<PAGE>
Registration No. 2-74667
Registration No.811-3301
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No.
Post-Effective Amendment No. 29 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 31 [X]
(Check appropriate box or boxes)
--------------------------------
SEPARATE ACCOUNT NO. 301
of
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(Exact Name of Registrant)
--------------------------
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(Name of Depositor)
1290 Avenue of the Americas, New York, New York 10104
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: 1-(800) 248-2138
--------------------------
MARY P. BREEN
VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL
The Equitable Life Assurance Society of the United States
1290 Avenue of the Americas, New York, New York 10104
(Names and Addresses of Agents for Service)
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Please send copies of all communications to:
PETER E. PANARITES
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W., Suite 825
Washington, D.C. 20036
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<PAGE>
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective (check
appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485.
[X] On May 1, 1998 pursuant to paragraph (b) of Rule 485.
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
[ ] On (date) pursuant to paragraph (a)(1) of Rule 485.
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485.
[ ] On (date) pursuant to paragraph (a)(3) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for
previously filed post-effective amendment.
Title of Securities Being Registered:
Units of interest in separate account under variable annuity contracts.
-----------------------------
<PAGE>
CROSS REFERENCE SHEET
SHOWING LOCATION OF INFORMATION IN PROSPECTUS
---------------------------------------------
FORM N-4 ITEM PROSPECTUS CAPTION
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1. Cover Page Cover Page
2. Definitions Summary - Questions and Answers
3. Synopsis Summary - Questions and Answers
4. Condensed Financial Certificate
Information Provisions - Investment of
Contributions in the Investment
Divisions
5. General Description of Equitable; Our Separate
Registrant, Depositor and Account
Portfolio Companies
6. Deductions and Expenses Deductions and Charges
7. General Description of Certificate Provisions
Variable Annuity Contracts
8. Annuity Period Certificate Provisions
9. Death Benefit Certificate Provisions - Death and
Disability Benefits
10. Purchases and Contract Value Certificate Provisions
11. Redemptions Certificate Provisions -
Retirement Benefits
12. Taxes Federal Income Tax Aspects of the
Retirement Programs
13. Legal Proceedings Not Applicable
14. Table of Contents of the Table of Contents of the
Statement of Additional Statement of Additional
Information Information
<PAGE>
CROSS REFERENCE SHEET
SHOWING LOCATION OF INFORMATION
IN STATEMENT OF ADDITIONAL INFORMATION
--------------------------------------
STATEMENT OF ADDITIONAL
FORM N-4 ITEM INFORMATION CAPTION
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15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information Part 3: Reorganization
18. Services Not Applicable
19. Purchase of Certificate
Securities Being Provisions - Transfers
Offered Among the Investment Options in
the Prospectus
20. Underwriters Our Separate Account - the Trust
in the Prospectus
21. Calculation of Comparative Investment
Performance Data Performance in the Prospectus
22. Annuity Payments Not Applicable
23. Financial Statements Financial Statements
<PAGE>
PROSPECTUS
CERTIFICATES AND GROUP ANNUITY CONTRACTS
FUNDED THROUGH THE INVESTMENT FUNDS OF
SEPARATE ACCOUNT NO. 301
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
1290 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10104
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This prospectus describes certificates and group annuity contracts which are
designed for use in connection with IRAs, TSAs, SEPs and SIMPLEs, all
qualifying for favorable tax treatment under the Internal Revenue Code of 1986,
as amended.
Contributions may be put into one or more of twelve Investment Options:
SEPARATE ACCOUNT INVESTMENT FUNDS GENERAL ACCOUNT OPTIONS
o Alliance Money Market o 1 Year Guaranteed
o Alliance Intermediate Government Securities Rate Account
o Alliance High Yield o 3 Year Guaranteed
o Alliance Balanced the Rate Account
o Alliance Growth & Income
o Alliance Common Stock
o Alliance Aggressive Stock
o Alliance Global
o Alliance Conservative Investors
o Alliance Growth Investors
EFFECTIVE ON OR ABOUT JULY 1, 1998, THE FOLLOWING ADDITIONAL INVESTMENT FUNDS
WILL BE AVAILABLE AS INVESTMENT OPTIONS:
o MFS Emerging Growth Companies
o BT Equity 500 Index
o Lazard Small Cap Value
o T. Rowe Price International Stock
The Alliance Money Market, Alliance Intermediate Government Securities,
Alliance High Yield, Alliance Balanced, Alliance Growth & Income, Alliance
Common Stock, Alliance Aggressive Stock, Alliance Global, Alliance Conservative
Investors and Alliance Growth Investors Funds each invest in Class IA shares of
a corresponding portfolio (PORTFOLIO) of The Hudson River Trust, a mutual fund
that invests the assets of separate accounts of insurance companies. The
prospectus for The Hudson River Trust, which is attached to this prospectus,
describes the investment objectives, policies and risks of this Trust's
Portfolios.
The MFS Emerging Growth Companies, BT Equity 500 Index, Lazard Small Cap Value
and T. Rowe Price International Stock Funds each invest in Class IB shares of a
corresponding Portfolio (PORTFOLIO) of the EQ Advisors Trust, a mutual fund
that invests the assets of separate accounts of insurance companies. The
prospectus for the EQ Advisors Trust, which is attached to this prospectus,
describes the investment objectives, policies and risks of this Trust's
Portfolio.
This prospectus provides information that you should know before investing,
and should be read and retained for future reference. This prospectus is not
valid unless it is attached to a current prospectus for each of The Hudson
River Trust and EQ Advisors Trust (collectively the TRUSTS), which you should
also read carefully, and retain for future reference.
For further information and assistance, you should contact our Administrative
Office at P.O. Box 2468, G.P.O., New York, New York 10116. You may also call
the following toll-free number: 1-800-248-2138.
A Statement of Additional Information (SAI), dated May 1, 1998, has been filed
with Securities and Exchange Commission. The SAI has been incorporated by
reference into this prospectus. The SAI is available at no charge by writing to
the above address or by calling the telephone number listed above. The table of
contents to the SAI appears on page 30 of this prospectus. You may also request
an SAI for the Trust.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1998.
Copyright 1998 The Equitable Life Assurance Society of the United States. All
rights reserved.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
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PAGE
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<S> <C>
SUMMARY--QUESTIONS AND ANSWERS ............................................... 3
Fee Tables .................................................................. 6
Example ..................................................................... 8
Summary of Unit Values ...................................................... 9
EQUITABLE LIFE ............................................................... 9
OUR SEPARATE ACCOUNT ......................................................... 9
The Trusts .................................................................. 10
The Hudson River Trust's Manager and Investment Adviser...................... 11
EQ Advisors Trust's Manager.................................................. 11
EQ Advisors Trust's Investment Advisers...................................... 12
Investment Policies of The Hudson River Trust Portfolios and the EQ Advisors
Trust Portfolios............................................................ 14
CERTIFICATE PROVISIONS ....................................................... 15
Participants, Certificate Owners and Annuitants ............................. 15
Contributions ............................................................... 15
Investment of Contributions in the Investment Funds ......................... 16
Guaranteed Rate Accounts .................................................... 17
Withdrawals ................................................................. 17
Transfers Among the Investment Options ...................................... 18
Death and Disability Benefits ............................................... 19
Retirement Benefits ......................................................... 19
Revocation Rights ........................................................... 21
Year 2000 Progress........................................................... 21
Miscellaneous ............................................................... 21
COMPARATIVE INVESTMENT PERFORMANCE ........................................... 22
Annual Percent Changes in Unit Value ........................................ 23
Annualized Rates of Return .................................................. 24
FEDERAL INCOME TAX ASPECTS OF THE RETIREMENT PROGRAMS ........................ 25
Tax Changes.................................................................. 25
Tax-Sheltered Annuity Arrangements (TSAs) ................................... 25
Individual Retirement Annuities (Regular and Roth IRAs) ..................... 25
IRAs Under Simplified Employee Pension Plans (SEPs and SIMPLEs) ............ 25
DEDUCTIONS AND CHARGES ....................................................... 26
Participant Service Charge .................................................. 26
Administration Charge ....................................................... 26
Other Expenses .............................................................. 26
Deductions and Expenses of The Hudson River Trust and EQ Advisors Trust .... 26
Expense Limitations ......................................................... 26
Fixed Annuity Administrative Charge ......................................... 27
SEP/SIMPLE Enrollment Fee ................................................... 27
Guaranteed Rate Account Premature Withdrawal Charge ......................... 27
Charge for Premium or Other Applicable Taxes ................................ 27
VOTING RIGHTS ................................................................ 27
The Hudson River Trust and EQ Advisors Trust Voting Rights .................. 27
How We Determine a Participant's Voting Shares .............................. 28
Voting Rights of Others ..................................................... 28
Separate Account Voting Rights .............................................. 28
Changes in Applicable Law ................................................... 28
REPORTS ...................................................................... 29
LEGAL PROCEEDINGS............................................................. 29
REGULATION ................................................................... 29
ADDITIONAL INFORMATION ....................................................... 29
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION ..................... 29
</TABLE>
2
<PAGE>
SUMMARY--QUESTIONS
AND ANSWERS
WHAT RETIREMENT PROGRAMS ARE OFFERED UNDER THE CERTIFICATES AND CONTRACTS?
In this prospectus we describe group annuity contracts and certificates
issued under group annuity contracts that are used in connection with
retirement programs that qualify for Federal tax benefits under the Internal
Revenue Code of 1986, as amended (the CODE). Individuals who make
contributions or for whom contributions are made are Participants. We offer
IRAs, TSAs, SEPs and SIMPLEs under a group annuity contract between Equitable
Life and the Chase Manhattan Bank, N.A. (CHASE) as the Contract Holder.
Individual certificates are issued to each Participant to describe the
Participant's interest under the contract. In summary, the retirement
programs we offer are:
o Individual retirement annuities (IRAS), which can be either REGULAR IRAS or
ROTH IRAS. A Regular IRA is generally purchased with pre-tax contributions
and the distributions are treated as taxable. A Roth IRA is an IRA which
must be funded on an after-tax basis, the distributions from which may be
tax-free under specified circumstances. The tax aspects of both kinds of
IRAs are discussed in more detail in the SAI.
o Tax-sheltered annuity arrangements (TSAS) which qualify for favorable tax
treatment under Code Section 403(b) for employees of tax-exempt
organizations and public schools.
o Simplified employee pension plans (SEPS) sponsored by sole proprietorships,
partnerships and corporations. Contributions for each eligible employee are
made by an employer to a Regular IRA certificate (SEP-IRA) issued to the
employee. Each individual Participant covered by the SEP is the owner and
annuitant of the Regular IRA certificate set up on his or her behalf.
o Savings Incentive Match Plan for Employees (SIMPLE) plans sponsored by sole
proprietorships, partnerships and corporations. Under a SIMPLE plan, an
employee can elect to have the employer contribute part of his or her pay
to a special form of IRA called a "SIMPLE IRA." In addition, the employer
is required to make an additional contribution, either matching or
non-elective.
For more information about these tax favored programs, see "Federal Income
Tax Aspects of the Retirement Programs" and, in the SAI, "Part 1--Federal Tax
Considerations of the Retirement Programs."
WHAT ARE THE AVAILABLE INVESTMENT
OPTIONS?
Twelve options are available for the investment of contributions. The ten
INVESTMENT FUNDS of SEPARATE ACCOUNT No. 301 are the Alliance Money Market,
Alliance Intermediate Government Securities, Alliance High Yield, Alliance
Balanced, Alliance Growth & Income, Alliance Common Stock, Alliance
Aggressive Stock, Alliance Global, Alliance Conservative Investors and
Alliance Growth Investors Funds. The Alliance Conservative Investors and
Alliance Growth Investors Funds are Asset Allocation Options. Additionally, a
one-year and a three-year Guaranteed Rate Account, which are part of our
General Account, are available.
Effective on or about July 1, 1998, the following four additional INVESTMENT
FUNDS will be available for the investment of contributions: MFS Emerging
Growth Companies, BT Equity 500 Index, Lazard Small Cap Value and T. Rowe
Price International Stock Funds.
Each of the Investment Funds invests in a corresponding Portfolio of The
Hudson River Trust or EQ Advisors Trust. Collectively, the fourteen
Investment Funds and the Guaranteed Rate Accounts are called the "INVESTMENT
OPTIONS" or "OPTIONS." The availability of Investment Options to Participants
may be limited in some cases. Participants should check with their employers
or plan trustees.
HOW ARE CONTRIBUTIONS MADE AND
INVESTED?
Contributions should be made by check or money order payable to Equitable
Life. For
3
<PAGE>
details regarding acceptable forms of payments, See "Certificate Provisions--
Contributions--Frequency and Amount." In the case of a TSA, SEP or SIMPLE
IRA, the employer makes contributions on the Participant's behalf. An
employer may arrange to have contributions deducted from a Participant's
salary and in these cases will automatically transfer those amounts deducted
to us for investment as directed by the Participant. In the case of a Regular
IRA or a Roth IRA certificate the Participant makes contributions to us
directly (by completing the appropriate form and enclosing the payment).
Contributions will be allocated to the Investment Options pursuant to
instructions we receive from the Participant. See "Certificate
Provisions--Investment of Contributions in the Investment Funds." In the SAI,
see "Part 2--The Guaranteed Rate Accounts" for details.
IS THERE A MINIMUM CONTRIBUTION
AMOUNT?
There is no minimum contribution amount; however, if a Participant is
contributing through an employer, the employer may have a minimum. See
"Certificate Provisions--Contributions."
CAN THE ALLOCATION OF CONTRIBUTIONS
AMONG THE INVESTMENT OPTIONS BE
CHANGED?
The Participant may change the allocation of contributions among the
Investment Options as often as the Participant wishes by telephone. See
"Certificate Provisions--Contributions." Changing the allocation of
contributions does not cause a reallocation of amounts previously invested.
CAN AMOUNTS BE TRANSFERRED AMONG
THE INVESTMENT OPTIONS?
All or part of a Participant's Account Balance in one Investment Fund may be
transferred to any other Investment Fund as often as the Participant wishes
and without charge or tax liability. Transfers from the Guaranteed Rate
Accounts are subject to special rules. Instructions to transfer amounts among
the Options must be made in writing, unless we have the Participant's
authorization to accept telephone transfers. Transferring amounts does not
affect the allocation of future contributions. For more information regarding
restrictions and other matters,
see "Certificate Provisions--Transfers Among the Investment Options" and, in
the SAI, "Part 2--The Guaranteed Rate Accounts."
WHAT RETIREMENT OPTIONS ARE AVAILABLE?
At retirement, a Participant may choose to receive monthly fixed annuity
payments funded through our General Account, periodic distributions from the
Investment Options, a lump sum or a combination of these benefits. For more
information, see "Certificate Provisions--Retirement Benefits."
WHAT ARE THE DEATH AND DISABILITY
BENEFITS?
If a Participant becomes disabled or dies before the Participant's retirement
date as defined in the certificate (RETIREMENT DATE), we will pay the Account
Balance as a disability benefit to the Participant or as a death benefit to a
beneficiary designated by the Participant. See "Certificate Provisions--Death
and Disability Benefits."
CAN WITHDRAWALS BE MADE UNDER THE
CERTIFICATES?
Unless restricted by the retirement program under which the Participant is
covered or by provisions of the Code, all or any portion of the Participant's
Account Balance and, subject to penalty, the Participant's Guaranteed Rate
Account Cash Value may be withdrawn at any time prior to retirement. See in
the SAI, "Part 2--The Guaranteed Rate Accounts."
Withdrawals may be taxable and subject to an additional 10% Federal income
tax penalty on early withdrawals. Certain withdrawal restrictions apply to
TSA and SIMPLE IRA certificates. We urge each Participant to consult a tax
advisor before making a withdrawal. See "Certificate Provisions--Withdrawals"
above and "Part 1--Federal Income Tax Aspects of the Retirement Programs" in
the SAI for more information.
4
<PAGE>
CAN PARTICIPATION BE REVOKED?
The Participant has a right to revoke participation under a certificate. In
most states, the Participant must exercise this right within 10 days of
receipt of the certificate. The Participant should consult a tax advisor
before deciding to revoke, as cancellation may have adverse tax consequences.
See "Certificate Provisions--Revocation Rights" and "Part 1--Federal Income
Tax Aspects of the Retirement Programs" in the SAI.
WHAT IS EQUITABLE LIFE'S ADDRESS?
All communications to Equitable Life, except contributions, should be
addressed to Equitable Life 300+ Series, Box 2468, G.P.O., New York, New York
10116. Contribution checks should be addressed to Equitable Life 300+ Series,
P.O. Box 13871, Newark, New Jersey 07188-0871.
5
<PAGE>
FEE TABLES
The Tables give effect to generally applicable charges. The Tables reflect
expenses of both the Separate Account and The Hudson River Trust and EQ
Advisors Trust, respectively for the year ended December 31, 1997. Certain
expenses and fees shown in these Tables may not apply to each certificate. To
determine whether a particular item in these Tables apply (and the actual
amount, if any), consult the portion of the prospectus indicated in the notes
to the Table. There is no transaction expenses (sales load on purchases) and
the maximum Annual Participant Service Charge is $30. Other charges, such as
enrollment fees and premium tax charges, may be applicable. See "Deductions
and Charges."
HUDSON RIVER TRUST
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE INTERMEDIATE ALLIANCE
MONEY GOVERNMENT HIGH
MARKET SECURITIES YIELD
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<S> <C> <C> <C>
SEPARATE ACCOUNT
ANNUAL EXPENSES
Administration Charge 0.25% 0.25% 0.25%
Other Expenses 0.19 0.27 0.45
Total 0.44% 0.52% 0.70%
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TRUST ANNUAL EXPENSES
Management Fees(3) 0.35% 0.50%(1) 0.60%
Other Expenses 0.04 0.06 0.04
Total 0.39% 0.56%(1) 0.64%
- -------------------------------------------------------
TOTAL SEPARATE ACCOUNT
AND TRUST ANNUAL
EXPENSES AFTER
APPLICABLE
REIMBURSEMENT (2) 0.83% 0.93% (1) 1.34%
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE ALLIANCE
ALLIANCE GROWTH & COMMON AGGRESSIVE ALLIANCE CONSERVATIVE GROWTH
BALANCED INCOME STOCK STOCK GLOBAL INVESTORS INVESTORS
-------- -------- -------- ---------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT
ANNUAL EXPENSES
ADMINISTRATION CHARGE 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
OTHER EXPENSES 0.17 0.49 0.15 0.25 0.29 1.03 0.69
TOTAL 0.42% 0.74% 0.40% 0.50% 0.54% 1.28% 0.94%
- ------------------------------------------------------------------------------------------------
TRUST ANNUAL EXPENSES
Management Fees(3) 0.42% 0.55% 0.37% 0.54% 0.65% 0.48% 0.52%
Other Expenses 0.05 0.04 0.03 0.03 0.08 0.07 0.05
Total 0.47% 0.59% 0.40% 0.57% 0.73% 0.55% 0.57%
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TOTAL SEPARATE ACCOUNT
AND TRUST ANNUAL
EXPENSES AFTER
APPLICABLE
REIMBURSEMENT (2) 0.89% 1.33% 0.80% 1.07% 1.27% 1.83% 1.51%
</TABLE>
(1) The annual amount of Management Fees applicable to the Alliance
Intermediate Government Securities Portfolio is limited to 0.35%
of the value of the Portfolio's average daily assets. This
limitation is a contractual right for Participants who enrolled in
the program prior to May 1, 1987 and cannot be changed without
their consent. Equitable Life has voluntarily agreed to impose
this limitation for all other Participants and reserves the right
to discontinue it at any time. See "Deductions and
Charges--Expense Limitations."
(2) The amounts shown in the Table under "Separate Account Annual
Expenses" and under "Trust Annual Expenses" for the Alliance Money
Market, Alliance Intermediate Government Securities, Alliance
Balanced and Alliance Common Stock Funds, respectively when added
together, are limited by the certificates and contracts to 1% of
the value of the Alliance Money Market Fund's average daily net
assets and 1.5% of the value of the Alliance Common Stock,
Alliance Intermediate Government Securities or Alliance Balanced
Funds' average daily net assets. For the Alliance High Yield,
Alliance Aggressive Stock and Alliance Global Funds, Equitable
Life applies a voluntary expense limitation at an effective annual
rate of 1.5% of average daily net assets of each fund. See
"Deductions and Charges--Expense Limitations."
(3) Effective May 1, 1997, a new Investment Advisory Agreement was
entered into between The Hudson River Trust and Alliance Capital
Management L.P., The Hudson River Trust's Investment Adviser,
which effected changes in The Hudson River Trust's management fee
and expense structure.
The tables above reflecting The Hudson River Trust's expenses are
based on Portfolio average net assets for the year ended December
31, 1997 and have been restated to reflect (i) the fees that would
have been paid to Alliance if the current advisory agreement had
been in effect as of January 1, 1997 and (ii) estimated accounting
expenses for the year ending December 31, 1997.
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6
<PAGE>
EQ ADVISORS TRUST
<TABLE>
<CAPTION>
MFS EMERGING BT EQUITY LAZARD SMALL T. ROWE
GROWTH COMPANIES 500 INDEX CAP VALUE INTERNATIONAL STOCK
---------------- ----------- -------------- -------------------
<S> <C> <C> <C> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES
Administration Charge 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.20 0.20 0.20 0.20
Total 0.45% 0.45% 0.45% 0.45%
- ---------------------------------------------------------------------------------------------------------
TRUST ANNUAL EXPENSES
Investment Management and Advisory
Fee 0.55% 0.25% 0.80% 0.75%
12b-1 Fee (1) 0.25 0.25 0.25 0.25
Other Expenses 0.05 0.05 0.15 0.20
Total (2) 0.85% 0.55% 1.20% 1.20%
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TOTAL SEPARATE ACCOUNT AND
TRUST ANNUAL EXPENSES 1.30% 1.00% 1.65% 1.65%
</TABLE>
- -------------------
(1) The Class IB shares of EQ Advisors Trust are subject to fees
imposed under distribution plans (herein, the "Rule 12b-1 Plans")
adopted by EQ Trust pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended. The Rule 12b-1 Plans provide that
EQ Trust, in behalf of each portfolio, may pay annually up to
0.25% of the average daily net assets of a portfolio attributable
to its Class IB shares in respect to activities primarily intended
to result in the sale of the Class IB share.
(2) All EQAT Portfolios commenced operations on May 1, 1997 except the
BT Equity 500 Index and the Lazard Small Cap Value Portfolios,
which had initial seed capital invested on December 31, 1997.
The maximum investment management and advisory fees for each EQAT
Portfolio cannot be increased without a vote of that Portfolio's
shareholders. The amounts shown as "Other Expenses" will fluctuate
from year to year depending on actual expenses, however, EQ
Financial Consultants, Inc. ("EQ Financial"), EQAT's manager, has
entered into an expense limitation agreement with respect to each
Portfolio, ("Expense Limitation Agreement") pursuant to which EQ
Financial has agreed to waive or limit its fees and assume other
expenses. Under the Expense Limitation Agreement, total annual
operating expenses of each Portfolio (other than interest, taxes,
brokerage commissions, capitalized expenditures, extraordinary
expenses and 12b-1 fees) are limited for the respective average
daily net assets of each Portfolio as follows: 0.30% for BT Equity
500 Index; 0.60% for MFS Emerging Growth Companies; and 0.95% for
T. Rowe Price International Stock and Lazard Small Cap Value.
Absent the expense limitation, "Other Expenses" for 1997 on an
annualized basis would have been 1.56% for T. Rowe Price
International Stock and 1.02% for MFS Emerging Growth Companies.
Absent the expense limitation, "Other Expenses" for the BT Equity
500 Index and the Lazard Small Cap Value Portfolios, which had
initial seed capital invested on December 31, 1997, are estimated
for 1998 to be 0.29% and 0.23%, respectively.
Each Portfolio may at a later date make a reimbursement to EQ
Financial for any of the management fees waived or limited and
other expenses assumed and paid by EQ Financial pursuant to the
Expense Limitation Agreement provided that, among other things,
such Portfolio has reached sufficient size to permit such
reimbursement to be made and provided that the Portfolio's current
annual operating expenses do not exceed the operating expense
limit determined for such Portfolio. See the EQAT prospectus for
more information.
7
<PAGE>
EXAMPLE. The purpose of this Table is to assist the Participant in
understanding the various costs and expenses which the Participant may bear
directly or indirectly under your certificate. The Table reflects expenses of
both the Separate Account and either The Hudson River Trust or the EQ
Advisors Trust, as applicable.
The examples below show the expenses that the Participant would pay, assuming
a single investment of $1,000 in each Investment Fund listed and a 5% annual
return on assets(1). Applicable expenses are the same whether or not the
Participant withdraws all or part of the Account Balance at the end of each
time period shown. These figures are based on the expenses set forth in the
preceding table after applicable expense reimbursements. For purposes of
these examples, the Participant Service Charge is computed by applying a
Participant Service Charge of $12 to the average number of Participants for
the year, divided by the average Fund assets for the same period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Alliance Money Market ...................... $ 8.86 $27.68 $ 48.08 $106.83
Alliance Intermediate Government Securities 9.88 30.83 53.49 118.53
Alliance High Yield ........................ 14.04 43.65 75.40 165.20
Alliance Balanced .......................... 9.28 28.96 50.26 111.54
Alliance Growth & Income ................... 13.94 43.34 74.87 164.09
Alliance Common Stock ...................... 8.56 26.74 46.45 103.29
Alliance Aggressive Stock .................. 11.30 35.23 61.03 134.70
Alliance Global ............................ 13.33 41.47 71.69 157.38
Alliance Conservative Investors ............ 19.20 59.37 102.01 220.45
Alliance Growth Investors .................. 15.77 48.92 84.35 183.96
MFS Emerging Growth Companies .............. 13.64 42.41 -- --
BT Equity 500 Index......................... 10.59 33.03 -- --
Lazard Small Cap Value...................... 17.18 53.23 -- --
T. Rowe Price International Stock........... 17.18 53.23 -- --
</TABLE>
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be
greater or less than those shown above. Similarly, the annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance.
- -------------------
(1) An Account Balance could not be converted to an annuity at the end of
any of the periods shown in the examples. For any form of annuity
distribution, the minimum amount applied must be $2,000, and the
minimum initial annuity payment must be at least $20. See "Certificate
Provisions--Retirement Benefits." In some cases, charges for state
premium or other taxes will be deducted from the amount applied.
8
<PAGE>
SUMMARY OF UNIT VALUES. The Unit Values shown are the same as they would
have been if the Separate Account had operated as a unit investment trust
investing in the Trust for all the periods shown, as currently reported in
the Trust's prospectus and Statement of Additional Information. Because the
Alliance Growth & Income, Alliance Conservative Investors and Alliance Growth
Investors Funds do not have corresponding Predecessor Separate Accounts, no
unit values are presented for them prior to December 1994.
<TABLE>
<CAPTION>
UNIT VALUES
----------------------------------------
ALLIANCE
ALLIANCE INTERMEDIATE ALLIANCE
MONEY GOVERNMENT HIGH
MARKET SECURITIES* YIELD
LAST BUSINESS DAY OF FUND FUND FUND
- -------------------- ------------- -------------- ----------
<S> <C> <C> <C>
December 1987....... $16.14 $22.41 $10.41
December 1988 ...... 17.23 23.63 11.60
December 1989 ...... 18.73 27.19 11.67
December 1990 ...... 20.17 28.79 11.11
December 1991 ...... 21.29 32.73 13.84
December 1992 ...... 21.93 34.34 15.40
December 1993 ...... 22.48 37.77 18.84
December 1994 ...... 23.32 36.13 18.18
December 1995 ...... 24.55 40.82 21.67
December 1996 ...... 25.77 42.20 26.45
December 1997 ...... 27.05 45.11 31.16
Number of Units
Outstanding at
December 31, 1997
(000's) ........... 736 116 136
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
UNIT VALUES
--------------------------------------------------------------------------------------
ALLIANCE ALLIANCE
ALLIANCE COMMON AGGRESSIVE ALLIANCE ALLIANCE ALLIANCE ALLIANCE
BALANCED STOCK STOCK GLOBAL GROWTH & CONSERVATIVE GROWTH
LAST BUSINESS DAY OF FUND FUND FUND FUND INCOME INVESTORS INVESTORS
- -------------------- ---------- ---------- ------------ ---------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
December 1987....... $23.88 $ 29.88 $ 8.59 $ 8.58 -- -- --
December 1988 ...... 27.04 33.04 8.70 9.58 -- -- --
December 1989 ...... 33.91 40.94 12.47 11.97 -- -- --
December 1990 ...... 33.76 35.87 13.34 11.23 -- -- --
December 1991 ...... 47.50 51.55 23.43 14.20 -- -- --
December 1992 ...... 45.92 52.97 22.54 14.01 -- -- --
December 1993 ...... 51.38 65.89 26.14 18.40 -- -- --
December 1994 ...... 47.03 64.13 24.95 19.25 $ 9.92 $ 9.92 $ 9.79
December 1995 ...... 56.07 84.56 32.67 22.76 12.21 11.79 12.23
December 1996 ...... 62.36 104.68 39.73 25.95 14.55 12.25 13.64
December 1997 ...... 71.42 134.77 43.83 28.80 18.35 13.71 15.80
Number of Units
Outstanding at
December 31, 1997
(000's) ........... 523 678 201 206 324 67 126
</TABLE>
*Prior to September 6, 1991, the Bond Fund.
EQUITABLE LIFE
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Equitable Life has been
selling annuities since the turn of the century. Our Home Office is located
at 1290 Avenue of the Americas, New York, New York 10104. We are authorized
to sell life insurance and annuities in all fifty states, the District of
Columbia, Puerto Rico and the Virgin Islands. We maintain local offices
throughout the United States. We are one of the nation's leading pension fund
managers.
Equitable Life is a wholly-owned subsidiary of The Equitable Companies
Incorporated (HOLDING COMPANY). The largest stockholder of the Holding
Company is AXA-UAP ("AXA"). As of December 31, 1997, AXA beneficially owns
58.7% of the outstanding shares of common stock of the Holding Company. Under
its investment arrangements with Equitable Life and the Holding Company, AXA
is able to exercise significant influence over the operations and capital
structure of the Holding Company and its subsidiaries, including Equitable
Life. AXA, a French Company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed
approximately $274.1 billion of assets as of December 31, 1997, including
third party assets of approximately $216.9 billion. These assets are
primarily managed for retirement and annuity programs for businesses,
tax-exempt organizations and individuals. This broad customer base includes
nearly half the Fortune 100, more than 42,000 small businesses, state and
local retirement funds in more than half the 50 states, approximately 250,000
employees of educational and non-profit institutions, as well as nearly
500,000 individuals. Millions of Americans are covered by Equitable Life's
annuity, life, health and pension contracts.
