 7.74% 7.29% 3.78% 13.33% (4.37)% 10.58% 5.60% 12.26%
Net return........................ (0.46)% 7.10% 6.65% 3.15% 12.65% (4.95)% 9.88% 4.96% 11.60%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ---------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 4.96% 5.34% 5.42% 5.33% 5.74% 4.02% 3.00% 3.56% 6.18% 8.24%
Net return........................ 4.35% 4.71% 4.79% 4.70% 5.11% 3.39% 2.35% 2.94% 5.55% 7.59%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------------- -----------------
ALLIANCE QUALITY BOND 1999 1998 1997 1996 1995 1994 1993
- --------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... (2.00)% 8.69% 9.14% 5.36% 17.02% (5.10)% (0.51)%
Net return........................ (2.59)% 8.03% 8.49% 4.73% 16.32% (5.67)% (0.66)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... (3.35)% (5.15)% 18.47% 22.89% 19.92% (2.79)% 23.15% 12.31% 24.46% (1.12)%
Net return........................ (3.93)% (5.72)% 17.76% 22.14% 19.20% (3.37)% 22.41% 11.64% 23.72% (1.71)%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 25.19% 29.39% 29.40% 24.28% 32.45% (2.14)% 24.84% 3.22% 37.88% (8.12)%
Net return........................ 24.44% 28.61% 28.44% 23.53% 31.66% (2.73)% 24.08% 2.60% 37.06% (8.67)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30 (A)
YEARS ENDED DECEMBER 31, TO DECEMBER 31,
----------------------------------------------- -----------------
ALLIANCE EQUITY INDEX 1999 1998 1997 1996 1995 1994
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return...................... 20.38% 28.07% 32.58% 22.39% 36.48% 1.08%
Net return........................ 19.66% 27.30% 31.77% 21.65% 35.66% 0.58%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------------- -----------------
ALLIANCE GROWTH & INCOME 1999 1998 1997 1996 1995 1994 1993
- ------------------------ ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 18.66% 20.86% 26.90% 20.09% 24.07% (0.58)% (0.25)%
Net return........................ 17.95% 20.14% 25.99% 19.36% 23.33% (1.17)% (0.41)%
</TABLE>
- -------------------
+ 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
variable investment option. The gross return and net return reflects
performance for the periods indicated, and 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 reflects 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-29
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
EQUITY OPTIONS (CONTINUED):
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%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
Gross return...................... 19.00% 11.59% 16.99%
Net return........................ 18.23% 10.91% 16.55%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return...................... 8.76%
Net return........................ 8.06%
MAY 1 (A) to
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MFS RESEARCH 1999 1998 1997
- -------------- ---- ---- ----
Gross return...................... 23.12% 24.11% 16.07%
Net return........................ 22.38% 23.36% 15.59%
MAY 1 (A) to
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999 1998 1997
- ------------------------------- ---- ---- ----
Gross return...................... (1.27)% 12.75% 16.23%
Net return........................ (1.95)% 12.14% 15.75%
- -------------------
+ 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
variable investment option. The gross return and net return reflects
performance for the periods indicated, and 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 reflects 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-30
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
EQUITY OPTIONS (CONTINUED):
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
T. ROWE PRICE EQUITY INCOME 1999 1998 1997
- --------------------------- ---- ---- ----
Gross return...................... 3.54% 9.11% 22.11%
Net return........................ 2.93% 8.42% 21.64%
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 38.53% 21.80% 11.66% 14.60% 18.81% 5.23% 32.09% (0.50)% 30.55% (6.07)%
Net return........................ 37.70% 21.07% 10.88% 13.91% 18.11% 4.60% 31.33% (1.10)% 29.77% (6.63)%
</TABLE>
<TABLE>
<CAPTION>
APRIL 3 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------- -----------------
ALLIANCE INTERNATIONAL 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return...................... 37.31% 10.57% (2.98)% 9.82% 11.29%
Net return........................ 36.96% 9.90% (3.63)% 9.15% 10.79%
</TABLE>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
MORGAN STANLEY EMERGING ----------------------------- ---------------
MARKETS EQUITY 1999 1998 1997
- -------------- ---- ---- ----
Gross return...................... 95.82% (27.10)% (20.16)%
Net return........................ 94.57% (27.46)% (20.37)%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
T. ROWE PRICE INTERNATIONAL
STOCK 1999 1998 1997
- --------------------------- ---- ---- ----
Gross return...................... 31.92% 13.68% (1.49)%
Net return........................ 31.08% 13.01% (1.90)%
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 18.84% 0.29% 10.94% 22.20% 31.63% (3.81)% 16.77% (3.16)% 86.86% 8.17%
Net return........................ 18.13% (0.31)% 10.14% 21.46% 30.85% (4.39)% 16.05% (3.74)% 85.75% 7.51%
</TABLE>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
Gross return...................... 27.75% (4.28)% 26.74%
Net return........................ 27.14% (4.85)% 26.18%
- -------------------
+ 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-31
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
EQUITY OPTIONS (CONCLUDED):
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return...................... 9.70%
Net return........................ 9.06%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
Gross return...................... 73.62% 34.57% 22.42%
Net return........................ 72.63% 33.71% 21.95%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
WARBURG PINCUS
SMALL COMPANY VALUE 1999 1998 1997
- ------------------- ---- ---- ----
Gross return...................... 1.80% (10.02)% 19.15%
Net return........................ 1.19% (10.55)% 18.65%
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 17.79% 18.11% 15.06% 11.68% 19.75% (8.02)% 12.28% (2.84)% 41.26% 0.24 %
Net return........................ 17.09% 17.40% 14.30% 11.00% 19.03% (8.57)% 11.64% (3.42)% 40.42% (0.36)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE
INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 10.14% 13.88% 13.25% 5.21% 20.40% (4.10)% 10.76% 5.72% 19.87% 6.37%
Net return........................ 9.48% 13.20% 12.55% 4.57% 19.68% (4.67)% 10.15% 5.09% 19.16% 5.73%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return...................... 26.58% 19.13% 16.87% 12.61% 26.37% (3.15)% 15.26% 4.90% 48.89% 10.66%
Net return........................ 25.82% 18.41% 16.07% 11.93% 25.62% (3.73)% 14.58% 4.27% 48.01% 10.00%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return..................... 7.38%
Net return....................... 6.72%
- -------------------
+ 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-32
<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,
- ---------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
ASSET ALLOCATION OPTIONS (CONCLUDED):
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
Gross return...................... 0.01% 11.92% 14.38%
Net return........................ (0.56)% 11.14% 14.02%
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MERRILL LYNCH WORLD STRATEGY 1999 1998 1997
- ---------------------------- ---- ---- ----
Gross return...................... 21.35% 6.81% 4.70%
Net return........................ 20.62% 6.18% 4.29%
- -------------------
+ 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-33
<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 SALES 1999 AND AFTER
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
FIXED INCOME OPTIONS:
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES 1999
- ---------------------- ----
Gross return...................... (0.23)%
Net return........................ 0.32%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE MONEY MARKET 1999
- --------------------- ----
Gross return...................... 4.71%
Net return........................ 4.10%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE QUALITY BOND 1999
- --------------------- ----
Gross return...................... (2.25)%
Net return........................ (0.95)%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE HIGH YIELD 1999
- ------------------ ----
Gross return...................... (3.58)%
Net return........................ (4.16)%
EQUITY OPTIONS:
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE COMMON STOCK 1999
- --------------------- ----
Gross return...................... 24.88%
Net return........................ 24.13%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE EQUITY INDEX 1999
- --------------------- ----
Gross return...................... 20.08%
Net return........................ 9.66%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE GROWTH & INCOME 1999
- ------------------------ ----
Gross return...................... 18.37%
Net return........................ 6.33%
- -------------------
+ 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-34
<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 SALES 1999 AND AFTER,
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
EQUITY OPTIONS (CONTINUED):
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%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MERRILL LYNCH BASIC VALUE EQUITY 1999
- -------------------------------- ----
Gross return...................... 19.00%
Net return........................ 18.23%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return...................... 8.76%
Net return........................ 8.06%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS RESEARCH 1999
- ------------ ----
Gross return...................... 23.12%
Net return........................ 22.38%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999
- ------------------------------- ----
Gross return...................... (1.27)%
Net return........................ (1.95)%
- -------------------
+ 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-35
<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 SALES 1999 AND AFTER
- -----------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
EQUITY OPTIONS (CONTINUED):
JUNE 4 (B) TO
DECEMBER 31,
--------------
T. ROWE PRICE EQUITY INCOME 1999
- --------------------------- ----
Gross return........................... 3.54%
Net return............................. 2.93%
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE GLOBAL 1999
- --------------- ----
Gross return........................... 38.17%
Net return............................. 27.23%
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE INTERNATIONAL 1999
- --------------------- ----
Gross return........................... 36.90%
Net return............................. 34.41%
JUNE 4 (B) TO
DECEMBER 31,
--------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999
- -------------------------------------- ----
Gross return........................... 95.82%
Net return............................. 94.57%
JUNE 4 (B) TO
DECEMBER 31,
--------------
T. ROWE PRICE INTERNATIONAL STOCK 1999
- --------------------------------- ----
Gross return........................... 31.92%
Net return............................. 31.08%
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE AGGRESSIVE STOCK 1999
- ------------------------- ----
Gross return........................... 18.55%
Net return............................. 17.83%
- -------------------
+ 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-36
<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 SALES 1999 AND AFTER,
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
EQUITY OPTIONS (CONCLUDED):
JUNE 4 (B) TO
DECEMBER 31,
--------------
ALLIANCE SMALL CAP GROWTH 1999
- ------------------------- ----
Gross return........................... 27.46%
Net return............................. 26.86%
JUNE 4 (B) TO
DECEMBER 31,
--------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return........................... 9.70%
Net return............................. 9.06%
JUNE 4 (B) TO
DECEMBER 31,
--------------
MFS EMERGING GROWTH COMPANIES 1999
- ----------------------------- ----
Gross return........................... 73.62%
Net return............................. 72.63%
JUNE 4 (B) TO
DECEMBER 31,
--------------
WARBURG PINCUS SMALL COMPANY VALUE 1999
- ---------------------------------- ----
Gross return........................... 1.80%
Net return............................. 1.19%
- -------------------
+ 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-37
<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 SALES 1999 AND AFTER,
- ------------------------------------
SURVIVORSHIP INCENTIVE LIFE*
- ---------------------------
ASSET ALLOCATION OPTIONS:
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE BALANCED 1999
- ----------------- ----
Gross return...................... 17.50%
Net return........................ 10.98%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE CONSERVATIVE INVESTORS 1999
- ------------------------------- ----
Gross return...................... 9.87%
Net return........................ 5.79%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
ALLIANCE GROWTH INVESTORS 1999
- ------------------------- ----
Gross return...................... 26.27%
Net return........................ 15.36%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return...................... 7.38%
Net return........................ 6.72%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/PUTNAM BALANCED 1999
- -------------------- ----
Gross return...................... 0.01%
Net return........................ (0.56)%
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MERRILL LYNCH WORLD STRATEGY 1999
- ---------------------------- ----
Gross return...................... 21.35%
Net return........................ 20.62%
- -------------------
+ 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-38
<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
- -----------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- -----------------
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 0.02% 7.74% 7.29% 3.78% 13.33% (4.37)% 10.58% 0.90%
Net return.................................... (0.76)% 6.78% 6.33% 2.84% 12.31% (5.23)% 9.55% 0.56%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- -----------------
ALLIANCE MONEY MARKET 1999 1998 1997 1996 1995 1994 1993 1992
- --------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 4.96% 5.34% 5.42% 5.33% 5.74% 4.02% 3.00% 1.11%
Net return.................................... 4.04% 4.39% 4.47% 4.38% 4.80% 3.08% 2.04% 0.77%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- -----------------
ALLIANCE QUALITY BOND 1999 1998 1997 1996 1995 1994 1993
- --------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. (2.00)% 8.69% 9.14% 5.36% 17.02% (5.10)% (0.51)%
Net return.................................... (2.88)% 7.71% 8.16% 4.41% 15.97% (5.95)% (0.73)%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE HIGH YIELD 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. (3.35)% (5.15)% 18.47% 22.89% 19.92% (2.79)% 23.15% 1.84%
Net return.................................... (4.22)% (6.00)% 17.40% 21.77% 18.84% (3.66)% 22.04% 1.50%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- -----------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995 1994 1993 1992
- ---------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 25.19% 29.39% 29.40% 24.28% 32.45% (2.14)% 24.84% 5.28%
Net return.................................... 24.07% 28.22% 28.06% 23.15% 31.26% (3.02)% 23.70% 4.93%
</TABLE>
<TABLE>
<CAPTION>
MARCH 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------------ -----------------
ALLIANCE EQUITY INDEX 1999 1998 1997 1996 1995 1994
- -------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.................................. 20.38% 28.07% 32.58% 22.39% 36.48% 1.08%
Net return.................................... 19.30% 26.92% 31.38% 21.28% 35.26% 0.33%
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- -----------------
ALLIANCE GROWTH & INCOME 1999 1998 1997 1996 1995 1994 1993
- ------------------------ ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 18.66% 20.86% 26.90% 20.09% 24.07% (0.58)% (0.25)%
Net return.................................... 17.60% 19.78% 25.61% 19.00% 22.96% (1.47)% (0.48)%
</TABLE>
- -------------------
+ 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-39
<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
- -----------------
EQUITY OPTIONS (CONTINUED):
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%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 19.00% 11.59% 16.99%
Net return.................................... 17.87% 10.58% 16.32%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-----------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return.................................. 8.76%
Net return.................................... 7.74%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
MFS RESEARCH 1999 1998 1997
- ------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 23.12% 24.11% 16.07%
Net return.................................... 22.01% 22.99% 15.36%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
EQ/PUTNAM GROWTH & INCOME VALUE 1999 1998 1997
- ------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. (1.27)% 12.75% 16.23%
Net return.................................... (2.25)% 11.81% 15.52%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ --------------
T. ROWE PRICE EQUITY INCOME FUND 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 3.54% 9.11% 22.11%
Net return.................................... 2.62% 8.09% 21.40%
</TABLE>
- -------------------
+ 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-40
<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
- -----------------
EQUITY OPTIONS (CONTINUED):
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------------- ----------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995 1994 1993 1992
- --------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return................................. 38.53% 21.80% 11.66% 14.60% 18.81% 5.23% 32.09% 4.87%
Net return................................... 37.28% 20.70% 10.54% 13.56% 17.75% 4.29% 30.93% 44.52%
</TABLE>
<TABLE>
<CAPTION>
APRIL 3 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------- ----------------
ALLIANCE
INTERNATIONAL 1999 1998 1997 1996 1995
- ------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return................................. 37.31% 10.57% (2.98)% 9.82% 11.29%
Net return................................... 36.55% 9.57% (3.93)% 8.82% 10.55%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------- ---------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999 1998 1997
- -------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 95.82% (27.10)% (20.16)%
Net return.................................... 93.98% (27.68)% (20.46)%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ ------------
T. ROWE PRICE INTERNATIONAL STOCK 1999 1998 1997
- --------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 31.92% 13.68% (1.49)%
Net return.................................... 30.68% 12.67% (2.10)%
</TABLE>
<TABLE>
<CAPTION>
MARCH 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- --------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 18.84% 0.29% 10.94% 22.20% 31.63% (3.81)% 16.77% 11.49%
Net return.................................... 17.77% (0.62)% 9.81% 21.09% 30.46% (4.68)% 15.70% 11.11%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 27.75% (4.28)% 26.74%
Net return.................................... 26.76% (5.14)% 25.92%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-----------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return.................................. 9.70%
Net return.................................... 8.73%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 73.62% 34.57% 22.42%
Net return.................................... 72.11% 33.31% 21.70%
</TABLE>
- -------------------
+ 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-41
<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
- -----------------
EQUITY OPTIONS (CONCLUDED):
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
WARBURG PINCUS SMALL COMPANY VALUE 1999 1998 1997
- ---------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 1.80% (10.02)% 19.15%
Net return.................................... 0.88% (10.82)% 18.41%
</TABLE>
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995 1994 1993 1992
- ----------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 17.79% 18.11% 15.06% 11.68% 19.75% (8.02)% 12.28% 5.37%
Net return.................................... 16.73% 17.05% 13.96% 10.67% 18.68% (8.84)% 11.30% 5.02%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE CONSERVATIVE INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 10.14% 13.88% 13.25% 5.21% 20.40% (4.10)% 10.76% 1.38%
Net return.................................... 9.15% 12.85% 12.21% 4.26% 19.32% (4.96)% 9.81% 1.04%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 17 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE GROWTH INVESTORS 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................................. 26.58% 19.13% 16.87% 12.61% 26.37% (3.15)% 15.26% 6.89%
Net return.................................... 25.44% 18.06% 15.72% 11.59% 25.24% (4.02)% 14.24% 6.53%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
----------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return.................................. 7.38%
Net return.................................... 6.14%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 0.01% 11.92% 14.38%
Net return.................................... (0.86)% 10.81% 13.79%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------ -------------
MERRILL LYNCH WORLD STRATEGY 1999 1998 1997
- ---------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.................................. 21.35% 6.81% 4.70%
Net return.................................... 20.25% 5.86% 4.08%
</TABLE>
- -------------------
+ 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-42
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES 1999 1998 1997 1996 1995
- -------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 0.02% 7.74% 7.29% 3.78% 13.31%
Net return ........................... 0.02% 7.74% 7.29% 3.78% 13.31%
ALLIANCE MONEY MARKET
- ----------------------
Gross return ......................... 4.96% 5.34% 5.42% 5.33% 5.69%
Net return ........................... 4.96% 5.34% 5.42% 5.33% 5.69%
ALLIANCE QUALITY BOND
- ---------------------
Gross return ......................... (2.00)% 8.69% 9.14% 5.36% 17.13%
Net return ........................... (2.00)% 8.69% 9.14% 5.36% 17.13%
ALLIANCE HIGH YIELD
- -------------------
Gross return ......................... (3.35)% (5.15)% 18.47% 22.89% 19.95%
Net return ........................... (3.35)% (5.15)% 18.47% 22.89% 19.95%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995
- --------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 25.19% 29.39% 29.40% 24.28% 33.07%
Net return ........................... 25.19% 29.39% 29.40% 24.28% 33.07%
ALLIANCE EQUITY INDEX
- ---------------------
Gross return ......................... 20.38% 28.07% 32.57% 22.38% 36.53%
Net return ........................... 20.38% 28.07% 32.57% 22.38% 36.53%
ALLIANCE GROWTH & INCOME
- ------------------------
Gross return ......................... 18.66% 20.86% 26.90% 20.09% 24.38%
Net return ........................... 18.66% 20.86% 26.90% 20.09% 24.38%
</TABLE>
JUNE 4 (C) TO
DECEMBER 31,
------------------
EQ/ALLIANCE PREMIER GROWTH 1999
- -------------------------- ----
Gross return ......................... 18.97%
Net return ........................... 19.55%
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no Separate Account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1995 indicated is not an
annualized rate of return.