OUR SEPARATE ACCOUNT
The aggregate assets of all the Investment Funds are held in our Separate
Account No. 301, which was established on October 19, 1981 under the New York
Insurance Law. The Separate Account is organized as a unit investment trust
registered with the Securities and Exchange Commission (SEC) under the
Investment Company Act of 1940 (1940 ACT). This registration does not involve
any supervision by the SEC of the management or investment policies of the
Separate Account.
The Separate Account currently has ten Investment Funds: Alliance Money
Market
9
<PAGE>
Fund, Alliance Intermediate Government Securities Fund, Alliance High Yield
Fund, Alliance Balanced Fund, Alliance Growth & Income Fund, Alliance Common
Stock Fund, Alliance Aggressive Stock Fund, Alliance Global Fund, Alliance
Conservative Investors Fund, and Alliance Growth Investors Fund. On or about
July 1, 1998, subject to regulatory approval, four additional Investment
Funds will become available--MFS Emerging Growth Companies Fund, BT Equity
500 Index Fund, Lazard Small Cap Value Fund and T. Rowe Price International
Stock Fund. Each Investment Fund invests in Class IA shares of a
corresponding Portfolio of The Hudson River Trust or Class IB shares of a
corresponding Portfolio of EQ Advisors Trust.
The assets of the Separate Account are our property. The certificates provide
that the portion of the Separate Account's assets equal to the reserves and
other contract liabilities with respect to the Separate Account will not be
chargeable with liabilities arising out of any other business we may conduct.
Accordingly, income, gains or losses, whether or not realized, from assets of
the Separate Account are credited to or charged against the Separate Account
without regard to Equitable's other income, gains or losses. We are the
issuer of the certificates and the obligations set forth therein, other than
those of Participants or employers, are ours.
In addition to contributions made under the certificates described in this
Prospectus, we may allocate to the Separate Account monies received under
other agreements or annuity contracts. Each Participant will participate in
the Separate Account in proportion to the amount in the Separate Account
attributable to such Participant's certificate. We may transfer to our
General Account any of the Separate Account's assets that are in excess of
the reserves and other liabilities relating to the certificates described in
this prospectus or certain other contracts.
We reserve the right, subject to compliance with applicable law, including
approval of the Participants, if required, (1) to cause the registration or
deregistration of the Separate Account under the 1940 Act, (2) to operate the
Separate Account under the direction of a committee and to discharge such
committee at any time, (3) to restrict or eliminate any voting rights of
Participants or other persons who have voting rights as to the Separate
Account, (4) to add, change or remove the designated investment company, (5)
to add, change or remove Investment Funds, (6) to combine any two or more
Investment Funds, (7) to transfer assets from any one of the Investment Funds
to another Investment Fund, and (8) to operate the Separate Account or one or
more of the Investment Funds by making direct investments or investments in
any other form Equitable Life in its sole discretion determines.
We may make other changes in the certificates that do not reduce any Cash
Value, Account Balance, Annuity Value or Annuity Benefit or other accrued
rights or benefits.
EQ Financial Consultants, Inc. (EQF), a wholly-owned subsidiary of Equitable
Life, performs all sales functions for the Separate Account and may be deemed
to be its principal underwriter under the 1940 Act. EQF is also the principal
underwriter of The Hudson River Trust and the EQ Advisors Trust. EQF is
registered with the SEC as a broker-dealer under the Securities Exchange Act
of 1934 (EXCHANGE ACT) and is a member of the National Association of
Securities Dealers, Inc. EQF's principal business address is 1290 Avenue of
the Americas, New York, New York 10104. The offering described in the
prospectus, which is intended to be continuous, will be made through
registered representatives of EQF.
THE TRUSTS
The Trusts are open-end, management investment companies registered under the
1940 Act, more commonly called mutual funds. As a "series" type of mutual
fund, each Trust issues several different series of stock, each of which
relates to a different Portfolio of that Trust. The Hudson River Trust
commenced operations in January 1976 with a predecessor of its Alliance
Common Stock Portfolio. The EQ Advisors Trust commenced operations on May 1,
1997. The Trusts do not impose sales charges or "loads" for buying and
selling their shares. All dividends and other distributions on a Portfolio's
shares are reinvested in full and fractional shares of the Portfolio to which
they relate. Each Investment Fund invests in either Class IA or Class IB
shares of a corresponding Portfolio. Portfolios of the
10
<PAGE>
Hudson River Trust sell Class IA shares to the Funds and Portfolios of EQ
Advisors Trust sell Class IB shares to the Funds.
The EQ Advisors Trust sells its shares to Equitable separate accounts in
connection with Equitable's variable life insurance and annuity products. The
Hudson River Trust sells its shares to separate accounts of Equitable and of
other insurance companies not affiliated with Equitable. We currently do not
foresee any disadvantages to our policy/contract owners arising out of this.
However, The Hudson River Trust's Board of Trustees intends to monitor events
in order to identify any material irreconcilable conflicts that possibly may
arise and to determine what action, if any, should be taken in response. If
we believe that The Hudson River Trust's response to any of those events
insufficiently protects our policy/contract owners, we will see to it that
appropriate action is taken to do so. Also, if we ever believe that any of
the Trusts' Portfolios is so large as to materially impair the investment
performance of the Portfolio or the Trust involved, we will examine other
investment options.
All of the Portfolios (except the Lazard Small Cap Value Fund) are
diversified for 1940 Act purposes. More detailed information about the
Trusts, their investment objectives, policies, restrictions, risks, expenses,
multiple class distribution systems, the Rule 12b-1 distribution plan
relating to Class IB shares of EQ Advisors Trust and all other aspects of
their operations, appears in the Hudson River Trust prospectus (beginning
after this prospectus), the EQ Advisors Trust prospectus (beginning after the
Hudson River Trust prospectus), or in their respective Statements of
Additional Information, which are available upon request.
THE HUDSON RIVER TRUST'S MANAGER AND INVESTMENT ADVISER
The Hudson River Trust is managed and its Portfolios are advised by Alliance
Capital Management L.P. (ALLIANCE), which is registered with the SEC as an
investment adviser under the Investment Advisers Act of 1940.
In its role as manager of The Hudson River Trust, Alliance has overall
responsibility for the general management and administration of The Hudson
River Trust, including selecting the portfolio managers for The Hudson River
Trust's Portfolios, monitoring their investment programs and results,
reviewing brokerage matters, performing fund accounting, overseeing compliance
by The Hudson River Trust with various Federal and state statutes, and
carrying out the directives of its Board of Trustees. With the approval of The
Hudson River Trust's Trustees, Alliance may enter into agreements with other
companies to assist with Alliance's administrative and management
responsibilities to The Hudson River Trust.
ALLIANCE CAPITAL MANAGEMENT L.P.
Alliance, a leading international investment adviser, provides investment
management and consulting services to mutual funds, endowment funds,
insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
Alliance is publicly traded limited partnership incorporated in Delaware. On
December 31, 1997, Alliance was managing over $218.7 billion in assets.
Alliance employs 223 investment professionals, including 83 research
analysts. Portfolio managers have average investment experience of more than
18 years.
All of The Hudson River Trust Portfolios are advised by Alliance. As adviser,
Alliance is responsible for developing the Portfolios' investment programs,
making investment decisions for the Portfolios, placing all orders for the
purchase and sale of those investments and performing certain limited related
administrative functions.
Alliance is an indirect, majority-owned subsidiary of Equitable Life, and its
main office is located at 1345 Avenue of the Americas, New York, NY 10105.
Additional information regarding Alliance is located in The Hudson River
Trust's prospectus which directly follows this prospectus.
EQ ADVISORS TRUST'S MANAGER
EQ Financial Consultants, Inc. (EQF), subject to the supervision and
direction of the Trustees of EQ Advisors Trust, has overall responsibility
for the general management and administration of the EQ Advisors Trust.
11
<PAGE>
EQF is an investment adviser registered under the Investment Advisers Act of
1940, as amended, and a broker-dealer registered under the Exchange Act. EQF
currently furnishes specialized investment advice to other clients, including
individuals, pension and profit-sharing plans, trusts, charitable
organizations, corporations, and other business entities. EQF is Delaware
corporation and an indirect, wholly owned subsidiary of Equitable Life.
EQF is responsible for providing management and administrative services to EQ
Advisors Trust and selects the investment advisers for EQ Advisors Trust's
Portfolios, monitors EQ Advisors Trust investment programs and results,
reviews brokerage matters, oversees compliance by EQ Advisors Trust with
various Federal and state statutes, and carries out the directives of its
Board of Trustees.
Pursuant to a service agreement, Chase Global Funds Services company assists
EQF in the performance of its administrative responsibilities to EQ Advisors
Trust with other necessary administrative, fund accounting and compliance
services. EQF's main office is located at 1290 Avenue of the Americas, New
York, NY 10104.
EQ ADVISORS TRUST'S INVESTMENT ADVISERS
Rowe Price-Fleming International, Inc., T. Rowe Price Associates, Inc.,
Bankers Trust Company, Lazard Asset Management and Massachusetts Financial
Services Company (each an EQ ADVISORS TRUST ADVISER) serve as advisers only
for their respective EQ Advisors Trust Portfolios.
Each EQ Advisors Trust Adviser furnishes EQ Advisors Trust's manager, EQF,
with an investment program (updated periodically) for its Portfolios, makes
investment decisions on behalf of its EQ Advisors Trust Portfolios, places
all orders for the purchase and sale of investments for the Portfolios's
account with brokers or dealers selected by such Adviser and may perform
certain limited related administrative functions.
The assets of each Portfolio are allocated currently among the EQ Advisors
Trust Advisers. If an EQ Advisors Trust Portfolio shall at any time have more
than one EQ Advisors Trust Adviser, the allocation of an EQ Advisors Trust
Portfolio's assets among EQ Advisors Trust Advisers may be changed at any
time by EQF.
T. ROWE PRICE ASSOCIATES, INC. AND ROWE
PRICE-FLEMING INTERNATIONAL, INC.
Founded in 1937, T. Rowe Price Associates, Inc. provides investment
management to both individuals and institutions. With its affiliates, assets
under management were over $126 billion as of December 31, 1997. The company
is located at 100 East Pratt Street, Baltimore, MD 21202.
Rowe Price-Fleming International, Inc. (PRICE-FLEMING) was founded as a joint
venture between T. Rowe Price and Robert Fleming Holdings, Ltd., a
diversified British investment organization. Price-Fleming's predominately
non-U.S. assets under management were the equivalent of approximately
$30 billion as of December 31, 1997. Price-Fleming advises T. Rowe Price
International Stock, an international equity portfolio and is located at
100 East Pratt Street, Baltimore, MD 21202.
MASSACHUSETTS FINANCIAL SERVICES
COMPANY
Massachusetts Financial Services Company (MFS) is America's oldest mutual
fund organization, whose assets under management as of December 31, 1997 were
in excess of $70 billion on behalf of more than 2.5 million investors. MFS
advises MFS Emerging Growth Companies, an aggressive equity portfolio. MFS is
an indirect subsidiary of Sun Life Assurance Company of Canada and is located
at 500 Boylston Street, Boston, MA 02116.
BANKER'S TRUST COMPANY
Bankers Trust Company (BANKERS TRUST) is a wholly-owned subsidiary of Bankers
Trust New York Corporation which was founded in 1903. Bankers Trust conducts
a variety of general banking and trust activities and is a major wholesale
supplier of financial services to the international and domestic
institutional markets. Bankers Trust advises BT Equity 500 Index, a domestic
equity portfolio. As December 31, 1997, Bankers
12
<PAGE>
Trust New York Corporation had approximately $317.8 billion in assets under
management worldwide. The executive offices of Bankers Trust are located at
130 Liberty Street (One Bankers Trust Plaza), New York, NY 10006.
LAZARD ASSET MANAGEMENT
Lazard Asset Management (LAZARD) is a division of Lazard Freres & Co. LLC,
which was founded in 1848. Lazard and its affiliates managed in excess of $60
billion as of December 31, 1997. Lazard advises Lazard Small Cap Value, an
aggressive equity portfolio. Lazard's global headquarters are located at 30
Rockefeller Plaza, New York, NY 10020.
Additional information regarding each of the companies which serve as an EQ
Advisors Trust Adviser appears in the EQ Advisors Trust prospectus attached
to this prospectus.
HRT AND EQAT CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against the Trusts' assets, direct
operating expenses of the Trusts (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and
liability insurance), and certain investmentrelated expenses of the Trusts
(such as brokerage commissions and other expenses related to the purchase and
sale of securities) are reflected in each Portfolio's daily share price. The
maximum investment advisory fees paid annually by the Portfolios cannot be
increased without a vote of that Portfolio's shareholders.
Investment advisory fees are established under investment advisory agreements
between HRT and its investment manager, Alliance, and between EQAT, EQ
Financial, as Manager and the EQAT Advisers. All of these fees and expenses
are described more fully in the prospectuses of HRT and EQAT attached hereto.
Since shares are purchased at their net asset value, these fees and expenses
are, in effect, passed on to the Separate Account and are reflected in the
Accumulation Unit Values for the Investment Funds. The maximum investment
advisory fees are as follows:
<TABLE>
<CAPTION>
MAXIMUM
INVESTMENT
ADVISORY FEE
HRT PORTFOLIO (ANNUAL RATE)
- ------------- -------------
<S> <C>
Alliance Money Market........... 0.350%
Alliance Intermediate
Government Securities.......... 0.500%
Alliance High Yield............. 0.600%
Alliance Growth & Income........ 0.550%
Alliance Global................. 0.675%
Alliance Conservative
Investors...................... 0.475%
Alliance Growth Investors ...... 0.550%
Alliance Common Stock........... 0.475%
Alliance Aggressive Stock ...... 0.625%
Alliance Balanced............... 0.450%
</TABLE>
<TABLE>
<CAPTION>
MAXIMUM
INVESTMENT
MANAGEMENT
AND
ADVISORY FEE
EQAT PORTFOLIO (ANNUAL RATE)
- -------------- -------------
<S> <C>
T. Rowe Price International
Stock.......................... 0.75%
MFS Emerging Growth Companies .. 0.55%
BT Equity 500 Index............. 0.25%
Lazard Small Cap Value.......... 0.80%
</TABLE>
13
<PAGE>
INVESTMENT POLICIES OF THE HUDSON RIVER TRUST PORTFOLIOS AND EQ ADVISORS
TRUST PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve
by following separate investment policies. The objectives and policies of
each Portfolio will affect its return and its risks. There is no guarantee
that these objectives will be achieved.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Money Market Primarily high quality U.S. dollar denominated High level of current income
money market instruments while preserving assets and
maintaining liquidity
- -------------------------------------------------------------------------------------------------------
Alliance Intermediate Primarily debt securities issued or guaranteed High current income
Government Securities by the U.S. Government, its agencies and consistent with relative
instrumentalities. Each investment will have a stability of principal
final maturity of not more than 10 years or a
duration not exceeding that of a 10-year
Treasury note
- -------------------------------------------------------------------------------------------------------
Alliance High Yield Primarily a diversified mix of high yield, High return by maximizing
fixed income securities involving greater current income and, to the
volatility of price and risk of principal and extent consistent with that
income than high quality fixed income objective, capital
securities. The medium and lower quality debt appreciation
securities in which the Portfolio may invest
are known as "junk bonds"
- -------------------------------------------------------------------------------------------------------
Alliance Balanced Primarily common stocks, publicly-traded debt High return through a
securities and high quality money market combination of current income
instruments and capital appreciation
- -------------------------------------------------------------------------------------------------------
Alliance Growth & Primarily income producing common stocks and High total return through a
Income securities convertible into common stocks combination of current income
and capital appreciation
- -------------------------------------------------------------------------------------------------------
Alliance Common Stock Primarily common stock and other equity-type Long-term growth of capital
instruments
- -------------------------------------------------------------------------------------------------------
Alliance Aggressive Primarily common stocks and other equity-type Long-term growth of capital
Stock securities issued by medium and other smaller
sized companies with strong growth potential
- -------------------------------------------------------------------------------------------------------
Alliance Global Primarily equity securities of non-United Long-term growth of capital
States as well as United States companies
- -------------------------------------------------------------------------------------------------------
Asset Allocation Diversified mix of publicly traded fixed-income High total return without, in
Series: Alliance and equity securities; asset mix and security the adviser's opinion, undue
Conservative selection primarily based upon factors expected risk to principal
Investors to reduce risk
- -------------------------------------------------------------------------------------------------------
Asset Allocation Diversified mix of publicly-traded, fixed High total return consistent
Series: Alliance income and equity securities; asset mix and with the adviser's
Growth security selection based upon factors expected determination of reasonable
Investors to increase possibility of high long-term risk
return
- -------------------------------------------------------------------------------------------------------
14
<PAGE>
- -------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- -------------------------------------------------------------------------------------------------------
MFS Emerging Primarily (i.e., at least 80% of its assets Long-term growth of capital
Growth under normal circumstances) in common stocks of
Companies emerging growth companies that the Adviser
believes are early in their life cycle but
which have the potential to become major
enterprises.
- -------------------------------------------------------------------------------------------------------
BT Equity 500 Index Invest in a statistically selected sample of Replicate as closely as
the 500 stocks included in the Standard & possible (before the
Poor's 500 Composite Stock Price Index (S&P deduction of Portfolio
500). expenses) the total return of
the S&P 500
- -------------------------------------------------------------------------------------------------------
Lazard Small Cap Value Primarily equity securities of U.S. companies Capital appreciation
with small market capitalizations (i.e.
companies in the range of companies represented
in the Russell 2000 Index) that the Adviser
considers inexpensively priced relative to the
return on total capital or equity.
- -------------------------------------------------------------------------------------------------------
T. Rowe Price Primarily common stocks of established Long-term growth of capital
International Stock non-United States companies
- -------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATE PROVISIONS
An employer may, in certain circumstances, limit a Participant's rights under
a certificate. The Participant should check the provisions of the employer's
plan or agreements with the Participant to see if there are any such
limitations and, if so, what they are.
PARTICIPANTS, CERTIFICATE OWNERS
AND ANNUITANTS
Individuals who make contributions or individuals for whom contributions are
made under certificates are Participants. Each Participant is also an
Annuitant, meaning the person upon whose life the certificate is issued and
the person who is entitled to receive benefit payments. Each Participant is
also the owner of the certificate. Under a Regular IRA or a Roth IRA, a
Participant's spouse may also become a Participant by establishing a separate
spousal Regular IRA or a Roth IRA. In such case, we will issue a separate
certificate to the spouse.
CONTRIBUTIONS
Frequency and Amount. In the case of a Regular IRA, a Roth IRA or SEP, the
Participant may make contributions. In the case of a SEP, TSA or SIMPLE IRA,
the employer makes contributions by completing the appropriate contribution
form and enclosing the payment. There is no minimum contribution amount
except for any established by an employer for contributions made by payroll
deductions. Contributions should be sent by check or money order drawn on a
U.S. bank in U.S. dollars to Equitable Life 300+ Series and made payable to
Equitable Life.
The preferred form of payment is a single check in U.S. dollars on your
business or personal account payable to Equitable Life. Payment may also be
in the form of a single money order, bank draft or cashier's check payable to
Equitable Life. These checks, money orders and drafts are accepted subject to
collection. Cash and traveler's checks are not acceptable. Third party checks
endorsed to Equitable Life are not acceptable forms of payment unless the
check is rollover money directly from a qualified retirement plan, a tax-free
exchange under the Internal Revenue Code, or a trustee check that involves no
refund. We reserve the right to reject a payment if an unacceptable form of
payment is received.
Annual contributions to a retirement program may be subject to maximum limits
imposed by the Code. See "Part 1--Federal Income Tax Aspects of the
Retirement Programs" in the SAI for a discussion of these
15
<PAGE>
limitations. We do not monitor whether or not the contributions made under
any of the retirement programs may be in excess of the maximum limits imposed
by the Code, but we reserve the right to refuse contributions we believe to
be in excess of such maximum levels.
Subject to any restrictions imposed by an employer's retirement program,
rollover and direct transfer contributions will be accepted. See "Part
1--Federal Income Tax Aspects of the Retirement Programs" in the SAI for
details.
Allocation of Contributions. The Participant, by written instructions to us,
will designate how each contribution will be allocated among the Investment
Options. The Participant may use our telephone service (Account Investment
Management (AIM) System) to change the future allocation for contributions.
Requests for changes in allocations among the Investment Options will become
effective on the date of the receipt. Checks accompanied by an allocation
change request will be invested in accordance with that request. Changes in
the allocation of future contributions have no effect on amounts already
invested.
Discontinuance and Resumption of Contributions. A Participant is under no
obligation to continue making contributions. If contributions made by or on
behalf of a Participant are discontinued, participation under the certificate
will remain in effect, and, except for SEP or SIMPLE certificates,
contributions can be resumed at any time. However, we reserve the right to
close a Participant's Account if no contributions are made within 120 days of
the issue date of the certificate.
We also reserve the right to close a Participant's Account and pay any
Account Balance if contributions are discontinued for at least three years
from the date of the last contribution, and either (1) the Account Balance
does not exceed $2,000 or (2) the annuity which the existing Account Balance
would purchase at the Participant's Retirement Date would be less than $20
per month based on the current annuity rates in effect under the certificate.
INVESTMENT OF CONTRIBUTIONS IN
THE INVESTMENT FUNDS
Business Day. Generally, a business day is any day Equitable Life is open and
the New York Stock Exchange is open for trading. We may close due to
emergency conditions. Generally, no transactions are processed if we are
closed. A business day ends at 4:00 p.m. Eastern time.
Purchase of Units in the Investment Funds. Contributions are invested on the
date of receipt, provided they are received by us on an Equitable Life
business day and are correctly payable and accompanied by a properly
completed contribution form. We may retain contributions accompanied by an
incomplete contribution form for five business days while we attempt to
obtain the information required to complete the form. Contributions will be
invested immediately after the contribution form is complete.
The portion of each contribution allocated to an Investment Fund will be used
to purchase Units in that Fund. The number of Units purchased by a
contribution to an Investment Fund is calculated by dividing the amount of
the contribution by the Investment Fund's Unit Value on the business day we
receive the contribution. See "How We Determine the Unit Value" below. The
number of Units purchased will not vary, however, because of any subsequent
fluctuation in the Unit Value.
The value of the Unit fluctuates with the investment performance of the
corresponding Portfolio of The Hudson River Trust and EQ Advisors Trust,
respectively, which reflects the investment income and realized and
unrealized capital gains and losses of the Fund and Trust expenses and
charges. Unit Values also reflect the deductions and charges made to the
Investment Funds of the Separate Account. See "Deductions and Charges."
On any given day, the value you have in any Investment Fund of our Separate
Account is the Unit Value times the number of Units credited to you in that
Investment Fund.
16
<PAGE>
How We Determine the Unit Value. Unit Values for the Investment Funds of our
Separate Account are determined at the end of each business day.
The Unit Value of any Investment Fund for any business day is equal to the
Unit Value for the preceding business day multiplied by the Net Investment
Factor for that Investment Fund on that business day.
A Net Investment Factor for each Investment Fund is determined every business
day as follows:
o First, we take the value of the shares belonging to the Investment Fund
in the corresponding Portfolio of The Hudson River Trust or EQ Advisors
Trust, respectively, at the close of business that day (before giving
effect to any amounts allocated to or withdrawn from the Investment Fund
for that day). For this purpose, we use the share value reported to us by
the Portfolio.
o Then, we divide this amount by the value of the amounts in the Investment
Fund at the close of business on the preceding business day (after giving
effect to any amounts allocated or withdrawn for that day).
o Finally, we subtract any daily charge for fees or expenses payable by the
Investment Fund, other than the participant service charge (see
"Deductions and Charges").
Illustration of Changes in Unit Values. Generally, if on a particular
Business Day investment income and realized and unrealized capital gains
exceed realized and unrealized capital losses and any expense charges, the
Unit Value would be greater than the value for the previous period.
For example, assume that at the close of trading on a Monday, the value of an
Investment Fund's assets is $2,500,000, and the Unit Value is $10. If on the
next business day, Tuesday, the investment income and realized and unrealized
capital gains exceed realized and unrealized losses by $7,500, and the daily
accrual for expenses charged to the Trust is $50, the Unit Value for that day
would be calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
1. Unit Value for Monday ........... $10
2. Value of assets at close of
business on Monday .............. $2,500,000
3. Excess of investment income and
realized and unrealized capital
gains over realized and
unrealized losses ............... $7,500
4. Daily accrual for expenses
(administration charges and
certain expenses borne directly
by the Investment Funds) charged
to the Investment Fund .......... $50
5. Value of assets, less charge for
expenses, at close of business
day on Tuesday, (2) + (3) -(4) .. $2,507,450
6. Net Investment Factor (5)
divided by (2) .................. 1.00298
7. Unit Value for Tuesday
(1) X (6) ....................... $10.0298
</TABLE>
If, on the other hand, the realized and unrealized losses exceeded investment
income and realized and unrealized capital gains on that day by $7,500, the
Unit Value for Tuesday would have been $9.9698.
GUARANTEED RATE ACCOUNTS
Contributions to a Guaranteed Rate Account are credited with interest at a
fixed rate for one-year and three-year periods. The amount of the
contribution is guaranteed by us (before deduction of any applicable
participant service charge). The effective guaranteed annual rate will always
be at least 3%. New one and three-year Guarantees will be offered each
quarter, with the new Guaranteed Rates generally being announced at least 10
days before the beginning of the quarter. Contributions are permitted at any
time. Withdrawals or transfers prior to maturity are restricted and are also
subject to a premature withdrawal charge, except under certain limited
circumstances.
For more information on the Guaranteed Rate Accounts, see "Part 2: The
Guaranteed Rate Accounts" in the SAI.
WITHDRAWALS
All or part of the Participant's Account Balance in the Investment Funds of
the
17
<PAGE>
Separate Account plus the Participant's Guaranteed Rate Account Cash Values
may be withdrawn by submitting the proper form to us.
Withdrawals may be taxable, subject to Federal income tax withholding, and
may also be subject to penalties if withdrawals are made prior to age 59 1/2.
A Participant should consult with a tax advisor, as well as review the
provisions of the retirement program before making a withdrawal. See "Part
1--Federal Income Tax Aspects of the Retirement Programs" in the SAI.
Generally, the request for a withdrawal is sent directly to us by the
Participant. In the case of certain TSAs, the Participant notifies the
employer, who will submit the Participant's request to us.
The request for a partial withdrawal should specify the dollar amount of the
withdrawal and the Investment Option from which the withdrawal should be
made. If not specified, the withdrawal will be made from each Investment
Option on a pro rata basis.
Withdrawals pursuant to a periodic distribution option from the Investment
Funds will be subject to certain restrictions described below under
"Retirement Benefits."
The request for a withdrawal should be made on the form supplied by us for
that purpose and sent to us. If a full withdrawal is requested, the
Participant's certificate should accompany the withdrawal request.
Withdrawals are made by reducing the number of Units the Participant has in
each Investment Fund from which withdrawals are to be made. For each
Investment Fund, the number of Units deducted is determined by dividing the
dollar amount of the withdrawal by that Fund's Unit Value on the business day
we receive a correctly completed withdrawal request. Withdrawals which result
in a total remaining Account Balance of less than $100 may be considered a
request to surrender unless we are told by the Participant to keep the
account active.
Except as stated under "Miscellaneous--Deferment Provisions," we will pay all
single sum payments from the Investment Funds within seven days after the
date as of which the amount of the payment is determined.
For TSAs, restrictions on distributions (whether by withdrawal, surrender or
annuitization) apply to the amount of the Participant's salary reduction
(elective deferral contributions and related earnings). These restrictions do
not apply to such amounts as of December 31, 1988 (or to the extent such
amounts were carried over from a prior TSA). To take advantage of this
grandfathering for transferred amounts, the participant or employer must
notify us in writing of the December 31, 1988 account balance. TSA
withdrawals may also require spousal consent. Distributions of restricted
salary reduction amounts may be made only if the Participant attains age 59
1/2, dies, is disabled, separates from service or incurs a financial
hardship. Hardship distributions are limited to the amount actually
contributed under a salary reduction agreement, without earnings.
TRANSFERS AMONG THE INVESTMENT OPTIONS
Participants may transfer all or a portion of their Account Balances in one
Investment Fund to any other Investment Fund at any time without charge or
tax liability. Participants may make transfers using the AIM System.
Procedures have been established by Equitable Life that are considered to be
reasonable and are designed to confirm that instructions communicated by
telephone are genuine. Such procedures include requiring certain personal
identification information prior to acting on telephone instructions and
providing written confirmation of instructions communicated by telephone. If
Equitable Life does not employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, it may be liable for any
losses arising out of any action on its part or any failure or omission to
act as a result of its own negligence, lack of good faith, or willful
misconduct. In light of the procedures established, Equitable Life will not
be liable for following telephone instructions that it reasonably believes to
be genuine. We may discontinue the telephone transfer service at any time
without notice.
If amounts are transferred from one Investment Fund to another Investment
Fund, Units in one Investment Fund are "sold"
18
<PAGE>
and new Units are "purchased" in the second Investment Fund. We will make the
transfer as of the business day on which the transfer request is received.
Transfers from the Guaranteed Rate Accounts are subject to special rules set
forth in the SAI. Participants may not transfer amounts from the Guaranteed
Rate Accounts during the Open Period. Thereafter, transfers made before the
maturity of a GRA will be subject to a penalty. Transfers will not change the
allocation of any future contributions to the Investment Options.
DEATH AND DISABILITY BENEFITS
For either a death or disability payment, the Account Balance is determined
as of the business day we receive written notification and proof of death or
disability.
If we receive notification of a Participant's death prior to the
Participant's Retirement Date, we will pay the Participant's Account Balance
to the designated beneficiary, subject to any restrictions under a TSA
retirement program. If the designated beneficiary is the Participant's
surviving spouse, the distribution of the Account Balance need not commence
until the earlier of (1) the date the Participant would have attained age 70
1/2 or (2) the date the surviving spouse elects payment to commence.
Depending on the Participant's election, the death benefit will be paid as a
single sum, as periodic payments, as an annuity or as a combination of the
three. If no death benefit election is in effect, the beneficiary may elect a
single sum or an alternate form of benefit payment within the time limit
prescribed in the Code. Different elections may have different tax
consequences. Distributions received by a beneficiary are generally given the
same tax treatment the Participant would have received if distribution had
been made to the Participant. See "Part 1--Federal Income Tax Aspects of the
Retirement Programs" in the SAI for more information.
In the case of disability prior to a Participant's Retirement Date, the
Account Balance will be paid to the Participant, subject to any restrictions
under a TSA retirement program.
RETIREMENT BENEFITS
Retirement. Upon enrollment, Participants are asked to specify a Retirement
Date when retirement benefits are expected to begin. If the Participant fails
to specify a Retirement Date, we will assume it is age 65. The Retirement
Date can be changed at any time but must be on the first day of a calendar
month. It may be changed by written notice to us and will become effective on
the date it is received.
Distributions generally must commence no later than April 1st of the calendar
year following the year in which the Participant attains age 70 1/2. Once
required distributions begin, subsequent required distributions must be made
by December 31st of each calendar year. Special rules may apply to a TSA
participant regarding when minimum distributions must commence from the value
of the TSA. These rules are discussed more fully in the SAI.
Forms of Retirement Benefits. Subject to the provisions of the retirement
program under which the Participant is covered, at the Participant's
Retirement Date the Participant's Account Balance in the Investment Funds and
the Guaranteed Rate Account Cash Values are applied to provide a retirement
benefit as a single sum, a periodic distribution option, a fixed annuity or a
combination of these options. The Participant's Guaranteed Rate Accounts will
not be subject to the premature withdrawal charge if either of the following
options is elected: (1) a fixed annuity or (2) a periodic distribution option
whereby payments are made over a period of greater than three years.
Unless a TSA retirement program specifies differently, if the Participant has
not elected a retirement benefit before the Retirement Date selected, the
Normal Form of Annuity Benefit will be purchased. In the case of certain
TSAs, the Participant may be required to elect a joint and survivor annuity
payout unless the Participant's spouse consents in writing to a contrary
election. Participants should ask their employers whether this requirement is
applicable.
If the Participant has not already selected a form of annuity six months
before the
19
<PAGE>
Retirement Date, we will send an appropriate notification form on which the
Participant may indicate the type of annuity desired or confirm to us that
the Normal Form of Annuity Benefit is to be purchased. If we do not receive a
completed notification form on or before the Retirement Date, the
Participant's Account Balances and Guaranteed Rate Account Cash Values will
remain invested until we have received written instructions.
Normal Form of Annuity Benefit. The Normal Form of Annuity Benefit payable is
the Full Cash Refund Annuity. This is a fixed annuity for the lifetime of the
Annuitant. The Participant's beneficiary will receive a cash refund if, at
the Participant's death, the total annuity payments do not equal the amount
that was applied to provide the annuity. The refund equals the difference
between the amount applied to purchase the annuity and the annuity payments
actually received.
Once fixed annuity payments commence, the amount of each payment does not
change. The minimum amount of the fixed payments is determined from tables in
the certificate which show monthly payments for each $1,000 applied (after
deduction of any applicable taxes and the fixed annuity administrative fee
described below) and depends on the form of annuity selected and the age of
the Annuitant. If our group annuity rates for payment of proceeds or our rate
for single premium immediate annuities then in effect at the Participant's
Retirement Date should produce a larger payment, these rates will apply in
lieu of the minimum rates shown in the tables. We may change the amount of
the monthly payments shown in the certificates for new Participants.
Periodic Distribution Option. This option is designed to pay out the
Participant's entire Account Balance in monthly, quarterly, semi-annual or
annual installment payments over a minimum three-year period (as you or your
beneficiary may specify). This period may not generally exceed applicable
life expectancy limitations as described under "Part 1--Federal Income Tax
Aspects of the Retirement Programs" in the SAI.
The amount of each payment can be calculated in one of two ways: either the
Participant can specify a dollar amount or a time period. If a time period,
the payment is determined by dividing the remaining Account Balances by the
number of remaining payments. Withdrawals are made pro-rata from each
Investment Option. Such periodic payments may currently be made from the
Guaranteed Rate Accounts without premature withdrawal charge; however, we
retain the right to suspend such distributions from the Guaranteed Rate
Accounts in the future.
An initial monthly payment of at least $50 is required under the Periodic
Distribution Option. After installment payments have begun, Participants may
continue to transfer amounts among the Investment Options as they prefer. By
written notice to us, the Participant may make a partial withdrawal or elect
to stop the installment payments and receive the Account Balance in a single
sum.
Election of Other Annuities or Optional Retirement Benefits. The
Participant's Account Balance may be used to provide forms of fixed annuities
(other than the Normal Form of Annuity Benefit) that are offered by us,
including joint and survivor annuities. Payments made under life or joint
life annuities which do not specify a minimum distribution period terminate
with the death of the last surviving annuitant.
A participant may, therefore, specify a minimum distribution period whereby
benefits would continue to a beneficiary. A participant may not specify a
minimum distribution period that is greater than the participant's life
expectancy or the life expectancy of the beneficiary. If the beneficiary is
someone other than the Participant's spouse, payments to the surviving
beneficiary must be limited as prescribed in Proposed Treasury Regulations.
See "Part 1--Federal Income Tax Aspects of the Retirement Programs" in the
SAI.
Once a life annuity takes effect, the Annuitant may not redeem or change it
to any other form of benefit. If payment under an annuity continues to a
beneficiary, the beneficiary will have the right to redeem the annuity for
its commuted value. An annuity is available only if the amount to be applied
is $2,000 or more and would result in an initial payment of at least $20.
20
<PAGE>
REVOCATION RIGHTS
The Participant can revoke participation under a certificate and the
certificate may be cancelled by returning it to us within 10 days (or longer
if your state requires) after receipt by the Participant. We will refund all
contributions made or, if greater, with respect to contributions allocated to
the Investment Options, we will refund the Participant's Account Balance,
computed on the business day we receive the certificate.
The Participant should consult a tax advisor before deciding to revoke, as
cancellation may have adverse tax consequences. For more complete
information, see "Part 1--Federal Income Tax Aspects of the Retirement
Programs" in the SAI.
YEAR 2000 PROGRESS
Equitable Life relies upon various computer systems in order to administer
the Retirement Programs and operate the Investment Options. Some of these
systems belong to service providers who are not affiliated with Equitable
Life.
In 1995, Equitable Life began addressing the question of whether its computer
systems would recognize the year 2000 before, on or after January 1, 2000,
and Equitable Life believes it has identified those of its systems critical
to business operations that are not Year 2000 compliant. By year end 1998,
Equitable Life expects that the work of modifying or replacing non-compliant
systems will substantially be completed and expects a comprehensive test of
its Year 2000 compliance will be performed in the first half of 1999.
Equitable Life is in the process of seeking assurances from third party
service providers that they are acting to address the Year 2000 issue with
the goal of avoiding any material adverse effect on services provided to
Participants and on operations of the Investment Options. Any significant
unresolved difficulty related to the Year 2000 compliance initiatives could
have a material adverse effect on the ability to administer the Retirement
Programs and operate the Investment Options. Assuming the timely completion
of computer modifications by Equitable Life and third party service
providers, there should be no material adverse effect on our ability to
perform these functions.
MISCELLANEOUS
Assignment. Unless contrary to applicable law, the certificate, or any rights
to any payment thereunder, may not be assigned, sold, discontinued or pledged
as collateral to any person other than to us.
Beneficiaries. The Participant may name the beneficiary at the time of
enrollment. The beneficiary can be changed any time during the Participant's
lifetime. See "Federal Income Tax Aspects of the Retirement Programs" in the
SAI for spousal consent limitations for certain TSAs.
Deferment Provisions. Assuming we have been properly notified of a death,
disability or other withdrawal, we will normally make payment of the Account
Balance within seven days. However, we may defer payments from the Investment
Funds for any period during which (1) the New York Stock Exchange is closed
or trading on it is restricted, (2) sale of securities or determination of
the fair value of the Investment Fund assets is not reasonably practicable
because of an emergency or (3) the SEC by order permits postponement for the
protection of persons having interests in the Investment Funds.
Disqualification. In the event that a retirement program funded under the
certificates offered by this prospectus fails to qualify under the Code for
the tax-favored status for which it was purchased, we have the right to
terminate the certificate and pay to the Participant, plan trustee or any
other designated payee the sum of the Investment Fund Account Balances and
the Guaranteed Rate Account Cash Value less any deduction for Federal income
tax payable by us as a result of that non-qualification.
Contract Holder. Regular IRA, Roth IRA, TSA, SEP and SIMPLE certificates are
issued under group annuity contracts between us and Chase, as Trustee or
Custodian. The sole responsibility of Chase is to serve as party to the
contracts. It has no responsibility for the administration of these programs,
for payments to the Investment Options or to Participants, or for any
distributions or duties under these contracts. Under certain circumstances,
we may make changes in the certificates and contracts as described under
"Changes in Applicable Law."
21
<PAGE>
COMPARATIVE
INVESTMENT PERFORMANCE
The comparisons should be considered in light of the investment policies and
objectives of each of the Investment Funds (which are substantially similar
to the investment policies and objectives of the corresponding Portfolios of
the Trusts). Since the Investment Funds do not distribute dividends or
interest, the market indices have been adjusted to reflect reinvestment of
dividends and interest to provide comparability. Because of the continually
changing portfolio mix of the Balanced Fund, a comparison with specific
benchmarks is not included.
The performance information shown in the tables does not represent the actual
experience of amounts invested by a particular Participant. The amount and
timing of the Participant's investment also affect individual performance as
does the participant service charge. The performance of the Investment Funds
shown in the tables reflects the deduction of asset-based charges but does
not reflect the effect of the participant service charge. As unmanaged groups
of securities, the benchmarks do not reflect deductions of any asset-based
charges for investment management, administration or other expenses.
Comparisons with these benchmarks, therefore, are of limited use. We include
them because they are widely known and may help you to understand the
universe of securities from which each Investment Fund is likely to select
its holdings.
FUND AND COMPARATIVE BENCHMARKS
ALLIANCE MONEY MARKET: Salomon Brothers
Three-Month T-Bill Index.
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES: Lehman Intermediate
Government Bond Index.
ALLIANCE HIGH YIELD: Merrill Lynch Master
High Yield.
ALLIANCE BALANCED: 50% S&P 500 Index
and 50% Lehman Government/Corporate Bond
Index.
ALLIANCE GROWTH & INCOME: 75% Standard
& Poor's 500 Index and 25% Value Line
Convertible Index.
ALLIANCE COMMON STOCK: Standard &
Poor's 500 Index.
ALLIANCE AGGRESSIVE STOCK: 50% Standard
& Poor's Mid-Cap Total Return Index and
50% Russell 2000 Small Stock Index.
ALLIANCE GLOBAL: Morgan Stanley Capital
International World Index.
ALLIANCE CONSERVATIVE INVESTORS:
70% Lehman Treasury Bond Composite Index
and 30% Standard & Poor's 500 Index.
ALLIANCE GROWTH INVESTORS: 30% Lehman
Government/Corporate Bond Index and
70% Standard & Poor's 500 Index.
22
<PAGE>
ANNUAL PERCENT CHANGES IN UNIT VALUE
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE INTERMEDIATE ALLIANCE
MONEY GOVERNMENT HIGH
DECEMBER 31 MARKET SECURITIES (A) YIELD
- ------------- ---------- -------------- ----------
<S> <C> <C> <C>
1987 ......... 5.8% 2.5% 4.0(b)%
1988 ......... 6.7 5.4 11.4
1989 ......... 8.7 15.1 0.6
1990 ......... 7.7 5.9 -4.8
1991 ......... 5.6 13.7 24.6
1992 ......... 3.0 4.9 11.3
1993 ......... 2.5 10.0 22.3
1994.......... 3.8 -4.3 -3.5
1995.......... 5.3 13.0 19.2
1996.......... 4.9 3.4 22.0
1997 ......... 5.0 6.9 17.8
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE ALLIANCE
ALLIANCE COMMON AGGRESSIVE ALLIANCE GROWTH GROWTH CONSERVATIVE
DECEMBER 31 BALANCED STOCK STOCK GLOBAL & INCOME INVESTORS INVESTORS
- ------------- ---------- ---------- ------------ ----------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1987 ......... -2.8% 6.7% -15.2(c)% -14.3(b)% -- -- --
1988 ......... 13.2 10.6 1.3 11.7 -- -- --
1989 ......... 25.4 23.9 43.3 24.9 -- -- --
1990 ......... -0.4 -12.4 7.0 -6.2 -- -- --
1991 ......... 40.7 43.7 75.6 26.4 -- -- --
1992 ......... -3.3 2.7 -3.8 -1.3 -- -- --
1993 ......... 11.9 24.4 16.0 31.3 -- -- --
1994.......... -8.1 -2.6 -4.1 4.9 -1.2(d)% -3.1(d)% -1.1(d)%
1995.......... 19.2 31.9 30.9 18.2 23.1 24.9 18.8
1996.......... 11.2 23.8 21.6 14.0 19.2 11.6 3.9
1997 ......... 14.5 28.7 10.3 11.0 26.1 15.8 11.9
</TABLE>
- ------------
(a) Prior to September 6, 1991, the Bond Fund.
(b) From June 2, 1987, the date contributions were first allocated to
these Funds.
(c) From June 1, 1987, the date contributions were first allocated to the
Funds.
(d) From May 1, 1994, the date contributions were first allocated to
these Funds.
Rates of return are time weighted and include reinvestment of investment
income. The annualized rate assumes an investment of the same amount invested
at the beginning of each year with the percentage demonstrating the effective
annual rate over the period shown.
PAST PERFORMANCE IS NOT A GUARANTEE OR INDICATION OF FUTURE PERFORMANCE. NO
PROVISIONS HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS, OR ANY
TAX PENALTIES, UPON DISTRIBUTION.
23
<PAGE>
ANNUALIZED RATES OF RETURN--DECEMBER 31, 1997
<TABLE>
<CAPTION>
DATE OF INCEPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS SINCE INCEPTION
----------------- ------ ------- ------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Alliance Money Market ... February 5, 1982 5.0% 5.1% 4.3% 5.3% 6.5%
Salomon Bros. 3-Mo.
T-Bill Index .......... 5.2 5.4 4.7 5.6 6.9
Alliance Intermediate
Gov't Securities (a) . February 5, 1982 6.9 7.7 5.6 7.2 9.9
Lehman Intermediate
Gov't Bond Index ...... 7.7 8.6 6.4 -- 7.5
Alliance High Yield .... June 2, 1987 17.8 19.7 15.1 11.6 11.3
Merrill Lynch Master
High Yield ............ 12.8 14.5 11.7 12.1 11.4
Alliance Balanced ....... February 5, 1982 14.5 14.9 9.2 11.6 13.2
50% S&P 500 Index/ 50%
Lehman Gov't/Corp.
Bond Index............. 21.6 21.7 14.6 14.4 --
Alliance Common Stock ... February 5, 1982 28.7 28.1 20.5 16.3 17.8
Standard & Poor's 500
Index ................. 33.4 31.1 20.3 18.0 15.4
Alliance Aggressive
Stock.................. June 1, 1987 10.3 20.6 14.2 17.7 15.0
50% S&P Midcap Total
Return Index/50%
Russell 2000 Small
Stock Index............ 27.3 24.9 17.1 17.7 15.1
Alliance Global ......... June 2, 1987 11.0 14.4 15.5 12.9 10.5
Morgan Stanley Capital
Int'l World Index ..... 15.8 16.6 15.3 10.6 8.2
Alliance Growth &
Income ............... May 1, 1994 26.1 22.7 -- -- 18.0
75% Standard & Poor's
500 Stock Index/25%
Value Line Convertible
Index ................. 29.5 28.6 -- -- 20.1
Alliance Growth
Investors ............ May 1, 1994 15.8 17.3 -- -- 13.3
30% Lehman Gov't/Corp.
Bond Index/70%
Standard & Poor's 500
Index ................. 26.3 25.6 -- -- 14.5
Alliance Conservative
Investors ............ May 1, 1994 11.9 11.4 -- -- 9.0
70% Lehman Treasury
Bond Composite
Index/30% Standard &
Poor's 500 Index ...... 16.7 17.2 -- -- 11.4
</TABLE>
- ------------
(a) Prior to September 6, 1991, the Bond Fund.
(b) From June 2, 1987, the date contributions were first allocated to
these Funds.
(c) From June 1, 1987, the date contributions were first allocated to the
Funds.
(d) From May 1, 1994, the date contributions were first allocated to
these Funds.
Rates of return are time weighted and include reinvestment of investment
income. The annualized rate assumes an investment of the same amount invested
at the beginning of each year with the percentage demonstrating the effective
annual rate over the period shown.
PAST PERFORMANCE IS NOT A GUARANTEE OR INDICATION OF FUTURE PERFORMANCE. NO
PROVISIONS HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS, OR ANY
TAX PENALTIES, UPON DISTRIBUTION.
24
<PAGE>
FEDERAL INCOME TAX ASPECTS
OF THE RETIREMENT
PROGRAMS
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of annuities. In addition, the Treasury Department may amend
existing regulations, issue new regulations, or adopt new interpretations of
existing laws. State tax laws or for United States residents, foreign tax
laws, may affect the tax consequences to the Participant or the beneficiary.
These laws may change from time to time without notice and, as a result, the
tax consequences may be altered. There is no way of predicting whether, when
or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest consulting a legal or tax adviser.
TAX-SHELTERED ANNUITY ARRANGEMENTS
(TSAS)
An employee of a public educational institution or a tax-exempt organization
described in Code Section 501(c)(3) may exclude from Federal gross income for
a tax year contributions made to a TSA by the employer in that year subject to
the limitations provided in the Code and in related regulations. When the
employee makes withdrawals or surrenders the certificate, generally the full
amount will be included in income. Premature withdrawals may be subject to a
10% Federal tax penalty. In addition, TSA amounts relating to salary
reduction agreements cannot be distributed prior to age 59 1/2, death,
disability, separation from service or hardship. In the event of hardship,
only the salary reduction contributions can be distributed.
INDIVIDUAL RETIREMENT ANNUITIES (REGULAR AND ROTH IRAS)
Compensation based annual contributions may be made to individual retirement
arrangements which individuals establish with no employer involvement.
An individual may make contributions to a Regular IRA until age 70 1/2 as
long as the individual still has compensation. An individual who has
compensation may make contributions to a Roth IRA even after age 70 1/2 as
long as adjusted gross income is within specific limits. Generally, $2,000 is
the maximum amount of contributions which may be made to all Regular and Roth
IRAs by an individual in any taxable year. The above limit may be less where
the individual's earnings are below the applicable amount. These limits do
not apply to rollover or custodian-to-custodian contributions into either
kind of IRA. Subject to the rules of the Code an individual and a nonworking
spouse can together contribute annually an aggregate maximum of $4,000 to
Regular and Roth IRAs for the individual and the spouse (but no more than
$2,000 to any one IRA certificate). There is no tax on amounts credited to
Regular IRAs until the amounts are withdrawn from the certificate.
Distributions from Regular IRAs are generally fully includible in gross
income. If specified criteria for Roth IRAs are met, withdrawals may be
tax-free; otherwise, contributions are recovered tax-free first before
earnings are taxable. The taxable portion of certain early withdrawals may be
subject to a 10% Federal tax penalty.
IRAS UNDER SIMPLIFIED EMPLOYEE
PENSION PLANS (SEPS AND SIMPLES)
An employer can establish a SEP for its employees and can make contributions
to a SEP for each eligible employee. A Regular IRA funding a SEP is, like
other IRAs, owned by the Participant. Most of the rules applicable to Regular
IRAs also apply. A major difference is the amount of permissible
contributions. An employer can annually contribute an amount for an employee
up to the lesser of $24,000 or 15% of the employee's compensation,
(determined without taking into account the employer's contribution to the
SEP). This $24,000 maximum, based on the 1998 statutory compensation limit of
$160,000, may be further adjusted for cost of living changes in future years.
25
<PAGE>
An eligible employer may establish a "SIMPLE" plan to make contributions to
special individual retirement accounts or individual retirement annuities for
its employees ("SIMPLE IRAs"). A SIMPLE IRA is a form of IRA, owned by the
Participant, and generally the rules applicable to Regular IRAs discussed
above apply. There are differences in the amount and type of permissible
contributions (employee salary reduction contributions of up to $6,000 may be
made in 1998; the employer must make contributions, generally a
dollar-for-dollar match up to 3% of compensation). Also, employees who have
not participated in the employer's SIMPLE IRA plan for at least two full
years may be subject to an increased penalty tax on withdrawals or transfers
of SIMPLE IRA funds.
Further discussion of tax aspects of TSA, Regular IRA, Roth IRA, SEP and
SIMPLE IRA contributions, distributions and other matters is available in the
SAI.
DEDUCTIONS AND CHARGES
The deductions and charges discussed below apply during the accumulation
period and if either the periodic distribution option or the fixed annuity
option is elected.
Participant Service Charge. On the last day of each calendar quarter, a
charge will be made against the Account Balance of each Participant as a
reimbursement for administrative expenses unrelated to sales, such as
salaries, rent, postage, telephone, travel, legal, actuarial and accounting
costs, office equipment and stationery. This charge is $15 per year for SEP
and SIMPLE IRAs certificates. The charge for IRA and TSA certificates or
contracts will not exceed $30 annually and will be deducted from the amounts
held in the Investment Options in accordance with Equitable Life's
administrative procedures then in effect.
The participant service charge applicable to a certificate depends on several
factors. It will vary depending on (1) the method by which payment is made to
us (payroll deduction or direct contribution), (2) the number of Participants
contributing through the same payroll deduction facility or group,(3) the
total contributions received from an affiliated group, (4) the nature of the
group purchasing the certificates, (5) the extent to which an employer
provides services that would otherwise be provided by us, and (6) other
circumstances which may have an impact on administrative expenses. We reserve
the right to change this charge upon advance written notice, or to impose the
charge on a less or more frequent basis, but in no case will it exceed $30
per year.
Administration Charge. Administrative expenses are charged directly to each
Investment Fund at the effective annual rate of 0.25% of the value of each
Investment Fund's assets attributable to the certificates. The charge is
designed as a reimbursement for administrative expenses not covered by the
participant service charge. This charge is reflected in the computation of
Unit Values.
Other Expenses. Certain additional costs and expenses are also charged
directly to the Investment Funds. These include, among other things, certain
expenses incurred in the operation of the Separate Account and the Investment
Funds, taxes, interest, SEC charges and certain related expenses including
printing of registration statements and amendments, outside auditing and
legal expenses and recordkeeping. These expenses are reflected in the Unit
Value. See "Certificate Provisions--Investment of Contributions in the
Investment Funds."
Deductions and Expenses of The Hudson River Trust and EQ Advisors Trust.
Deductions and expenses paid out of the assets of the Portfolios of The
Hudson River Trust and EQ Advisors Trust are described in the prospectuses
for The Hudson River Trust and EQ Advisors Trust attached hereto and also
detailed in the Fee Table in this prospectus. There are no deductions or
charges for sales expenses made from contributions received by us or upon any
withdrawals.
Expense Limitations. If in any calendar year the aggregate expenses of the
Alliance Money Market, Alliance Common Stock, Alliance Intermediate
Government Securities or Alliance Balanced Funds (including
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investment advisory fees and certain other Trust expenses attributable to
assets of such Investment Fund invested in a Portfolio of the Trust, and
asset-based charges for administration and expenses borne directly by the
Investment Funds, but excluding interest, taxes, brokerage and extraordinary
expenses permitted by appropriate state regulatory authorities) exceed 1% of
the value of the Alliance Money Market Fund's average daily net assets, or
1.5% of the value of the Alliance Common Stock, Alliance Intermediate
Government Securities and Alliance Balanced Fund's average daily net assets,
Equitable Life will reimburse that Fund for the excess. This expense
limitation cannot be changed without the Participant's consent. In addition,
Equitable Life reimburses the Alliance High Yield, Alliance Aggressive Stock
and Alliance Global Funds for aggregate expenses in excess of a voluntary
expense limitation of 1.5% of the value of each Fund's average daily net
assets. The voluntary expense limitation may be discontinued by Equitable
Life at its discretion.
Also, if the annual amount of management fees applicable to the Alliance
Money Market and Alliance Intermediate Government Securities Funds exceeds
0.35% of the average daily net asset value of either Fund, Equitable Life
will reimburse that Fund for such excess. This expense limitation is a
contractual right for Participants who enrolled prior to May 1, 1987 and
cannot be changed without the consent of those Participants. Equitable Life
has voluntarily agreed to impose this expense limitation for Participants who
enrolled after May 1, 1987 and reserves the right to discontinue this at any
time.
EQ Financial has entered into expense limitation agreements with EQAT with
respect to each Portfolio, pursuant to which EQ Financial has agreed to waive
or limit its fees and to assume other expenses so that the total annual
operating expenses of each Portfolio other than interest, taxes, brokerage
commissions, other expenditures which are capitalized in accordance with
generally accepted accounting principles, other extraordinary expenses not
incurred in the ordinary course of each Portfolio's business and amounts
pursuant to a plan adopted in accordance with Rule 12b-1 under the 1940 Act
are limited to certain amounts. See the EQAT prospectus for details. The Rule
12b-1 Plans provide that EQAT, on behalf of each Portfolio, may charge
annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of the Class IB shares. The 12b-1 fee will not
be increased for the life of the Contracts.
Fixed Annuity Administrative Charge. If a Participant elects the fixed
annuity option at retirement, an annuitization fee of up to $350 (depending
upon the date of enrollment in the program, as provided in your certificate)
will be deducted from the amount applied to purchase the annuity to
reimburse for administrative expenses associated with processing the
application for the annuity and with issuing each monthly payment. We may
give any Participant a better annuity purchase rate than those currently
guaranteed for the Program. The annuity administrative charge may be greater
than $350 in that case, unless otherwise provided in your certificate.
SEP/SIMPLE Enrollment Fee. A non-refundable fee of $25 will be charged upon
the enrollment of each Participant. It can either be paid by the employer or
deducted from the first contribution.
Guaranteed Rate Account Premature Withdrawal Charge. There is a charge for
most withdrawals made before the maturity date of the Guaranteed Rate
Account. This charge equals 7% of the amount withdrawn, or, if less, interest
earned. See the SAI, "Part 2--The Guaranteed Rate Accounts."
Charge for Premium or Other Applicable Taxes. In certain jurisdictions, a
charge for premium or other applicable tax currently ranging up to a maximum
of 5% on the amounts applied to purchase an annuity is imposed. Such taxes
will depend, among other things, on the Participant's place of residence,
applicable laws and the retirement option elected by the Participant. We
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reserve the right to deduct a charge for premium or other applicable taxes
based on the Participant's place of residence at the Participant's Retirement
Date. If an annuity option is elected, we reserve the right to deduct a
charge for any premium or other applicable taxes from the amount applied to
purchase the annuity or from contributions. If the periodic distribution
option is elected, a charge for any premium or other taxes will be deducted
from each payment when made. No charge for premium or other applicable taxes
will be applicable if a single sum is elected.
VOTING RIGHTS
THE HUDSON RIVER TRUST AND EQ ADVISORS
TRUST VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of The Hudson River Trust
and EQ Advisors Trust. Since we own the assets of the Separate Account, we
are the legal owner of the shares and, as such, have the right to vote on
certain matters. Among other things, we may vote:
o to elect the trust's Board of Trustees,
o to ratify the selection of independent auditors for each trust, and
o on any other matters described in each trust's current prospectus or
requiring a vote by shareholders under the 1940 Act.
Because The Hudson River Trust is a Massachusetts business trust and EQ
Advisors Trust is a Delaware business trust, annual meetings are not
required. Whenever a shareholder vote is taken, we will give Certificate
Owners the opportunity to instruct us how to vote the number of shares
attributable to their Certificates. If we do not receive instructions in time
from all Certificate Owners, we will vote the shares of a Portfolio for which
no instructions have been received in the same proportion as we vote shares
of that Portfolio for which we have received instructions. We will also vote
any shares that we are entitled to vote directly because of amounts we have
in an Investment Fund in the same proportions that Certificate Owners vote.
Each share of each Trust is entitled to one vote. Fractional shares will be
counted. Voting generally is on a Portfolio-by-Portfolio basis except that
shares will be voted on an aggregate basis when universal matters, such as
election of Trustees and ratification of independent auditors, are voted
upon. However, if the Trustees determine that shareholders in a Portfolio are
not affected by a particular matter, then such shareholders generally would
not be entitled to vote on that matter.
HOW WE DETERMINE A PARTICIPANT'S
VOTING SHARES
A Participant can participate in voting only on matters concerning a
Portfolio in which the Participant's assets have been invested. We determine
the number of The Hudson River Trust and EQ Advisors Trust shares in each
Investment Fund that are attributable to a certificate by dividing the amount
of the Account Balance allocated to that Investment Fund by the net asset
value of one share of the corresponding Portfolio of The Hudson River Trust
or EQ Advisors Trust as of the record date for that Trust's shareholder
meeting. (Fractional shares are counted). The record date for this purpose
must be no more than 60 days before the meeting of The Hudson River Trust and
EQ Advisors Trust. During payment under a periodic distribution option, as
the amounts are paid out and the Account Balance allocated to the Investment
Funds declines, the number of votes will decrease correspondingly.
We will send proxy material and a form for giving us voting instructions to
each Participant who has a voting interest. Votes may be cast in person or by
proxy.
VOTING RIGHTS OF OTHERS
Currently, we control each trust. EQ Advisors Trust shares are sold only to
our separate accounts. The Hudson River Trust shares are held by other
separate accounts of ours and by separate accounts of insurance companies
unaffiliated with us. Shares held by these separate accounts will probably be
voted according to the instructions of the owners of insurance policies and
contracts issued by those insurance companies. The Hudson River Trust's Board
of Trustees intends to monitor events in order to identify any material
irreconcilable conflicts that
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possibly may arise and to determine what action, if any, should be taken in
response. If we believe that The Hudson River Trust's response to any of
those events insufficiently protects our Certificate Owners, we will see to
it that appropriate action is taken to protect our Certificate Owners.
SEPARATE ACCOUNT VOTING RIGHTS
Under the 1940 Act, certain actions (such as some of those described under
"Changes in Applicable Law") may require Participant approval. In that case,
a Participant will be entitled to one vote for every unit the Participant has
in the Investment Funds of our Separate Account. We will cast votes
attributable to any amounts we have in the Investment Funds of our Separate
Account in the same proportions as votes cast by Participants.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
REPORTS
Before payments start under a certificate, reports will be sent to the
Participant at least annually showing as of a specified date (1) the number
of units credited to each Investment Fund under the certificate, (2) the Unit
Values, (3) the Account Balance of each Investment Fund and Guaranteed Rate
Account and the total and (4) the Cash Values of the Guaranteed Rate
Accounts. Similar reports will be sent to persons receiving payments under
the periodic distribution option. All transactions will be individually
confirmed.