(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-43
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
EQUITY OPTIONS (CONTINUED):
AUGUST 30 (C) TO
DECEMBER 31,
------------------
CAPITAL GUARDIAN RESEARCH 1999
- ------------------------- ----
Gross return ......................... 7.10%
Net return ........................... 8.04%
CAPITAL GUARDIAN U.S. EQUITY
- ----------------------------
Gross return ......................... 3.76%
Net return ........................... 3.56%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 19.00% 11.59% 17.02%
Net return ........................... 19.00% 11.59% 17.02%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return ......................... 8.76%
Net return ........................... 3.50%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS RESEARCH 1999 1998 1997
- ------------ ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 23.12% 24.11% 16.05%
Net return ........................... 23.12% 24.11% 16.05%
EQ/PUTNAM GROWTH & INCOME VALUE
- -------------------------------
Gross return ......................... (1.27)% 12.75% 14.48%
Net return ........................... (1.27)% 12.75% 14.48%
T. ROWE PRICE EQUITY INCOME
- ---------------------------
Gross return ......................... 3.54% 9.11% 22.13%
Net return ........................... 3.54% 9.11% 22.13%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no Separate Account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1995 indicated is not an
annualized rate of return.
(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-44
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
EQUITY OPTIONS (CONTINUED):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995
- --------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 38.53% 21.80% 11.66% 14.60% 19.38%
Net return ........................... 38.53% 21.80% 11.66% 14.60% 19.38%
</TABLE>
<TABLE>
<CAPTION>
APRIL 30 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
--------------------------------------------------- --------------------------------
ALLIANCE INTERNATIONAL 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 37.31% 10.57% (3.05)% 9.81% 11.29%
Net return ........................... 37.31% 10.57% (3.05)% 9.81% 11.29%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 20 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ----------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999 1998 1997
- -------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 95.82% (27.10)% (20.19)%
Net return ........................... 95.82% (27.10)% (20.19)%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
T. ROWE PRICE INTERNATIONAL STOCK 1999 1998 1997
- --------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 31.92% 13.68% (1.50)%
Net return ........................... 31.92% 13.68% (1.50)%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no separate account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1998 indicated is not an
annualized rate of return.
(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-45
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
EQUITY OPTIONS (CONCLUDED):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995
- ------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 18.84% 0.29% 10.94% 22.20% 33.00%
Net return ........................... 18.84% 0.29% 10.94% 22.20% 33.00%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 20 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ----------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 27.75% (4.28)% 26.69%
Net return ........................... 27.75% (4.28)% 26.69%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return ......................... 9.70%
Net return ........................... 7.10%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 73.62% 34.57% 22.44%
Net return ........................... 73.62% 34.57% 22.44%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
WARBURG PINCUS SMALL COMPANY VALUE 1999 1998 1997
- ---------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 1.80% (10.02)% 19.13%
Net return ........................... 1.80% (10.02)% 19.13%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no separate account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1998 indicated is not an
annualized rate of return.
(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-46
<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 ORIGINAL SERIES*(B)
- ---------------------------------------
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995
- ----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return ......................... 17.79% 18.11% 15.06% 11.68% 20.32%
Net return ........................... 17.79% 18.11% 15.06% 11.68% 20.32%
ALLIANCE CONSERVATIVE INVESTORS
- -------------------------------
Gross return ......................... 10.14% 13.88% 13.25% 5.21% 20.59%
Net return ........................... 10.14% 13.88% 13.25% 5.21% 20.59%
ALLIANCE GROWTH INVESTORS
- -------------------------
Gross return ......................... 26.58% 19.13% 16.87%% 12.61% 26.92%
Net return ........................... 27.58% 19.13% 16.87%% 12.61% 26.92%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return ......................... 7.38%
Net return ........................... 6.97%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- --------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 0.01% 11.92% 14.48%
Net return ........................... 0.01% 11.92% 14.48%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MERRILL LYNCH WORLD STRATEGY 1999 1998 1997
- ---------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 21.35% 6.81% 4.71%
Net return ........................... 21.35% 6.81% 4.71%
</TABLE>
- -------------------
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
* Sales of Incentive Life Plus Original Series commenced on January 6, 1995.
Date as of which net premiums under the policies were first allocated to the
variable investment option. The returns for the periods indicated are not
annual rates of return. There are no separate account asset charges for this
policy and therefore the gross and net rates of return are the same. The
rate of return for the year ended December 31, 1998 indicated is not an
annualized rate of return.
(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-47
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- ---------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES 1999 1998 1997 1996
- --------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 0.02% 7.74% 7.29% 3.78%
Net return ........................... (0.66)% 6.88% 6.43% 4.49%
ALLIANCE MONEY MARKET
- ---------------------
Gross return ......................... 4.96% 5.34% 5.42% 5.33%
Net return ........................... 4.14% 4.50% 4.57% 2.98%
ALLIANCE QUALITY BOND
- ---------------------
Gross return ......................... (2.00)% 8.69% 9.14% 5.36%
Net return ........................... (2.78)% 7.82% 8.27% 7.86%
ALLIANCE HIGH YIELD
- -------------------
Gross return ......................... (3.35)% (5.15)% 18.47% 22.89%
Net return ........................... (4.13)% (5.91)% 17.52% 13.90%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- ---------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996
- --------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 25.19% 29.39% 29.40% 24.28%
Net return ........................... 24.19% 28.35% 28.18% 17.44%
ALLIANCE EQUITY INDEX
- ---------------------
Gross return ......................... 20.38% 28.07% 32.58% 22.39%
Net return ........................... 19.42% 27.05% 31.51% 16.25%
ALLIANCE GROWTH AND INCOME
- --------------------------
Gross return ......................... 18.66% 20.86% 26.90% 20.09%
Net return ........................... 17.71% 19.90% 25.74% 15.63%
</TABLE>
JUNE 4 (C) TO
DECEMBER 31,
-------------------
EQ/ALLIANCE PREMIER GROWTH 1999
- -------------------------- ----
Gross return ......................... 18.97%
Net return ........................... 18.36%
- -------------------
+ 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-48
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
EQUITY OPTIONS (CONTINUED):
AUGUST 30 (C) TO
DECEMBER 31,
-------------------
CAPITAL GUARDIAN RESEARCH 1999
- ------------------------- ----
Gross return ......................... 7.10%
Net return ........................... 6.53%
AUGUST 30 (C) TO
DECEMBER 31,
-------------------
CAPITAL GUARDIAN U.S. EQUITY 1999
- ---------------------------- ----
Gross return ......................... 3.76%
Net return ........................... 3.28%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- -----------------
MERRILL LYNCH BASIC VALUE EQUITY 1999 1998 1997
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return ......................... 19.00% 11.59% 16.99%
Net return ........................... 17.99% 10.69% 16.40%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-------------------
MFS GROWTH WITH INCOME 1999
- ---------------------- ----
Gross return ......................... 8.76%
Net return ........................... 7.85%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS RESEARCH 1999 1998 1997
- ------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 23.12% 24.11% 16.07%
Net return............................ 22.13% 23.11% 15.43%
EQ/PUTNAM GROWTH & INCOME VALUE
- ---------------------------------
Gross return.......................... (1.27)% 12.75% 16.23%
Net return............................ (2.15)% 11.92% 13.87%
T. ROWE PRICE EQUITY INCOME
- ---------------------------
Gross return.......................... 3.54% 9.11% 22.11%
Net return............................ 2.73% 8.20% 21.48%
</TABLE>
- -------------------
+ 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-49
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
EQUITY OPTIONS (CONTINUED):
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------- ----------------
ALLIANCE GLOBAL 1999 1998 1997 1996
- --------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 38.53% 21.80% 11.66% 14.60%
Net return ........................... 37.42% 20.83% 10.65% 6.78%
ALLIANCE INTERNATIONAL
- ----------------------
Gross return ......................... 37.31% 10.57% (2.98)% 9.82%
Net return ........................... 36.68% 9.68% (3.83)% 2.11%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MORGAN STANLEY EMERGING MARKETS EQUITY 1999 1998 1997
- -------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 95.82% (27.10)% (20.16)%
Net return............................ 94.18% (27.60)% (20.43)%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
T. ROWE PRICE INTERNATIONAL STOCK 1999 1998 1997
- --------------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 31.92% 13.68% (1.49)%
Net return............................ 30.81% 12.79% (2.03)%
</TABLE>
<TABLE>
<CAPTION>
AUGUST 5 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------------------------- ---------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996
- ------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 18.84% 0.29% 10.94% 22.20%
Net return ........................... 17.89% (0.52)% 9.92% 6.22%
</TABLE>
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
ALLIANCE SMALL CAP GROWTH 1999 1998 1997
- ------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 27.75% (4.28)% 26.74%
Net return............................ 26.89% (5.04)% 26.01%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
------------------
EQ/EVERGREEN 1999
- ------------ ----
Gross return.......................... 9.70%
Net return............................ 6.81%
- -------------------
+ 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-50
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
IL PROTECTOR*
- -------------
EQUITY OPTIONS: (CONCLUDED):
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
MFS EMERGING GROWTH COMPANIES 1999 1998 1997
- ----------------------------- ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 73.62% 34.57% 22.42%
Net return............................ 72.28% 33.44% 21.78%
WARBURG PINCUS SMALL COMPANY VALUE
- -----------------------------------
Gross return.......................... 1.80% (10.02)% 19.15%
Net return............................ 0.99% (10.73)% 18.49%
</TABLE>
ASSET ALLOCATION OPTIONS:
<TABLE>
<CAPTION>
AUGUST 5 (A)
TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------- ---------------
ALLIANCE BALANCED 1999 1998 1997 1996
- ----------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross return ......................... 17.79% 18.11% 15.06% 11.68%
Net return ........................... 16.85% 17.17% 14.07% 8.67%
ALLIANCE CONSERVATIVE INVESTORS
- -------------------------------
Gross return ......................... 10.14% 13.88% 13.25% 5.21%
Net return ........................... 9.26% 12.97% 12.32% 7.94%
ALLIANCE GROWTH INVESTORS
- -------------------------
Gross return ......................... 26.58% 19.13% 16.87% 12.61%
Net return ........................... 25.57% 18.18% 15.84% 9.38%
</TABLE>
JUNE 4 (B) TO
DECEMBER 31,
-------------------
EQ/EVERGREEN FOUNDATION 1999
- ----------------------- ----
Gross return.......................... 7.38%
Net return............................ 9.83%
<TABLE>
<CAPTION>
MAY 1 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
----------------------------------- ---------------
EQ/PUTNAM BALANCED 1999 1998 1997
- ------------------ ---- ---- ----
<S> <C> <C> <C>
Gross return.......................... 0.01% 11.92% 14.38%
Net return............................ (0.76)% 10.92% 13.87%
MERRILL LYNCH WORLD STRATEGY
- ----------------------------
Gross return.......................... 21.35% 6.81% 4.70%
Net return............................ 20.37% 5.97% 4.15%
</TABLE>
- -------------------
+ 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-51
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
RATES OF RETURN:
SP-FLEX
- -------
FIXED INCOME OPTIONS:
<TABLE>
<CAPTION>
APRIL 1 (A) TO
ALLIANCE INTERMEDIATE YEARS ENDED DECEMBER 31, DECEMBER 31,
GOVERNMENT --------------------------------------------------------------------------- -------------------
SECURITIES 1999 1998 1997 1996 1995 1994 1993 1992 1991
- ---------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 0.02% 7.74% 7.29% 3.78% 13.33% (4.37)% 10.58% 5.60% 12.10%
Net return................ (1.65)% 5.82% 5.38% 1.91% 11.31% (6.08)% 8.57% 3.71% 10.59%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 4.96% 5.34% 5.42% 5.33% 5.74% 4.02% 3.00% 3.56% 6.17% 8.24%
Net return................ 3.11% 3.46% 3.54% 3.44% 3.86% 2.17% 1.13% 1.71% 4.29% 6.30%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE QUALITY BOND 1999 1998 1997 1996 1995 1994
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. (2.00)% 8.69% 9.14% 5.36% 17.02% (2.20)%
Net return................ (3.75)% 6.75% 7.19% 3.47% 14.94% (2.35)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. (3.35)% (5.15)% 18.47% 22.89% 19.92% (2.79)% 23.15% 12.31% 24.46% (1.12)%
Net return................ (5.08)% (6.84)% 16.35% 20.68% 17.79% (4.52)% 20.96% 10.30% 22.25% (2.89)%
</TABLE>
EQUITY OPTIONS:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 25.19% 29.39% 29.40% 24.28% 32.45% (2.14)% 24.84% 3.23% 37.87% (8.12)%
Net return................ 22.96% 27.08% 26.91% 22.04% 30.10% (3.88)% 22.60% 1.38% 35.43% (9.76)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE EQUITY INDEX 1999 1998 1997 1996 1995 1994
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 20.38% 28.07% 32.58% 22.39% 36.48% (2.54)%
Net return................ 18.24% 25.79% 30.21% 20.19% 34.06% (2.69)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE GROWTH & INCOME 1999 1998 1997 1996 1995 1994
- ------------------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.............. 18.66% 20.86% 26.90% 20.09% 24.07% (3.40)%
Net return................ 16.55% 18.71% 24.50% 17.93% 21.87% (3.55)%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- --------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 38.53% 21.80% 11.66% 14.60% 18.81% 5.23% 32.09% (0.50)% 30.55% (6.07)%
Net return................ 36.06% 19.63% 9.56% 12.54% 16.70% 3.36% 29.77% (2.28)% 28.23% (7.75)%
</TABLE>
- -------------------
+ 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-52
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
DECEMBER 31, 1999
RATES OF RETURN (CONCLUDED):
SP-FLEX
- -------
EQUITY OPTIONS (CONCLUDED):
<TABLE>
<CAPTION>
APRIL 3 (A) TO
YEARS ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------- ----------------
ALLIANCE INTERNATIONAL 1999 1998 1997 1996 1995
- ---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross return.............. 37.31% 10.57% (3.05)% 9.82% 11.29%
Net return................ 35.33% 8.60% (4.78)% 7.84% 9.82%
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 18.84% 0.29% 10.94% 22.20% 31.63% (3.81)% 16.77% (3.16)% 86.86% 8.17%
Net return................ 16.72% (1.50)% 8.83% 20.00% 29.30% (5.53)% 14.67% (4.89)% 83.54% 6.23%
</TABLE>
ASSET ALLOCATION SERIES:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
ALLIANCE BALANCED 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.................. 17.79% 18.11% 15.06% 11.68% 19.75% (8.02)% 12.28% (2.83)% 41.27% 0.24 %
Net return.................... 15.69% 16.01% 12.94% 9.67% 17.62% (9.66)% 10.31% (4.57)% 38.75% (1.56)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
ALLIANCE YEARS ENDED DECEMBER 31 DECEMBER 31,
CONSERVATIVE --------------------------------------------------------------------------- -------------------
INVESTORS 1999 1998 1997 1996 1995 1994
- --------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.................. 10.14% 13.88% 13.25% 5.21% 20.40% (1.83)%
Net return.................... 8.18% 11.85% 11.21% 3.32% 18.26% (1.98)%
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1 (A) TO
YEARS ENDED DECEMBER 31 DECEMBER 31,
--------------------------------------------------------------------------- -------------------
ALLIANCE GROWTH INVESTORS 1999 1998 1997 1996 1995 1994
- ------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross return.................. 26.58% 19.13% 16.87% 12.61% 26.37% (3.16)%
Net return.................... 24.33% 17.00% 14.69% 10.58% 24.12% (3.31)%
</TABLE>
- -------------------
+ 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.