As required by the 1940 Act, each Participant will be sent semi-annually a
report containing financial statements and a list of the portfolio securities
of each Portfolio.
LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings,
none of which, in our view, are likely to have a material adverse effect upon
the Separate Accounts, our ability to meet our obligations under the
Contracts or the Contracts distribution.
REGULATION
We are subject to regulation and supervision by the Insurance Department of
the State of New York which periodically examines our affairs. We are also
subject to the insurance laws and regulations of all jurisdictions in which
we are authorized to do business. The certificates and contracts have been
filed with and approved by the Insurance Department of the State of New York.
Its regulation and approval do not, however, involve any supervision of the
investment policies of the Investment Funds or The Hudson River Trust, EQ
Advisors Trust, or of the selection of any investments except to determine
compliance with the Insurance Laws of New York.
We are required to submit annual statements of our operations, including
financial statements, to the insurance departments of the various
jurisdictions in which we do business for purposes of determining solvency
and compliance with local insurance laws and regulations.
ADDITIONAL INFORMATION
A Registration Statement under the Securities Act of 1933 has been filed with
the SEC relating to the offering described in this prospectus. This
prospectus does not include all the information included in the Registration
Statement, certain portions of which, including the SAI, have been omitted
pursuant to the rules and regulations of the SEC. The omitted information may
be obtained by requesting a copy of the registration statement from the SEC's
principal office in Washington, D.C., upon payment of the SEC's prescribed
fees, or by accessing the SEC's Electronic Data Gathering, Analysis and
Retrieval (EDGAR) System. A free copy of the SAI may be obtained by calling
the
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toll-free number on the first page of this prospectus or by submitting the
coupon below.
- -----------------------------------------------------------------------------
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
- -----------------------------------------------------------------------------
Part 1--Federal Income Tax Aspects of the Retirement Programs
Part 2--The Guaranteed Rate Accounts
Part 3--Reorganization
Part 4--Experts
Part 5--Money Market Fund Yield
Information
Part 6--Financial Statements
- -----------------------------------------------------------------------------
PLEASE SEND ME A FREE COPY OF THE
STATEMENT OF ADDITIONAL INFORMATION.
Equitable Life 300+ Series
Box 2468 G.P.O.
New York, New York 10116
ATTN: SAI Request for Separate Account
No. 301
- ----------------------------------------------------------
Name
- ----------------------------------------------------------
Address
- ----------------------------------------------------------
City State Zip
- -----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1998
CERTIFICATES AND
GROUP ANNUITY CONTRACTS
FUNDED THROUGH THE INVESTMENT FUNDS OF
SEPARATE ACCOUNT NO. 301
OF
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
Part 1 -Federal Income Tax Aspects of the Retirement
Programs ................................................... 2
Part 2 -The Guaranteed Rate Accounts......................... 21
Part 3 -Reorganization....................................... 26
Part 4 -Experts.............................................. 26
Part 5 -Alliance Money Market Fund Yield Information ........ 26
Part 6 -Financial Statements................................. 27
</TABLE>
- -----------------------------------------------------------------------------
This Statement of Additional Information (SAI) is not a prospectus. It should
be read in conjunction with the Separate Account No. 301 prospectus, dated
May 1, 1998.
A copy of the prospectus to which this SAI relates is available at no charge
by writing to Equitable Life 300 + Series at P. O. Box 2468, G.P.O. New York,
New York 10116 or by calling 1-800-248-2138.
Copyright 1998 The Equitable Life Assurance Society of the United States.
All rights reserved.
<PAGE>
PART 1--FEDERAL TAX
CONSIDERATIONS OF THE
RETIREMENT PROGRAMS
This Section generally provides current Federal tax information with respect
to contributions, distributions and payments under the various tax-favored
retirement programs utilizing the Investment Options described in the
prospectus, although some information on other provisions is also provided.
In addition to being subject to the Internal Revenue Code of 1986, as amended
(the Code) and applicable Treasury Regulations, certain retirement plans may
also be subject to The Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which is administered by The Department of Labor ("DOL").
You should be aware that Federal tax laws and ERISA are continually under
review by the Congress, and any changes in those laws, or in the regulations
interpreting those laws, may affect the tax treatment of amounts invested in
the certificate. Because of the complexity of the law and the fact that the
tax results will vary according to the actual circumstances of the individual
involved, we cannot provide detailed tax information in this prospectus. This
prospectus does not address state and local income taxes and other taxes, or
federal gift and estate taxes. Not every certificate has every feature
discussed in this Part. The provisions of the Code and ERISA are highly
complex. For complete information on these provisions, as well as all other
Federal, state, local and other tax considerations, qualified legal and tax
advisors should be consulted.
TAX SHELTERED ANNUITY
ARRANGEMENTS (TSAS)
Under the provisions of Section 403(b) of the Code, an employee of a public
educational institution or a tax-exempt organization described in Section
501(c)(3) of the Code may exclude from Federal gross income contributions
made on the employee's behalf to a TSA.
Except in the case of a rollover or direct transfer contribution from another
TSA, tax-deferred contributions to a TSA must be made by the employer, which
forwards all the contributions made on behalf of the Participant to us for
investment in accordance with the Participant's directions.
Annual Contributions to TSAs
Commonly, some or all of the contributions made to the TSA are made under a
salary reduction agreement between the employee and the employer. These
contributions are called "salary reduction" or "elective deferral"
contributions. However, a TSA can also be wholly or partially funded through
nonelective employer contributions or after-tax contributions.
Annual contributions to TSAs made through the employer's payroll are limited.
Generally, this contribution limit is the lowest of the following: (1) the
annual "maximum exclusion allowance" for the employee in Section 403(b)(2) of
the Code, (2) the annual limit under Section 415 of the Code on employer
contributions to defined contribution plans and (3) the annual limit on all
elective deferrals.
If contributions to a TSA exceed the applicable limit in any year, the excess
will be included in the Participant's gross income and taxed as ordinary
income. In certain situations discussed below, excess contributions may be
distributed to avoid tax penalties.
In general, the "maximum exclusion allowance" for any Participant for a
taxable year is equal to the excess, if any, of (1) the amount determined by
multiplying 20 percent of the Participant's includable compensation, as
defined in the Code, by the number of years of employment with the employer,
over (2) the amounts contributed by the employer to tax-favored retirement
plans (including TSAs, qualified plans and eligible deferred compensation
plans of state and local governments and tax-exempt organizations, also known
as "457 Plans" or "EDC Plans"), which were excludable from the employee's
federal gross income for any prior tax year.
The overall contribution limit referred to above applicable to qualified
defined contribution plans under Section 415 of the Code is 25% of the
Participant's compensation in a calendar year (or in any other 12-month
period chosen by the Participant) up to a maximum contribution of
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$30,000. In 1998, compensation or earned income in excess of $160,000 cannot
be considered in calculating contributions to the plan. This amount may be
further adjusted for cost of living changes in future years.
Special limits on contributions apply to anyone who participates in more than
one qualified plan or who controls another trade or business. There is also
an overall limit on the total amount of contributions and benefits under all
tax-favored retirement programs in which a person participates.
Employees of certain tax-exempt organizations (educational institutions,
hospitals, home health care agencies, health and welfare service agencies and
churches) may make an irrevocable election to increase the exclusion
allowance by applying one of three special limitations as provided under the
Code. Employees of church organizations are eligible for further special
elections which will increase either the overall contribution limit or the
exclusion allowance applicable to the employee.
The annual limit on all salary reduction or elective deferral contributions
under all plans of any employer an individual participates in is generally
limited to $10,000 in 1998. Note, however, that the maximum salary reduction
contribution that may be made by a Participant who participates both in a TSA
arrangement and an EDC plan will be limited to the lower maximum allowed
under Section 457 of the Code (in 1998, this is $8,000).
Special rules may apply to increase this limit in the case of an educational
organization, hospital, home health service agency, health and welfare
service agency, church or certain church related organizations.
Any excess deferral contributions which are not withdrawn by April 15
following the year of the deferral may cause the Certificate to fail to be
treated as a TSA.
Rollover or Direct Transfer Contributions to TSAs
Rollover contributions may be made to a Participant's TSA certificate from
TSAs under Section 403(b) of the Code (including custodial accounts under
Section 403(b)(7) of the Code). See "Tax Deferred Rollovers and Transfers"
below for a description of rollovers. With appropriate written documentation,
we will accept rollover contributions from "conduit IRAs" for TSA funds. See
"Regular Individual Retirement Annuities" below.
We will also accept direct transfer of TSA funds pursuant to Revenue Ruling
90-24 if the Participant provides us with acceptable documentation as to the
source of funds.
Penalties for Excess Deferrals
If an individual's aggregate elective deferrals under 401(k) plans and TSAs
exceed the permitted elective deferral limit in any taxable year ($10,000 in
1998) the individual will be taxed twice on the excess deferral--once in the
year of the deferral and again when a distribution occurs. If, in the case of
a TSA, the individual notifies the affected plan or plans and, by April 15 of
the following year, receives a distribution of the excess deferral and
related income and the individual takes a withdrawal of the excess amount by
April 15 following the year of the deferral, the excess deferral will only be
taxed in the year of deferral. Any related income will be taxed in the year
of the distribution. The distribution of the excess deferral plus income is
not treated as a withdrawal of restricted funds from a TSA, is not subject to
the 10% penalty tax on early retirement distributions from the TSAs and IRAs
and, with respect to TSAs, is not an eligible rollover distribution subject
to 20% mandatory federal income tax withholding discussed below. If excess
deferrals remain in the plan, the plan may be disqualified.
Limitations on Distributions
The Code sets forth certain withdrawal restrictions which apply to the salary
reduction or elective deferral portion of a TSA certificate, contributed
after December 31, 1988 (and earnings) plus earnings on the account balance
as of December 31, 1988. If a Participant directly transfers amounts to the
Certificate under Revenue Ruling 90-24, the Participant must provide us with
the December 31, 1988 account balance to avoid limits on withdrawals.
Withdrawals (whether by partial withdrawal, surrender of the contract or
annuitization) of restricted amounts may be made only if the
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Participant attains age 59 1/2, dies, is disabled, separates from service or
suffers a financial hardship. Hardship withdrawals are limited to the amount
actually contributed under the salary reduction contributions, without
earnings.
Minimum Distributions
Distributions of benefits accruing after 1986 (including earnings on pre-1987
contributions) must commence no later than April 1st of the calendar year
following the later of the calendar year in which the Participant attains age
70 1/2 or retires from service with the employer sponsoring the TSA. Once
required distributions begin, subsequent distributions must be made by
December 31st of each calendar year. TSA benefits which accrued prior to 1987
must be distributed commencing at age 75. Proposed Treasury Regulations
provide that in order for these special minimum distribution rules to apply
to a Participant, the issuer of the TSA must keep records of the pre-1987
account balance and make changes to that amount as necessary. To the extent a
Participant takes a distribution in order to comply with the minimum
distribution rules, and the amount of the distribution is in excess of the
amount the Code requires the Participant to receive for that particular year,
the issuer of the TSA must decrease the pre-1987 account balance by the
amount of that excess. Additional distribution rules may apply, and you
should consult your tax advisor regarding the timing of distributions from
your certificate.
The distributions may be in the form of a life annuity, a joint and survivor
annuity, or other periodic or lump sum form of payment which does not extend
beyond the life or life expectancy of the Participant or the lives or joint
life expectancies of the Participant and a beneficiary and which satisfies
certain minimum distribution and incidental benefit rules under the Code. If
a Participant dies before beginning required distributions, distributions
under the contract or certificate must be completed within five years after
death, unless payments begin within one year of death and are made over the
life (or a period certain which does not extend beyond the life expectancy)
of the beneficiary. If the Participant's spouse is the beneficiary,
distributions need not commence until the deceased Participant would have
attained age 70 1/2. In the alternative, the surviving spouse may elect to
roll over the death benefit into his or her own individual retirement
arrangement (Regular IRA). If a Participant dies after required payments have
begun, post-death payments must be made at least as rapidly as payments made
before the death of the Participant.
Failure to make required distributions may cause the disqualification of the
TSA. Disqualification results in current taxation of the Participant's entire
benefit. In addition, a 50% penalty tax is imposed on the difference between
the required distribution amount and the amount actually distributed.
Distributions from TSAs
Amounts held under TSAs are generally not subject to Federal income tax until
benefits are distributed. Distributions received by a beneficiary are
generally given the same tax treatment the Participant would have received if
distribution had been made to the Participant.
If a certificate is surrendered for its value, the amount received that
exceeds the Participant's tax basis, if any, for the certificate is treated
as ordinary income to the Participant. The Participant may have a basis in
the certificate if the employer made contributions which were required to be
included in the employee's gross income in the year of the employer's
contribution, for example.
The amount of any partial distribution from a TSA prior to the annuity
starting date is generally treated as ordinary income by the Participant
except to the extent that the distribution is treated as a withdrawal of
after-tax contributions. Distributions are normally treated as pro rata
withdrawals of after-tax contributions and earnings on those contributions.
If the employer's program allowed withdrawals prior to separation from
service as of May 5, 1986, however, all after-tax contributions made prior to
January 1, 1987 may be withdrawn tax-free prior to withdrawing any taxable
amounts.
Where a Participant elects to receive benefits in the form of an annuity, the
amount of each annuity payment received by a Participant after
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<PAGE>
retirement is treated as ordinary income except to the extent that the
Participant has a cost basis in the certificate.
If an annuity distribution option is elected, any basis will be recovered as
each payment is received by dividing the investment in the contract by an
expected return determined under an IRS table prescribed for qualified
annuities. The amount of each payment not excluded from income under this
exclusion ratio is fully taxable. The full amount of the payments received
after the cost basis of the annuity is recovered is fully taxable. If the
participant dies before recovering basis and there is a refund feature under
the annuity, the beneficiary of the refund may recover the remaining cost
basis as payments are made. If the participant (and beneficiary under a joint
and survivor annuity) die prior to recovering the full cost basis of the
annuity, a deduction is allowed on the participant's (or beneficiary's) final
tax return.
Distributions from a TSA will be subject to a 10% penalty tax unless the
distribution is made on or after the Participant's death, disability or
attainment of age 59 1/2. The penalty tax will also not apply if the
Participant (i) separates from service and elects a payout over his or her
life or life expectancy (or joint and survivor lives or life expectancies),
(ii) reaches age 55 and separates from service, or (iii) uses the
distribution to pay certain extraordinary medical expenses.
Tax Deferred Rollovers and Transfers
Any distribution from a TSA which is an "eligible rollover distribution" may
be rolled over into another eligible retirement plan, either as a direct
rollover or a rollover within 60 days of receiving the distribution. To the
extent a distribution is rolled over, it remains tax deferred.
A distribution from a TSA may be rolled over to another TSA which will accept
rollover contributions or a Regular IRA. Death benefits received by a spousal
beneficiary may only be rolled over to a Regular IRA.
The taxable portion of most distributions will be eligible for rollover,
except as specifically excluded under the Code. Distributions which cannot be
rolled over generally include periodic payments for life or for a period of
10 years or more, and minimum distributions required under Section 401(a)(9)
of the Code (discussed above). Eligible rollover distributions are discussed
in greater detail under "Federal and State Income Tax Withholding", below,
including rules requiring 20% income tax withholding applicable to certain
distributions from TSAs.
Amounts held under TSAs may be directly transferred (under Revenue Ruling
90-24) to another TSA issuer in a tax-free transaction, provided that the
successor TSA contains the same or greater restrictions as the original TSA.
IRAS
This SAI contains portions of the information which the Internal Revenue
Service (IRS) requires to be disclosed to an individual who purchases an IRA.
Required information also appears in various sections of the prospectus.
GENERAL DISCUSSION OF IRAS
The term "IRA" may generally refer to all individual retirement arrangements,
including individual retirement accounts and individual retirement annuities.
In addition to being available in both trusteed or custodial account form or
individual annuity form, there are many varieties of IRAs. There are "Regular
IRAs" which are generally funded on a pre-tax basis. There are Roth IRAs,
newly available in 1998, which must be funded on an after-tax basis. SEP-IRAs
and SIMPLE-IRAs are issued and funded in connection with employer-sponsored
retirement plans. Education IRAs are not discussed in here because they are
not available in individual retirement annuity form. Regardless of the type
of IRA, your interest in the IRA cannot be forfeited. You or your
beneficiaries who survive you are the only ones who can receive the benefits
or payments.
All versions of the 300+ Series IRA are designed to qualify as an "individual
retirement annuity" under Section 408(b) of the Code. By filling out the
proper forms to designate the Account, Participants can also establish a 300+
Series Roth IRA under Sections 408(b) and 408A of the Code.
Further information regarding individual retirement arrangements generally
can be found in Internal Revenue Service Publication 590,
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entitled "Individual Retirement Arrangements (IRAs)," which is generally
updated annually, and can be obtained from any IRS district office.
There is no limit to the number of IRAs (including Roth IRAs) you may
establish or maintain as long as you meet the requirements for establishing
and funding the IRA. However, if you maintain multiple IRAs you may be
required to aggregate IRA values or contributions for tax purposes. You
should be aware that all types of IRAs are subject to certain restrictions in
order to qualify for special treatment under the Federal tax law.
We have received favorable opinion letters from the IRS approving the form of
Group Individual Retirement Annuity No. 301-10,001-93 as a Regular IRA. The
IRS has provided a determination letter that the 300+ Series SIMPLE IRA
qualifies as to form. Such IRS approval is a determination only that the form
of the contract or certificate meets the requirements for an individual
retirement annuity and does not represent a determination of the merits of
the contract or certificate as an investment. The IRS does not yet have a
procedure in place for approving the form of Roth IRAs.
CANCELLATION OR REVOCATION OF IRA
See "CertificateProvisions--Revocation Rights" in the Prospectus for a
Revocation of a Regular IRA. If you are purchasing a new 300+ Series Roth IRA
(that is, you are not converting an existing Regular 300+ Series IRA into a
Roth IRA) you can cancel the new Roth IRA by following the directions on the
front of the Certificate under "Ten Days to Review" by mailing the
certificate to the Equitable at the address shown on page 3 of the
Certificate. If you are converting an existing Regular 300+ Series IRA you
can cancel your conversion from a Regular IRA to a Roth IRA within 10 days of
the receipt of your Roth IRA Endorsement by returning the Endorsement,
following the directions on the front of the Certificate under "Ten Days to
Review." This will not result in the free-look cancellation of your existing
Certificate, merely the return to Regular IRA status that existed before.
Since there may be adverse tax consequences if a Certificate is canceled (and
because we are required to report to the IRS certain distributions from
canceled IRAs), you should consult with a tax adviser before making any such
decision.
INDIVIDUAL RETIREMENT ANNUITIES ("REGULAR IRAS")
The following discussion relates to Regular IRAs. Roth IRAs, SEP-IRAs and
SIMPLE-IRAs are discussed later in this SAI.
CONTRIBUTIONS TO REGULAR IRAS
Individuals may make three different types of contributions to establish a
Regular IRA, or as later additions to an existing Regular IRA: "regular"
contributions out of earnings, tax-deferred "rollover" contributions from
specified tax-qualified plans, or direct custodian-to-custodian transfers
from other Regular individual retirement arrangements ("direct transfers").
The immediately following discussion relates to "regular" contributions to
Regular IRAs. Direct transfer and rollover contributions are discussed below
under "Transfer and Rollover Contributions to Regular IRAs."
Regular contributions to Regular IRAs
HOW MUCH CAN I CONTRIBUTE? Generally, the sum of an individual's
contributions to all of his/her Regular IRAs and Roth IRAs for a taxable year
may not exceed $2,000. This $2,000 annual limit does not apply to rollover or
direct transfer contributions into an IRA. In addition, where an individual
earns less than $2,000 in a taxable year, such individual's contributions
will be limited to the amount of his/her earnings (rather than $2,000), with
the following exception.
Where married individuals file joint income tax returns, their compensation
effectively can be aggregated for purposes of determining the permissible
amount of regular contributions to Regular IRAs (and Roth IRAs). Even if one
spouse has no compensation or compensation under $2,000, married individuals
filing jointly may be able to contribute up to $4,000 for any taxable year to
any combination of Regular IRAs and Roth IRAs. (Any contributions to Roth
IRAs reduce the ability to contribute to Regular IRAs and vice-versa.) No
more than $2,000 can be contributed annually to either spouse's Regular
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IRAs or Roth IRAs. Each spouse owns his or her individual retirement
arrangements (Regular IRA and Roth IRA) even if contributions were fully
funded by the other spouse.
As long as an individual has earnings as described above of at least the
amount of the contribution, there is no maximum income limit which would
prevent him or her from making regular contributions of up to $2,000 to a
Regular IRA. (The individual's income may affect the deductibility of the
Regular IRA contribution.)
HOW MUCH CAN I DEDUCT? The amount of Regular IRA contribution for a tax year
that you can deduct depends on whether you are covered by an
employer-sponsored, tax-favored retirement plan (including a qualified plan,
TSA, SEP-IRA or SIMPLE IRA, but not an EDC plan).
In certain cases, individuals covered by a tax-favored retirement plan
include persons eligible to participate in the plan although not actually
participating. Whether or not a person is covered by a retirement plan will
be reported on an employee's Form W-2.
Regardless of adjusted gross income (AGI), if you are not covered by a
retirement plan you may make a deductible contribution to a Regular IRA for
each tax year (MAXIMUM PERMISSIBLE DOLLAR DEDUCTION) up to the lesser of
$2,000 or 100% of compensation.
If you are single and covered by a retirement plan during any part of the
taxable year, the deduction for Regular IRA contributions phases out with AGI
between $30,000 and $40,000 in 1998. This amount will be indexed every year
until 2005. If you are married and file a joint return, and you are covered
by a retirement plan during any part of the taxable year, the deduction for
Regular IRA contributions phases out with AGI between $50,000 and $60,000 in
1998. This amount will be indexed every year until 2007. Married individuals
filing separately and living apart at all times are not treated as being
married for purposes of this deductible contribution calculation. Generally,
the active participation in an employer-sponsored retirement plan of an
individual is determined independently for each spouse. Where spouses have
"married filing jointly" status, however, the maximum deductible Regular IRA
contribution for an individual who is not an active participant (but whose
spouse is an active participant) is phased out for taxpayers with AGI of
between $150,000 and $160,000.
To determine the deductible amount of a Regular IRA contribution with the
phase-out, you determine AGI and subtract $30,000 if you are single, or
$50,000 if you are married and file a joint return with your spouse. The
resulting amount is your Excess AGI. You then determine the limit on the
deduction for Regular IRA contributions using the following formula:
Maximum Adjusted
($10,000-Excess AGI) Permissble Dollar
$10,000 X Dollar = Deduction
Deduction Limit
NONDEDUCTIBLE REGULAR IRA CONTRIBUTIONS. An individual not eligible to deduct
part or all of the Regular IRA contribution may still make nondeductible
contributions to Regular IRAs on which earnings will accumulate on a
tax-deferred basis. The deductible and nondeductible contributions to the
individual's Regular IRAs and Roth IRAs (or the nonworking spouse's Regular
IRAs and Roth IRAs) may not, however, together exceed the maximum $2,000 per
person limit. See "Excess Contributions." Individuals must keep their own
records of deductible and nondeductible contributions to Regular IRAs in
order to prevent double taxation on the distribution of previously taxed
amounts. See "Withdrawals, Payments and Transfers of Funds out of Regular
IRAs--Nondeductible Contributions."
An individual making nondeductible contributions in any taxable year, or
receiving amounts from any Regular IRA to which he or she has made
nondeductible contributions, must file the required information with the IRS.
Moreover, individuals making nondeductible Regular IRA contributions must
retain all income tax returns and records pertaining to such contributions
until interests in such IRAs are fully distributed.
WHEN CAN I MAKE MY CONTRIBUTIONS? Contributions may be made for a tax year
until the deadline for filing a Federal income tax return for that tax year
(without extensions). Thus, for
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calendar year taxpayers, contributions to a Regular IRA for a tax year may be
made through April 15 of the next tax year.
No contributions to a Regular IRA are allowed for the tax year in which an
individual attains age 70 1/2 or any tax year after that. A working spouse
age 70 1/2 or over, however, can contribute up to the lesser of $2,000 or
100% of "earned income" to a spousal Regular IRA for a non-working spouse
until the year in which the non-working spouse reaches age 70 1/2.
Transfer and Rollover Contributions to
Regular IRAs
Rollover contributions may be made to a Regular IRA from these sources: (i)
qualified plans under Section 401 of the Code, (ii) TSAs under Section 403(b)
of the Code (including 403(b)(7) custodial accounts) and (iii) other Regular
individual retirement arrangements. In 1998 we do not accept rollover
contributions from SIMPLE-IRAs. Direct transfer contributions may be made to
a Regular IRA only from another Regular IRA (including for this purpose a
SEP-IRA, but not a SIMPLE IRA or Roth IRA).
The difference between a rollover and a direct transfer is that in a rollover
the individual actually receives the funds rolled over, or is treated as
receiving them in the case of a change from one type of plan to another. In a
direct transfer, the individual never takes possession of the funds, but
directs the first IRA custodian, trustee or issuer to transfer funds directly
to Equitable, as the IRA issuer. Direct transfers can only be made between
identical plan types (for example, Regular IRA to Regular IRA or Roth IRA to
Roth IRA). Rollovers may also be made between identical plan types. Although
the economic effect of a Regular IRA to Regular IRA rollover and a Regular
IRA to Regular IRA direct transfer are the same--both can be accomplished on
a completely tax-free basis--Regular IRA to Regular IRA rollovers are limited
to once every 12-month period for the same funds. Trustee-to-trustee or
custodian-to-custodian direct transfers are not rollovers and can be made
more frequently than once a year.
A rollover contribution is made to the Certificate either as a "direct
rollover" of an "eligible rollover distribution" (described below) or as a
rollover by the individual plan participant or owner of the Regular
individual retirement arrangement. In the latter cases, the rollover must be
made within 60 days of the date the proceeds from another Regular individual
retirement arrangement or an eligible rollover distribution from a qualified
plan or TSA were received.
Generally the taxable portion of any distribution from a qualified plan or
TSA is an eligible rollover distribution and may be rolled over tax-free to a
Regular IRA unless the distribution is (i) a required minimum distribution
under Section 401(a)(9) of the Code; or (ii) one of a series of substantially
equal periodic payments made (not less frequently than annually) (a) for the
life (or life expectancy) of the plan participant or the joint lives (or
joint life expectancies) of the plan participant and his or her designated
beneficiary, or (b) for a specific period of ten years or more. The
distribution from a qualified plan or TSA generally will be all taxable
unless the Participant has made nondeductible employee contributions to the
plan or TSA. After-tax contributions to plans cannot be rolled over. The
Participant's plan fiduciary should provide information as to what amounts
are eligible to be rolled over.
Tax-free direct rollovers are also available to the surviving spouse
beneficiary of a deceased individual, or a spousal alternate payee of a
qualified domestic relations order applicable to a qualified plan or TSA. A
nonspouse beneficiary cannot roll over qualified plan or TSA benefits. In
some cases, IRAs can be transferred on a tax-free basis between spouses or
former spouses incidental to a judicial decree of divorce or separation.
CONDUIT IRAS. In certain limited circumstances, a Regular IRA can serve as a
"conduit IRA." A Regular IRA qualifies as a "conduit IRA" if it serves as a
holding account or conduit for assets received from an employer's qualified
plan (or TSA, as the case may be) and gains and earnings on those assets. To
get this "conduit" IRA treatment, the source of funds used to establish the
Regular IRA must be a rollover contribution from the qualified plan and the
entire amount received from the Regular IRA (including any earnings on the
rollover contribution) must be
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rolled over into another qualified plan within 60 days of the date received.
Similar rules apply in the case of a TSA. If the source of the funds
originally rolled over into a Regular IRA is from a qualified plan (or TSA,
as the case may be) and no other funds are commingled with this IRA, amounts
can be rolled out of the IRA in the future to another qualified plan (or TSA,
as the case may be) that accepts such contributions. The conduit IRA will no
longer qualify as such if you mix regular Regular IRA contributions or
contribute funds from other sources with the rollover distribution from the
qualified plan (or TSA, as the case may be). You cannot roll over amounts
that were originally in a qualified plan through a conduit IRA to a TSA and
vice-versa.
300+ Series offers a separate Regular IRA contract subject to separate
charges, designed to serve as a "conduit" IRA for this purpose (qualified
rollover IRA Certificate). Therefore amounts in a qualified rollover IRA
Certificate which are not commingled with "regular" Regular IRA Contributions
or nonqualified plan funds (or TSA funds, as the case may be) may be eligible
to be rolled over into another qualified plan (or TSA, as the case may be)
which accepts such contributions.
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF REGULAR IRAS
NO LIMITATIONS ON WITHDRAWALS. You can withdraw any or all of your funds
from a Regular IRA at any time; you do not need to wait for a special event
like retirement. However, for the tax consequences of withdrawals from
Regular IRAs, see the discussion on "Taxable Distributions from Regular
IRAs", and "Penalty Tax on Premature Distributions" below.
TAXABLE DISTRIBUTIONS FROM REGULAR IRAS. Amounts paid from Regular IRAs are
not subject to Federal income tax until benefits are distributed to the
individual owner or beneficiary. Distributions include withdrawals from your
Certificate, termination of your Certificate and annuity payments from your
Certificate. Death benefits paid to a beneficiary are also taxable
distributions. Unless an exception applies, payments from Regular IRAs are
includible in gross income as ordinary income. Distributions made before age
59 1/2 may be subject to an additional 10% federal income tax penalty. (See
"Penalty Tax on Premature Distributions" below.)
Distributions from a Regular IRA are not entitled to the special favorable
five-year averaging method (or, in certain cases, favorable ten-year
averaging and long-term capital gain treatment) available in certain cases to
distributions from qualified plans.
TAXATION OF DEATH BENEFIT. Distributions received by a beneficiary are
generally given the same tax treatment the individual would have received if
distribution had been made to the individual.
NONDEDUCTIBLE CONTRIBUTIONS. If you have ever made nondeductible IRA
contributions to any Regular individual retirement arrangement (whether or
not this particular Regular IRA), you may be able to recover a portion of any
Regular IRA distribution tax free. You must keep records of all such
nondeductible contributions. At the end of any tax year in which you receive
a distribution from any Regular IRA, you determine the ratio of the total
nondeductible Regular IRA contributions (less any amounts previously
withdrawn tax-free) to the total account balances of all Regular IRAs held by
you at the end of the tax year plus all Regular IRA distributions made during
such tax year. The resulting ratio is then multiplied by all distributions
from Regular IRAs during that tax year to determine the nontaxable portion of
each distribution.
NONTAXABLE TRANSACTIONS--REGULAR IRAS. A distribution from a Regular IRA
(other than a required minimum distribution discussed below) is not taxable
if (1) the amount received is a return of excess contributions which are
withdrawn, as described under "Excess Contributions;" (2) the entire amount
received is rolled over to another individual retirement arrangement; (3) if
an amount is directly transferred at the Owner's direction to another Regular
IRA; (see "Contributions to Regular IRAs--Transfer and Rollover Contributions
to Regular IRAs") or (4) in certain limited circumstances, where the Regular
IRA acts as a "conduit IRA," the entire amount is paid into a qualified plan
or TSA that accepts such contributions. See "Conduit IRAs," above.
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REQUIRED MINIMUM DISTRIBUTIONS AFTER
AGE 70 1/2
Distributions During Life
The minimum distribution rules require Regular IRA owners to start taking
annual distributions with respect to their IRAs beginning at age 70 1/2. The
distribution requirements are designed to provide for distribution of Regular
IRAs over the owner's life expectancy. Whether the correct amount has been
distributed is calculated on a year-by-year basis; there are no provisions to
allow amounts taken in excess of the required amount to be carried over or
carried back and credited to other years.
Generally, an individual must take the first required minimum distribution
with respect to the calendar year in which the individual turns age 70 1/2.
The individual has the choice to take the first required minimum distribution
during the calendar year he or she turns age 70 1/2, or to delay taking it
until the three month (January 1-April 1) period in the next calendar year.
(Distributions must commence no later than the "Required Beginning Date,"
which is the April 1st of the calendar year following the calendar year in
which the individual turns age 70 1/2.) If the individual chooses to delay
taking the first annual minimum distribution, then the individual will have
to take two minimum distributions in that year--the delayed one for the first
year and the one actually for that year. Once minimum distributions begin,
they must be made at some time every year.
There are two general ways to take minimum distributions--"account-based" or
"annuity-based"--and there are a number of distribution options in both of
these categories. These choices are intended to give individuals a great deal
of flexibility to provide for themselves and their families.
An account-based minimum distribution method may be a lump sum payment, or
periodic withdrawals made over a period which does not extend beyond the
individual's life expectancy or the joint life expectancies of the individual
and a designated beneficiary. Generally the required minimum distribution for
each year for an account-based method is computed by dividing the Regular IRA
account balance as of the close of business on December 31 of the preceding
year by the applicable life expectancy, determined using IRS tables and IRS
rules. An annuity-based method involves application of the Annuity Account
Value to an annuity over the individual's life or the joint lives of the
individual and a designated beneficiary, or over a period certain not
extending beyond applicable life expectancies.
You should discuss with your tax adviser which minimum distribution options
are best for your own personal situation. Individuals who are participants in
more than one Regular individual retirement arrangement or other tax favored
retirement plan may be able to choose different distribution options for each
arrangement. Your Required Minimum Distribution for any taxable year is
calculated by adding together the separate Required Minimum Distribution
amounts from each of your Regular individual retirement arrangements. The
IRS, however, does not require that you take out the Required Minimum
Distribution from each Regular individual retirement arrangement that you
maintain. As long as the total amount distributed annually for all Regular
IRAs satisfies your overall required minimum distribution requirement for all
of your Regular IRAs, you may choose to take annual required distributions
for Regular IRAs from any one or more Regular individual retirement
arrangements that you maintain.
Distributions After Death
If the individual dies after distribution in the form of an annuity has
begun, or after the Required Beginning Date, payment of the remaining
interest must be made at least as rapidly as under the method used prior to
the individual's death. The IRS has indicated that an exception to this rule
may apply if the beneficiary of the Regular IRA is the surviving spouse. In
some circumstances, the surviving spouse may elect to "make the Regular IRA
his or her own" and halt distributions until he or she reaches age 70 1/2.
If an individual dies before the Required Beginning Date and before
distributions in the form of an annuity begin, distributions of the
individual's entire interest under the Regular IRA must be completed by
December 31 of the fifth year after the owner's death, unless payments to a
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designated beneficiary begin by December 31 of the year after the
individual's death and are made over the beneficiary's life or over a period
certain which does not extend beyond the beneficiary's life expectancy.
If the surviving spouse is the designated beneficiary, the spouse may delay
the commencement of such payments up until the individual would have attained
age 70 1/2. In the alternative, a surviving spouse may elect to treat the
Regular IRA as his or her own, or roll over the inherited IRA into the
surviving spouse's own Regular IRA, in which case the spouse can delay taking
distributions until the spouse attains age 70 1/2.
If there is an insufficient distribution in any year, a 50% tax may be
imposed on the amount by which the minimum required to be distributed exceeds
the amount actually distributed. The penalty tax may be waived by the
Secretary of the Treasury in certain limited circumstances. Failure to have
distributions made as the Code and Treasury regulations require may result in
disqualification of your Regular IRA. See "Tax Penalty for Insufficient
Distributions" below.
It is the Participant's responsibility to see that the minimum distributions
are made with respect to a Regular IRA Certificate. We do not automatically
make distributions from a Regular IRA Certificate before the maturity date
unless a request has been made. We will notify you when our records show that
your age 70 1/2 is approaching. If you do not select a method, we will assume
you are taking your minimum distribution from another Regular IRA that you
maintain. You should consult with your tax adviser concerning these rules and
their proper application to your situation.
PROHIBITED TRANSACTIONS. An IRA may not be borrowed against or used as
collateral for a loan or other obligation. If the IRA is borrowed against or
used as collateral, its tax-favored status will be lost as of the first day
of the tax year in which the event occurred. If this happens, the individual
must include in Federal gross income for that year an amount equal to the
fair market value of the IRA Contract as of the first day of that tax year.
Also, the early distribution penalty tax of 10% will apply if the individual
has not reached age 59 1/2 before the first day of that tax year. See
"Penalty Tax on Premature Distributions," below.
EXCESS CONTRIBUTIONS. Excess contributions to an IRA are subject to a 6%
excise tax for the year in which made and for each year thereafter until
withdrawn. In the case of "regular" IRA contributions, contributions to all
Regular IRAs and Roth IRAs in excess of the lesser of $2,000 or 100% of
compensation or earned income is an "excess contribution," (without regard to
the deductibility or nondeductibility of Regular IRA contributions under this
limit). Also, any "regular" contributions to a Regular IRA made after you
reach age 70 1/2 are excess contributions.
In the case of rollover Regular IRA contributions, excess contributions are
amounts which are not eligible to be rolled over (for example, after-tax
contributions to a qualified plan or minimum distributions required to be
made after age 70 1/2).
An excess contribution (rollover or "regular") which is withdrawn before the
time for filing the individual's federal income tax return for the tax year
(including extensions) is not includable in income and is not subject to the
10% penalty tax on early distributions (discussed below under "Penalty Tax on
Premature Distributions"), provided any earnings attributable to the excess
contribution are also withdrawn and no tax deduction is taken for the excess
contribution. The withdrawn earnings on the excess contribution, however,
would be includable in the individual's gross income for the tax year in
which the excess contribution from which they arose was made and would be
subject to the 10% penalty tax. If excess contributions are not withdrawn
before the time for filing the individual's federal income tax return for the
tax year (including extensions), the "regular" contributions may still be
withdrawn after that time if the Regular IRA and Roth IRA contributions for
the tax year did not exceed $2,000 and no tax deduction was taken for the
excess contribution; in that event, the excess contribution would not be
includable in gross income and would not be subject to the 10% penalty tax.
Lastly, excess "regular" contributions may also be reduced by underutilizing
the allowable contribution limits for a later year.
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If excess rollover contributions are not withdrawn before the time for filing
your Federal tax return for the year (including extensions) and the excess
contribution occurred as a result of incorrect information provided by the
plan, any such excess amount can be withdrawn if no tax deduction was taken
for the excess contribution. Excess rollover contributions withdrawn under
those circumstances would not be includable in gross income and would not be
subject to the 10% penalty tax for premature distributions.
PENALTY TAX ON PREMATURE DISTRIBUTIONS. The taxable portion of distributions
from a Regular IRA made before you reach age 59 1/2 will be subject to an
additional 10% federal income tax penalty unless one of the following
exceptions applies. There are exceptions for:
o Your death,
o Your disability,
o Distributions used to pay certain extraordinary medical expenses,
o Distributions used to pay medical insurance premiums for certain unemployed
individuals,
o Substantially equal payments made at least annually over your life (or your
life expectancy), or over the lives of you and your beneficiary (or your
joint life expectancies) using an IRS-approved distribution method,
o Distributions used to pay specified higher education expenses as defined in
the Code, and
o "Qualified first-time homebuyer distributions" as defined in the Code.
ROTH IRAS
CONTRIBUTIONS TO ROTH IRAS
Individuals may make four different types of contributions to purchase a Roth
IRA, or as later additions to an existing Roth IRA: "regular" after-tax
contributions out of earnings, taxable "rollover" contributions from Regular
IRAs ("conversion" contributions), tax-free rollover contributions from other
Roth IRAs, or tax-free direct custodian-to-custodian transfers from other
Roth IRAs ("direct transfers"). The immediately following discussion relates
to "regular" Roth IRA contributions. Direct transfer and rollover
contributions are discussed below under "Direct Transfers and Rollovers."
Regular contributions to Roth IRAs
Generally, the sum of an individual's contributions to all of his/her Regular
IRAs and Roth IRAs for a taxable year may not exceed $2,000. This $2,000
annual limit does not apply to rollover or direct transfer contributions into
a Regular or Roth IRA, nor does it apply to employer contributions to a
SIMPLE-IRA or SEP-IRA. In addition, where an individual earns less than
$2,000 in a taxable year, such individual's contributions will be limited to
the amount of his/her earnings (rather than $2,000), with the following
exception.
Where married individuals file joint income tax returns, their compensation
effectively can be aggregated for purposes of determining the permissible
amount of regular contributions to Regular IRAs (and Roth IRAs). Even if one
spouse has no compensation or compensation under $2,000, married individuals
filing jointly may be able to contribute up to $4,000 for any taxable year to
any combination of Regular IRAs and Roth IRAs. (Any contributions to Roth
IRAs reduce the ability to contribute to Regular IRAs and vice versa.) No
more than $2,000 can be contributed annually to either spouse's Regular IRAs
or Roth IRAs. Each spouse owns his or her individual retirement arrangements
(Regular IRA and Roth IRA) even if contributions were fully funded by the
other spouse.
As long as an individual has earnings as described above of at least the
amount of the contribution, there is no maximum income limit which would
prevent him or her from making regular contributions of up to $2,000 to a
Regular IRA. (The individual's income may affect the deductibility of the
Regular IRA contribution.) IN CONTRAST, ROTH IRA CONTRIBUTIONS CANNOT BE MADE
AT ALL FOR ANY YEAR WHERE AN INDIVIDUAL'S FEDERAL INCOME TAX FILING STATUS IS
"MARRIED FILING JOINTLY" AND ADJUSTED INCOME IS OVER $160,000, OR FILING
STATUS IS SINGLE WITH ADJUSTED GROSS INCOME OVER $110,000.
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Roth IRA contributions may be made in reduced amounts for married individuals
filing jointly with adjusted gross income between $150,000 and $160,000 and
single taxpayers with adjusted gross income between $95,000 and $110,000. A
married individual filing separately with adjusted gross income of more than
$10,000 cannot make a regular Roth IRA contribution; and the amount of the
permissible contribution is phased out for married individuals filing
separately with adjusted gross income of between $0 and $10,000. For the
potential effects of violating these rules, see discussion of "Excess
Contributions" below.
Contributions may be made for a tax year until the deadline for filing a
Federal income tax return for that tax year (without extensions). Thus, for
calendar year taxpayers, contributions to a Roth IRA for a tax year may be
made through April 15 of the next tax year. In contrast to Regular IRAs,
regular contributions to Roth IRAs are allowed for the tax year in which an
individual attains age 70 1/2 or any tax year after that.
Roth IRA contributions are not tax-deductible.
Rollovers and Direct Transfers
Rollover contributions may be made to a Roth IRA from only two sources: (i)
another Roth IRA, or (ii) another Regular IRA in a "conversion" rollover. No
contribution may be made to a Roth IRA from a qualified plan under Section
401(a) of the Code, or a tax sheltered arrangement under Section 403(b) of
the Code. Currently we also do not accept rollover contributions from
SIMPLE-IRAs. The rollover must be made within 60 days of the date the
proceeds from the other Roth IRA or the Regular IRA was received.
Direct transfer contributions may be made to a Roth IRA only from another
Roth IRA. The difference between a rollover and a direct transfer is that in
a rollover the individual actually receives the funds rolled over, or is
treated as receiving them in the case of a change from one type of plan to
another. In a direct transfer, the individual never takes possession of the
funds, but directs the first Roth IRA custodian, trustee or issuer to
transfer funds directly to Equitable, as the Roth IRA issuer. Direct
transfers can only be made between identical plan types (for example, Roth
IRA to Roth IRA). Rollovers may also be made between identical plan types.
Although the economic effect of a Roth IRA to Roth IRA rollover and a Roth
IRA to Roth IRA direct transfer are the same--both can be accomplished on a
completely tax-free basis--Roth IRA to Roth rollovers are limited to once
every 12-month period for the same funds. Trustee-to-trustee or
custodian-to-custodian direct transfers are not rollovers and can be made
more frequently than once a year.
The surviving spouse beneficiary of a deceased individual can roll over or
directly transfer an inherited Roth IRA to one or more other Roth IRAs. Also,
in some cases, Roth IRAs can be transferred on a tax-free basis between
spouses or former spouses incidental to a judicial decree of divorce or
separation.
Conversion Rollover Contributions to Roth IRAs
In a conversion rollover transaction, you withdraw (or are deemed to
withdraw) all or a portion of funds from a Regular IRA you maintain and roll
it over to a Roth IRA within 60 days after you receive (or are deemed to
receive) the Regular IRA proceeds. Unlike a rollover from a Regular IRA to
another Regular IRA, the conversion rollover transaction is not tax-exempt;
the distribution from the Regular IRA is generally fully taxable. (If you
have ever made nondeductible regular contributions to any Regular
IRA--whether or not it is the Regular IRA you are converting--a pro rata
portion of the distribution is tax exempt.) For this reason, Equitable is
required to withhold 10% Federal income tax from the amount converted unless
you elect out of such withholding. See "Federal and State Income Tax
Withholding" below.
However, even if you are under age 59 1/2 there is no premature distribution
penalty on the Regular IRA withdrawal. Also, a special rule applies to
Regular IRA funds converted to a Roth IRA in calendar year 1998 only. For
1998 Roth IRA conversion transactions you include the gross income from the
Regular IRA conversion ratably over the four-year period 1998-2001. See
discussion of pre-age 59 1/2 withdrawal penalty and the special penalties
that could apply to premature withdrawals of converted funds under "Penalty
Tax on Premature Distributions" below.
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YOU CANNOT MAKE CONVERSION ROLLOVER CONTRIBUTIONS TO A ROTH IRA FOR ANY
TAXABLE YEAR IN WHICH YOUR ADJUSTED GROSS INCOME EXCEEDS $100,000 REGARDLESS
OF YOUR FEDERAL INCOME TAX FILING STATUS. (For this purpose, adjusted gross
income is computed without the gross income stemming from the Regular IRA
conversion.) Even if your adjusted gross income is $100,000 or less, you also
cannot make conversion rollover contributions to a Roth IRA for any taxable
year in which your federal income tax filing status is "married filing
separately."
Finally, you cannot make conversion rollover contributions to a Roth IRA to
the extent that the funds in the Regular IRA are subject to the annual
required minimum distribution rule applicable to Regular IRAs beginning at
age 70 1/2. For the potential effects of violating these rules, see
discussion of "Additional Taxes and Penalties--Excess Contributions," below.
Withdrawals, Payments and Transfers of Funds Out of Roth IRAs
NO RESTRICTIONS ON WITHDRAWALS. You can withdraw any or all of your funds
from a Roth IRA at any time; you do not need to wait for a special event like
retirement. However, these withdrawals may be subject to a charge on
withdrawal or Certificate termination. Also, the withdrawal may be taxable to
an extent and, even if not taxable, may be subject to penalty in certain
circumstances. See the discussion below under "Distributions from Roth IRAs"
and "Penalty Tax on Premature Distributions" below.
DISTRIBUTIONS FROM ROTH IRAS
Distributions include withdrawals from your Certificate, termination or
surrender of your Certificate and annuity payments from your Certificate.
Death benefits are also distributions.
The following distributions from Roth IRAs are free of income tax:
(1) Rollovers from a Roth IRA to another Roth IRA.
(2) Direct transfers from a Roth IRA to another Roth IRA (see "Rollovers and
Direct Transfers" under "Contributions to Roth IRAs," above).
(3) "Qualified Distributions" from Roth IRAs. (See "Qualified Distributions
from Roth IRAs," below).
(4) Return of excess contributions (see "Excess Contributions," below).
Qualified Distributions from Roth IRAs
Distributions from Roth IRAs made because of one of four qualifying events or
reasons are not includable in income, provided a specified five-year holding
or aging period is met. The qualifying events or reasons are the owner's
attainment of age 59 1/2, the owner's death, the owner's disability, or a
"qualified first-time homebuyer distribution" (as defined in the Code).
Qualified first-time homebuyer distributions are limited to $10,000 lifetime
in the aggregate from all Roth IRAs and Regular IRAs of the taxpayer.
Five-year holding or aging period
The applicable five-year holding or aging period depends on the type of
contribution made to the Roth IRA. For Roth IRAs funded by regular
contributions, or rollover or direct transfer contributions which are not
directly or indirectly attributable to converted Regular IRAs, any
distribution made after the five-taxable year period beginning with the first
taxable year for which the individual made a regular contribution to any Roth
IRA (whether or not the one from which the distribution is being made) meets
the five-year holding or aging period.
For Roth IRAs funded directly or indirectly by converted Regular IRAs, the
applicable five-year holding period begins with the year of the conversion
transaction.
Although there is currently no statutory prohibition against commingling
regular contributions and conversion rollover contributions in any Roth IRA,
or against commingling conversion rollover contributions made in more than
one taxable year to Roth IRAs, the IRS strongly encourages individuals to
maintain separate Roth IRAs for regular contributions and conversion rollover
contributions. It also strongly encourages individuals to differentiate Roth
conversion IRAs by conversion year.
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<PAGE>
Various legislative proposals are pending regarding Roth IRAs. Under one
proposal, aggregation of Roth conversion IRAs with the same 5-year holding
period may be required when determining the amount of a withdrawal which is
attributable to amounts that were included in income due to a conversion. In
the case of a Roth IRA which contains conversion rollover contributions and
regular contributions, or conversion rollover contributions from more than
one year, the five-year holding period would be reset to begin with the most
recent taxable year for which a conversion contribution is made. It is
unclear whether any further legislation regarding Roth IRAs will be enacted
and what provisions will be affected. Any such legislation could have a
retroactive effective date.
Nonqualified Distributions from Roth IRAs
Nonqualified distributions from Roth IRAs are any distributions which do not
meet the qualifying event and five-year holding or aging period tests
described above and are potentially taxable as ordinary income. Regular IRA
distributions are fully taxable unless the individual has made nondeductible
contributions to any of his/her Regular IRAs. In contrast, nonqualified
distributions from Roth IRAs receive return-of-investment-first treatment.
That is, the recipient is taxable only on the difference between the amount
of the distribution and the amount of Roth IRA contributions (less any
distributions previously recovered tax-free).
Like Regular IRAs, taxable distributions from a Roth IRA are not entitled to
the special favorable five-year averaging method (or, in certain cases,
favorable ten-year averaging and long-term capital gain treatment) available
in certain cases to distributions from qualified plans.
Although the IRS has not yet issued complete guidance on all aspects of Roth
IRAs, it appears that individuals will be required to keep their own records
of regular and conversion rollover contributions to all of their Roth IRAs in
order to assure appropriate taxation. An individual making contributions to a
Roth IRA in any taxable year, or receiving amounts for any Roth IRA, may be
required to file the information with the IRS and retain all income tax
return and records pertaining to such contribution until interests in Roth
IRAs are fully distributed.
Required Minimum Distribution at Death
If you die before annuitization or before the entire amount of the Roth IRA
has been distributed to you, distributions of your entire interest under the
Roth IRA must be completed by December 31 of the fifth year after your death,
unless payments to a designated beneficiary begin by December 31 of the year
after your death and are made over the beneficiary's life or over a period
which does not extend beyond the beneficiary's life expectancy. If your
surviving spouse is the designated beneficiary, no distributions are required
until after the surviving spouse's death.
Taxation of Death Benefit
Distributions received by a beneficiary are generally given the same tax
treatment the individual would have received if the distributions had been
made to the individual.
Prohibited Transactions
The prohibited transaction rules discussed under Regular IRAs also apply to
Roth IRAs.
Excess Contributions
As with Regular IRAs discussed above, excess contributions to a Roth IRA are
subject to a 6% excise tax for the year in which made and for each year
thereafter until withdrawn. In the case of "regular" Roth IRA contributions,
any contributions in excess of the amount permitted is an "excess
contribution." (As discussed above under "Contributions to Roth IRAs--Regular
Contributions to Roth IRAs", the amount permitted may be zero for persons
over adjusted gross income limits, and is generally $2,000--or earnings if
less--reduced by regular contributions made to Regular IRAs.) In the case of
rollover Roth IRA contributions, "excess contributions" are amounts which are
not eligible to be rolled over (for example, conversion rollovers from a
Regular IRA for individuals with adjusted gross income in excess of $100,000
in the conversion year).
There is some uncertainty under current law regarding the adjustment of
excess contributions
15
<PAGE>
to Roth IRAs. The rules applicable to Regular IRAs, which may apply, provide
that an excess contribution ("regular" or rollover) which is withdrawn before
the time for filing the individual's federal income tax return for the tax
year (including extensions) is not includable in income and is not subject to
the 10% penalty tax on early distributions (discussed above under "Penalty
Tax on Premature Distributions"), provided any earnings attributable to the
excess contribution are also withdrawn. The withdrawn earnings on the excess
contribution, however, could be includable in the individual's gross income
for the tax year in which the excess contribution for which they arose was
made and could be subject to the 10% penalty tax. If excess contributions are
not withdrawn before the time for filing the individual's federal income tax
return for the tax year (including extensions), the "regular" contributions
may still be withdrawn after that time if the Roth IRA contribution for the
tax year did not exceed $2,000 and no tax deduction was taken for the excess
contribution. In that event, the excess contribution would not be includible
in gross income and would be subject to the 10% penalty tax.
Pending legislation, if enacted, would provide that a taxpayer has up until
the due date of the federal income tax return for a tax year (including
extensions) to correct an excess contribution to a Roth IRA by doing a
trustee-to-trustee transfer to a Regular IRA of the excess contribution and
the applicable earnings, as long as no deduction is taken for the
contribution. It is unclear whether such provision will be enacted and if so
the effective date of such legislation.
PENALTY TAX ON PREMATURE DISTRIBUTIONS
The taxable portion of distributions from a Roth IRA made before you reach
age 59 1/2 will be subject to an additional 10% federal income tax penalty
unless one of the following exceptions applies. There are exceptions for:
o Your death.
o Your disability.
o Distributions used to pay certain extraordinary medical expenses.
o Distributions used to pay medical insurance premiums for certain unemployed
individuals.
o Substantially equal payments made at least annually over your life (or your
life expectancy), or over the lives of you and your beneficiary (or you
joint life expectancies) using an IRS-approved distribution method.
o Distributions used to pay specified higher education expenses as defined in
the Code, and
o "Qualified first-time homebuyer distributions" as defined in the Code. (The
penalty exception applies, for example, if you have not met the five-year
holding or aging period for the distribution to be completely tax-free).
Under pending legislation, if amounts converted from a Regular IRA to a Roth
IRA are withdrawn in the five-year period beginning with the year of
conversion, to the extent attributable to amounts that were includable in
income due to the conversion transaction, the amount withdrawn from the Roth
IRA would be subject to the 10% early withdrawal penalty, EVEN IF THE AMOUNT
WITHDRAWN FROM THE ROTH IRA IS NOT INCLUDABLE IN INCOME BECAUSE OF THE
RECOVERY-OF-INVESTMENT FIRST RULE. However, if the recipient is eligible for
one of the penalty exceptions listed above (e.g. being age 59 1/2 or older)
no penalty will apply.
Such pending legislation also provides that an additional 10% penalty
applies, apparently without exception, to withdrawals allocable to 1998
conversion transactions made before the five-year exclusion date, in order to
recapture the benefit of the prorated inclusion of Regular IRA conversion
income over the four-year period. See "Contributions to Roth IRAs--Conversion
Rollover Contributions to Roth IRAs." It is not known whether the legislation
will be enacted in its current from, but it could be retroactive to
January 1, 1998.
IRAS UNDER SIMPLIFIED EMPLOYEE PENSION PLANS (SEP)
When an employer establishes a SEP for its employees, contributions for each
eligible employee can be made to a Regular IRA certificate for that employee
(SEP). The employee may also make his
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<PAGE>
or her own IRA contributions to that SEP certificate. See "Regular IRA
Contributions" above.
Contributions. Due to statutory limits, in 1998 an employer can annually
contribute an amount for an employee up to the lesser of $24,000 or 15% of
the employee's compensation, determined without taking into account the
employer's contribution to the SEP. This $24,000 maximum, based on the
statutory compensation limit of $160,000, may be further adjusted for cost of
living changes in future years. These limits may be reduced by contributions
made by the employer to other qualified plans. The employer must make a
contribution for each employee who has reached age 21 and has worked for the
employer during at least three of the preceding five years. Contributions are
not required for employees who (1) earn less than $400 in 1998, (2) are
covered by a collective bargaining agreement or (3) are non-resident aliens
who receive no earned income from sources within the United States.
Employer contributions must be made under a written program which provides
that (i) withdrawals are permitted, (ii) contributions are made under an
allocation formula and (iii) contributions bear a uniform relationship to
compensation, not in excess of $160,000 in 1998, which may be further
adjusted for cost of living changes in future years. Contributions cannot
discriminate in favor of highly compensated employees. Contributions to the
SEP may be integrated with Social Security; call our toll-free number for
assistance.
Except as otherwise indicated in this section, all of the Regular IRA rules
discussed above, including those relating to revocation, minimum
distributions and penalties for premature distributions, apply to SEPs.
SIMPLE IRAS
An eligible employer may establish a "SIMPLE" plan to make contributions to
special individual retirement accounts or individual retirement annuities for
its employees ("SIMPLE IRAs"). A SIMPLE IRA is a form of regular IRA owned by
the Participant, and generally the rules applicable to Regular IRAs discussed
above apply. There are differences in the amount and type of permissible
contributions. Also, employees who have not participated in the employer's
SIMPLE IRA plan for at least two full years may be subject to an increased
penalty tax on withdrawals of SIMPLE IRA funds.
The employer cannot maintain any other qualified plan, SEP or TSA arrangement
if it makes contributions under a SIMPLE IRA plan. (Eligible employers may
maintain EDC plans.)
An employer establishing a SIMPLE plan should consult its tax advisor
concerning the various technical rules applicable to establishing and
maintaining SIMPLE IRA plans. For example, the definition of employee's
"compensation" varies depending on whether it is used in the context of
employer eligibility, employee participation, and employee or employer
contributions.
Participation must be open to all employees who received at least $5,000 in
compensation from the employer in any two preceding years (they do not have
to be consecutive years) and who are reasonably expected to receive at least
$5,000 in compensation during the year. (Certain collective bargaining unit
and alien employees may be excluded.)
The only kinds of contributions which may be made to a SIMPLE IRA are (i)
contributions under a salary reduction agreement entered into between the
employer and the participating employee and (ii) required employer
contributions (employer matching contributions or employer nonelective
contributions). (Direct transfer and rollover contributions from other SIMPLE
IRAs, but not Regular IRAs, may also be made.) Salary reduction contributions
can be any percentage of compensation (or a specific dollar amount, if the
employer's plan permits) but are limited to $6,000 in 1998. The $6,000
elective deferral limit may be indexed for cost of living adjustments in
future years.
Generally, the employer is required to make matching contributions on behalf
of each eligible employee in an amount equal to the salary reduction
contributions, up to 3% of the employee's compensation.
Amounts contributed to SIMPLE IRAs are not currently taxable to employees.
Only the employer can deduct SIMPLE IRA contributions, not the
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<PAGE>
employee. An employee eligible to participate in a SIMPLE IRA is treated as
an active participant in an employer plan and thus may not be able to deduct
(fully) regular contributions to his/her own IRA.
As with Regular IRAs in general, contributions and earnings accumulate tax
deferred until withdrawn and are then fully taxable. There are no withdrawal
restrictions applicable to SIMPLE IRAs. However, because of the level of
employer involvement, SIMPLE IRA plans are subject to ERISA. See "ERISA
Matters" below.
Amounts withdrawn from a SIMPLE IRA can be rolled over to another SIMPLE IRA,
or to a Regular IRA. No rollovers from a SIMPLE IRA to a Regular IRA are
permitted for individuals under age 59 1/2 who have not participated in the
employer's SIMPLE IRA for two full years. Also, for such individuals, any
amounts withdrawn from a SIMPLE IRA are not only fully taxable but are
subject to a 25% additional Federal income tax penalty. (The exceptions to
penalty application for death, disability and attainment of age 59 1/2
apply).
FEDERAL AND STATE INCOME TAX
WITHHOLDING
Equitable is required to withhold Federal income tax on payments from annuity
contracts which may be included in gross income.
Unless the payment is an "eligible rollover distribution" from a TSA, the
recipient generally may elect not to be subject to income tax withholding.
The rate of withholding will depend on the type of distribution and, in
certain cases, the amount of the distribution. Compare "Elective Withholding"
and "Mandatory Withholding from TSAs," below.
Certain states have indicated that state income tax withholding will apply to
payments from annuity contracts made to residents. Generally, an election out
of Federal withholding will also be considered an election out of state
withholding. In some states, a recipient may elect out of state withholding,
even if Federal withholding applies. If you need more information concerning
a particular state, consult your tax advisor.
Special withholding rules apply to foreign recipients and United States
citizens residing outside the United States. See your tax advisor if you may
be affected by such rules.
Elective Withholding
Requests not to withhold Federal income tax must be made in writing prior to
receiving benefits under the certificate. We will provide forms for this
purpose. No election out of withholding is valid unless the recipient
provides us with the correct Taxpayer Identification Number and a United
States residence address.
Any income tax withheld is a credit against income tax liability. If a
recipient does not have sufficient income tax withheld or does not make
sufficient estimated income tax payments, the recipient may incur penalties
under the estimated income tax rules. Recipients should consult their tax
advisors to determine whether they should elect out of withholding.