- ------------------------------
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-53
<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>
Appendix A
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------ ----------
A-1
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.
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Francoise Colloc'h Director of Equitable Life (since July 1992). Member of the AXA Management
AXA Board and Group Executive President, Human Resources, Communication and
23 Avenue Matignon Synergies of AXA (since January 2000). Prior thereto, Senior Executive Vice
75008 Paris, France President, AXA (1993-2000). Director or officer of various subsidiaries and
affiliates of the AXA Group.
- ------------------------------------------------------------------------------------------------------------------------
Henri de Castries Director of Equitable Life (since September 1993). Chairman of the Board of
AXA AXA Financial (since April 1998); Vice Chairman (February 1996 to April
23 Avenue Matignon 1998). Vice Chairman of AXA's Management Board (since January 2000). Prior
75008 Paris, France 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.
- ------------------------------------------------------------------------------------------------------------------------
Joseph L. Dionne Director of Equitable Life (since May 1982). Retired Chairman of The
The McGraw-Hill Companies McGraw-Hill Companies (since January 2000); prior thereto, Chairman (April
1221 Avenue of the Americas 1988 to January 2000) and Chief Executive Officer (April 1983 to April 1998).
New York, NY 10020 Director of The McGraw-Hill Companies, Harris Corporation and Ryder System,
Inc. Director of AXA Financial, Inc. (since May, 1992).
- ------------------------------------------------------------------------------------------------------------------------
Denis Duverne Director of Equitable Life (since February 1998). Executive Vice President,
AXA International (US-UK-Benelux) AXA and member of AXA Executive Board (since
23, Avenue Matignon January, 2000). Director, Alliance (since February 1996) and Donaldson Lufkin
75008 Paris, France & Jenrette ("DLJ")(since February 1997).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------- ----------------------------------------------------------------------------------------------------------
A-2
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Jean-Rene Fourtou Director of Equitable Life (since July 1992). Vice Chairman of the Management
Rhone-Poulenc S.A. Board of Aventis (since December 1999). Prior thereto, Chairman and Chief
25, Quai Paul Doumer Executive Officer of Rhone-Poulenc, S.A. (1986 to December 1999). Member of
92408 Courbevoie Cedex the Supervisory Board of AXA. Director of Schneider S.A., Paribas, and Groupe
France Pernod-Ricard. Member of the Consulting Council of Banque de France.
Director, AXA Financial (since July, 1992).
- ------------------------------------------------------------------------------------------------------------------------
Norman C. Francis Director of Equitable Life (since March 1989). President of Xavier University
Xavier University of Louisiana of Louisiana; Director, First National Bank of Commerce, New Orleans, LA,
7325 Palmetto Street Piccadilly Cafeterias, Inc., and Entergy Corporation.
New Orleans, LA 70125
- ------------------------------------------------------------------------------------------------------------------------
Donald J. Greene Director of Equitable Life (since July 1991). Of Counsel, LeBoeuf, Lamb,
LeBouef, Lamb, Greene & MacRae, Greene & MacRae, L.L.P. (since 1999). Prior thereto, Partner of the firm
L.L.P. (1965 to 1999). Director of AXA Financial (since May 1992).
125 West 55th Street
New York, NY 10019-4513
- ------------------------------------------------------------------------------------------------------------------------
John T. Hartley Director of Equitable Life (since August 1987). Currently a Director and
1025 NASA Boulevard retired Chairman and Chief Executive Officer of Harris Corporation (retired
Melbourne, FL 32919 July 1995); previously held other officerships with Harris Corporation.
Director of AXA Financial (since May 1992); Director of the McGraw Hill
Companies.
- ------------------------------------------------------------------------------------------------------------------------
John H.F. Haskell Jr. Director of Equitable Life (since July 1992); Director of AXA Financial
SBC Warburg Dillon Read LLC (since July 1992); Director, Senior Advisor of Warburg Dillon Read LLC (since
535 Madison Avenue 1999); Prior thereto, Managing Director and member of its Board of Directors
New York, NY 10022 (1975-1999); Chairman, Supervisory Board, Dillon Read (France) Gestion (until
1998); Director, Pall Corporation (since November 1998).
- ------------------------------------------------------------------------------------------------------------------------
Mary (Nina) Henderson Director of Equitable Life (since December 1996). Corporate Vice President,
BESTFOODS Core Business Development of Bestfoods (since June 1999). Prior thereto,
International Plaza President, Bestfoods Grocery and Vice President, Bestfoods (formerly CPC
700 Sylvan Avenue International, Inc.)(1997 to 1999). President, Bestfoods Specialty Markets
Englewood Cliffs, NJ 07632-9976 Group (1993 to 1997); Director, Hunt Corporation and PACTIV Corporation.
Director, AXA Financial (since December 1996).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------ ----------
A-3
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
W. Edwin Jarmain Director of Equitable Life (since July 1992). President, Jarmain Group Inc.
Jarmain Group Inc. (since 1979); and officer or director of several affiliated companies.
121 King Street West Director, DLJ (since October 1992), AXA Insurance (Canada), Anglo Canada
Suite 2525 General Insurance Company, and AXA Pacific Insurance Company, and Alternate
Toronto, Ontario M5H 3T9 Director, AXA Asia Pacific Holdings Limited. Chairman (non-executive) and
Canada Director, FCA International Ltd. (January 1994 to May 1998). Director of AXA
Financial, Inc. (since July 1992).
- ------------------------------------------------------------------------------------------------------------------------
George T. Lowy Director of Equitable Life (since July 1992). Partner, Cravath, Swaine &
Cravath, Swaine & Moore Moore. Director, Eramet.
825 Eighth Avenue
New York, NY 10019
- ------------------------------------------------------------------------------------------------------------------------
Didier Pineau-Valencienne Director of Equitable Life (since February 1996). Vice Chairman Credit Suisse
Credit Suisse, First Boston First Boston (since March 1999). Chairman and Chief Executive Officer (1981
64, rue de Miromesnel to February 1999)(now Honorary Chairman) Schneider Electric. Member of the
75008 Paris, France 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).
- ------------------------------------------------------------------------------------------------------------------------
George J. Sella, Jr. Director of Equitable Life (since May 1987). Retired Chairman and Chief
P.O. Box 397 Executive Officer of American Cyanamid Company (retired April 1993);
Newton, NJ 07860 previously held other officerships with American Cyanamid. Director of AXA
Financial (since May 1992) and Coulter Pharmaceutical (since May 1987).
- ------------------------------------------------------------------------------------------------------------------------
Peter J. Tobin Director of Equitable Life (since March 1999); Dean of the Peter J. Tobin
St. John's University College of Business Administration, St. John's University (since August
8000 Utopia Parkway 1998); Chief Financial Officer, Chase Manhattan Corp. (1985 to 1997).
Jamaica, NY 11439
- ------------------------------------------------------------------------------------------------------------------------
Dave H. Williams Director of Equitable Life (since March 1991). Chairman (since 1977) and
Alliance Capital Management former Chief Executive Officer (1977 to January 1999), of Alliance, and
Corporation Chairman or Director of numerous subsidiaries and affiliated companies of
1345 Avenue of the Americas Alliance. Senior Executive Vice President of AXA (since January 1997).
New York, NY 10105 Director of AXA Financial (since May 1992).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------- ----------------------------------------------------------------------------------------------------------
A-4
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OFFICER-DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
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).
- ------------------------------------------------------------------------------------------------------------------------
Edward D. Miller 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.
- ------------------------------------------------------------------------------------------------------------------------
Stanley B. Tulin 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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------ ----------
A-5
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Leon B. Billis 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.
- ------------------------------------------------------------------------------------------------------------------------
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).
- ------------------------------------------------------------------------------------------------------------------------
Harvey Blitz 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.
- ------------------------------------------------------------------------------------------------------------------------
Kevin R. Byrne 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.
- ------------------------------------------------------------------------------------------------------------------------
John A. Caroselli 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).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------- ----------------------------------------------------------------------------------------------------------
A-6
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Judy A. Faucett 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).
- ------------------------------------------------------------------------------------------------------------------------
Alvin H. Fenichel 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.
- ------------------------------------------------------------------------------------------------------------------------
Paul J. Flora Senior Vice President and Auditor, Equitable Life. Vice President and
Auditor, AXA Financial.
- ------------------------------------------------------------------------------------------------------------------------
Robert E. Garber 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.
- ------------------------------------------------------------------------------------------------------------------------
Donald R. Kaplan Senior Vice President (since September 1999), Chief Compliance
Officer and Associate General Counsel, Equitable Life. Previously held other
officerships with Equitable Life.
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
Richard J. Matteis 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).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------ ----------
A-7
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<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).
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
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>
<TABLE>
<CAPTION>
- -------- ----------------------------------------------------------------------------------------------------------
A-8
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<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>
APPENDIX B
- ----------------------------------------------------------------- ----------
B-1
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:
Barron's Money Management Letter
Morningstar's Variable Investment Dealers Digest
Annuities/Life National Underwriter
Business Week Pension & Investments
Forbes USA Today
Fortune Investor's Daily
Institutional Investor The New York Times
Money The Wall Street Journal
Kiplinger's Personal Finance The Los Angeles Times
Financial Planning The Chicago Tribune
Investment Advisor
Investment Management Weekly
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
<PAGE>
- ------- ----------------------------------------------------------------------
B-2
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 policy's premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long- or short-term debt securities. 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. 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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RATES OF RETURN
- --------------------------------------------------------------------------------------------------------------------
FOR THE FOLLOWING LONG-TERM LONG-TERM INTERMEDIATE- U.S.
PERIODS ENDING COMMON GOVERNMENT CORPORATE TERM GOV'T TREASURY CONSUMER
DECEMBER 31, 1999 STOCKS BONDS BOND 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 8.03 1.98 2.46 2.08 0.69 0.00
Since 1926
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- ----------------------------------------------------------------- ----------
B-3
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 C
- ----------------------------------------------------------------- ----------
C-1
DATES OF PREVIOUS PROSPECTUSES AND SUPPLEMENTS
This supplement updates
the prospectuses dated which relate to our
- ---------------------- -------------------
May 1, 1999 and October 18, 1999 Incentive Life Policies
May 1, 1999 and October 18, 1999 Survivorship Incentive Life Policies
In addition, you may have also received an August 30, 1999 prospectus
supplement. This supplement is still relevant and you should retain it with your
prospectus.
<PAGE>
The Equitable Life Assurance Society
of the United States
Variable Life Insurance Policies
Incentive Life
Survivorship Incentive Life
Incentive Life Plus(R)
Survivorship 2000
PROSPECTUS SUPPLEMENT DATED MAY 1, 2000
- --------------------------------------------------------------------------------
This supplement updates certain information in the most recent prospectus you
received for your Equitable variable life insurance policy listed above, and in
any prior supplements to that prospectus.*
NEW INVESTMENT OPTIONS. Beginning on or about May 22, 2000 you will have a new
variable investment option (Fund) available under your policy:
o EQ/Alliance Technology**
Alliance Capital Management L.P. is the investment advisor for this new
Portfolio of EQ Advisors Trust. See "Investment Portfolios" below, as well as
the EQ Advisors Trust prospectus attached to this supplement, for more
information.
EQUITABLE. The information under the heading "Equitable" in your prospectus is
updated as follows:
EQUITABLE. We are The Equitable Life Assurance Society of the United States
(Equitable or 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
$462.7 billion in assets as of December 31, 1999. 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.
HOW TO REACH US. To obtain (1) any forms you
- ------------------
* The dates of such prior prospectuses are listed for your information in
Appendix C to this supplement. You should keep this supplement with your
prospectus and any previous prospectus supplement. We will send you another
copy of any prospectus or supplement, without charge, on written request.
** This option may not be available in California.
Copyright 2000 The Equitable Life Assurance Society of the United States.
All rights reserved. Incentive Life Plus(R) is a registered service mark of
The Equitable Life Assurance Society of the United States.
E2431
<PAGE>
- --------------------------------------------------------------------------------
2
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 Client Services
Radio City Station
P.O. Box 808
New York, New York 10101-0808
- ---------------------------------------------------------
BY EXPRESS DELIVERY ONLY:
- ---------------------------------------------------------
At the Street Address for our Administrative Office:
Equitable Life Client Services
135 W. 50th St., 10th Floor
New York, New York 10020
- ---------------------------------------------------------
BY TOLL-FREE PHONE:
- ---------------------------------------------------------
1-888-228-6690
- ---------------------------------------------------------
BY E-MAIL:
- ---------------------------------------------------------
[email protected]
- ---------------------------------------------------------
BY FAX:
- ---------------------------------------------------------
1-212-641-7075
- ---------------------------------------------------------
BY INTERNET:
- ---------------------------------------------------------
Our Web site (www.equitable.com) can also provide 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 sole
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 investment options; and
(e) changes in allocation percentages for premiums and deductions.