Periodic payments are generally subject to wage-bracket type withholding (as
if such payments were wages by an employer to an employee) unless the
recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally be made as if the recipient is married and
claiming three withholding exemptions. There is an annual threshold of
taxable income from periodic payments which is exempt from withholding based on
this assumption. For 1998 a recipient of periodic payments (e.g., monthly or
annual payments) which total less than $14,400 taxable amount for the year will
generally be exempt from Federal income tax withholding, unless the recipient
specifies a different choice of withholding exemption. If a recipient fails to
provide a correct Taxpayer Identification Number, withholding is made as if the
recipient is single with no exemptions.
A recipient of a partial or total non-periodic distribution (other than an
"eligible rollover distribution" discussed below) will generally be subject
to withholding at a flat 10% rate. A recipient who provides a United States
residence address and a correct Taxpayer Identification Number will generally
be permitted to elect not to have tax withhold.
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<PAGE>
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right, if any, to make
withholding elections. A withholding election may be revoked at any time and
remains effective until revoked.
Mandatory Withholding From TSAs
All "eligible rollover distributions" from TSAs are subject to mandatory
Federal income tax-withholding of 20% unless the employee elects to have the
distribution directly rolled over to another TSA or a Regular IRA. The
following are not eligible rollover distributions subject to mandatory 20%
withholding:
o any distribution to the extent that the distribution is a "required minimum
distribution" under Section 401(a)(9) of the Code;
o any distribution which is one of a series of substantially equal periodic
payments made (not less frequently than annually (1) for the life (or life
expectancy) of the employee or the joint lives (or joint life expectancies)
of the employee and his or her designated beneficiary, or (2) for a
specified period of 10 years or more;
o certain corrective distributions under Code Section 402(g); and
o a distribution to a beneficiary other than to a surviving spouse or to a
current or former spouse under a qualified domestic relations order.
If a distribution is made to a plan participant's surviving spouse, or to a
current or former spouse under a qualified domestic relations order, the
distribution may be an eligible rollover distribution, subject to mandatory
20% withholding, unless one of the exceptions described above applies.
If a distribution is not an "eligible rollover distribution," the rules on
elective withholding described above, apply.
Withholding from Roth IRAs
We are generally required to withhold on conversion rollovers of Regular IRAs
to Roth IRAs, as the deemed withdrawal from the Regular IRA is taxable.
Generally, no withholding is required on distributions which are not taxable
(for example, a direct transfer from one Roth IRA to another Roth IRA). In
the case of distributions from a Roth IRA, we may not be able to calculate
the portion of the distribution (if any) subject to tax. We may be required
to withhold on the gross amount of the distribution unless the recipient
elects out of withholding as described above. This may result in tax being
withheld even though the Roth IRA distribution is not taxable in whole or in
part. If we withhold income tax, any income tax withheld is a credit against
income tax liability.
ERISA MATTERS
Certain TSAs and SIMPLE IRAs may be subject to some or all rules applicable
to ERISA plans. For TSAs subject to ERISA (but not SIMPLE IRAs) if a
Participant is married at the time a withdrawal or other distribution is
requested under the Certificate, spousal consent is required. In addition,
unless the Participant elects otherwise with the written consent of the
spouse, the retirement benefits payable under the plan or arrangement must be
paid in the form of a "qualified joint and survivor annuity" (QJSA). A QJSA
is an annuity payable for the life of the Participant with a survivor annuity
for the life of the spouse in an amount which is not less than one-half of
the amount payable to the Participant during his or her lifetime. In
addition, a married Participant's beneficiary must be the spouse, unless the
spouse consents in writing to the designation of a different beneficiary.
Section 404(c) of ERISA, and the related DOL regulation, provide that if a
plan participant or beneficiary exercises control over the assets in his or
her plan account, plan fiduciaries will not be liable for any loss that is
the direct and necessary result of the plan participant's or beneficiary's
exercise of control. As a result, if the plan complies with Section 404(c)
and the DOL regulation thereunder, the plan participant can make and is
responsible for the results of his or her own investment decisions. Section
404(c) plans must provide, among other things that a broad range of
investment choices are available to plan participants and beneficiaries and
must provide such plan participants and beneficiaries with enough information
to make informed investment
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decisions. Compliance with the Section 404(c) regulation is completely
voluntary by the plan sponsor, and the plan sponsor may choose not to comply
with Section 404(c). The Equitable 300 Series TSA and SIMPLE IRA programs
provide the broad range of investment choices and information needed in order
to meet the requirements of the Section 404(c) regulation. If the plan is
intended to be a Section 404(c) plan, it is, however, the plan sponsor's
responsibility to see that the requirements of the DOL regulation are met.
Equitable Life shall not be responsible if a plan fails to meet the
requirements of Section 404(c).
IMPACT OF TAXES TO EQUITABLE
The certificates provide that we may charge the Investment Funds for taxes or
set up reserves for that purpose. In computing Unit Values in the Investment
Funds, no charge for Federal income taxes is presently contemplated on the
income and gains of the Investment Funds attributable to the certificates.
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PART 2--THE GUARANTEED RATE
ACCOUNTS
Contributions to a Guaranteed Rate Account become part of our General
Account, which supports all of our insurance and annuity guarantees as well
as our general obligations. The General Account, as part of our insurance and
annuity operations, is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions in which we are authorized to do business, as discussed
in the prospectus under "Regulation." Because of applicable exemptive and
exclusionary provisions, interests in the General Account have not been
registered under the Securities Act of 1933 (1933 ACT) nor is the General
Account an investment company under the Investment Company Act of 1940 (1940
ACT). Accordingly, neither the General Account nor any interests therein are
subject to regulation under the 1933 Act or the 1940 Act, and we have been
advised that the staff of the Securities and Exchange Commission has not made
a review of the disclosures which are included in this SAI for your
information and which relate to the General Account and the Guaranteed Rate
Accounts. These disclosures, however, may be subject to certain generally
applicable provisions of the Federal securities laws relating to the accuracy
and completeness of statements made in prospectuses and SAIs.
THE GUARANTEES
Contributions to a Guaranteed Rate Account are credited with interest at a
fixed rate for a specified period. The amount of the contribution is
guaranteed by us (before deduction of any applicable participant service
charge). The effective guaranteed annual rate will always be at least 3%.
New one-year and three-year Guarantees will be offered each quarter.
Generally 10 days before the beginning of the quarter, we will announce the
one-year and three-year Guarantee Rates, that is, the fixed interest rate
expressed as an effective annual interest rate, which will apply to
contributions made throughout the open period for each Guarantee. The open
period will be the calendar quarter (CONTRIBUTION QUARTER) unless during that
quarter we close the Guarantee and instead offer a new Guarantee at a
different Guarantee Rate for the remainder of the Contribution Quarter. We
reserve the right to close a Guarantee at any time based on market
conditions. Contributions made during the open period will not be affected by
subsequent rate changes and will continue to receive the Guaranteed Rate
until the maturity date for that Guarantee. All Guarantees of the same
duration which are opened during a Contribution Quarter mature on the same
day. After the last day of the Contribution Quarter, however, no further
contributions may be applied to that Guarantee. Contributions allocated to a
Guaranteed Rate Account during the next Contribution Quarter would be
allocated to the Guarantees being offered during that subsequent quarter at
the new Guarantee Rates in accordance with instructions. The new Guarantee
Rates may be obtained by calling us at the number listed on the front of this
SAI.
We may offer Guarantees with different maturities and different rates during
a particular calendar quarter. Currently, we offer Guarantees of one and
three year maturities.
We may offer additional or different maturities in future Contribution
Quarters.
CONTRIBUTIONS
Contributions to a Guaranteed Rate Account are permitted at any time. There
is no minimum contribution; however, if you are contributing through an
employer, your employer may have a minimum.
Contributions to the Guaranteed Rate Accounts are credited until maturity
with the interest rate in effect on the date of receipt. The rate is
expressed as an effective annual rate, reflecting daily compounding and the
deduction of the participant service charge, described under "Deductions and
Charges," in the prospectus.
Written requests for changes in the percentage of contributions to be
allocated to a Guaranteed Rate Account will become effective on the date of
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receipt. Alternatively, allocation or contribution instructions may be made
by telephone through the AIM System.
MATURING GUARANTEES
At the end of a Guarantee, unless we are instructed otherwise, the amount
accumulated will be automatically contributed to a new Guarantee of similar
duration, or, if no Guarantee of similar duration is then being offered, to
the Guarantee of the shortest duration then being offered.
Amounts in maturing Guarantees may be allocated to one or more other
Investment Funds by using the AIM System. Instructions must be received prior
to the maturity of the Guarantee and will apply to all maturing Guarantees
until other instructions are received.
PREMATURE WITHDRAWALS
OR TRANSFERS
Transfers may not be made from one Guarantee to another. Transfers may also
not be made from a Guarantee during the open period for that Guarantee. In
the case of a trustee-to-trustee transfer during the open period, there will
be a premature withdrawal charge.
Amounts in the Guaranteed Rate Accounts will be withdrawn or transferred on a
last in-first out basis unless otherwise specified by the Participant. All
other amounts withdrawn or transferred will be subject to a withdrawal charge
in an amount equal to (1) 7% of the amount withdrawn or transferred
(including the amount of the withdrawal charge) or, if less, (2) the amount
of the Participant's accumulated interest attributable to the amount
withdrawn or transferred (calculated as provided in the certificate). The
withdrawal charge will be deducted from the remaining amounts in the
Participant's Guarantee after the withdrawal or transfer payment is
processed, or from the withdrawn or transferred amount if remaining amounts
are insufficient.
This charge for premature withdrawals from a Guaranteed Rate Account is never
applied against the amount of the Participant's contributions. Also, the
charge for premature withdrawals does not apply:
o at maturity of the Guarantee;
o from withdrawals due to death or disability;
o when the installment option is elected; or
o when an annuity retirement option is elected.
It does apply to any other premature withdrawal or transfer, including
withdrawals on retirement.
- -----------------------------------------------------------------------------
Example: $2,000 is contributed to the Guaranteed Rate Account on January 1,
with the contribution being directed to a three-year Guarantee with a
Guarantee Rate of 4%. On December 31, a premature withdrawal is made of
$1,000 from the Guaranteed Rate Account. The maximum Participant Service
Charge applicable to the Participant is $30 per year ($7.50 per quarter). The
withdrawal charge will be calculated as follows:
<TABLE>
<CAPTION>
PARTICIPANT
SERVICE
DATE CONTRIBUTION INTEREST CHARGE
- ------- -------------- ---------- -------------
<S> <C> <C> <C>
1/1 $2,000 -- --
3/31 -- $19.71 $7.50
6/30 -- 19.83 7.50
9/30 -- 19.95 7.50
12/31 -- 20.07 7.50
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
PREMATURE
AMOUNT WITHDRAWAL CHECK ACCOUNT
DATE REQUESTED CHARGE AMOUNT BALANCE
- ------- ----------- ------------ -------- -----------
<S> <C> <C> <C> <C>
1/1 -- -- -- $2,000.00
3/31 -- -- -- 2,012.21
6/30 -- -- -- 2,024.54
9/30 -- -- -- 2,036.09
12/31 $1,000 $26.00* $1,000 1,023.56
</TABLE>
- ------------
* The lesser of (a) 7% ($75.27) of the amount withdrawn (including the
amount of the withdrawal charge) or (b) the amount of the Participant's
accumulated interest ($26.00) attributable to that same amount.
The example assumes that each quarter contains the same number of days and
that each transaction occurs on a business day.
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CASH VALUE
The Account Balance of a Guaranteed Rate Account is equal to the value of the
contributions and transfers assigned to each Guarantee then current, less
transfers out of the Guaranteed Rate Account, partial withdrawals and
applicable participant service charges, plus accrued interest. Because
withdrawals before the end of a Guarantee are subject to a premature
withdrawal charge, we use the term "Cash Value" to mean the Account Balance
of a Guaranteed Rate Account less any applicable premature withdrawal charge.
The Cash Value is the amount that would be paid to the Participant if the
Participant withdrew the entire Account Balance of a Guaranteed Rate Account
before the end of the Guarantees to which contributions were directed.
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TABLE I
ACCOUNT BALANCES AND CASH VALUES
(ASSUMING $1,000 CONTRIBUTIONS MADE ANNUALLY ON THE ENROLLMENT DATE)
<TABLE>
<CAPTION>
CASH VALUE ACCOUNT BALANCE
--------------------------- ---------------------------
ATTAINED 3% 6% 3% 6%
AGE MINIMUM ILLUSTRATED MINIMUM ILLUSTRATED
YEAR END GUARANTEE RATE GUARANTEE RATE
- ---------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
1 $ 999.66 $ 999.66 $ 999.66 $ 1,029.33
2 2,000.00 2,000.00 2,029.32 2,120.42
3 3,000.00 3,047.59 3,089.86 3,276.98
4 4,000.00 4,187.72 4,182.22 4,502.93
5 5,000.00 5,396.26 5,307.36 5,802.44
6 6,013.60 6,677.32 6,466.24 7,179.91
7 7,123.70 8,035.23 7,659.89 8,640.04
8 8,267.10 9,474.63 8,889.35 10,187.77
9 9,444.80 11,000.38 10,155.70 11,828.37
10 10,657.83 12,617.68 11,460.03 13,567.40
11 11,907.25 14,332.03 12,803.50 15,410.78
12 13,194.16 16,149.23 14,187.27 17,364.76
13 14,519.67 18,075.46 15,612.55 19,435.98
14 15,884.95 20,117.27 17,080.59 21,631.47
15 17,291.19 22,281.58 18,592.68 23,958.69
16 18,739.61 24,575.75 20,150.12 26,425.54
17 20,231.49 27,007.58 21,754.29 29,040.40
18 21,768.12 29,585.31 23,406.58 31,812.16
19 23,350.85 32,317.70 25,108.44 34,750.22
20 24,981.07 35,214.04 26,861.36 37,864.56
21 26,660.19 38,284.17 28,666.87 41,165.77
22 28,389.68 41,538.50 30,526.54 44,665.05
23 30,171.06 44,988.08 32,442.00 48,374.28
24 32,005.88 48,644.65 34,414.92 52,306.07
25 33,895.74 52,520.60 36,447.04 56,473.77
26 35,842.30 56,629.12 38,540.11 60,891.52
27 37,847.26 60,984.14 40,695.98 65,574.34
28 39,912.37 65,600.47 42,916.52 70,538.14
29 42,039.43 70,493.77 45,203.68 75,799.76
30 44,230.30 75,680.68 47,559.46 81,377.07
31 46,486.89 81,178.79 49,985.91 87,289.03
32 48,811.19 87,006.80 52,485.15 93,555.70
33 51,205.21 93,184.49 55,059.37 100,198.37
34 53,671.06 99,732.83 57,710.81 107,239.61
35 56,210.88 106,674.08 60,441.80 114,703.31
36 58,826.89 114,031.80 63,254.72 122,614.84
37 61,521.38 121,830.99 66,152.03 131,001.06
38 64,296.71 130,098.12 69,136.25 139,890.45
39 67,155.30 138,861.29 72,210.00 149,313.21
40 70,099.65 148,150.24 75,375.97 159,301.34
41 73,132.33 157,996.54 78,636.91 169,888.75
42 76,255.99 168,433.61 81,995.68 181,111.41
43 79,473.35 179,496.90 85,455.22 193,007.42
44 82,787.24 191,224.00 89,018.54 205,617.20
45 86,200.55 203,654.71 92,688.76 218,983.56
46 89,716.25 216,831.28 96,469.09 233,151.91
47 93,337.43 230,798.43 100,362.83 248,170.35
48 97,067.24 245,603.61 104,373.38 264,089.91
49 100,908.94 261,297.11 108,504.24 280,964.63
50 104,865.90 277,932.21 112,759.03 298,851.84
</TABLE>
24
<PAGE>
TABLE II
ACCOUNT BALANCES AND CASH VALUES
(ASSUMING A SINGLE CONTRIBUTION OF $1,000 AND NO FURTHER CONTRIBUTION)
<TABLE>
<CAPTION>
CASH VALUE ACCOUNT BALANCE
-------------------------- --------------------------
ATTAINED 3% 6% 3% 6%
AGE MINIMUM ILLUSTRATED MINIMUM ILLUSTRATED
YEAR END GUARANTEE RATE GUARANTEE RATE
- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
1 $999.66 $1,000.00 $999.66 $1,029.33
2 999.32 1,000.00 999.32 1,060.42
3 998.96 1,016.84 998.96 1,093.38
4 998.60 1,049.33 998.60 1,128.31
5 998.22 1,083.77 998.22 1,165.34
6 997.83 1,120.27 997.83 1,204.59
7 997.43 1,158.96 997.43 1,246.20
8 997.02 1,199.98 997.02 1,290.30
9 996.60 1,243.46 996.60 1,337.05
10 996.16 1,289.54 996.16 1,386.60
11 995.71 1,338.39 995.71 1,439.13
12 995.25 1,390.17 995.25 1,494.81
13 994.77 1,445.06 994.77 1,553.83
14 994.28 1,503.24 994.28 1,616.39
15 993.77 1,564.92 993.77 1,682.70
16 993.25 1,630.29 993.25 1,753.00
17 992.71 1,699.58 992.71 1,827.51
18 992.16 1,773.04 992.16 1,906.49
19 991.59 1,850.90 991.59 1,990.21
20 991.00 1,933.43 991.00 2,078.95
21 990.39 2,020.91 990.39 2,173.02
22 989.77 2,113.64 989.77 2,272.73
23 989.13 2,211.94 989.13 2,378.43
24 988.47 2,316.13 988.47 2,490.46
25 987.79 2,426.57 987.79 2,609.22
26 987.09 2,543.65 987.09 2,735.10
27 986.36 2,667.74 986.36 2,868.54
28 985.62 2,799.28 985.62 3,009.98
29 984.85 2,938.72 984.85 3,159.91
30 984.06 3,086.52 984.06 3,318.84
31 983.25 3,243.19 983.25 3,487.30
32 982.41 3,409.26 982.41 3,665.87
33 981.55 3,585.29 981.55 3,855.15
34 980.66 3,771.88 980.66 4,055.79
35 979.74 3,969.68 979.74 4,268.47
36 978.80 4,179.34 978.80 4,493.91
37 977.82 4,401.58 977.82 4,732.88
38 976.82 4,637.15 976.82 4,986.18
39 975.79 4,886.85 975.79 5,254.68
40 974.73 5,151.54 974.73 5,539.29
41 973.64 5,432.11 973.64 5,840.98
42 972.51 5,729.52 972.51 6,160.77
43 971.35 6,044.77 971.35 6,499.75
44 970.16 6,378.93 970.16 6,859.07
45 968.93 6,733.15 968.93 7,239.94
46 967.66 7,108.61 967.66 7,643.67
47 966.35 7,506.61 966.35 8,071.62
48 965.01 7,928.48 965.01 8,525.25
49 963.63 8,375.67 963.63 9,006.10
50 962.20 8,849.69 962.20 9,515.79
</TABLE>
25
<PAGE>
PART 3--REORGANIZATION
- -----------------------------------------------------------------------------
Prior to May 1, 1987, the Separate Account was one of four separate accounts
used to fund benefits under the certificates. Each of these predecessor
separate accounts, which included a Money Market Account, a Stock Account, a
Bond Account and a Balanced Account (collectively, the Predecessor Separate
Accounts), was organized as an open-end management investment company, with
its own investment objectives and policies. Effective May 1, 1987, with the
approval of Contract Owners, we reorganized the Predecessor Separate Accounts
into one separate account (Separate Account No. 301, referred to as the
Separate Account) in unit investment trust form with investment divisions. In
connection with the reorganization, all of the investment-related assets and
liabilities of the Predecessor Separate Accounts were transferred to the
corresponding Funds of Prism Investment Trust ("Prism"), in exchange for
shares in the Funds. In addition, we created an Aggressive Stock Fund, a High
Yield Fund and a Global Fund. The reorganization did not change the Account
Balances under existing certificates. As of September 6, 1991, each of the
above-listed Investment Funds of the Separate Account invests in shares of a
corresponding Portfolio of The Hudson River Trust. Previously, the Investment
Funds had invested in shares of Prism. Shares of Prism's Money Market, Common
Stock, Balanced, Aggressive Stock, High Yield and Global Funds formerly held
by the Separate Account, were replaced by shares of the corresponding
Portfolios of The Hudson River Trust; and the Investment Fund which had
invested in the Bond Fund of Prism now invests (as the Alliance Intermediate
Government Securities Fund) in shares of the Alliance Intermediate Government
Securities Portfolio of The Hudson River Trust.
PART 4--EXPERTS
- -----------------------------------------------------------------------------
The financial statements as of December 31, 1997 and for each of the two
years in the period then ended for the Separate Account and the financial
statements as of December 31, 1997 and 1996 and for each of the three years
ended December 31, 1997 for Equitable Life have been audited by Price
Waterhouse LLP, as stated in its reports. These financial statements included
in this SAI have been so included in reliance on the reports of Price
Waterhouse LLP, independent accountants, given the authority of such firm as
experts in accounting and auditing.
PART 5--ALLIANCE MONEY MARKET
FUND YIELD INFORMATION
- -----------------------------------------------------------------------------
The Alliance Money Market Fund calculates yield information for seven-day
periods. The seven-day current yield calculation is based on a hypothetical
Account Balance with one Unit at the beginning of the period. To determine
the seven-day rate of return, the net change in the Unit Value is computed by
subtracting the Unit Value at the beginning of the period from a Unit Value,
exclusive of capital changes, at the end
of the period.
The net change is then reduced by the average administrative charge factor
(explained below). This reduction is made to recognize the deduction of the
participant service charge, which is not reflected in the unit value. See
"Deductions and Charges--Participant Service Charge" in the prospectus. Unit
Values reflect all other accrued expenses of the Alliance Money Market Fund.
The adjusted net change is divided by the Unit Value at the beginning of the
period to obtain the adjusted base period rate of return. This seven-day
adjusted base period return is then multiplied by 365/7 to produce an
annualized seven-day current yield figure carried to the nearest
one-hundredth of one percent.
The actual dollar amount of the participant service charge that is deducted
from the Alliance Money Market Fund will vary for each Participant depending
upon how the Account Balance is allocated among the Investment Options. To
determine the effect of the participant service charge on the yield, we start
with the total dollar amount of the charges deducted from the Fund on the
last day of the prior quarter. This amount is multiplied by 7/91.25 to
produce an average participant service charge factor which is used in all
weekly yield computations for the ensuing quarter. The average administrative
charge is then divided by the number of Alliance Money Market
26
<PAGE>
Fund Units as of the end of the prior calendar quarter, and the resulting
quotient is deducted from the net change in Unit Value for the seven-day
period.
The effective yield is obtained by modifying the current yield to give effect
to the compounding nature of the Money Market Fund's investments, as follows:
the unannualized adjusted base period return is compounded by adding one to
the adjusted base period return, raising the sum to a power equal to 365
divided by 7, and subtracting one from the result, i.e., effective yield =
(base period return + 1) (365)/7 -1.
The Alliance Money Market Fund yields will fluctuate daily. Accordingly,
yields for any given period are not necessarily representative of future
results. In addition, the value of Units of the Money Market Fund will
fluctuate and not remain constant.
The Alliance Money Market Fund yields reflect charges that are not normally
reflected in the yields of other investments and therefore may be lower when
compared with yields of other investments. Alliance Money Market Fund yields
should not be compared to the return on fixed rate investments which
guarantee rates of interest for specified periods, such as the Guaranteed
Rate Accounts or bank deposits. The yield should not be compared to the yield
of money market funds made available to the general public because their
yields usually are calculated on the basis of a constant $1 price per share
and they pay out earnings in dividends which accrue on a daily basis.
The seven-day current yield for the Alliance Money Market Fund was 4.70% for
the period ended December 31, 1997. The effective yield for that period was
4.82%. Because these yields reflect the deduction of Separate Account
expenses, including the participant service charge, they are lower than the
corresponding yield figures for the Alliance Money Market Portfolio which
reflect only the deduction of Trust-level expenses.
PART 6--FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
The financial statements of Equitable Life included herein should be
considered only as bearing upon the ability of Equitable Life to meet its
obligations under the certificates. The financial statements begin on the
following page.
27
<PAGE>
REPORT OF INDEPENDENT ACCOUNTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and Contractowners of Separate Account No. 301
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly,
in all material respects, the financial position of the Alliance Money Market
Fund, Alliance Intermediate Government Securities Fund, Alliance High Yield
Fund, Alliance Growth Investors Fund, Alliance Common Stock Fund, Alliance
Global Fund, Alliance Aggressive Stock Fund, Alliance Conservative Investors
Fund, Alliance Growth & Income Fund and Alliance Balanced Fund, separate
investment funds of The Equitable Life Assurance Society of the United States
("Equitable Life") Separate Account No. 301 at December 31, 1997 and the
results of each of their operations and changes in each of their net assets
for the periods indicated, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of Equitable
Life's managament; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of shares owned in The Hudson River
Trust at December 31, 1997 with the transfer agent, provide a reasonable
basis for the opinion expressed above. The unit value information presented
in Note 5 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.
Price Waterhouse LLP
New York, New York
February 10, 1998
28
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 301
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE INTERMEDIATE ALLIANCE ALLIANCE
MONEY GOVERNMENT HIGH GROWTH
MARKET SECURITIES YIELD INVESTORS
FUND FUND FUND FUND
----------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Investments in shares of
The Hudson River Trust,
at market value (Note 2)
Cost: $19,991,081 ......... $19,930,237
5,263,050 .......... $5,249,235
4,120,743 .......... $4,238,947
1,914,212 .......... $1,991,226
69,218,894 ..........
5,913,870 ..........
9,101,156 ..........
881,068 ..........
5,598,274 ..........
35,444,362 ..........
Receivable for The Hudson River
Trust shares sold.............. -- 307 175 75
Due From Equitable's General
Account ....................... 63,179 466 -- --
----------- ---------- ---------- ----------
Total assets ................... 19,993,416 5,250,008 4,239,122 1,991,301
----------- ---------- ---------- ----------
LIABILITIES:
Payable for The Hudson River
Trust shares purchased ........ 63,179 -- -- --
Due to Equitable's General
Account........................ -- -- 175 75
Accrued expenses ............... 15,166 5,850 2,463 1,974
----------- ---------- ---------- ----------
Total liabilities .............. 78,345 5,850 2,638 2,049
----------- ---------- ---------- ----------
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS................... $19,915,071 $5,244,158 $4,236,484 $1,989,252
=========== ========== ========== ==========
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
COMMON ALLIANCE AGGRESSIVE CONSERVATIVE GROWTH & ALLIANCE
STOCK GLOBAL STOCK INVESTORS INCOME BALANCED
FUND FUND FUND FUND FUND FUND
----------- ---------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in shares of
The Hudson River Trust,
at market value (Note 2)
Cost: $19,991,081 .........
5,263,050 ...........
4,120,743 ...........
1,914,212 ...........