You can change your allocation 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 Requests" below.
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 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.
You should send all requests and notices to our Administrative Office at the
addresses specified above. We will also accept requests and notices by
<PAGE>
- --------------------------------------------------------------------------------
3
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 premium payments after the first one to our Administrative Office at
the above addresses; except that you should send any premiums for which we have
billed you to the address on the billing notice.
TELEPHONE AND EQACCESS REQUESTS. If you are both the sole owner and an insured
person under your policy, you may call 1-888-228-6690 (toll free) from a touch
tone phone to make the following types of requests:
o policy loans
o changes of address
o changes of premium allocation percentages
o transfers among investment options (Funds)
If you are not both an insured person and the owner, you may send 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.
By the end of 2000, we anticipate that you will be able to make transfers among
investment options (Funds) and changes in premium allocation percentages 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 transactions apply to EQAccess transactions.
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.
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 confirmation letter by first class mail.
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 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"
below).
<PAGE>
- --------------------------------------------------------------------------------
4
Any telephone or Internet transaction request that you make 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 transactions 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.
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.
ASSET REBALANCING. Over time, your relative position in each investment option
may change due to the fluctuation of unit prices, premium payments, monthly
deductions and other transactions. Asset rebalancing, which we introduced last
year, can be useful to you if you wish to maintain a specified asset mix.
The following description replaces the description of our asset rebalancing
service in your prospectus (or supplement):
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.
You may request the asset rebalancing service at any time. You may change your
allocation instructions or discontinue participation in the asset rebalancing
service at any time.
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.
Subsequent periodic rebalancings will occur quarterly, semiannually or annually,
as you have requested.
INVESTMENT PORTFOLIOS. Your policy offers the investment Portfolios listed in
the table below, along with the Guaranteed Interest Account.
In addition to the other charges we make under your policy, you also bear your
proportionate share of all fees and expenses paid by a Portfolio that
corresponds to any variable investment option (Fund)
<PAGE>
- --------------------------------------------------------------------------------
5
you are using. The tables below show the fees and expenses paid by each
Portfolio for the year ended December 31, 1999, except as otherwise noted. 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(4) 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(5) 0.90% 0.25% 0.23% 1.38% 0.23% 1.15%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth(6) 0.75% 0.25% 0.07% 1.07% -- 1.07%
- -----------------------------------------------------------------------------------------------------------------------
EQ/Alliance Technology(7) 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(5) 0.85% 0.25% 0.66% 1.76% 0.56% 1.20%
- -----------------------------------------------------------------------------------------------------------------------
Capital Guardian Research(5) 0.65% 0.25% 0.47% 1.37% 0.42% 0.95%
- -----------------------------------------------------------------------------------------------------------------------
Capital Guardian U.S. Equity(5) 0.65% 0.25% 0.34% 1.24% 0.29% 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%
- -----------------------------------------------------------------------------------------------------------------------
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>
(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 Money Market, Alliance High Yield,
Alliance Common Stock, Alliance Small Cap Growth and EQ/Aggressive Stock
Portfolios 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. 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
<PAGE>
- --------------------------------------------------------------------------------
6
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 Large Cap Value
Portfolio reflects a decrease effective on May 1, 2000.
(4) Formerly named "Alliance Aggressive Stock." Effective May 1, 2000,
Massachusetts Financial Services Company joined Alliance Capital Management
L.P. as an investment advisor for this Portfolio.
(5) Initial seed capital was invested in the EQ/Alliance Premier Growth,
Capital Guardian Research and Capital Guardian U.S. Equity Portfolios on
April 30, 1999; thus, Other Expenses for these Portfolios have been
estimated.
(6) 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.
(7) Expenses shown are based on annualized estimates for 2000. Initial seed
capital will be invested in the EQ/Alliance Technology Portfolio on or about
May 1, 2000
INVESTMENT PERFORMANCE. Footnote 6 to the Separate Account FP financial
statements set forth below contains information about the net return for each
Fund (variable investment option) which commenced operations prior to December
31, 1999. The attached prospectus for EQ Advisors Trust contains rates of return
and other Portfolio performance information for various periods ended December
31, 1999. The changes in the Policy Account value of your policy depend not only
on the performance of the Portfolios, but also on the deductions and charges
under your policy. To obtain the current unit values of the Separate Account
Funds, call (888) 228-6690.
The values reported in footnote 6 for all policies are computed using net rates
of return for the corresponding Portfolios of EQ Advisors Trust. The returns
reported in footnote 6 for each of the policy forms are reduced only by any
mortality and expense risk charge deducted from Separate Account assets.
LONG-TERM MARKET TRENDS. Appendix B to this supplement presents historical
return trends for various types of securities which may be useful for
understanding how different investment strategies may affect long-term results.
DISTRIBUTION. Because of its activities in distributing our products, Equitable
Distributors, Inc. is the "principal underwriter" (as defined in the Investment
Company Act of 1940) of our variable life insurance policies. In 1998 and 1999
we paid Equitable Distributors, Inc. fees of $35,582,313 and $46,957,345,
respectively, for its services as such.
ILLUSTRATIONS OF POLICY BENEFITS. For purposes of illustrations of the type set
forth under this caption in your prospectus, the new aggregate expense
assumption for the Portfolios is 0.96% per annum (0.63% per annum for investment
management fees and 0.33% per annum for other expenses). The investment
management fee assumption is the average of the advisory fees payable for each
EQ Advisors Trust Portfolio based on average net assets for 1999. The other
expense assumption is the weighted average of the other expenses (including
"Rule 12b-1" distribution fees) of the EQ Advisors Trust Portfolios, based on
average net assets for 1999. The tables under this caption in your prospectus
have not been restated to reflect this new Portfolio expense assumption. For a
personalized illustration reflecting the fees and expenses under your policy,
contact your financial professional.
<PAGE>
- --------------------------------------------------------------------------------
7
DELETION OF CERTAIN INFORMATION. The following information that appears in your
prospectus is deleted:
o all quotations of investment yield or return that are based on the
historical investment performance of the available Portfolios under
your policy; and all illustrations of policy values based on such
historical performance.
o all information about the Portfolios' investment objectives and policies.
MANAGEMENT. A list of our directors and, to the extent they are responsible for
variable life insurance operations, our principal officers and a brief statement
of their business experience for the past five years is contained in Appendix A
to this supplement.
FINANCIAL STATEMENTS. The financial statements of Separate Account FP as of
December 31, 1999 and for 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 the three years in the period ended December 31, 1999 included in this
prospectus supplement have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements of Equitable Life contained in this prospectus
supplement should be considered only as bearing upon the ability of Equitable
Life to meet its obligations under the policies. They should not be considered
as bearing upon the investment experience of the Funds in the Separate Account.
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants....................................... FSA-2
Financial Statements:
Statements of Assets and Liabilities, December 31, 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-16
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants....................................... F-1
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 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, 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
+ Formerly known as Equitable Variable Life Insurance Company Separate Account
FP.
FSA-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and Policyowners of Separate Account FP
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of the 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>
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>
APPENDIX A
- --------------------------------------------------------------------------------
A-1
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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Francoise Colloc'h Director of Equitable Life (since July 1992). Member of the AXA Management
AXA Board and Group Executive President, Human Resources, Communication and
23 Avenue Matignon Synergies of AXA (since January 2000). Prior thereto, Senior Executive Vice
75008 Paris, France President, AXA (1993-2000). Director or officer of various subsidiaries and
affiliates of the AXA Group.
- ------------------------------------------------------------------------------------------------------------------------
Henri de Castries Director of Equitable Life (since September 1993). Chairman of the Board of
AXA AXA Financial (since April 1998); Vice Chairman (February 1996 to April
23 Avenue Matignon 1998). Vice Chairman of AXA's Management Board (since January 2000). Prior
75008 Paris, France 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.
- ------------------------------------------------------------------------------------------------------------------------
Joseph L. Dionne Director of Equitable Life (since May 1982). Retired Chairman of The
The McGraw-Hill Companies McGraw-Hill Companies (since January 2000); prior thereto, Chairman (April
1221 Avenue of the Americas 1988 to January 2000) and Chief Executive Officer (April 1983 to April 1998).
New York, NY 10020 Director of The McGraw-Hill Companies, Harris Corporation and Ryder System,
Inc. Director of AXA Financial, Inc. (since May, 1992).
- ------------------------------------------------------------------------------------------------------------------------
Denis Duverne Director of Equitable Life (since February 1998). Executive Vice President,
AXA International (US-UK-Benelux) AXA and member of AXA Executive Board (since
23, Avenue Matignon January, 2000). Director, Alliance (since February 1996) and Donaldson Lufkin
75008 Paris, France & Jenrette ("DLJ")(since February 1997).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
A-2
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Jean-Rene Fourtou Director of Equitable Life (since July 1992). Vice Chairman of the Management
Rhone-Poulenc S.A. Board of Aventis (since December 1999). Prior thereto, Chairman and Chief
25, Quai Paul Doumer Executive Officer of Rhone-Poulenc, S.A. (1986 to December 1999). Member of
92408 Courbevoie Cedex the Supervisory Board of AXA. Director of Schneider S.A., Paribas, and Groupe
France Pernod-Ricard. Member of the Consulting Council of Banque de France.
Director, AXA Financial (since July, 1992).
- ------------------------------------------------------------------------------------------------------------------------
Norman C. Francis Director of Equitable Life (since March 1989). President of Xavier University
Xavier University of Louisiana of Louisiana; Director, First National Bank of Commerce, New Orleans, LA,
7325 Palmetto Street Piccadilly Cafeterias, Inc., and Entergy Corporation.
New Orleans, LA 70125
- ------------------------------------------------------------------------------------------------------------------------
Donald J. Greene Director of Equitable Life (since July 1991). Of Counsel, LeBoeuf, Lamb,
LeBoeuf, Lamb, Greene & MacRae, Greene & MacRae, L.L.P. (since 1999). Prior thereto, Partner of the firm
L.L.P. (1965 to 1999). Director of AXA Financial (since May 1992).
125 West 55th Street
New York, NY 10019-4513
- ------------------------------------------------------------------------------------------------------------------------
John T. Hartley Director of Equitable Life (since August 1987). Currently a Director and
1025 NASA Boulevard retired Chairman and Chief Executive Officer of Harris Corporation (retired
Melbourne, FL 32919 July 1995); previously held other officerships with Harris Corporation.
Director of AXA Financial (since May 1992); Director of the McGraw Hill
Companies.
- ------------------------------------------------------------------------------------------------------------------------
John H.F. Haskell Jr. Director of Equitable Life (since July 1992); Director of AXA Financial
SBC Warburg Dillon Read LLC (since July 1992); Director, Senior Advisor of Warburg Dillon Read LLC (since
535 Madison Avenue 1999); Prior thereto, Managing Director and member of its Board of Directors
New York, NY 10022 (1975-1999); Chairman, Supervisory Board, Dillon Read (France) Gestion (until
1998); Director, Pall Corporation (since November 1998).
- ------------------------------------------------------------------------------------------------------------------------
Mary (Nina) Henderson Director of Equitable Life (since December 1996). Corporate Vice President,
BESTFOODS Core Business Development of Bestfoods (since June 1999). Prior thereto,
International Plaza President, Bestfoods Grocery and Vice President, Bestfoods (formerly CPC
700 Sylvan Avenue International, Inc.)(1997 to 1999). President, Bestfoods Specialty Markets
Englewood Cliffs, NJ 07632-9976 Group (1993 to 1997); Director, Hunt Corporation and PACTIV Corporation.
Director, AXA Financial (since December 1996).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
A-3
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPEREIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
W. Edwin Jarmain Director of Equitable Life (since July 1992). President, Jarmain Group Inc.
Jarmain Group Inc. (since 1979); and officer or director of several affiliated companies.
121 King Street West Director, DLJ (since October 1992), AXA Insurance (Canada), Anglo Canada
Suite 2525 General Insurance Company, and AXA Pacific Insurance Company, and Alternate
Toronto, Ontario M5H 3T9 Director, AXA Asia Pacific Holdings Limited. Chairman (non-executive) and
Canada Director, FCA International Ltd. (January 1994 to May 1998). Director of AXA
Financial, Inc. (since July 1992).
- ------------------------------------------------------------------------------------------------------------------------
George T. Lowy Director of Equitable Life (since July 1992). Partner, Cravath, Swaine &
Cravath, Swaine & Moore Moore. Director, Eramet.
825 Eighth Avenue
New York, NY 10019
- ------------------------------------------------------------------------------------------------------------------------
Didier Pineau-Valencienne Director of Equitable Life (since February 1996). Vice Chairman Credit Suisse
Credit Suisse, First Boston First Boston (since March 1999). Chairman and Chief Executive Officer (1981
64, rue de Miromesnel to February 1999)(now Honorary Chairman) Schneider Electric. Member of the
75008 Paris, France 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).
- ------------------------------------------------------------------------------------------------------------------------
George J. Sella, Jr. Director of Equitable Life (since May 1987). Retired Chairman and Chief
P.O. Box 397 Executive Officer of American Cyanamid Company (retired April 1993);
Newton, NJ 07860 previously held other officerships with American Cyanamid. Director of AXA
Financial (since May 1992) and Coulter Pharmaceutical (since May 1987).
- ------------------------------------------------------------------------------------------------------------------------
Peter J. Tobin Director of Equitable Life (since March 1999); Dean of the Peter J. Tobin
St. John's University College of Business Administration, St. John's University (since August
8000 Utopia Parkway 1998); Chief Financial Officer, Chase Manhattan Corp. (1985 to 1997).
Jamaica, NY 11439
- ------------------------------------------------------------------------------------------------------------------------
Dave H. Williams Director of Equitable Life (since March 1991). Chairman (since 1977) and
Alliance Capital Management former Chief Executive Officer (1977 to January 1999), of Alliance, and
Corporation Chairman or Director of numerous subsidiaries and affiliated companies of
1345 Avenue of the Americas Alliance. Senior Executive Vice President of AXA (since January 1997).
New York, NY 10105 Director of AXA Financial (since May 1992).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
A-4
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OFFICER-DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
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).
- ------------------------------------------------------------------------------------------------------------------------
Edward D. Miller 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.
- ------------------------------------------------------------------------------------------------------------------------
Stanley B. Tulin 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.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
A-5
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Leon B. Billis 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.
- ------------------------------------------------------------------------------------------------------------------------
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).
- ------------------------------------------------------------------------------------------------------------------------
Harvey Blitz 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.
- ------------------------------------------------------------------------------------------------------------------------
Kevin R. Byrne 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.
- ------------------------------------------------------------------------------------------------------------------------
John A. Caroselli 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).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
A-6
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Judy A. Faucett 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).
- ------------------------------------------------------------------------------------------------------------------------
Alvin H. Fenichel 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.
- ------------------------------------------------------------------------------------------------------------------------
Paul J. Flora Senior Vice President and Auditor, Equitable Life. Vice President and
Auditor, AXA Financial.
- ------------------------------------------------------------------------------------------------------------------------
Robert E. Garber 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.
- ------------------------------------------------------------------------------------------------------------------------
Donald R. Kaplan Senior Vice President (since September 1999), Chief Compliance
Officer and Associate General Counsel, Equitable Life. Previously held other
officerships with Equitable Life.
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
Richard J. Matteis 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).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
A-7
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<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).
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
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>
- --------------------------------------------------------------------------------
A-8
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<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>
APPENDIX B
- --------------------------------------------------------------------------------
B-1
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:
Barron's Money Management Letter
Morningstar's Variable Investment Dealers Digest
Annuities/Life National Underwriter
Business Week Pension & Investments
Forbes USA Today
Fortune Investor's Daily
Institutional Investor The New York Times
Money The Wall Street Journal
Kiplinger's Personal Finance The Los Angeles Times
Financial Planning The Chicago Tribune
Investment Advisor
Investment Management Weekly
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
<PAGE>
- --------------------------------------------------------------------------------
B-2
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 policy's premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long- or short-term debt securities. 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. 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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RATES OF RETURN
- --------------------------------------------------------------------------------------------------------------------
FOR THE FOLLOWING LONG-TERM LONG-TERM INTERMEDIATE- U.S.
PERIODS ENDING COMMON GOVERNMENT CORPORATE TERM GOV'T 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 8.03 1.98 2.46 2.08 0.69 0.00
Since 1926
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
B-3
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 C
- --------------------------------------------------------------------------------
C-1
DATES OF PREVIOUS PROSPECTUSES AND SUPPLEMENTS
This supplement updates
the prospectuses dated which relate to our
- ----------------------- -------------------
July 15, 1998; May 1, 1999; and
October 18, 1999..................... Incentive Life Plus Policies
July 15, 1998; May 1, 1999; and
October 18, 1999..................... Survivorship 2000 Policies
August 1, 1999; and
October 18, 1999; ................... Incentive Life Policies
August 1, 1999; and
October 18, 1999; ................... Survivorship Incentive Life Policies
In addition, you may have also received a prospectus supplement dated August 30,
1999. This supplement is still relevant and you should retain it with your
prospectus.
- ---------------------
<PAGE>
The Equitable Life Assurance Society
of the United States
Incentive Life Plus(R)
Variable Life Insurance Policies
PROSPECTUS SUPPLEMENT DATED MAY 1, 2000
TO INCENTIVE LIFE PLUS PROSPECTUS DATED OCTOBER 18, 1999
- --------------------------------------------------------------------------------
This supplement updates certain information in the prospectus dated October 18,
1999 for Incentive Life Plus.
NEW INVESTMENT OPTIONS. Beginning on or about May 22, 2000 you will have a
new variable investment option (Fund) available under your policy:
o EQ/Alliance Technology*
Alliance Capital Management L.P. is the investment advisor for this new
Portfolio of EQ Advisors Trust. See "Investment Portfolios" below, as well as
the EQ Advisors Trust prospectus attached to this supplement, for more
information.
EQUITABLE. The information under the heading "Equitable" in your prospectus is
updated as follows:
EQUITABLE. We are The Equitable Life Assurance Society of the United States
(Equitable or 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
$462.7 billion in assets as of December 31, 1999. 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.
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
- ------------------
* This option may not be available in California.
Copyright 2000 The Equitable Life Assurance Society of the United States.
All rights reserved. Incentive Life Plus(R) is a registered service mark of
The Equitable Life Assurance Society of the United States.
<PAGE>
- ------- --------------------------------------------------------------------
2
with your policy or the portfolios, you can contact us
- ---------------------------------------------------------
BY MAIL:
- ---------------------------------------------------------
at the Post Office Box for our Administrative Office:
Equitable Life Client Services
Radio City Station
P.O. Box 808
New York, New York 10101-0808
- ---------------------------------------------------------
BY EXPRESS DELIVERY ONLY:
- ---------------------------------------------------------
At the Street Address for our Administrative Office:
Equitable Life Client Services
135 W. 50th St., 10th Floor
New York, New York 10020
- ---------------------------------------------------------
BY TOLL-FREE PHONE:
- ---------------------------------------------------------
1-888-228-6690
- ---------------------------------------------------------
BY E-MAIL:
- ---------------------------------------------------------
[email protected]
- ---------------------------------------------------------
BY FAX:
- ---------------------------------------------------------
1-212-641-7075
- ---------------------------------------------------------
BY INTERNET:
- ---------------------------------------------------------
Our Web site (www.equitable.com) can also provide 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 investment options; and
(e) changes in allocation percentages for premiums and deductions.
You can change your allocation 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 Requests" below.
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 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.
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 premium payments after the first one to our Administrative Office at
the above addresses;
<PAGE>
- --------------------------------------------------------------- -----------
3
except that you should send any premiums for which we have billed you to the
address on the billing notice.
TELEPHONE AND EQACCESS REQUESTS. If you are both the sole owner and an insured
person under your policy, you may call 1-888-228-6690 (toll free) from a touch
tone phone to make the following types of requests:
o policy loans
o changes of address
o changes of premium allocation percentages
o transfers among investment options (Funds)
If you are not both an insured person and the owner, you may send 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.
By the end of 2000, we anticipate that you will be able to make transfers among
investment options (Funds) and changes in premium allocation percentages 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 transactions apply to EQAccess transactions.
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.
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 confirmation letter by first class mail.
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 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"
below).
Any telephone or Internet transaction request that you make 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
<PAGE>
- -------- -----------------------------------------------------------------
3
transactions 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.
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.
ASSET REBALANCING. Over time, your relative position in each investment option
may change due to the fluctuation of unit prices, premium payments, monthly
deductions and other transactions. Asset rebalancing, which we introduced last
year, can be useful to you if you wish to maintain a specified asset mix.
The following description replaces the description of our asset rebalancing
service in your prospectus (or supplement):
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.
You may request the asset rebalancing service at any time. You may change your
allocation instructions or discontinue participation in the asset rebalancing
service at any time.
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.
Subsequent periodic rebalancings will occur quarterly, semiannually or annually,
as you have requested.
INVESTMENT PORTFOLIOS. Your policy offers the investment Portfolios listed in
the table below, along with the Guaranteed Interest Account.
In addition to the other charges we make under your policy, you also bear your
proportionate share of all fees and expenses paid by a Portfolio that
corresponds to any variable investment option (Fund) you are using. The tables
below show the fees and expenses paid by each Portfolio for the year ended
December 31, 1999, except as otherwise noted. 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.
<PAGE>
- ---------------------------------------------------------------- ----------
5
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(4) 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(5) 0.90% 0.25% 0.23% 1.38% 0.23% 1.15%
- -----------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth(6) 0.75% 0.25% 0.07% 1.07% -- 1.07%
- -----------------------------------------------------------------------------------------------------------------------
EQ/Alliance Technology(7) 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(5) 0.85% 0.25% 0.66% 1.76% 0.56% 1.20%
- -----------------------------------------------------------------------------------------------------------------------
Capital Guardian Research(5) 0.65% 0.25% 0.47% 1.37% 0.42% 0.95%
- -----------------------------------------------------------------------------------------------------------------------
Capital Guardian U.S. Equity(5) 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(8) 0.60% 0.25% 0.17% 1.02% 0.07% 0.95%
- -----------------------------------------------------------------------------------------------------------------------
Mercury World Strategy(9) 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>
(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 Money Market, Alliance High Yield,
Alliance Common Stock, Alliance Small Cap Growth and EQ/Aggressive Stock
Portfolios 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. 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
<PAGE>
- ------- --------------------------------------------------------------------
6
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 Large Cap Value Portfolios reflect a decrease
effective on May 1, 2000.
(4) Formerly named "Alliance Aggressive Stock." Effective May 1, 2000,
Massachusetts Financial Services Company joined Alliance Capital Management
L.P. as an investment advisor for this Portfolio.
(5) Initial seed capital was invested in the EQ/Alliance Premier Growth,
Capital Guardian International, Capital Guardian Research and Capital
Guardian U.S. Equity Portfolios on April 30, 1999; thus, Other Expenses for
these Portfolios have been estimated.
(6) 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.
(7) Expenses shown are based on annualized estimates for 2000. Initial seed
capital will be invested in the EQ/Alliance Technology Portfolio on or
about May 1, 2000.
(8) Formerly named "Merrill Lynch Basic Value Equity."
(9) Formerly named "Merrill Lynch World Strategy."
INVESTMENT PERFORMANCE. Footnote 6 to the Separate Account FP financial
statements set forth below contains information about the net return for
each Fund (variable investment option) which commenced operations prior to
December 31, 1999. The attached prospectus for EQ Advisors Trust contains
rates of return and other Portfolio performance information for various
periods ended December 31, 1999. The changes in the Policy Account value of
your policy depend not only on the performance of the Portfolios, but also
on the deductions and charges under your policy. To obtain the current unit
values of the Separate Account Funds, call (888) 228-6690.
The values reported in footnote 6 for all policies are computed using net rates
of return for the corresponding Portfolios of EQ Advisors Trust. The returns
reported in footnote 6 for each of the policy forms are reduced only by any
mortality and expense risk charge deducted from Separate Account assets.
LONG-TERM MARKET TRENDS. Appendix B to this supplement presents historical
return trends for various types of securities which may be useful for
understanding how different investment strategies may affect long-term results.
DISTRIBUTION. Because of its activities in distributing our products, Equitable
Distributors, Inc. is the "principal underwriter" (as defined in the Investment
Company Act of 1940) of our variable life insurance policies. In 1998 and 1999
we paid Equitable Distributors, Inc. fees of $35,582,313 and $46,957,345,
respectively, for its services as such.
ILLUSTRATIONS OF POLICY BENEFITS. For purposes of illustrations of the type set
forth under this caption in your prospectus, the new aggregate expense
assumption for the Portfolios is 0.96% per annum (0.63% per annum for investment
management fees and 0.33% per annum for other expenses). The investment
management fee assumption is the average of the advisory fees payable for each
EQ Advisors Trust Portfolio based on average net assets for 1999. The other
expense assumption is the weighted average of the other expenses (including
"Rule 12b-1" distribution fees) of the EQ Advisors Trust Portfolios, based on
average net assets for 1999. The tables under this
<PAGE>
- ---------------------------------------------------------------- -----------
7
caption in your prospectus have not been restated to reflect this new Portfolio
expense assumption. For a personalized illustration reflecting the fees and
expenses under your policy, contact your financial professional.
DELETION OF CERTAIN INFORMATION. The following information that appears in your
prospectus is deleted:
o all quotations of investment yield or return that are based on the
historical investment performance of the available Portfolios under your
policy; and all illustrations of policy values based on such historical
performance.
o all information about the Portfolios' investment objectives and policies.
MANAGEMENT. A list of our directors and, to the extent they are responsible for
variable life insurance operations, our principal officers and a brief statement
of their business experience for the past five years is contained in Appendix A
to this supplement.
FINANCIAL STATEMENTS. The financial statements of Separate Account FP as of
December 31, 1999 and for 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 the three years in the period ended December 31, 1999 included in this
prospectus supplement have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements of Equitable Life contained in this prospectus
supplement should be considered only as bearing upon the ability of Equitable
Life to meet its obligations under the policies. They should not be considered
as bearing upon the investment experience of the Funds in the Separate Account.
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT FP+
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
<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
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants.................................................................................. F-1
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 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, 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
</TABLE>
+ Formerly known as Equitable Variable Life Insurance Company
Separate Account FP.
FSA-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and Policyowners of Separate Account FP
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of the 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>
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>
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.
- --------------------------------------------------------------- ----------
A-1
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Francoise Colloc'h Director of Equitable Life (since July 1992). Member of the AXA Management
AXA Board and Group Executive President, Human Resources, Communication and
23 Avenue Matignon Synergies of AXA (since January 2000). Prior thereto, Senior Executive Vice
75008 Paris, France President, AXA (1993-2000). Director or officer of various subsidiaries and
affiliates of the AXA Group.
- ------------------------------------------------------------------------------------------------------------------------
Henri de Castries Director of Equitable Life (since September 1993). Chairman of the Board of
AXA AXA Financial (since April 1998); Vice Chairman (February 1996 to April
23 Avenue Matignon 1998). Vice Chairman of AXA's Management Board (since January 2000). Prior
75008 Paris, France 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.
- ------------------------------------------------------------------------------------------------------------------------
Joseph L. Dionne Director of Equitable Life (since May 1982). Retired Chairman of The
The McGraw-Hill Companies McGraw-Hill Companies (since January 2000); prior thereto, Chairman (April
1221 Avenue of the Americas 1988 to January 2000) and Chief Executive Officer (April 1983 to April 1998).
New York, NY 10020 Director of The McGraw-Hill Companies, Harris Corporation and Ryder System,
Inc. Director of AXA Financial, Inc. (since May, 1992).
- ------------------------------------------------------------------------------------------------------------------------
Denis Duverne Director of Equitable Life (since February 1998). Executive Vice President,
AXA International (US-UK-Benelux) AXA and member of AXA Executive Board (since
23, Avenue Matignon January, 2000). Director, Alliance (since February 1996) and Donaldson Lufkin
75008 Paris, France & Jenrette ("DLJ")(since February 1997).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------- -----------------------------------------------------------------------------------------------------------
A-2
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Jean-Rene Fourtou Director of Equitable Life (since July 1992). Vice Chairman of the Management
Rhone-Poulenc S.A. Board of Aventis (since December 1999). Prior thereto, Chairman and Chief
25, Quai Paul Doumer Executive Officer of Rhone-Poulenc, S.A. (1986 to December 1999). Member of
92408 Courbevoie Cedex the Supervisory Board of AXA. Director of Schneider S.A., Paribas, and Groupe
France Pernod-Ricard. Member of the Consulting Council of Banque de France.
Director, AXA Financial (since July, 1992).
- ------------------------------------------------------------------------------------------------------------------------
Norman C. Francis Director of Equitable Life (since March 1989). President of Xavier University
Xavier University of Louisiana of Louisiana; Director, First National Bank of Commerce, New Orleans, LA,
7325 Palmetto Street Piccadilly Cafeterias, Inc., and Entergy Corporation.
New Orleans, LA 70125
- ------------------------------------------------------------------------------------------------------------------------
Donald J. Greene Director of Equitable Life (since July 1991). Of Counsel, LeBoeuf, Lamb,
LeBouef, Lamb, Greene & MacRae, Greene & MacRae, L.L.P. (since 1999). Prior thereto, Partner of the firm
L.L.P. (1965 to 1999). Director of AXA Financial (since May 1992).
125 West 55th Street
New York, NY 10019-4513
- ------------------------------------------------------------------------------------------------------------------------
John T. Hartley Director of Equitable Life (since August 1987). Currently a Director and
1025 NASA Boulevard retired Chairman and Chief Executive Officer of Harris Corporation (retired
Melbourne, FL 32919 July 1995); previously held other officerships with Harris Corporation.
Director of AXA Financial (since May 1992); Director of the McGraw Hill
Companies.
- ------------------------------------------------------------------------------------------------------------------------
John H.F. Haskell Jr. Director of Equitable Life (since July 1992); Director of AXA Financial
SBC Warburg Dillon Read LLC (since July 1992); Director, Senior Advisor of Warburg Dillon Read LLC (since
535 Madison Avenue 1999); Prior thereto, Managing Director and member of its Board of Directors
New York, NY 10022 (1975-1999); Chairman, Supervisory Board, Dillon Read (France) Gestion (until
1998); Director, Pall Corporation (since November 1998).
- ------------------------------------------------------------------------------------------------------------------------
Mary (Nina) Henderson Director of Equitable Life (since December 1996). Corporate Vice President,
BESTFOODS Core Business Development of Bestfoods (since June 1999). Prior thereto,
International Plaza President, Bestfoods Grocery and Vice President, Bestfoods (formerly CPC
700 Sylvan Avenue International, Inc.)(1997 to 1999). President, Bestfoods Specialty Markets
Englewood Cliffs, NJ 07632-9976 Group (1993 to 1997); Director, Hunt Corporation and PACTIV Corporation.