69,218,894 ........... $91,608,737
5,913,870 ........... $5,928,686
9,101,156 ........... $8,809,578
881,068 ........... $920,090
5,598,274 ........... $5,958,721
35,444,362 ........... $37,396,302
Receivable for The Hudson River
Trust shares sold.............. 8,270 212 439 33 98 70,673
Due From Equitable's General
Account ....................... -- -- -- -- -- --
----------- ---------- ---------- -------- ---------- -----------
Total assets ................... 91,617,007 5,928,898 8,810,017 920,123 5,958,819 37,466,975
----------- ---------- ---------- -------- ---------- -----------
LIABILITIES:
Payable for The Hudson River
Trust shares purchased ........ -- -- -- -- -- --
Due to Equitable's General
Account........................ 8,270 212 439 33 98 70,673
Accrued expenses ............... 38,043 4,383 5,356 1,698 2,309 24,981
----------- ---------- ---------- -------- ---------- -----------
Total liabilities .............. 46,313 4,595 5,795 1,731 2,407 95,654
----------- ---------- ---------- -------- ---------- -----------
NET ASSETS ATTRIBUTABLE TO
POLICYOWNERS................... $91,570,694 $5,924,303 $8,804,222 $918,392 $5,956,412 $37,371,321
=========== ========== ========== ======== ========== ===========
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 301
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE INTERMEDIATE ALLIANCE ALLIANCE
MONEY GOVERNMENT HIGH GROWTH
MARKET SECURITIES YIELD INVESTORS
FUND FUND FUND FUND
---------- ------------ -------- ---------
<S> <C> <C> <C> <C>
INCOME AND EXPENSE:
Investment Income:
Dividends from The Hudson River
Trust (Note 2)................... $1,060,818 $ 292,734 $332,507 $ 45,839
---------- --------- -------- --------
Expenses (Note 3):
Administrative fees............... 52,287 13,283 8,977 4,558
Recordkeeping charges............. 26,768 12,833 9,382 8,462
Professional fees................. 4,792 1,274 715 350
Printing and mailing expenses .... 5,641 1,499 842 412
Miscellaneous..................... 66 18 10 4
---------- --------- -------- --------
Total expenses................... 89,554 28,907 19,926 13,786
Less: Reimbursement for excess
expense limitation................ 3,667 7,965 -- --
---------- --------- -------- --------
Net expenses..................... 85,887 20,942 19,926 13,786
---------- --------- -------- --------
NET INVESTMENT INCOME (LOSS) ....... 974,931 271,792 312,581 32,053
---------- --------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain (loss) from share
transactions ..................... 67,317 (327,420) 1,376 37,701
Realized gain distribution from
The Hudson River Trust............ 1,316 -- 165,571 103,615
---------- --------- -------- --------
Net Realized Gain (Loss)......... 68,633 (327,420) 166,947 141,316
---------- --------- -------- --------
Change in unrealized
appreciation/(depreciation) of
investments....................... (27,007) 401,428 111,190 102,273
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS........................ 41,626 74,008 278,137 243,589
---------- --------- -------- --------
NET INCREASE IN NET ASSETS FROM
OPERATIONS......................... $1,016,557 $ 345,800 $590,718 $275,642
========== ============ ======== =========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
COMMON ALLIANCE AGGRESSIVE CONSERVATIVE GROWTH & ALLIANCE
STOCK GLOBAL STOCK INVESTORS INCOME BALANCED
FUND FUND FUND FUND FUND FUND
----------- --------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSE:
Investment Income:
Dividends from The Hudson River
Trust (Note 2)................... $ 444,993 $ 118,356 $ 13,237 $37,075 $ 36,269 $1,204,835
----------- ---------- ---------- ------- -------- ----------
Expenses (Note 3):
Administrative fees............... 202,902 14,859 24,093 2,270 9,549 91,184
Recordkeeping charges............. 66,558 12,020 14,152 7,961 8,943 39,820
Professional fees................. 17,060 1,281 1,927 223 818 8,059
Printing and mailing expenses .... 20.082 1,508 2,269 232 962 9,487
Miscellaneous..................... 234 18 26 3 11 110
----------- ---------- ---------- ------- -------- ----------
Total expenses................... 306,836 29,686 42,467 10,689 20,283 148,678
Less: Reimbursement for excess
expense limitation................ -- -- -- -- -- --
----------- ---------- ---------- ------- -------- ----------
Net expenses..................... 306,836 29,686 42,467 10,689 20,283 148,678
----------- ---------- ---------- ------- -------- ----------
NET INVESTMENT INCOME (LOSS) ....... 138,157 88,670 (29,230) 26,386 15,986 1,056,157
----------- ---------- ---------- ------- -------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain (loss) from share
transactions ..................... 3,521,498 720,766 527,518 12,696 354,430 1,121,506
Realized gain distribution from
The Hudson River Trust............ 6,839,389 377,028 737,027 27,713 340,925 1,845,736
----------- ---------- ---------- ------- -------- ----------
Net Realized Gain (Loss)......... 10,360,887 1,097,794 1,264,545 40,409 695,355 2,967,242
----------- ---------- ---------- ------- -------- ----------
Change in unrealized
appreciation/(depreciation) of
investments....................... 10,127,141 (570,164) (227,485) 30,727 63,314 979,323
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS........................ 20,488,028 527,630 1,037,060 71,136 758,669 3,946,565
----------- ---------- ---------- ------- -------- ----------
NET INCREASE IN NET ASSETS FROM
OPERATIONS......................... $20,626,185 $ 616,300 $1,007,830 $97,522 $774,655 $5,002,722
=========== ========== ========== ======= ======== ==========
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 301
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ALLIANCE
INTERMEDIATE
ALLIANCE GOVERNMENT
MONEY MARKET FUND SECURITIES FUND
------------------------ ----------------------
1997 1996 1997 1996
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
FROM OPERATIONS:
Net investment income ..... $ 974,931 $ 958,627 $ 271,792 $ 303,815
Realized gain (loss) on
investments................ 68,633 59,696 (327,420) (194,292)
Change in unrealized
appreciation/depreciation
of investments ............ (27,007) (16,202) 401,428 80,606
----------- ----------- ---------- ----------
Net increase (decrease) in
net assets from
operations................. 1,016,557 1,002,121 345,800 190,129
----------- ----------- ---------- ----------
FROM CONTRACT OWNER
TRANSACTIONS (NOTES 3 AND
4):
Contributions and
Transfers:
Contributions ............. 1,483,866 1,652,784 165,347 152,473
Transfers from other Funds 12,126,642 5,736,734 1,346,973 406,548
Transfers from Guaranteed
Rate Account ............. 1,444,241 1,248,903 94,401 29,829
----------- ----------- ---------- ----------
Total contributions ..... 15,054,749 8,638,421 1,606,721 588,850
----------- ----------- ---------- ----------
Withdrawals and Transfers:
Withdrawals ............... 5,013,401 2,915,123 657,245 695,654
Transfers to other Funds . 11,804,062 6,816,252 1,541,457 804,638
Transfers to Guaranteed
Rate Account.............. 27,233 56,409 12,546 12,000
Participant service
charge.................... 25,638 14,400 1,594 939
----------- ----------- ---------- ----------
Total withdrawals ........ 16,870,334 9,802,184 2,212,842 1,513,231
----------- ----------- ---------- ----------
Net increase (decrease) in
net assets from Contract
Owner transactions........ (1,815,585) (1,163,763) (606,121) (924,381)
----------- ----------- ---------- ----------
INCREASE (DECREASE) IN NET
ASSETS ATTRIBUTABLE TO
POLICYOWNERS................ (799,028) (161,642) (260,321) (734,252)
NET ASSETS -BEGINNING OF
YEAR ATTRIBUTABLE TO
POLICYOWNERS................ 20,714,099 20,875,741 5,504,479 6,238,731
----------- ----------- ---------- ----------
NET ASSETS -END OF YEAR
(NOTE 1) ATTRIBUTABLE TO
POLICYOWNERS................ $19,915,071 $20,714,099 $5,244,158 $5,504,479
=========== =========== ========== ==========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
HIGH YIELD FUND GROWTH INVESTORS FUND COMMON STOCK FUND GLOBAL FUND
---------------------- ---------------------- ------------------------ ---------------------
1997 1996 1997 1996 1997 1996 1997 1996
---------- ---------- ---------- ---------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
FROM OPERATIONS:
Net investment income ..... $ 312,581 $ 222,155 $ 32,053 $ 20,292 $ 138,157 $ 281,816 $ 88,670 $ 64,915
Realized gain (loss) on
investments................ 166,947 168,814 141,316 230,291 10,360,887 8,543,579 1,097,794 361,293
Change in unrealized
appreciation/depreciation
of investments ............ 111,190 70,493 102,273 (98,089) 10,127,141 4,909,576 (570,164) 240,914
---------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
Net increase (decrease) in
net assets from
operations................. 590,718 461,462 275,642 152,494 20,626,185 13,734,971 616,300 667,122
---------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
FROM CONTRACT OWNER
TRANSACTIONS (NOTES 3 AND
4):
Contributions and
Transfers:
Contributions ............. 322,513 146,990 176,704 160,032 2,493,485 4,029,542 488,048 138,950
Transfers from other Funds 972,728 650,181 502,761 372,192 9,320,877 5,281,055 2,571,195 1,005,748
Transfers from Guaranteed
Rate Account ............. 77,364 25,965 24,896 32,473 358,057 321,524 76,975 67,007
---------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
Total contributions ..... 1,372,605 823,136 704,361 564,697 12,172,419 9,632,121 3,136,218 1,211,705
---------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
Withdrawals and Transfers:
Withdrawals ............... 71,448 77,388 48,477 212,724 4,684,497 3,426,595 552,263 252,398
Transfers to other Funds . 481,930 261,722 369,292 217,358 8,806,471 4,407,325 2,793,492 638,557
Transfers to Guaranteed
Rate Account.............. -- 1,489 -- -- 117,496 51,149 33,941 500
Participant service
charge.................... 805 345 326 166 30,773 16,200 1,129 742
---------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
Total withdrawals ........ 554,183 340,944 418,095 430,248 13,639,237 7,901,269 3,380,825 892,197
---------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
Net increase (decrease) in
net assets from Contract
Owner transactions........ 818,422 482,192 286,266 134,449 (1,466,818) 1,730,852 (244,607) 319,508
---------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
INCREASE (DECREASE) IN NET
ASSETS ATTRIBUTABLE TO
POLICYOWNERS................ 1,409,140 943,654 561,908 286,943 19,159,367 15,465,823 371,693 986,630
NET ASSETS -BEGINNING OF
YEAR ATTRIBUTABLE TO
POLICYOWNERS................ 2,827,344 1,883,690 1,427,344 1,140,401 72,411,327 56,945,504 5,552,610 4,565,980
---------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
NET ASSETS -END OF YEAR
(NOTE 1) ATTRIBUTABLE TO
POLICYOWNERS................ $4,236,484 $2,827,344 $1,989,252 $1,427,344 $91,570,694 $72,411,327 $5,924,303 $5,552,610
========== ========== ========== ========== =========== =========== ========== ==========
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 301
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE CONSERVATIVE
AGGRESSIVE STOCK FUND INVESTORS FUND
-------------------------- ----------------------
1997 1996 1997 1996
------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ......... $ (29,230) $ (19,303) $ 26,386 $ 24,855
Realized gain (loss) on
investments .................. 1,264,545 1,845,168 40,409 41,125
Change in unrealized
appreciation/depreciation of
investments .................. (227,485) (541,744) 30,727 (35,434)
---------- ---------- -------- --------
Net increase (decrease) in net
assets from operations ....... 1,007,830 1,284,121 97,522 30,546
---------- ---------- -------- --------
FROM CONTRACT OWNER
TRANSACTIONS (NOTES 3 AND 4):
Contributions and Transfers:
Contributions ................ 1,677,402 406,531 99,277 97,989
Transfers from other Funds .. 6,072,938 2,923,402 170,098 176,578
Transfers from Guaranteed
Rate Account ................ 159,364 98,695 1,300 16,550
---------- ---------- -------- --------
Total contributions ......... 7,909,704 3,428,628 270,675 291,117
---------- ---------- -------- --------
Withdrawals and Transfers:
Withdrawals .................. 606,970 453,535 8,438 127,152
Transfers to other Funds .... 6,947,161 3,016,856 315,494 205,845
Transfers to Guaranteed Rate
Account...................... -- 18,220 32 --
Participant service charge ... 2,160 1,108 156 83
---------- ---------- -------- --------
Total withdrawals ........... 7,556,291 3,489,719 324,120 333,080
---------- ---------- -------- --------
Net increase in net assets
from Contract Owner
transactions................. 353,413 (61,091) (53,445) (41,963)
---------- ---------- -------- --------
INCREASE (DECREASE) IN NET
ASSETS ATTRIBUTABLE TO
POLICYOWNERS .................. 1,361,243 1,223,030 44,077 (11,417)
NET ASSETS -BEGINNING OF YEAR
ATTRIBUTABLE TO POLICYOWNERS .. 7,442,979 6,219,949 874,315 885,732
---------- ---------- -------- --------
NET ASSETS -END OF YEAR
(NOTE 1) ATTRIBUTABLE TO
POLICYOWNERS................... $8,804,222 $7,442,979 $918,392 $874,315
========== ========== ======== ========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
ALLIANCE
GROWTH & ALLIANCE
INCOME FUND BALANCED FUND
-------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ......... $ 15,986 $ 24,887 $ 1,056,157 $ 941,498
Realized gain (loss) on
investments .................. 695,355 269,047 2,967,242 3,238,848
Change in unrealized
appreciation/depreciation of
investments .................. 63,314 74,966 979,323 (521,010)
---------- ---------- ----------- -----------
Net increase (decrease) in net
assets from operations ....... 774,655 368,900 5,002,722 3,659,336
---------- ---------- ----------- -----------
FROM CONTRACT OWNER
TRANSACTIONS (NOTES 3 AND 4):
Contributions and Transfers:
Contributions ................ 1,557,049 399,075 2,040,947 614,825
Transfers from other Funds .. 1,670,343 1,492,294 3,849,001 224,015
Transfers from Guaranteed
Rate Account ................ 205,299 40,086 86,218 184,830
---------- ---------- ----------- -----------
Total contributions ......... 3,432,691 1,931,455 5,976,166 1,023,670
---------- ---------- ----------- -----------
Withdrawals and Transfers:
Withdrawals .................. 293,988 428,697 4,212,986 2,625,584
Transfers to other Funds .... 1,317,274 147,357 4,226,912 1,752,837
Transfers to Guaranteed Rate
Account...................... -- -- 2,614 52,823
Participant service charge ... 367 174 13,533 7,225
---------- ---------- ----------- -----------
Total withdrawals ........... 1,611,629 576,228 8,456,045 4,438,469
---------- ---------- ----------- -----------
Net increase in net assets
from Contract Owner
transactions................. 1,821,062 1,355,227 (2,479,879) (3,414,799)
---------- ---------- ----------- -----------
INCREASE (DECREASE) IN NET
ASSETS ATTRIBUTABLE TO
POLICYOWNERS .................. 2,595,717 1,724,127 2,522,843 244,537
NET ASSETS -BEGINNING OF YEAR
ATTRIBUTABLE TO POLICYOWNERS .. 3,360,695 1,636,568 34,848,478 34,603,941
---------- ---------- ----------- -----------
NET ASSETS -END OF YEAR
(NOTE 1) ATTRIBUTABLE TO
POLICYOWNERS................... $5,956,412 $3,360,695 $37,371,321 $34,848,478
========== ========== =========== ===========
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 301
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. General
The Equitable Life Assurance Society of the United States (Equitable Life)
Separate Account No. 301 (the Account) is organized as a unit investment
trust, a type of investment company, and is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940. The
Account is used to fund benefits under certain group annuity contracts and
certificates (Contracts) in connection with individual retirement
annuities and tax-sheltered annuity arrangements. The Account has ten
investment funds (Funds): Alliance Money Market Fund, Alliance
Intermediate Government Securities Fund, Alliance High Yield Fund,
Alliance Growth Investors Fund, Alliance Common Stock Fund, Alliance
Global Fund, Alliance Aggressive Stock Fund, Alliance Conservative
Investors Fund, Alliance Growth & Income Fund and Alliance Balanced Fund.
The assets in each Fund are invested in Class IA shares of a corresponding
portfolio (Portfolio), of a mutual fund, The Hudson River Trust (Trusts).
The Trust is an open-end, diversified, management investment company that
invests the assets of separate accounts of insurance companies. Each
Portfolio has separate investment objectives.
The net assets of the Account are not chargeable with liabilities arising
out of any other business Equitable Life may conduct. The excess of assets
over reserves and other contract liabilities, if any, in the Account are
beneficially owned by Equitable Life and may be transferred to Equitable
Life's General Account.
2. Significant Accounting Policies
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Investments are made in shares of the Trust and are valued at the net
asset values per share of the respective Portfolios. The net asset value
is determined by the Trust using the market or fair value of the
underlying assets of the Portfolio, less liabilities.
Investment transactions are recorded on the trade date. Realized gains and
losses include gains and losses on redemptions of the Trust's shares
(determined on the identified cost basis) and Trust distributions
representing the net realized gains on Trust investment transactions.
Dividends and capital gain distributions are automatically reinvested on
the ex-dividend date. Dividends from the Trust are recorded at the end of
each quarter on the ex-dividend date. Capital gains are distributed by the
Trust at the end of each year.
No Federal income tax based on net investment income or realized and
unrealized capital gains is currently applicable to Contracts
participating in the Account by reason of applicable provisions of the
Internal Revenue Code and no Federal income tax payable by Equitable Life
is expected to affect the unit value of Contracts participating in the
Account. Accordingly, no provision for income taxes is required.
33
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 301
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
3. Asset Charges
The following charges are made directly against the assets of the Account
and are reflected daily in the computation of the unit values of the
Contracts:
o Administrative fees are charged at an effective annual rate of 0.25%
of the net assets of each Fund.
o Direct operating expenses are paid to cover expenses attributable to
the operations of each Fund.
Under the Contracts, Equitable Life reimburses the Alliance Money Market
Fund, the Alliance Common Stock Fund, the Alliance Intermediate Government
Securities Fund and the Alliance Balanced Fund for the excess of the
aggregate expense charges of each Fund (including investment advisory fees
and certain other Trust expenses attributable to assets of such Fund
invested in a Portfolio of the Trust and the asset-based charges of the
Fund, as described above) which during any calendar year exceed 1.5% of
the average daily net assets of the Alliance Common Stock Fund, the
Alliance Intermediate Government Securities Fund and the Alliance Balanced
Fund and 1.0% of the Alliance Money Market Fund. In addition, Equitable
Life voluntarily reimburses the Alliance High Yield Fund, the Alliance
Aggressive Stock Fund and the Alliance Global Fund for aggregate expenses
in excess of a 1.5% of each Fund's average daily net assets. This
voluntary expense limitation may be discontinued by Equitable Life at its
discretion.
Also, if the annual amount of management fees applicable to the Alliance
Money Market Portfolio and the Alliance Intermediate Government Securities
Portfolio exceeds 0.35% of the average daily net asset value of either
Portfolio, Equitable Life will reimburse the related Fund for such excess.
This expense limitation is a contractual right for Participants who
enrolled prior to May 1, 1987 and cannot be changed without the consent of
those Participants. Equitable Life has voluntarily agreed to impose this
expense limitation for Participants who enrolled after May 1, 1987 and
reserves the right to discontinue this at any time.
A quarterly Participant Service Charge is made for each participant at the
end of each calendar quarter before retirement benefits begin.
Participant's unit balances are reduced and proceeds are credited to
Equitable Life in payment of the participant's service charge which will
not exceed $30 per year.
4. Contributions and Withdrawals:
Contributions allocated to the Account are not subject to sales expense.
Participants may transfer all or part of the cash value under the
Contracts from one Fund to another subject to certain limitations.
Transfers to and from the Guaranteed Interest Account of Equitable Life's
General Account and the Account may be made subject to certain
limitations.
Full or partial withdrawals, including withdrawals of excess
contributions, may be made by participants.
34
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 301
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
4. Contributions and Withdrawals (Continued)
Units of the Account issued and redeemed during the periods indicated
were:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------
1997 1996
--------- ---------
<S> <C> <C>
ALLIANCE MONEY MARKET FUND
Issued ........................................ 570,094 342,708
Redeemed....................................... 637,829 388,975
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES FUND
Issued ........................................ 36,260 14,284
Redeemed....................................... 50,418 36,700
ALLIANCE HIGH YIELD FUND
Issued ........................................ 48,832 34,258
Redeemed....................................... 19,795 14,281
ALLIANCE GROWTH INVESTORS FUND
Issued ........................................ 49,187 44,307
Redeemed....................................... 28,095 32,950
ALLIANCE COMMON STOCK FUND
Issued ........................................ 102,590 102,495
Redeemed....................................... 115,815 84,167
ALLIANCE GLOBAL FUND
Issued ........................................ 110,921 49,937
Redeemed....................................... 119,387 36,549
ALLIANCE AGGRESSIVE STOCK FUND
Issued ........................................ 188,408 93,501
Redeemed....................................... 175,110 96,541
ALLIANCE CONSERVATIVE INVESTORS FUND
Issued ........................................ 21,439 25,117
Redeemed....................................... 25,854 28,851
ALLIANCE GROWTH & INCOME FUND
Issued ........................................ 198,680 141,519
Redeemed....................................... 105,360 44,640
ALLIANCE BALANCED FUND
Issued ........................................ 88,387 17,640
Redeemed....................................... 124,271 75,972
</TABLE>
35
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 301
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
5. Accumulation Unit Values
Shown below is unit value information for the periods shown.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET
FUND
Unit value, beginning of
year.................... $25.77 $24.55 $23.32 $22.48 $21.93 $21.29 $20.17 $18.73 $17.23 $16.14
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Unit value, end of year $27.05 $25.77 $24.55 $23.32 $22.48 $21.93 $21.29 $20.17 $18.73 $17.23
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Number of units
outstanding,
end of year (000's) ... 736 804 850 1,028 1,035 1,301 1,528 1,919 1,708 1,379
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
ALLIANCE INTERMEDIATE
GOVERNMENT
SECURITIES FUND
Unit value, beginning of
year ................... $42.20 $40.82 $36.13 $37.77 $34.34 $32.73 $28.79 $27.19 $23.63 $22.41
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Unit value, end of year . $45.11 $42.20 $40.82 $36.13 $37.77 $34.34 $32.73 $28.79 $27.19 $23.63
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Number of units
outstanding,
end of year (000's) ... 116 130 153 166 188 184 177 242 223 196
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
ALLIANCE HIGH YIELD FUND
Unit value, beginning of
year.................... $26.45 $21.67 $18.18 $18.84 $15.40 $13.84 $11.11 $11.67 $11.60 $10.41
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Unit value, end of year $31.16 $26.45 $21.67 $18.18 $18.84 $15.40 $13.84 $11.11 $11.67 $11.60
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Number of units
outstanding,
end of year (000's) ... 136 107 87 80 78 53 27 16 18 22
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, MAY 2, 1994* TO
---------------------------- DECEMBER 31,
1997 1996 1995 1994
-------- -------- -------- ---------------
<S> <C> <C> <C> <C>
ALLIANCE GROWTH INVESTORS FUND
Unit value, beginning of
year......................... $13.64 $12.23 $ 9.79 $10.00
======== ======== ======== ===============
Unit value, end of year ..... $15.80 $13.64 $12.23 $ 9.79
======== ======== ======== ===============
Number of units outstanding,
end of year (000's) ......... 126 105 93 37
======== ======== ======== ===============
</TABLE>
* Date on which participant contributions were first allocated to the Fund.
36
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 301
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
5. Accumulation Unit Values (Continued)
Shown below is unit value information for the periods shown.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
--------- --------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE COMMON STOCK
FUND
Unit value, beginning of
year ................... $104.68 $ 84.56 $64.13 $65.89 $52.97 $51.55 $35.87 $40.94 $33.04 $29.88
========= ========= ======== ======== ======== ======== ======== ======== ======== ========
Unit value, end of year . $134.77 $104.68 $84.56 $64.13 $65.89 $52.97 $51.55 $35.87 $40.94 $33.04
========= ========= ======== ======== ======== ======== ======== ======== ======== ========
Number of units
outstanding,
end of year (000's) ... 678 692 673 694 715 736 790 930 963 978
========= ========= ======== ======== ======== ======== ======== ======== ======== ========
ALLIANCE GLOBAL FUND
Unit value, beginning of
year.................... $ 25.95 $ 22.76 $19.25 $18.40 $14.01 $14.20 $11.23 $11.97 $ 9.58 $ 8.58
========= ========= ======== ======== ======== ======== ======== ======== ======== ========
Unit value, end of year $ 28.80 $ 25.95 $22.76 $19.25 $18.40 $14.01 $14.20 $11.23 $11.97 $ 9.58
========= ========= ======== ======== ======== ======== ======== ======== ======== ========
Number of units
outstanding,
end of year (000's) ... 206 214 201 195 153 55 42 32 19 12
========= ========= ======== ======== ======== ======== ======== ======== ======== ========
ALLIANCE AGGRESSIVE
STOCK FUND
Unit value, beginning of
year.................... $ 39.73 $ 32.67 $24.95 $26.14 $22.54 $23.43 $13.34 $12.47 $ 8.70 $ 8.59
========= ========= ======== ======== ======== ======== ======== ======== ======== ========
Unit value, end of year . $ 43.83 $ 39.73 $32.67 $24.95 $26.14 $22.54 $23.43 $13.34 $12.47 $ 8.70
========= ========= ======== ======== ======== ======== ======== ======== ======== ========
Number of units
outstanding,
end of year (000's) ... 201 187 190 141 125 156 125 48 27 9
========= ========= ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
37
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT NO. 301
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
5. Accumulation Unit Values (Continued)
Shown below is unit value information for the periods shown.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, MAY 2, 1994* TO
--------------------------- DECEMBER 31,
1997 1996 1995 1994
-------- -------- -------- ---------------
<S> <C> <C> <C> <C>
ALLIANCE CONSERVATIVE INVESTORS
FUND
- -----------------------------------
Unit value, beginning of year ...... $12.25 $11.79 $ 9.92 $10.00
======== ======== ======== ===============
Unit value, end of year ............ $13.71 $12.25 $11.79 $ 9.92
======== ======== ======== ===============
Number of units outstanding,
end of year (000's) ............... 67 71 75 50
======== ======== ======== ===============
ALLIANCE GROWTH & INCOME FUND
- -----------------------------------
Unit value, beginning of year ...... $14.55 $12.21 $ 9.92 $10.00
======== ======== ======== ===============
Unit value, end of year ............ $18.35 $14.55 $12.21 $ 9.92
======== ======== ======== ===============
Number of units outstanding,
end of year (000's) ............... 324 231 134 105
======== ======== ======== ===============
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE BALANCED FUND
- ------------------------
Unit value, beginning of
year ................... $62.36 $56.07 $47.03 $51.38 $45.92 $47.50 $33.76 $33.91 $27.04 $23.88
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Unit value, end of year . $71.42 $62.36 $56.07 $47.03 $51.38 $45.92 $47.50 $33.76 $33.91 $27.04
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Number of units
outstanding,
end of year (000's) ... 523 559 617 681 756 827 949 1,217 1,260 1,220
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
- ------------
* Date on which participant contributions were first allocated to the Fund.
38
<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 of cash
flows present fairly, in all material respects, the financial position of The
Equitable Life Assurance Society of the United States and its subsidiaries
("Equitable Life") at December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of Equitable
Life's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management and evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above.
As discussed in Note 2 to the consolidated financial statements, Equitable
Life changed its methods of accounting for long-duration participating life
insurance contracts and long-lived assets in 1996 and for loan impairments in
1995.
/s/ Price Waterhouse, LLP
Price Waterhouse LLP
New York, New York
February 10, 1998
F-1
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value............................. $ 19,630.9 $ 18,077.0
Mortgage loans on real estate............................................. 2,611.4 3,133.0
Equity real estate........................................................ 2,749.2 3,297.5
Policy loans.............................................................. 2,422.9 2,196.1
Other equity investments.................................................. 951.5 860.6
Investment in and loans to affiliates..................................... 731.1 685.0
Other invested assets..................................................... 624.7 25.4
----------------- -----------------
Total investments..................................................... 29,721.7 28,274.6
Cash and cash equivalents................................................... 300.5 538.8
Deferred policy acquisition costs........................................... 3,236.6 3,104.9
Amounts due from discontinued operations.................................... 572.8 996.2
Other assets................................................................ 2,685.2 2,552.2
Closed Block assets......................................................... 8,566.6 8,495.0
Separate Accounts assets.................................................... 36,538.7 29,646.1
----------------- -----------------
Total Assets................................................................ $ 81,622.1 $ 73,607.8
================= =================
LIABILITIES
Policyholders' account balances............................................. $ 21,579.5 $ 21,865.6
Future policy benefits and other policyholder's liabilities................. 4,553.8 4,416.6
Short-term and long-term debt............................................... 1,991.2 1,766.9
Other liabilities........................................................... 3,257.1 2,785.1
Closed Block liabilities.................................................... 9,073.7 9,091.3
Separate Accounts liabilities............................................... 36,306.3 29,598.3
----------------- -----------------
Total liabilities..................................................... 76,761.6 69,523.8
----------------- -----------------
Commitments and contingencies (Notes 10, 12, 13, 14 and 15)
SHAREHOLDER'S EQUITY
Common stock, $1.25 par value 2.0 million shares authorized, issued
and outstanding........................................................... 2.5 2.5
Capital in excess of par value.............................................. 3,105.8 3,105.8
Retained earnings........................................................... 1,235.9 798.7
Net unrealized investment gains............................................. 533.6 189.9
Minimum pension liability................................................... (17.3) (12.9)
----------------- -----------------
Total shareholder's equity............................................ 4,860.5 4,084.0
----------------- -----------------
Total Liabilities and Shareholder's Equity.................................. $ 81,622.1 $ 73,607.8
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee
income...................................................... $ 950.6 $ 874.0 $ 788.2
Premiums...................................................... 601.5 597.6 606.8
Net investment income......................................... 2,282.8 2,203.6 2,088.2
Investment (losses) gains, net................................ (45.2) (9.8) 5.3
Commissions, fees and other income............................ 1,227.2 1,081.8 897.1
Contribution from the Closed Block............................ 102.5 125.0 143.2
----------------- ----------------- -----------------
Total revenues.......................................... 5,119.4 4,872.2 4,528.8
----------------- ----------------- -----------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances.......... 1,266.2 1,270.2 1,248.3
Policyholders' benefits....................................... 978.6 1,317.7 1,008.6
Other operating costs and expenses............................ 2,203.9 2,075.7 1,775.8
----------------- ----------------- -----------------
Total benefits and other deductions..................... 4,448.7 4,663.6 4,032.7
----------------- ----------------- -----------------
Earnings from continuing operations before Federal
income taxes, minority interest and cumulative
effect of accounting change................................. 670.7 208.6 496.1
Federal income taxes.......................................... 91.5 9.7 120.5
Minority interest in net income of consolidated subsidiaries.. 54.8 81.7 62.8
----------------- ----------------- -----------------
Earnings from continuing operations before cumulative
effect of accounting change................................. 524.4 117.2 312.8
Discontinued operations, net of Federal income taxes.......... (87.2) (83.8) -
Cumulative effect of accounting change, net of Federal
income taxes................................................ - (23.1) -
----------------- ----------------- -----------------
Net Earnings.................................................. $ 437.2 $ 10.3 $ 312.8
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
Common stock, at par value, beginning and end of year......... $ 2.5 $ 2.5 $ 2.5
----------------- ----------------- -----------------
Capital in excess of par value, beginning and end of year..... 3,105.8 3,105.8 3,105.8
----------------- ----------------- -----------------
Retained earnings, beginning of year.......................... 798.7 788.4 475.6
Net earnings.................................................. 437.2 10.3 312.8
----------------- ----------------- -----------------
Retained earnings, end of year................................ 1,235.9 798.7 788.4
----------------- ----------------- -----------------
Net unrealized investment gains (losses), beginning of year... 189.9 396.5 (220.5)
Change in unrealized investment gains (losses)................ 343.7 (206.6) 617.0
----------------- ----------------- -----------------
Net unrealized investment gains, end of year.................. 533.6 189.9 396.5
----------------- ----------------- -----------------
Minimum pension liability, beginning of year.................. (12.9) (35.1) (2.7)
Change in minimum pension liability........................... (4.4) 22.2 (32.4)
-----------------
----------------- -----------------
Minimum pension liability, end of year........................ (17.3) (12.9) (35.1)
----------------- ----------------- -----------------
Total Shareholder's Equity, End of Year....................... $ 4,860.5 $ 4,084.0 $ 4,258.1
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
Net earnings.................................................. $ 437.2 $ 10.3 $ 312.8
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Interest credited to policyholders' account balances........ 1,266.2 1,270.2 1,248.3
Universal life and investment-type product
policy fee income......................................... (950.6) (874.0) (788.2)
Investment losses (gains)................................... 45.2 9.8 (5.3)
Change in Federal income tax payable........................ (74.4) (197.1) 221.6
Other, net.................................................. 169.4 330.2 80.5
----------------- ----------------- -----------------
Net cash provided by operating activities..................... 893.0 549.4 1,069.7
----------------- ----------------- -----------------
Cash flows from investing activities:
Maturities and repayments................................... 2,702.9 2,275.1 1,897.4
Sales....................................................... 10,385.9 8,964.3 8,867.1
Purchases................................................... (13,205.4) (12,559.6) (11,675.5)
(Increase) decrease in short-term investments............... (555.0) 450.3 (99.3)
Decrease in loans to discontinued operations................ 420.1 1,017.0 1,226.9
Sale of subsidiaries........................................ 261.0 - -
Other, net.................................................. (612.6) (281.0) (413.4)
----------------- ----------------- -----------------
Net cash used by investing activities......................... (603.1) (133.9) (196.8)
----------------- ----------------- -----------------
Cash flows from financing activities: Policyholders' account balances:
Deposits.................................................. 1,281.7 1,925.4 2,586.5
Withdrawals............................................... (1,886.8) (2,385.2) (2,657.1)
Net increase (decrease) in short-term financings............ 419.9 (.3) (16.4)
Additions to long-term debt................................. 32.0 - 599.7
Repayments of long-term debt................................ (196.4) (124.8) (40.7)
Payment of obligation to fund accumulated deficit of
discontinued operations................................... (83.9) - (1,215.4)
Other, net.................................................. (94.7) (66.5) (48.4)
----------------- ----------------- -----------------
Net cash used by financing activities......................... (528.2) (651.4) (791.8)
----------------- ----------------- -----------------
Change in cash and cash equivalents........................... (238.3) (235.9) 81.1
Cash and cash equivalents, beginning of year.................. 538.8 774.7 693.6
----------------- ----------------- -----------------
Cash and Cash Equivalents, End of Year........................ $ 300.5 $ 538.8 $ 774.7
================= ================= =================
Supplemental cash flow information
Interest Paid............................................... $ 217.1 $ 109.9 $ 89.6
================= ================= =================
Income Taxes Paid (Refunded)................................ $ 170.0 $ (10.0) $ (82.7)
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) ORGANIZATION
The Equitable Life Assurance Society of the United States ("Equitable
Life") is a wholly owned subsidiary of The Equitable Companies
Incorporated (the "Holding Company"). Equitable Life's insurance
business is conducted principally by Equitable Life and, prior to
December 31, 1996, its wholly owned life insurance subsidiary,
Equitable Variable Life Insurance Company ("EVLICO"). Effective January
1, 1997, EVLICO was merged into Equitable Life, which continues to
conduct the Company's insurance business. Equitable Life's investment
management business, which comprises the Investment Services segment,
is conducted principally by Alliance Capital Management L.P.