Director, AXA Financial (since December
1996).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------- ----------
A-3
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
DIRECTORS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
W. Edwin Jarmain Director of Equitable Life (since July 1992). President, Jarmain Group Inc.
Jarmain Group Inc. (since 1979); and officer or director of several affiliated companies.
121 King Street West Director, DLJ (since October 1992), AXA Insurance (Canada), Anglo Canada
Suite 2525 General Insurance Company, and AXA Pacific Insurance Company, and Alternate
Toronto, Ontario M5H 3T9 Director, AXA Asia Pacific Holdings Limited. Chairman (non-executive) and
Canada Director, FCA International Ltd. (January 1994 to May 1998). Director of AXA
Financial, Inc. (since July 1992).
- ------------------------------------------------------------------------------------------------------------------------
George T. Lowy Director of Equitable Life (since July 1992). Partner, Cravath, Swaine &
Cravath, Swaine & Moore Moore. Director, Eramet.
825 Eighth Avenue
New York, NY 10019
- ------------------------------------------------------------------------------------------------------------------------
Didier Pineau-Valencienne Director of Equitable Life (since February 1996). Vice Chairman Credit Suisse
Credit Suisse, First Boston First Boston (since March 1999). Chairman and Chief Executive Officer (1981
64, rue de Miromesnel to February 1999)(now Honorary Chairman) Schneider Electric. Member of the
75008 Paris, France 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).
- ------------------------------------------------------------------------------------------------------------------------
George J. Sella, Jr. Director of Equitable Life (since May 1987). Retired Chairman and Chief
P.O. Box 397 Executive Officer of American Cyanamid Company (retired April 1993);
Newton, NJ 07860 previously held other officerships with American Cyanamid. Director of AXA
Financial (since May 1992) and Coulter Pharmaceutical (since May 1987).
- ------------------------------------------------------------------------------------------------------------------------
Peter J. Tobin Director of Equitable Life (since March 1999); Dean of the Peter J. Tobin
St. John's University College of Business Administration, St. John's University (since August
8000 Utopia Parkway 1998); Chief Financial Officer, Chase Manhattan Corp. (1985 to 1997).
Jamaica, NY 11439
- ------------------------------------------------------------------------------------------------------------------------
Dave H. Williams Director of Equitable Life (since March 1991). Chairman (since 1977) and
Alliance Capital Management former Chief Executive Officer (1977 to January 1999), of Alliance, and
Corporation Chairman or Director of numerous subsidiaries and affiliated companies of
1345 Avenue of the Americas Alliance. Senior Executive Vice President of AXA (since January 1997).
New York, NY 10105 Director of AXA Financial (since May 1992).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------- -----------------------------------------------------------------------------------------------------------
A-4
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OFFICER-DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
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).
- ------------------------------------------------------------------------------------------------------------------------
Edward D. Miller 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.
- ------------------------------------------------------------------------------------------------------------------------
Stanley B. Tulin 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.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------- ----------
A-5
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Leon B. Billis 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.
- ------------------------------------------------------------------------------------------------------------------------
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).
- ------------------------------------------------------------------------------------------------------------------------
Harvey Blitz 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.
- ------------------------------------------------------------------------------------------------------------------------
Kevin R. Byrne 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.
- ------------------------------------------------------------------------------------------------------------------------
John A. Caroselli 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).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------- -----------------------------------------------------------------------------------------------------------
A-6
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- ------------------------------------------------------------------------------------------------------------------------
Judy A. Faucett 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).
- ------------------------------------------------------------------------------------------------------------------------
Alvin H. Fenichel 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.
- ------------------------------------------------------------------------------------------------------------------------
Paul J. Flora Senior Vice President and Auditor, Equitable Life. Vice President and
Auditor, AXA Financial.
- ------------------------------------------------------------------------------------------------------------------------
Robert E. Garber 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.
- ------------------------------------------------------------------------------------------------------------------------
Donald R. Kaplan Senior Vice President (since September 1999), Chief Compliance
Officer and Associate General Counsel, Equitable Life. Previously held other
officerships with Equitable Life.
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
Richard J. Matteis 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).
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------- ----------
A-7
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<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).
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------------
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>
<TABLE>
<CAPTION>
- -------- -----------------------------------------------------------------------------------------------------------
A-8
- ------------------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS (continued)
- ------------------------------------------------------------------------------------------------------------------------
<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>
APPENDIX B
- --------------------------------------------------------------- ----------
B-1
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:
Barron's Money Management Letter
Morningstar's Variable Investment Dealers Digest
Annuities/Life National Underwriter
Business Week Pension & Investments
Forbes USA Today
Fortune Investor's Daily
Institutional Investor The New York Times
Money The Wall Street Journal
Kiplinger's Personal Finance The Los Angeles Times
Financial Planning The Chicago Tribune
Investment Advisor
Investment Management Weekly
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
<PAGE>
- ------- --------------------------------------------------------------------
B-2
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 policy's premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long- or short-term debt securities. 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. 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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RATES OF RETURN
- --------------------------------------------------------------------------------------------------------------------
FOR THE FOLLOWING LONG-TERM LONG-TERM INTERMEDIATE- U.S.
PERIODS ENDING COMMON GOVERNMENT CORPORATE TERM GOV'T TREASURY CONSUMER PRICE
DECEMBER 31, 1999 STOCKS BONDS BONDS BONDS BILLS 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 8.03 1.98 2.46 2.08 0.69 0.00
Since 1926
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- ------------------------------------------------------------------- --------
B-3
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>
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
INCENTIVE LIFE COLI
FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE POLICIES
SUPPLEMENT DATED MAY 1, 2000 TO
INCENTIVE LIFE PLUS PROSPECTUS
DATED MAY 1, 2000
(FOR POLICIES DISTRIBUTED BY AXA ADVISORS, LLC)
- --------------------------------------------------------------------------------
This supplement modifies certain information in the prospectus dated May 1, 2000
for Incentive Life Plus flexible premium variable life insurance policies issued
by Equitable Life. Subject to the rules discussed below, Equitable Life will
offer a modified version of its Incentive Life Plus policy (the "Incentive Life
COLI policy") to qualified offerees. This supplement describes the material
differences between the Incentive Life COLI Policy and the Incentive Life Plus
policy described in the prospectus.
Under our current rules, the Incentive Life COLI policy will be offered to
corporations and partnerships that meet the following conditions at issue:
o a minimum of five policies are issued, each for a different eligible insured
person;
o the persons proposed to be insured under the policies are deemed by us
to be "highly compensated" individuals;
o the minimum initial premium under each of the policies must be remitted to us
by the employer;
o the aggregate annualized first year planned periodic premium for all policies
must be at least $150,000; and
o certain undertakings, which we may require in certain situations, have been
submitted to us.
Set forth below are modifications to the discussion in the prospectus which are
appropriate with respect to the Incentive Life COLI policy.
MINIMUM FACE AMOUNT. The minimum face amount for the Incentive Life COLI policy
is $100,000.
FACE AMOUNT INCREASES. You may not request a face amount increase after you
receive your Incentive Life COLI policy.
OPTIONAL RIDER BENEFITS. The optional benefits described in the Incentive Life
Plus prospectus under the heading "Other Benefits You Can Add By Rider" are not
available under the Incentive Life COLI Policy.
DEDUCTIONS FROM PREMIUMS. Rather than deducting the sales charge from premiums,
we will deduct a sales charge from the policy's account value as part of the
regular monthly deduction for each month during the policy's first ten policy
years. The amount deducted each month will depend on the specifics of your
policy.(1) The cumulative amount we deduct under this charge, however, will
never exceed 6% of the premiums you have paid to date.
METHOD OF DEDUCTING MORTALITY AND EXPENSE RISK CHARGE. Rather than deducting
this charge daily from investment performance (as we do for the Incentive Life
Plus policies), we will deduct it from your policy's account value each month as
part of our regular monthly deduction. The charge will be at an effective annual
rate of .60% of the amount you have in the policy's investment options (not
including any amounts we are holding as collateral for policy loans). We have
the right, however, to increase this charge, but not to more than .90%.
CURRENT COST OF INSURANCE CHARGE RATES. Current cost of insurance rates during
the first two years are generally lower than the current cost of insurance rates
for the Incentive Life Plus policy. This relationship between the cost of
insurance rates of the two policies is not guaranteed, however.
The reduction in the current charges that begins in the tenth policy year will
grade up to an annual rate of .60% in the twenty-fifth policy year and later.
This charge reduction (which, except for a difference in rate, is described in
the prospectus under "Deducting
- -------------------------
(1) For no policy, however, will it be higher than $0.78 per $1,000 of the
policy's initial face amount or lower than $0.02 per $1,000.
EVM 166
<PAGE>
2
- --------------------------------------------------------------------------------
Policy Charges--Monthly Cost of Insurance Charge") applies on a current basis
and is not guaranteed.
SURRENDER CHARGES. There is no administrative surrender charge under the
Incentive Life COLI policies.
Subject to certain limits described below that apply during the first 5 years,
the premium surrender charge for the Incentive Life COLI Policies will be the
smaller of (a) 66% of one "target premium"(2) (or less for surrenders after the
ninth year)(3) or (b) the sum of 24% of the amount of premiums you paid in your
policy's first year up to one target premium and 3% of all additional premiums
you pay in the first 15 years.
There is an additional limit that can reduce or eliminate the premium surrender
charge if the Incentive Life COLI policy is surrendered during its first five
years. The percentage reduction is as follows:
- ----------------------------------------------------------
SURRENDER IN PERCENT OF SURRENDER
POLICY YEAR CHARGES WAIVED
- ----------------------------------------------------------
1 100%
2 80%
3 60%
4 40%
5 20%
6 and later 0%
- ----------------------------------------------------------
- -------------------------
(2) The "target premium" is actuarially determined for each policy, based on
that policy's particular characteristics. The "target premium" used in
computing surrender charges may differ from target premiums used for other
purposes under the policies.
(3) Beginning in your policy's tenth year, this amount declines at a constant
rate each month until no surrender charge applies to surrenders made after
the policy's 15th year. The initial amount of the surrender charge in clause
(a) will be set forth in your policy. The lowest initial amount for clause
(a) for any policy would be $2.38 for each $1,000 of initial face amount and
the highest initial amount for clause (a) would be $27.59 per $1,000.
<PAGE>
The Equitable Life Assurance Society
of the United States
ACCOUNTING BENEFIT ENDORSEMENT
SUPPLEMENT DATED MAY 1, 2000 TO
INCENTIVE LIFE AND INCENTIVE LIFE PLUS
PROSPECTUSES DATED MAY 1, 2000
- --------------------------------------------------------------------------------
This supplement modifies certain information in the prospectuses dated May 1,
2000 for the Incentive Life and Incentive Life Plus flexible premium variable
life insurance policies issued by Equitable Life.
Subject to the conditions discussed below, Equitable Life will offer an
Endorsement to your Incentive Life or Incentive Life Plus policy (the
"Endorsement") that will refund or waive all or a portion of certain policy
charges if the policy is surrendered for its net cash surrender value within a
limited time period.
Under our current rules, the Endorsement will be offered where the following
conditions are met:
o a minimum of five policies are issued, each on the life of a different insured
person;
o the persons proposed to be insured are deemed by us to be "highly compensated"
individuals;
o the policies have an average face amount of at least $500,000;
o the initial premium under each of the policies is remitted to Equitable Life
by the employer; and
o the aggregate annualized first year planned periodic premium for all policies
is at least $150,000.
The Endorsement reduces the difference between the premiums paid for the policy
and the amount we will pay you if the policy is surrendered in its early years.
This, in turn, is expected to reduce any charge against the employer's earnings
when the employer accounts for the policy under generally accepted accounting
principles (GAAP). Policyowners must rely on the advice of their own
accountants, however, to determine how the purchase of a policy, as modified by
the Endorsement, will affect their GAAP financial statements.
The Endorsement works by refunding all or a portion of the deductions from
premiums and waiving all or a portion of the surrender charges, if the policy is
surrendered in its early years. The percentage of charges refunded or waived
under the Endorsement are as follows:
- ------------------------------------------------------
PERCENT OF
PREMIUM PERCENT OF
SURRENDER IN DEDUCTION SURRENDER
POLICY YEAR REFUNDED CHARGES WAIVED
- ------------------------------------------------------
1 100% 100%
2 67% 80%
3 33% 60%
4 0% 40%
5 0% 20%
6 and later 0% 0%
- ------------------------------------------------------
For example, if a policy subject to the Endorsement were surrendered in its
second policy year, we would refund:
o 67% of the charges that had been deducted from premiums (i.e., the sales
charge and charge for taxes); and
o 80% of the amount of surrender charges that we otherwise would have imposed
for the surrender (which includes both the premium surrender charges and the
administrative surrender charge).
Once the Endorsement terminates at the end of the fifth policy year, however,
there will be no refund of prior deductions from premiums, and the full amount
of the surrender charges otherwise payable under the policy will be assessed
upon surrender. The Endorsement operates only if the policy is surrendered in
full. There is no waiver of surrender charges or refund of premium deductions if
the policy terminates after a grace period or if the face amount is reduced. Nor
is there a refund of prior premium deductions for partial withdrawals. The
Endorsement does not affect the amount available for borrowing or withdrawing
from your policy. Nor does it affect the calculations to determine whether your
policy will lapse or terminate.
We will not approve Face Amount increases while the Endorsement is in effect.
EVM 163
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
Incentive Life(SM)
Survivorship Incentive Life(SM)
Flexible premium variable life
insurance policies
PROSPECTUS SUPPLEMENT DATED MAY 1, 2000
TO PROSPECTUS DATED MAY 1, 2000
(FOR POLICIES DISTRIBUTED IN NEW YORK
BY EQUITABLE DISTRIBUTORS, INC.)
- --------------------------------------------------------------------------------
THIS SUPPLEMENT IS APPLICABLE TO
NEW YORK POLICIES ONLY.
This supplement modifies certain information contained in the Prospectus you
received for your Equitable variable life insurance policy listed above. You
should keep this supplement with your prospectus. We will send you another
copy of the prospectus, without charge, on written request.
-----------------------------------------------------------------------------
The following replaces the information about our address and phone numbers in
your prospectus under "How to reach us":
-----------------------------------------------------------------------------
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 Client Services
Radio City Station
P.O. Box 808
New York, New York 10101-0808
- ----------------------------------------------------------
BY EXPRESS DELIVERY ONLY:
- ----------------------------------------------------------
at the Street Address for our Administrative Office:
Equitable Life Client Services
135 W. 50th St., 10th Floor
New York, New York 10020
- ----------------------------------------------------------
BY TOLL-FREE PHONE:
- ----------------------------------------------------------
1-888-228-6690
- ----------------------------------------------------------
BY E-MAIL:
- ----------------------------------------------------------
[email protected]
- ----------------------------------------------------------
BY FAX:
- ----------------------------------------------------------
1-212-641-7075
- ----------------------------------------------------------
BY INTERNET:
- ----------------------------------------------------------
Our Web site (www.equitable.com) can also provide you
information. You can also access your policy information
through our Web site by enrolling in EQAccess.
- ----------------------------------------------------------
The rest of the information under "How to reach us" remains unchanged.
- -----------------------------------------------------------------------------
The following replaces the phone numbers in your prospectus under
"Transferring your money among our investment options-Telephone transfers" and
"More information about other matters-Telephone requests":
- -----------------------------------------------------------------------------
TELEPHONE TRANSFERS
The phone number that is available if you are both the policy's insured person
and its owner is 1-888-228-6690 (toll free) from a touch tone phone.
All the other information in these sections of the prospectus remains
unchanged.
----------------------------------------------------------------------------
The following replaces the information in your prospectus under "More
information about other matters-How we market the policies":
----------------------------------------------------------------------------
HOW WE MARKET THE POLICIES
We offer variable life insurance policies (including Incentive 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 these variable life products 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
ProsSupp 7ANY (5/00)
72122
<PAGE>
- ----------------
2
- --------------------------------------------------------------------------------
insurance agents who sell our policies are appointed as agents of Equitable
Life, and are registered representatives 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: 50% of the amount
of the premium you pay in your policy's first year up to a certain amount,
plus 3% of all other premiums you pay in your policy's first year, plus 3% of
all premiums you pay in the second through tenth years. We pay comparable
commissions on the amount of premiums you pay that we deem attributable to any
face amount increase that you request. The agency may be required to return to
us any commissions on premiums that we have refunded to a policyowner.
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
PROSPECTUS SUPPLEMENT DATED MAY 1, 2000
TO THE INCENTIVE LIFE PLUS PROSPECTUS
Incentive Life COLI DATED MAY 1, 2000
Flexible premium variable life
insurance policies (FOR POLICIES DISTRIBUTED BY EQUITABLE
DISTRIBUTORS, INC.)
- --------------------------------------------------------------------------------
This supplement modifies certain information contained in the prospectus dated
May 1, 2000 for Incentive Life Plus flexible premium variable life insurance
policies issued by Equitable Life. Subject to the rules discussed below,
Equitable Life will offer a modified version of its Incentive Life Plus policy
(the "Incentive Life COLI policy") to qualified offerees. This supplement
describes the material differences between the Incentive Life COLI policy and
the Incentive Life Plus policy described in the prospectus. You should keep this
supplement with your prospectus. We will send you another copy of the Incentive
Life Plus prospectus, without charge, on written request.
Under our current rules, the Incentive Life COLI policy will be offered to
corporations and partnerships that meet the following conditions at issue:
o a minimum of five policies are issued, each for a different eligible
insured person;
o the persons proposed to be insured under the policies are deemed by us to
be "highly compensated" individuals;
o the minimum initial premium under each of the policies must be remitted to
us by the employer;
o the aggregate annualized first year planned periodic premium for all
policies must be at least $150,000; and
o certain undertakings, which we may require in certain situations, have been
submitted to us.
-----------------------------------------------------------------------------
Set forth below are modifications to the discussion in the prospectus which
are appropriate with respect to the Incentive Life COLI Policy.
-----------------------------------------------------------------------------
MINIMUM FACE AMOUNT. The minimum face amount for the Incentive Life COLI Policy
is $100,000.
FACE AMOUNT INCREASES. You may not request a face amount increase after you
receive your Incentive Life COLI policy.
OPTIONAL RIDER BENEFITS. The optional benefits described in the Incentive Life
Plus prospectus under the heading "Other benefits you can add by rider" are not
available under the Incentive Life COLI policy.
DEDUCTIONS FROM PREMIUMS. Rather than deducting the sales charge from premiums,
we will deduct a sales charge from the policy's account value as part of the
regular monthly deduction for each month during the policy's first ten policy
years. The amount deducted each month will depend on the specifics of your
policy.(1) The cumulative amount we deduct under this charge, however, will
never exceed 6% of the premiums you have paid to date.
METHOD OF DEDUCTING MORTALITY AND EXPENSE RISK CHARGE. Rather than deducting
this charge daily from investment performance (as we do for the Incentive Life
Plus policies), we will deduct it from your policy's account value each month as
part of our regular monthly deduction. The charge will be at an effective annual
rate of .60% of the amount you have in the policy's investment options (not
including any amounts we are holding as collateral for policy loans). We have
the right, however, to increase this charge, but not to more than .90%.
CURRENT COST OF INSURANCE CHARGE RATES. Current cost of insurance rates during
the first two years are generally lower than the current cost of insurance rates
for the Incentive Life Plus policy. This relationship between the cost of
insurance rates of the two policies is not guaranteed, however.
The reduction in the current charges that begins in the tenth policy year will
grade up to an annual rate of .60% in the twenty-fifth policy year and later.
This charge reduction (which, except for a difference in rate, is described in
the prospectus under "Deducting policy charges--monthly cost of insurance
charge") applies on a current basis and is not guaranteed.
- -------------------
(1) For no policy, however, will it be higher than $0.78 per $1,000 of the
policy's initial face amount or lower than $0.02 per $1,000.
ProsSupp5A(5/00) 72123
<PAGE>
- ----------------
2
- --------------------------------------------------------------------------------
SURRENDER CHARGES. There is no administrative surrender charge under the
Incentive Life COLI policies. Subject to certain limits described below that
apply during the first five years, the premium surrender charge for the
Incentive Life COLI Policies will be the smaller of (a) 66% of one "target
premium"(2) (or less for surrenders after the ninth year)(3) or (b) the sum of
24% of the amount of premiums you paid in your policy's first year up to one
target premium and 3% of all additional premiums you pay in the first 15 years.
There is an additional limit that can reduce or eliminate the premium surrender
charge if the Incentive Life COLI policy is surrendered during its first five
years. The percentage reduction is as follows:
- --------------------------------------
PERCENT OF
SURRENDER SURRENDER
IN POLICY YEAR CHARGES WAIVED
- --------------------------------------
1 100%
2 80%
3 60%
4 40%
5 20%
6 and later 0%
- -------------------------------------
- -------------------
(2) The "target premium" is actuarially determined for each policy, based on
that policy's particular characteristics. The "target premium" used in
computing surrender charges may differ from target premiums used for other
purposes under the policies.
(3) Beginning in your policy's tenth year, this amount declines at a constant
rate each month until no surrender charge applies to surrenders made after the
policy's 15th year. The initial amount of the surrender charge in clause (a)
will be set forth in your policy. The lowest initial amount for clause (a) for
any policy would be $2.38 for each $1,000 of initial face amount and the
highest initial amount for clause (a) would be $27.59 per $1,000.
- -----------------------------------------------------------------------------
The following replaces the information in your prospectus under "More
information about other matters--How we market the policies":
- -----------------------------------------------------------------------------
HOW WE MARKET THE POLICIES
We offer variable life insurance policies (including Incentive 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 these variable life products 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 registered representatives of the
agencies' affiliated broker-dealer. Sales commissions will be paid by Equitable
Life to the agency that 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: 50% of
the amount of the premium you pay in your policy's first year up to a certain
amount, plus 3% of all other premiums you pay in your policy's first year, plus
3% of all premiums you pay in the second through tenth years. The agency may be
required to return to us any commissions on premiums that we have refunded to a
policyowner.
<PAGE>
- --------------------------------------------------------------------------------
-----------------------------------------------------------------------------
The following replaces the information about our address and phone numbers in
your prospectus under "How to reach us":
-----------------------------------------------------------------------------
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 Client Services
Radio City Station
P.O. Box 808
New York, New York 10101-0808
- ---------------------------------------------------------
BY EXPRESS DELIVERY ONLY:
- ---------------------------------------------------------
at the Street Address for our Administrative Office:
Equitable Life Client Services
135 W. 50th St., 10th Floor
New York, New York 10020
- ---------------------------------------------------------
BY TOLL-FREE PHONE:
- ---------------------------------------------------------
1-888-228-6690
- ---------------------------------------------------------
BY E-MAIL:
- ---------------------------------------------------------
[email protected]
- ---------------------------------------------------------
BY FAX:
- ---------------------------------------------------------
1-212-641-7075
- ---------------------------------------------------------
BY INTERNET:
- ---------------------------------------------------------
Our Web site (www.equitable.com) can also provide you
information. You can also access your policy information
through our Web site by enrolling in EQAccess.
- ---------------------------------------------------------
The rest of the information under "How to reach us" remains unchanged.
- --------------------------------------------------------------------------------
The following replaces the phone numbers in your prospectus under
"Transferring your money among our investment options--Telephone transfers"
and "More information about other matters--Telephone requests":
- --------------------------------------------------------------------------------
TELEPHONE TRANSFERS
The phone number that is available if you are both the policy's insured person
and its owner is 1-888-228-6690 (toll free) from a touch-tone phone.
All the other information in these sections of the prospectus remains unchanged.
<PAGE>
Part II
REPRESENTATION REGARDING REASONABLENESS OF
AGGREGATE POLICY FEES AND CHARGES
Equitable Life represents that the fees and charges deducted under the Policies
described in this Registration Statement, in the aggregate, are reasonable in
relation to the services rendered, the expenses to be incurred, and the risks
assumed by Equitable Life under the Policies. Equitable Life bases its
representation on its assessment of all of the facts and circumstances,
including such relevant factors as: the nature and extent of such services,
expenses and risks, the need for Equitable Life to earn a profit, the degree to
which the Policies include innovative features, and regulatory standards for the
grant of exemptive relief under the Investment Company Act of 1940 used prior to
October 1996, including the range of industry practice. This representation
applies to all policies sold pursuant to this Registration Statement, including
those sold on the terms specifically described in the prospectuses contained
herein, or any variations therein, based on supplements, data pages or riders to
any policies or prospectuses, or otherwise.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
Reconciliation and Tie, previously filed with this Registration Statement File
No. 373-17663 on March 1, 1999.
The Incentive Life Prospectus (retail channel) dated May 1, 2000, consisting of
151 pages.
The Incentive Life Prospectus (core version--wholesale channel) dated May 1,
2000, consisting of 123 pages.
The Incentive Life Prospectus (Merrill Lynch/First Union version--wholesale
channel) dated May 1, 2000, consisting of 135 pages.
The Incentive Life Plus Prospectus (retail channel) dated May 1, 2000,
consisting of 153 pages.
Supplement (in-force; retail channel) dated May 1, 2000, relating to Incentive
Life Plus Prospectuses, consisting of 113 pages.
Supplement (in-force; retail channel) dated May 1, 2000, relating to Incentive
Life Prospectuses, consisting of 113 pages.
Supplement (in-force; wholesale channel) dated May 1, 2000, relating to
Incentive Life and Incentive Life Plus Prospectuses, consisting of 85 pages.
Supplement (wholesale channel) dated May 1, 2000 to Incentive Life Plus
Prospectus dated October 18, 1999, consisting of 85 pages.
Supplement (Incentive Life COLI--retail channel) dated May 1, 2000, consisting
of 2 pages.
Supplement (Accounting Benefit Rider) dated May 1, 2000, consisting of 1 page.
Supplement (for use in New York; wholesale channel) dated May 1, 2000, to the
Incentive Life Prospectus (retail channel) dated May 1, 2000, consisting of 2
pages.
Supplement (Incentive Life COLI--wholesale channel) dated May 1, 2000,
consisting of 2 pages.
Representation regarding reasonableness of aggregate policy fees and charges.
Undertaking to file reports, previously filed with this Registration Statement
File No. 333-17663 on December 11, 1996.
Undertaking pursuant to Rule 484(b)(1) under the Securities Act of 1933,
previously filed with this Registration Statement File No. 333-17663 on December
11, 1996.
The signatures.
Written Consents of the following persons:
Robin M. Wagner, Vice President and Counsel of Equitable Life. (See exhibit
2(a)(vi)).
Independent Public Accountants (See exhibit 6).
The following exhibits: Exhibits required by Article IX, paragraph A of Form
N-8B-2:
1-A(1)(a)(i) Certified resolution re Authority to Market
Variable Life Insurance and Establish Separate
Accounts, previously filed with this
Registration Statement File No. 333-17663 on
December 11, 1996.
II-1
<PAGE>
<TABLE>
<S> <C> <C>
1-A(2) Inapplicable.
1-A(3)(a) See Exhibit 1-A(8).
1-A(3)(b) Broker-Dealer and General Agent Sales Agreement, previously filed with this
Registration Statement File No. 333-17663 on December 11, 1996.
1-A(3)(c) See Exhibit 1-A(8)(i).
1-A(4) Inapplicable.
+ 1-A(5)(a)(i) Flexible Premium Variable Life Insurance Policy
(94-300) (Incentive Life Plus) (Equitable Variable), previously
filed with this Registration Statement File No. 333-17663
on December 11, 1996.
+ 1-A(5)(a)(ii) Flexible Premium Variable Life Insurance Policy
(94-300) (Incentive Life Plus) (Equitable), previously filed with this Registration
Statement File No. 333-17663 on December 11, 1996.
+ 1-A(5)(a)(iii) Flexible Premium Variable Life Insurance Policy
(95-300) (Corporate Incentive Life) (Equitable Variable), previously filed with this
Registration Statement File No. 333-17663 on December 11, 1996.
+ 1-A(5)(a)(iv) Flexible Premium Variable Life Insurance Policy
(95-300) (Corporate Incentive Life) (Equitable), previously filed with this
Registration Statement File No. 333-17663 on December 11, 1996.
1-A(5)(a)(v) Flexible Premium Variable Life Insurance Policy
(85-300) (Equitable Variable), previously filed with this Registration Statement File
No. 333-17663 on December 11, 1996.
1-A(5)(a)(vi) Flexible Premium Variable Life Insurance Policy (99-300), previously filed with this
Registration Statement File No. 333-17663 on March 1, 1999.
1-A(5)(b) Name Change Endorsement (S.97-1), previously filed with this
Registration Statement File No. 333-17663 on December 11, 1996.
+ 1-A(5)(c) Option to Purchase Additional Insurance Rider
(R94-204) (Equitable Variable), previously filed with this
Registration Statement File No. 333-17663 on December 11, 1996.
+ 1-A(5)(d) Option to Purchase Additional Insurance Rider
(R94-204) (Equitable), previously filed with
this Registration Statement File No. 333-17663
on December 11, 1996.
+ 1-A(5)(e) Substitution of Insured Rider (R94-212) (Equitable Variable),
previously filed with this Registration Statement File No. 333-17663
on December 11, 1996.
+ 1-A(5)(f) Substitution of Insured Rider (R94-212) (Equitable), previously filed with this
Registration Statement File No. 333-17663 on December 11, 1996.
+ 1-A(5)(g) Renewable Term Insurance Rider on the Insured
(R94-215) (Equitable Variable), previously filed with this Registration Statement File
No. 333-17663 on December 11, 1996.
+ 1-A(5)(h) Renewable Term Insurance Rider on the Insured
(R94-215) (Equitable), previously filed with
this Registration Statement File No. 333-17663
on December 11, 1996.
+ 1-A(5)(i) Disability Rider - Waiver of Monthly Deductions
(R94-216) (Equitable Variable), previously filed with this
Registration Statement File No. 333-17663 on December 11, 1996.
+ 1-A(5)(j) Disability Rider - Waiver of Monthly Deductions
(R94-216) (Equitable), previously filed with this Registration
Statement File No. 333-17663 on December 11, 1996.
+ 1-A(5)(k) Disability Rider - Waiver of Premiums (R94-216A) (Equitable Variable), previously
filed with this Registration Statement File No. 333-17663 on December 11, 1996.
+ 1-A(5)(l) Disability Rider - Waiver of Premiums (R94-216A) (Equitable), previously filed with
this Registration Statement File No. 333-17663 on December 11, 1996.
</TABLE>
- -----------------------
+State variations not included
II-2
<PAGE>
<TABLE>
<S> <C> <C>
+ 1-A(5)(m) Yearly Renewable Term Insurance Rider on the Insured (R94-220) (Equitable
Variable), previously filed with this Registration Statement File No. 333-17663 on
December 11, 1996.
+ 1-A(5)(n) Yearly Renewable Term Insurance Rider on the Insured (R94-220) (Equitable),
previously filed with this Registration Statement File No. 333-17663 on December 11,
1996.
1-A(5)(o) Accelerated Death Benefit Rider (R94-102) (Equitable Variable), previously filed with
this Registration Statement File No. 333-17663 on December 11, 1996.
1-A(5)(p) Accelerated Death Benefit Rider (R94-102) (Equitable), previously filed with this
Registration Statement File No. 333-17663 on December 11, 1996.
1-A(5)(q) Designated Insured Option Rider (R91-107) (Equitable Variable), previously filed
with this Registration Statement File No. 333-17663 on December 11, 1996.
1-A(5)(r) Designated Insured Option Rider (R91-107) (Equitable), previously filed with this
Registration Statement File No. 333-17663 on December 11, 1996.
1-A(5)(s) Accounting Benefit Rider (S.94-118) (Equitable Variable), previously filed with this
Registration Statement File No. 333-17663 on December 11, 1996.
1-A(5)(t) Accounting Benefit Rider (S.94-118) (Equitable), previously filed with this
Registration Statement File No. 333-17663 on December 11, 1996.
1-A(5)(u) Limitation on Amount of Insurance Rider (R85-406) (Equitable Variable), previously
filed with this Registration Statement File No. 333-17663 on December 11, 1996.
1-A(5)(v) Exchange Privilege Rider (R85-405) (for use with Policy 85-300) (Equitable Variable),
previously filed with this Registration Statement File No. 333-17663 on December 11,
1996.
1-A(5)(w) Disability Rider - Waiver of Monthly Deductions (R85-408) (for use with Policy 85-300)
(Equitable Variable), previously filed with this Registration Statement File No.
333-17663 on December 11, 1996.
1-A(5)(x) Pro Rata Surrender Charge Endorsement (S.87-289) (for use with Policy 85-300)
(Equitable Variable), previously filed with this Registration Statement File No.
333-17663 on December 11, 1996.
1-A(5)(y) Asset Allocation Endorsement (S.89-301) (for use with Policy 85-300) (Equitable
Variable), previously filed with this Registration Statement File No. 333-17663 on
December 11, 1996.
1-A(5)(z) Investment Options Rider and Guaranteed Interest Division Transfer Rider
(R.89-303)(for use with Policy No. 85-300) (Equitable Variable), previously filed with
this Registration Statement File No. 333-17663 on December 11, 1996.
1-A(5)(z)(ii) Face Amount Increase Endorsement (S.99-30), previously filed with this Registration
Statement File No. 333-17663 on March 1, 1999.
1-A(5)(z)(iii) Table of Guaranteed Payments Endorsement (S.99-33), previously filed with this
Registration Statement File No. 333-17663 on March 1, 1999.
1-A(5)(z)(iv) Form of Paid Up Death Benefit Guarantee Endorsement (S.99-32), previously filed with
this Registration Statement File No. 333-17663 on March 1, 1999.
1-A(5)(z)(v) Form of Enhanced Death Benefit Guarantee Rider (R99-100), previously filed with this
Registration Statement File No. 333-17663 on March 1, 1999.
1-A(6)(a) Declaration and Charter of Equitable, as amended January 1, 1997, previously filed
with this Registration Statement File No. 333-17663 on April 30, 1997.
1-A(6)(b) By-Laws of Equitable, as amended November 21, 1996, previously filed with this
Registration Statement File No. 333-17663 on April 30, 1997.
1-A(7) Inapplicable.
</TABLE>
- -----------------------
+State variations not included
II-3
<PAGE>
<TABLE>
<S> <C>
1-A(8) Distribution and Servicing Agreement among EQ Financial Consultants, Inc. (now AXA
Advisors, LLC), Equitable and Equitable Variable dated as of May 1, 1994, previously
filed with this Registration Statement File No. 333-17663 on December 11, 1996.
1-A(8)(i) Schedule of Commissions, previously filed with this Registration Statement File No.
333-17663 on December 11, 1996.
1-A(9)(a) Agreement and Plan of Merger of Equitable Variable with and into Equitable dated
September 19, 1996, previously filed with this Registration Statement File No.
333-17663 on December 11, 1996.
1-A(9)(b) Form of Participation Agreement among EQ Advisors Trust, Equitable, Equitable
Distributors, Inc. and EQ Financial Consultants, Inc. (now AXA Advisors, LLC) incorporated
by reference to the Registration Statement of EQ Advisors Trust on Form N-1A (File Nos.
333-17217 and 811-07953).
1-A(10)(a) Application EV4-200Y (Equitable Variable), previously filed with this Registration
Statement File No. 333-17663 on December 11, 1996.
1-A(10)(b) Application EV4-200Y (Equitable), previously filed with this Registration Statement
File No. 333-17663 on December 11, 1996.
2(a)(i) Opinion and Consent of Mary P. Breen, Vice President and Associate General Counsel
of Equitable, previously filed with this Registration Statement File No. 333-17663
on December 11, 1996.
2(a)(ii) Opinion and Consent of Mary P. Breen, Vice President and Associate General Counsel
of Equitable, previously filed with this Registration Statement File No. 333-17663
on April 30, 1997.
2(a)(iii) Opinion and Consent of William Schor, Vice President and Associate General Counsel of
Equitable, previously filed with this Registration Statement, File No. 333-17663,
filed April 30, 1999.
2(a)(iv) Opinion and Consent of William Schor, Vice President and Associate General Counsel of
Equitable, previously filed with this Registration Statement, File No. 333-17663 on
July 26, 1999.
2(a)(v) Opinion and Consent of William Schor, Vice President and Associate General Counsel of
Equitable, previously filed with this Registration Statement, File No. 333-17663 on
August 30, 1999.
2(a)(vi) Opinion and Consent of Robin M. Wagner, Vice President and Counsel of Equitable.
2(b)(i) Opinion and Consent of Barbara Fraser, F.S.A., M.A.A.A., Vice President of Equitable,
previously filed with this Registration Statement File No. 333-17663 on December 11,
1996.
2(b)(ii) Consent of Barbara Fraser, F.S.A., M.A.A.A., Vice President of Equitable relating to
Exhibit 2(b)(i), previously filed with this Registration Statement File No. 333-17663
on December 11, 1996.
2(b)(iii) Opinion and Consent of Barbara Fraser, F.S.A., M.A.A.A., Vice President of Equitable,
previously filed with this Registration Statement File No. 333-17663 on December 11,
1996.
2(b)(iv) Opinion and Consent of Barbara Fraser, F.S.A., M.A.A.A., Vice President of Equitable,
previously filed with this Registration Statement File No. 333-17663 on April 30,
1997.
2(b)(v) Opinion and Consent of Barbara Fraser, F.S.A., M.A.A.A., Vice President of Equitable,
previously filed with this Registration Statement File No. 333-17663 on May 1, 1998.
2(b)(vi) Opinion and Consent of Barbara Fraser, F.S.A., M.A.A.A., Vice President of Equitable,
previously filed with this Registration Statement, File No. 333-17663, on April 30, 1999.
3 Inapplicable.
4 Inapplicable.
6 Consent of Independent Public Accountants.
7(a) Powers-of-Attorney.
II-4
</TABLE>
<PAGE>
<TABLE>
<S> <C>
8 Description of Equitable's Issuance,
Transfer and Redemption Procedures for Flexible
Premium Policies pursuant to Rule 6e-3(T)(b)(12)(iii)
under the Investment Company Act of 1940, previously
filed with this Registration Statement File No. 333-17663
on December 11, 1996.
9(a) Illustration of Policy Benefits - Incentive Life, previously filed with this Registration
Statement, File No. 333-17663, on April 30, 1999.
9(b) Illustration of Policy Benefits - Incentive Life Plus, previously filed with this Registration
Statement, File No. 333-17663, on April 30, 1999.
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it meets all the requirements for effectiveness of this amendment
to the Registration Statement pursuant to paragraph (b) of Rule 485 under the
Securities Act of 1933 and has duly caused this amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, and its seal to be hereunto affixed and attested, in the City and
State of New York, on the 28th day of April, 2000.
SEPARATE ACCOUNT FP OF THE EQUITABLE
LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(REGISTRANT)
[SEAL] By: THE EQUITABLE LIFE
ASSURANCE SOCIETY OF
THE UNITED STATES,
(DEPOSITOR)
By: /s/ Mildred M. Oliver
------------------------------
(Mildred M. Oliver)
Vice President
Attest: /s/ Linda Galasso
------------------------
(Linda Galasso)
Assistant Secretary
April 28, 2000
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Depositor
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City and State of
New York, on the 28th day of April, 2000.
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
(DEPOSITOR)
By: /s/ Mildred M. Oliver
--------------------------------
(Mildred M. Oliver)
Vice President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
PRINCIPAL EXECUTIVE OFFICERS:
*Edward D. Miller Chairman of the Board and
Chief Executive Officer
*Michael Hegarty President and Chief Operating Officer
PRINCIPAL FINANCIAL OFFICER:
*Stanley B. Tulin Vice Chairman of the Board
and Chief Financial Officer
PRINCIPAL ACCOUNTING OFFICER:
*Alvin H. Fenichel Senior Vice President and Controller
*DIRECTORS:
Francoise Colloc'h Donald J. Greene George T. Lowy
Henri de Castries John T. Hartley Edward D. Miller
Joseph L. Dionne John H.F. Haskell, Jr. Didier Pineau-Valencienne
Denis Duverne Michael Hegarty George J. Sella, Jr.
Jean-Rene Fourtou Mary R. (Nina) Henderson Peter J. Tobin
Norman C. Francis W. Edwin Jarmain Stanley B. Tulin
Dave H. Williams
*By: /s/ Mildred M. Oliver
-----------------------
(Mildred M. Oliver)
Attorney-in-Fact
April 28, 2000
II-7
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. TAG VALUE
- ----------- ---------
2(a)(vi) Opinion and Consent of Counsel EX-99.29vi
6 Consent of Independent Public Accountants. EX-99.6
7(a) Powers of Attorney EX-99.7a
II-8
Robin M. Wagner
Vice President
and Counsel
(212) 314-3962
Fax: (212) 707-7785
(EQUITABLE -- MEMBER OF THE GLOBAL AXA GROUP LOGO)
LAW DEPARTMENT
April 27, 2000
The Equitable Life Assurance Society
of the United States
1290 Avenue of the Americas
New York, NY 10104
Dear Sirs:
This opinion is furnished in connection with the filing of a Registration
Statement on Form S-6, File No. 333-17663 ("Registration Statement") of Separate
Account FP ("Separate Account FP") of The Equitable Life Assurance Society of
the United States ("Equitable"). The Registration Statement covers an indefinite
number of units of interest in Separate Account FP ("Units") funding Incentive
Life Plus (policy form No. 94-300), Corporate Incentive Life (policy form No.
95-300), and Incentive Life (policy form No. 99-300), individual flexible
premium variable life insurance policies ("Policies") issued by The Equitable
Life Assurance Society of the United States. Net premiums received under the
Policies are allocated by Equitable to Separate Account FP to the extent
directed by owners of the Policies. Net premiums under other variable life
insurance policies issued by Equitable may also be allocated to Separate Account
FP.
The Policies are designed to provide life insurance protection and are to
be offered in the manner described in the Prospectus and the prospectus
supplements included in the Registration Statement. The Policies will be sold
only in jurisdictions authorizing such sales.
I have examined all such corporate records of Equitable and such other
documents and laws as I consider apropriate as a basis for the opinion
hereinafter expressed. On the basis of such examination, it is my opinion that:
1. Equitable is a corporation duly organized and validly existing under the
laws of the State of New York.
2. Separate Account FP was duly established and is maintained by Equitable
pursuant to the laws of the State of New York, under which income, gains and
losses, whether or not realized, from assets allocated to Separate Account FP,
are, in accordance with the Policies, credited to or charged against Separate
Account FP without regard to other income, gains or losses of Equitable.
3. Assets allocated to Separate Account FP will be owned by Equitable;
Equitable is not a trustee with respect thereto. The Policies provide that the
portion of the assets of Separate Account FP equal to the reserves and other
Policy liabilities with respect to Separate Account FP will not be chargeable
with liabilities arising out of any other business Equitable may conduct.
Equitable reserves the right to transfer assets of Separate Account FP in excess
of such reserves and other Policy liabilities to the general account of
Equitable.
4. When issued and sold as described above, the Policies (including any
Units duly credited thereunder) will be duly authorized and will constitute
validly issued and binding obligations of Equitable in accordance with their
terms.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Robin M. Wagner
-------------------
Robin M. Wagner
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
1290 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10104
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectuses and Prospectus Supplements in
this Post-Effective Amendment No. 8 to the Registration Statement No. 333-17663
on Form S-6 of (1) our report dated February 1, 2000 relating to the financial
statements of The Equitable Life Assurance Society of the United States Separate
Account FP for the year ended December 31, 1999, and (2) our report dated
February 1, 2000 relating to the consolidated financial statements of The
Equitable Life Assurance Society of the United States for the year ended
December 31, 1999, which reports appear in such Prospectuses and Prospectus
Supplements. We also consent to the reference to us under the heading "Financial
Statements of Separate Account FP and Equitable Life" in the Prospectuses and
"Financial Statements" in the Prospectus Supplements.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
New York, New York
April 27, 2000
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ Francoise Colloc'h
----------------------------------
Francoise Colloc'h
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ Norman C. Francis
----------------------------------
Norman C. Francis
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ Michael Hegarty
----------------------------------
Michael Hegarty
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ Edward Miller
----------------------------------
Edward Miller
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ Denis Duverne
----------------------------------
Denis Duverne
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ Donald J. Greene
----------------------------------
Donald J. Greene
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ George T. Lowy
----------------------------------
George T. Lowy
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ Peter J. Tobin
----------------------------------
Peter J. Tobin
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ Joseph L. Dionne
----------------------------------
Joseph L. Dionne
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ John T. Hartley
----------------------------------
John T. Hartley
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ John H.F. Haskell, Jr.
----------------------------------
John H.F. Haskell, Jr.
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
5th day of April, 2000.
/s/ Dave H. Williams
----------------------------------
Dave H. Williams
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ Mary B. (Nina) Henderson
----------------------------------
Mary B. (Nina) Henderson
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
4th day of April, 2000.
/s/ George J. Sella, Jr.
----------------------------------
George J. Sella, Jr.
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ W. Edwin Jarmain
----------------------------------
W. Edwin Jarmain
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
13th day of April, 2000.
/s/ Alvin H. Fenichel
----------------------------------
Alvin H. Fenichel
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
13th day of April, 2000.
/s/ Jean-Rene Fourtou
----------------------------------
Jean-Rene Fourtou
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
23rd day of March, 2000.
/s/ Stanley B. Tulin
----------------------------------
Stanley B. Tulin
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
4th day of April, 2000.
/s/ Henri de Castries
----------------------------------
Henri de Castries
Rev. 2/2000
122055
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
Director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints R. Lee Wilson, Anne M. Katcher, Stuart L. Faust, Nik Malvania, Pauline
Sherman, Naomi J. Weinstein, Mary A. Hyland, Maureen K. Wolfson, Mildred Oliver,
Robin Wagner and each of them (with full power to each of them to act alone),
his or her true and lawful attorney-in-fact and agent, with full power of
substitution to each, for him or her and on his or her behalf and in his or her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any
insurance or annuity contracts or other agreements providing for allocation of
amounts to Separate Accounts of the Company, and related units or interests in
Separate Accounts: registration statements on any form or forms under the
Securities Act of 1933 and the Investment Company Act of 1940 and annual reports
on any form or forms under the Securities Exchange Act of 1934, and any and all
amendments and supplements thereto, with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his, her or their substitutes being empowered to act with or
without the others, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
10th day of April, 2000.
/s/ Didier Pineau Valencienne
----------------------------------
Didier Pineau Valencienne
Rev. 2/2000
122055