("Alliance") and Donaldson, Lufkin & Jenrette, Inc. ("DLJ"), an
investment banking and brokerage affiliate. AXA-UAP ("AXA"), a French
holding company for an international group of insurance and related
financial services companies, is the Holding Company's largest
shareholder, owning approximately 58.7% at December 31, 1997 (54.3% if
all securities convertible into, and options on, common stock were to
be converted or exercised).
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements are prepared in
conformity with generally accepted accounting principles ("GAAP") which
require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The accompanying consolidated financial statements include the accounts
of Equitable Life and its wholly owned life insurance subsidiary
(collectively, the "Insurance Group"); non-insurance subsidiaries,
principally Alliance, an investment advisory subsidiary, and, through
June 10, 1997, Equitable Real Estate Investment Management, Inc.
("EREIM"), a real estate investment management subsidiary which was
sold (see Note 5); and those partnerships and joint ventures in which
Equitable Life or its subsidiaries has control and a majority economic
interest (collectively, including its consolidated subsidiaries, the
"Company"). The Company's investment in DLJ is reported on the equity
basis of accounting. Closed Block assets and liabilities and results of
operations are presented in the consolidated financial statements as
single line items (see Note 6). Unless specifically stated, all
disclosures contained herein supporting the consolidated financial
statements exclude the Closed Block related amounts.
All significant intercompany transactions and balances have been
eliminated in consolidation other than intercompany transactions and
balances with the Closed Block and the discontinued operations (see
Note 7).
The years "1997," "1996" and "1995" refer to the years ended December
31, 1997, 1996 and 1995, respectively.
Certain reclassifications have been made in the amounts presented for
prior periods to conform these periods with the 1997 presentation.
Closed Block
As of July 22, 1992, Equitable Life established the Closed Block for
the benefit of certain classes of individual participating policies for
which Equitable Life had a dividend scale payable in 1991 and which
were in force on that date. Assets were allocated to the Closed Block
in an amount which, together with anticipated revenues from policies
included in the Closed Block, was reasonably expected to be sufficient
to support such business, including provision for payment of claims,
certain expenses and taxes, and for continuation of dividend scales
payable in 1991, assuming the experience underlying such scales
continues.
F-6
<PAGE>
Assets allocated to the Closed Block inure solely to the benefit of the
holders of policies included in the Closed Block and will not revert to
the benefit of the Holding Company. No reallocation, transfer,
borrowing or lending of assets can be made between the Closed Block and
other portions of Equitable Life's General Account, any of its Separate
Accounts or any affiliate of Equitable Life without the approval of the
New York Superintendent of Insurance (the "Superintendent"). Closed
Block assets and liabilities are carried on the same basis as similar
assets and liabilities held in the General Account. The excess of
Closed Block liabilities over Closed Block assets represents the
expected future post-tax contribution from the Closed Block which would
be recognized in income over the period the policies and contracts in
the Closed Block remain in force.
Discontinued Operations
Discontinued operations consist of the business of the former
Guaranteed Interest Contract ("GIC") segment which includes the Group
Non-Participating Wind-Up Annuities ("Wind-Up Annuities") and the GIC
lines of business. An allowance was established for the premium
deficiency reserve for Wind-Up Annuities and estimated future losses of
the GIC line of business. Management reviews the adequacy of the
allowance each quarter and, during the 1997 and 1996 fourth quarter
reviews, the allowance for future losses was increased. Management
believes the allowance for future losses at December 31, 1997 is
adequate to provide for all future losses; however, the determination
of the allowance continues to involve numerous estimates and subjective
judgments regarding the expected performance of Discontinued Operations
Investment Assets. There can be no assurance the losses provided for
will not differ from the losses ultimately realized. To the extent
actual results or future projections of the discontinued operations
differ from management's current best estimates and assumptions
underlying the allowance for future losses, the difference would be
reflected in the consolidated statements of earnings in discontinued
operations. In particular, to the extent income, sales proceeds and
holding periods for equity real estate differ from management's
previous assumptions, periodic adjustments to the allowance are likely
to result (see Note 7).
Accounting Changes
In 1996, the Company changed its method of accounting for long-duration
participating life insurance contracts, primarily within the Closed
Block, in accordance with the provisions prescribed by SFAS No. 120,
"Accounting and Reporting by Mutual Life Insurance Enterprises and by
Insurance Enterprises for Certain Long-Duration Participating
Contracts". (See "Deferred Policy Acquisition Costs," "Policyholders'
Account Balances and Future Policy Benefits" and Note 6.)
The Company implemented SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," as of
January 1, 1996. SFAS No. 121 requires long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate the carrying value of such assets may
not be recoverable. Effective with SFAS No. 121's adoption, impaired
real estate is written down to fair value with the impairment loss
being included in investment gains (losses), net. Before implementing
SFAS No. 121, valuation allowances on real estate held for the
production of income were computed using the forecasted cash flows of
the respective properties discounted at a rate equal to The Equitable's
cost of funds. The adoption of the statement resulted in the release of
valuation allowances of $152.4 million and recognition of impairment
losses of $144.0 million on real estate held for production of income.
Real estate which management has committed to disposing of by sale or
abandonment is classified as real estate held for sale. Valuation
allowances on real estate held for sale continue to be computed using
the lower of depreciated cost or estimated fair value, net of
disposition costs. Implementation of the SFAS No. 121 impairment
requirements relative to other assets to be disposed of resulted in a
charge for the cumulative effect of an accounting change of $23.1
million, net of a Federal income tax benefit of $12.4 million, due to
the writedown to fair value of building improvements relating to
facilities vacated in 1996.
In the first quarter of 1995, the Company adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan". Impaired loans
within SFAS No. 114's scope are to be measured based on the present
value of expected future cash flows discounted at the loan's effective
interest rate, at the loan's observable market price or the fair value
of the collateral if the loan is collateral dependent. The adoption of
this statement did not have a material effect on the level of the
allowances for possible losses or on the Company's consolidated
statements of earnings and shareholder's equity.
F-7
<PAGE>
New Accounting Pronouncements
In January 1998, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 132, "Employers' Disclosures about Pension and Other
Postretirement Benefits," which revises current note disclosure
requirements for employers' pension and other retiree benefits. SFAS
No. 132 is effective for fiscal years beginning after December 15,
1997. The Company will adopt the provisions of SFAS No. 132 in the 1998
consolidated financial statements.
In December 1997, the American Institute of Certified Public
Accountants ("AICPA") issued Statement of Position ("SOP") 97-3,
"Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments". SOP 97-3 provides guidance for assessments related to
insurance activities and requirements for disclosure of certain
information. SOP 97-3 is effective for financial statements issued for
periods beginning after December 31, 1998. Restatement of previously
issued financial statements is not required. SOP 97-3 is not expected
to have a material impact on the Company's consolidated financial
statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information". SFAS No. 131 establishes
standards for the way public business enterprises report information
about operating segments in annual and interim financial statements
issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major
customers. Generally, financial information will be required to be
reported on the basis used by management for evaluating segment
performance and for deciding how to allocate resources to segments.
This statement is effective for fiscal years beginning after December
15, 1997 and need not be applied to interim reporting in the initial
year of adoption. Restatement of comparative information for earlier
periods is required. Management is currently reviewing its definition
of business segments in light of the requirements of SFAS No. 131.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income". SFAS No. 130 establishes standards for reporting and
displaying comprehensive income and its components in a full set of
general purpose financial statements. SFAS No. 130 requires an
enterprise to classify items of other comprehensive income by their
nature in a financial statement and display the accumulated balance of
other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of a statement of
financial position. This statement is effective for fiscal years
beginning after December 15, 1997. Reclassification of financial
statements for earlier periods provided for comparative purposes is
required. The Company will adopt the provisions of SFAS No. 130 in its
1998 consolidated financial statements.
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities".
SFAS No. 125 specifies the accounting and reporting requirements for
transfers of financial assets, the recognition and measurement of
servicing assets and liabilities and extinguishments of liabilities.
SFAS No. 125 is effective for transactions occurring after December 31,
1996 and is to be applied prospectively. In December 1996, the FASB
issued SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125," which defers for one year the
effective date of provisions relating to secured borrowings and
collateral and transfers of financial assets that are part of repurchase
agreements, dollar-roll, securities lending and similar transactions.
Implementation of SFAS No. 125 did not have nor is SFAS No. 127 expected
to have a material impact on the Company's consolidated financial
statements.
Valuation of Investments
Fixed maturities identified as available for sale are reported at
estimated fair value. The amortized cost of fixed maturities is
adjusted for impairments in value deemed to be other than temporary.
Valuation allowances are netted against the asset categories to which
they apply.
F-8
<PAGE>
Mortgage loans on real estate are stated at unpaid principal balances,
net of unamortized discounts and valuation allowances. Valuation
allowances are based on the present value of expected future cash flows
discounted at the loan's original effective interest rate or the
collateral value if the loan is collateral dependent. However, if
foreclosure is or becomes probable, the measurement method used is
collateral value.
Real estate, including real estate acquired in satisfaction of debt, is
stated at depreciated cost less valuation allowances. At the date of
foreclosure (including in-substance foreclosure), real estate acquired
in satisfaction of debt is valued at estimated fair value. Impaired
real estate is written down to fair value with the impairment loss
being included in investment gains (losses), net. Valuation allowances
on real estate held for sale are computed using the lower of
depreciated cost or current estimated fair value, net of disposition
costs. Depreciation is discontinued on real estate held for sale. Prior
to the adoption of SFAS No. 121, valuation allowances on real estate
held for production of income were computed using the forecasted cash
flows of the respective properties discounted at a rate equal to the
Company's cost of funds.
Policy loans are stated at unpaid principal balances.
Partnerships and joint venture interests in which the Company does not
have control or a majority economic interest are reported on the equity
basis of accounting and are included either with equity real estate or
other equity investments, as appropriate.
Common stocks are carried at estimated fair value and are included in
other equity investments.
Short-term investments are stated at amortized cost which approximates
fair value and are included with other invested assets.
Cash and cash equivalents includes cash on hand, amounts due from banks
and highly liquid debt instruments purchased with an original maturity
of three months or less.
All securities are recorded in the consolidated financial statements on
a trade date basis.
Net Investment Income, Investment Gains, Net and Unrealized Investment
Gains (Losses)
Net investment income and realized investment gains (losses)
(collectively, "investment results") related to certain participating
group annuity contracts which are passed through to the contractholders
are reflected as interest credited to policyholders' account balances.
Realized investment gains (losses) are determined by specific
identification and are presented as a component of revenue. Changes in
valuation allowances are included in investment gains or losses.
Unrealized investment gains and losses on fixed maturities available
for sale and equity securities held by the Company are accounted for as
a separate component of shareholder's equity, net of related deferred
Federal income taxes, amounts attributable to discontinued operations,
participating group annuity contracts and deferred policy acquisition
costs ("DAC") related to universal life and investment-type products
and participating traditional life contracts.
Recognition of Insurance Income and Related Expenses
Premiums from universal life and investment-type contracts are reported
as deposits to policyholders' account balances. Revenues from these
contracts consist of amounts assessed during the period against
policyholders' account balances for mortality charges, policy
administration charges and surrender charges. Policy benefits and
claims that are charged to expense include benefit claims incurred in
the period in excess of related policyholders' account balances.
F-9
<PAGE>
Premiums from participating and non-participating traditional life and
annuity policies with life contingencies generally are recognized as
income when due. Benefits and expenses are matched with such income so
as to result in the recognition of profits over the life of the
contracts. This match is accomplished by means of the provision for
liabilities for future policy benefits and the deferral and subsequent
amortization of policy acquisition costs.
For contracts with a single premium or a limited number of premium
payments due over a significantly shorter period than the total period
over which benefits are provided, premiums are recorded as income when
due with any excess profit deferred and recognized in income in a
constant relationship to insurance in force or, for annuities, the
amount of expected future benefit payments.
Premiums from individual health contracts are recognized as income over
the period to which the premiums relate in proportion to the amount of
insurance protection provided.
Deferred Policy Acquisition Costs
The costs of acquiring new business, principally commissions,
underwriting, agency and policy issue expenses, all of which vary with
and are primarily related to the production of new business, are
deferred. DAC is subject to recoverability testing at the time of
policy issue and loss recognition testing at the end of each accounting
period.
For universal life products and investment-type products, DAC is
amortized over the expected total life of the contract group (periods
ranging from 15 to 35 years and 5 to 17 years, respectively) as a
constant percentage of estimated gross profits arising principally from
investment results, mortality and expense margins and surrender charges
based on historical and anticipated future experience, updated at the
end of each accounting period. The effect on the amortization of DAC of
revisions to estimated gross profits is reflected in earnings in the
period such estimated gross profits are revised. The effect on the DAC
asset that would result from realization of unrealized gains (losses)
is recognized with an offset to unrealized gains (losses) in
consolidated shareholder's equity as of the balance sheet date.
For participating traditional life policies (substantially all of which
are in the Closed Block), DAC is amortized over the expected total life
of the contract group (40 years) as a constant percentage based on the
present value of the estimated gross margin amounts expected to be
realized over the life of the contracts using the expected investment
yield. At December 31, 1997, the expected investment yield, excluding
policy loans, generally ranged from 7.53% grading to 7.92% over a 20
year period. Estimated gross margin includes anticipated premiums and
investment results less claims and administrative expenses, changes in
the net level premium reserve and expected annual policyholder
dividends. The effect on the amortization of DAC of revisions to
estimated gross margins is reflected in earnings in the period such
estimated gross margins are revised. The effect on the DAC asset that
would result from realization of unrealized gains (losses) is
recognized with an offset to unrealized gains (losses) in consolidated
shareholder's equity as of the balance sheet date.
For non-participating traditional life and annuity policies with life
contingencies, DAC is amortized in proportion to anticipated premiums.
Assumptions as to anticipated premiums are estimated at the date of
policy issue and are consistently applied during the life of the
contracts. Deviations from estimated experience are reflected in
earnings in the period such deviations occur. For these contracts, the
amortization periods generally are for the total life of the policy.
For individual health benefit insurance, DAC is amortized over the
expected average life of the contracts (10 years for major medical
policies and 20 years for disability income ("DI") products) in
proportion to anticipated premium revenue at time of issue.
Policyholders' Account Balances and Future Policy Benefits
Policyholders' account balances for universal life and investment-type
contracts are equal to the policy account values. The policy account
values represents an accumulation of gross premium payments plus
credited interest less expense and mortality charges and withdrawals.
F-10
<PAGE>
For participating traditional life policies, future policy benefit
liabilities are calculated using a net level premium method on the
basis of actuarial assumptions equal to guaranteed mortality and
dividend fund interest rates. The liability for annual dividends
represents the accrual of annual dividends earned. Terminal dividends
are accrued in proportion to gross margins over the life of the
contract.
For non-participating traditional life insurance policies, future
policy benefit liabilities are estimated using a net level premium
method on the basis of actuarial assumptions as to mortality,
persistency and interest established at policy issue. Assumptions
established at policy issue as to mortality and persistency are based
on the Insurance Group's experience which, together with interest and
expense assumptions, include a margin for adverse deviation. When the
liabilities for future policy benefits plus the present value of
expected future gross premiums for a product are insufficient to
provide for expected future policy benefits and expenses for that
product, DAC is written off and thereafter, if required, a premium
deficiency reserve is established by a charge to earnings. Benefit
liabilities for traditional annuities during the accumulation period
are equal to accumulated contractholders' fund balances and after
annuitization are equal to the present value of expected future
payments. Interest rates used in establishing such liabilities range
from 2.25% to 11.5% for life insurance liabilities and from 2.25% to
13.5% for annuity liabilities.
During the fourth quarter of 1996, a loss recognition study of
participating group annuity contracts and conversion annuities
("Pension Par") was completed which included management's revised
estimate of assumptions, such as expected mortality and future
investment returns. The study's results prompted management to
establish a premium deficiency reserve which decreased earnings from
continuing operations and net earnings by $47.5 million ($73.0 million
pre-tax).
Individual health benefit liabilities for active lives are estimated
using the net level premium method and assumptions as to future
morbidity, withdrawals and interest. Benefit liabilities for disabled
lives are estimated using the present value of benefits method and
experience assumptions as to claim terminations, expenses and interest.
During the fourth quarter of 1996, the Company completed a loss
recognition study of the DI business which incorporated management's
revised estimates of future experience with regard to morbidity,
investment returns, claims and administration expenses and other
factors. The study indicated DAC was not recoverable and the reserves
were not sufficient. Earnings from continuing operations and net
earnings decreased by $208.0 million ($320.0 million pre-tax) as a
result of strengthening DI reserves by $175.0 million and writing off
unamortized DAC of $145.0 million related to DI products issued prior
to July 1993. The determination of DI reserves requires making
assumptions and estimates relating to a variety of factors, including
morbidity and interest rates, claims experience and lapse rates based
on then known facts and circumstances. Such factors as claim incidence
and termination rates can be affected by changes in the economic, legal
and regulatory environments and work ethic. While management believes
its DI reserves have been calculated on a reasonable basis and are
adequate, there can be no assurance reserves will be sufficient to
provide for future liabilities.
F-11
<PAGE>
Claim reserves and associated liabilities for individual DI and major
medical policies were $886.7 million and $869.4 million at December 31,
1997 and 1996, respectively. Incurred benefits (benefits paid plus
changes in claim reserves) and benefits paid for individual DI and
major medical policies (excluding reserve strengthening in 1996) are
summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Incurred benefits related to current year.......... $ 190.2 $ 189.0 $ 176.0
Incurred benefits related to prior years........... 2.1 69.1 67.8
----------------- ---------------- -----------------
Total Incurred Benefits............................ $ 192.3 $ 258.1 $ 243.8
================= ================ =================
Benefits paid related to current year.............. $ 28.8 $ 32.6 $ 37.0
Benefits paid related to prior years............... 146.2 153.3 137.8
----------------- ---------------- -----------------
Total Benefits Paid................................ $ 175.0 $ 185.9 $ 174.8
================= ================ =================
</TABLE>
Policyholders' Dividends
The amount of policyholders' dividends to be paid (including those on
policies included in the Closed Block) is determined annually by
Equitable Life's board of directors. The aggregate amount of
policyholders' dividends is related to actual interest, mortality,
morbidity and expense experience for the year and judgment as to the
appropriate level of statutory surplus to be retained by Equitable
Life.
At December 31, 1997, participating policies, including those in the
Closed Block, represent approximately 21.2% ($50.2 billion) of directly
written life insurance in force, net of amounts ceded.
Federal Income Taxes
The Company files a consolidated Federal income tax return with the
Holding Company and its consolidated subsidiaries. Current Federal
income taxes are charged or credited to operations based upon amounts
estimated to be payable or recoverable as a result of taxable
operations for the current year. Deferred income tax assets and
liabilities are recognized based on the difference between financial
statement carrying amounts and income tax bases of assets and
liabilities using enacted income tax rates and laws.
Separate Accounts
Separate Accounts are established in conformity with the New York State
Insurance Law and generally are not chargeable with liabilities that
arise from any other business of the Insurance Group. Separate Accounts
assets are subject to General Account claims only to the extent the
value of such assets exceeds Separate Accounts liabilities.
Assets and liabilities of the Separate Accounts, representing net
deposits and accumulated net investment earnings less fees, held
primarily for the benefit of contractholders, and for which the
Insurance Group does not bear the investment risk, are shown as
separate captions in the consolidated balance sheets. The Insurance
Group bears the investment risk on assets held in one Separate Account,
therefore, such assets are carried on the same basis as similar assets
held in the General Account portfolio. Assets held in the other
Separate Accounts are carried at quoted market values or, where quoted
values are not available, at estimated fair values as determined by the
Insurance Group.
The investment results of Separate Accounts on which the Insurance
Group does not bear the investment risk are reflected directly in
Separate Accounts liabilities. For 1997, 1996 and 1995, investment
results of such Separate Accounts were $3,411.1 million, $2,970.6
million and $1,963.2 million, respectively.
F-12
<PAGE>
Deposits to Separate Accounts are reported as increases in Separate
Accounts liabilities and are not reported in revenues. Mortality,
policy administration and surrender charges on all Separate Accounts
are included in revenues.
Employee Stock Option Plan
The Company accounts for stock option plans sponsored by the Holding
Company, DLJ and Alliance in accordance with the provisions of
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for
Stock Issued to Employees," and related interpretations. In accordance
with the opinion, compensation expense is recorded on the date of grant
only if the current market price of the underlying stock exceeds the
exercise price. See Note 21 for the pro forma disclosures for the
Holding Company, DLJ and Alliance required by SFAS No. 123, "Accounting
for Stock-Based Compensation".
3) INVESTMENTS
The following tables provide additional information relating to fixed
maturities and equity securities:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
----------------- ----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C> <C>
December 31, 1997
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 14,230.3 $ 785.0 $ 74.5 $ 14,940.8
Mortgage-backed.................... 1,702.8 23.5 1.3 1,725.0
U.S. Treasury securities and
U.S. government and
agency securities................ 1,583.2 83.9 .6 1,666.5
States and political subdivisions.. 673.0 6.8 .1 679.7
Foreign governments................ 442.4 44.8 2.0 485.2
Redeemable preferred stock......... 128.0 6.7 1.0 133.7
----------------- ----------------- ---------------- -----------------
Total Available for Sale............... $ 18,759.7 $ 950.7 $ 79.5 $ 19,630.9
================= ================= ================ =================
Equity Securities:
Common stock......................... $ 408.4 $ 48.7 $ 15.0 $ 442.1
================= ================= ================ =================
December 31, 1996
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 13,645.2 $ 451.5 $ 121.0 $ 13,975.7
Mortgage-backed.................... 2,015.9 11.2 20.3 2,006.8
U.S. Treasury securities and
U.S. government and
agency securities................ 1,539.4 39.2 19.3 1,559.3
States and political subdivisions.. 77.0 4.5 - 81.5
Foreign governments................ 302.6 18.0 2.2 318.4
Redeemable preferred stock......... 139.1 3.3 7.1 135.3
----------------- ----------------- ---------------- -----------------
Total Available for Sale............... $ 17,719.2 $ 527.7 $ 169.9 $ 18,077.0
================= ================= ================ =================
Equity Securities:
Common stock......................... $ 362.0 $ 49.3 $ 17.7 $ 393.6
================= ================= ================ =================
</TABLE>
F-13
<PAGE>
For publicly traded fixed maturities and equity securities, estimated
fair value is determined using quoted market prices. For fixed
maturities without a readily ascertainable market value, the Company
has determined an estimated fair value using a discounted cash flow
approach, including provisions for credit risk, generally based on the
assumption such securities will be held to maturity. Estimated fair
values for equity securities, substantially all of which do not have a
readily ascertainable market value, have been determined by the
Company. Such estimated fair values do not necessarily represent the
values for which these securities could have been sold at the dates of
the consolidated balance sheets. At December 31, 1997 and 1996,
securities without a readily ascertainable market value having an
amortized cost of $3,759.2 million and $3,915.7 million, respectively,
had estimated fair values of $3,903.9 million and $4,024.6 million,
respectively.
The contractual maturity of bonds at December 31, 1997 is shown below:
<TABLE>
<CAPTION>
Available for Sale
------------------------------------
Amortized Estimated
Cost Fair Value
---------------- -----------------
(In Millions)
<S> <C> <C>
Due in one year or less................................................ $ 149.9 $ 151.3
Due in years two through five.......................................... 2,962.8 3,025.2
Due in years six through ten........................................... 6,863.9 7,093.0
Due after ten years.................................................... 6,952.3 7,502.7
Mortgage-backed securities............................................. 1,702.8 1,725.0
---------------- -----------------
Total.................................................................. $ 18,631.7 $ 19,497.2
================ =================
</TABLE>
Bonds not due at a single maturity date have been included in the above
table in the year of final maturity. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
The Insurance Group's fixed maturity investment portfolio includes
corporate high yield securities consisting of public high yield bonds,
redeemable preferred stocks and directly negotiated debt in leveraged
buyout transactions. The Insurance Group seeks to minimize the higher
than normal credit risks associated with such securities by monitoring
the total investments in any single issuer or total investment in a
particular industry group. Certain of these corporate high yield
securities are classified as other than investment grade by the various
rating agencies, i.e., a rating below Baa or National Association of
Insurance Commissioners ("NAIC") designation of 3 (medium grade), 4 or
5 (below investment grade) or 6 (in or near default). At December 31,
1997, approximately 17.85% of the $18,610.6 million aggregate amortized
cost of bonds held by the Insurance Group were considered to be other
than investment grade.
In addition to its holdings of corporate high yield securities, the
Insurance Group is an equity investor in limited partnership interests
which primarily invest in securities considered to be other than
investment grade.
Fixed maturity investments with restructured or modified terms are not
material.
F-14
<PAGE>
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Balances, beginning of year........................ $ 137.1 $ 325.3 $ 284.9
SFAS No. 121 release............................... - (152.4) -
Additions charged to income........................ 334.6 125.0 136.0
Deductions for writedowns and
asset dispositions............................... (87.2) (160.8) (95.6)
----------------- ---------------- -----------------
Balances, End of Year.............................. $ 384.5 $ 137.1 $ 325.3
================= ================ =================
Balances, end of year comprise:
Mortgage loans on real estate.................... $ 55.8 $ 50.4 $ 65.5
Equity real estate............................... 328.7 86.7 259.8
----------------- ---------------- -----------------
Total.............................................. $ 384.5 $ 137.1 $ 325.3
================= ================ =================
</TABLE>
At December 31, 1997, the carrying values of investments held for the
production of income which were non-income producing for the twelve
months preceding the consolidated balance sheet date were $12.6 million
of fixed maturities and $.9 million of mortgage loans on real estate.
At December 31, 1997 and 1996, mortgage loans on real estate with
scheduled payments 60 days (90 days for agricultural mortgages) or more
past due or in foreclosure (collectively, "problem mortgage loans on
real estate") had an amortized cost of $23.4 million (0.9% of total
mortgage loans on real estate) and $12.4 million (0.4% of total
mortgage loans on real estate), respectively.
The payment terms of mortgage loans on real estate may from time to
time be restructured or modified. The investment in restructured
mortgage loans on real estate, based on amortized cost, amounted to
$183.4 million and $388.3 million at December 31, 1997 and 1996,
respectively. Gross interest income on restructured mortgage loans on
real estate that would have been recorded in accordance with the
original terms of such loans amounted to $17.2 million, $35.5 million
and $52.1 million in 1997, 1996 and 1995, respectively. Gross interest
income on these loans included in net investment income aggregated
$12.7 million, $28.2 million and $37.4 million in 1997, 1996 and 1995,
respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1997 1996
------------------- -------------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses.................. $ 196.7 $ 340.0
Impaired mortgage loans without provision for losses............... 3.6 122.3
------------------- -------------------
Recorded investment in impaired mortgage loans..................... 200.3 462.3
Provision for losses............................................... (51.8) (46.4)
------------------- -------------------
Net Impaired Mortgage Loans........................................ $ 148.5 $ 415.9
=================== ===================
</TABLE>
Impaired mortgage loans without provision for losses are loans where
the fair value of the collateral or the net present value of the
expected future cash flows related to the loan equals or exceeds the
recorded investment. Interest income earned on loans where the
collateral value is used to measure impairment is recorded on a cash
basis. Interest income on loans where the present value method is used
to measure impairment is accrued on the net carrying value amount of
the loan at the interest rate used to discount the cash flows. Changes
in the present value attributable to changes in the amount or timing of
expected cash flows are reported as investment gains or losses.
F-15
<PAGE>
During 1997, 1996 and 1995, respectively, the Company's average
recorded investment in impaired mortgage loans was $246.9 million,
$552.1 million and $429.0 million. Interest income recognized on these
impaired mortgage loans totaled $15.2 million, $38.8 million and $27.9
million ($2.3 million, $17.9 million and $13.4 million recognized on a
cash basis) for 1997, 1996 and 1995, respectively.
The Insurance Group's investment in equity real estate is through
direct ownership and through investments in real estate joint ventures.
At December 31, 1997 and 1996, the carrying value of equity real estate
held for sale amounted to $1,023.5 million and $345.6 million,
respectively. For 1997, 1996 and 1995, respectively, real estate of
$152.0 million, $58.7 million and $35.3 million was acquired in
satisfaction of debt. At December 31, 1997 and 1996, the Company owned
$693.3 million and $771.7 million, respectively, of real estate
acquired in satisfaction of debt.
Depreciation of real estate is computed using the straight-line method
over the estimated useful lives of the properties, which generally
range from 40 to 50 years. Accumulated depreciation on real estate was
$541.1 million and $587.5 million at December 31, 1997 and 1996,
respectively. Depreciation expense on real estate totaled $74.9
million, $91.8 million and $121.7 million for 1997, 1996 and 1995,
respectively.
4) JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information for real estate joint
ventures (29 and 34 individual ventures as of December 31, 1997 and
1996, respectively) and for limited partnership interests accounted for
under the equity method, in which the Company has an investment of
$10.0 million or greater and an equity interest of 10% or greater is as
follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
BALANCE SHEETS
Investments in real estate, at depreciated cost........................ $ 1,700.9 $ 1,883.7
Investments in securities, generally at estimated fair value........... 1,374.8 2,430.6
Cash and cash equivalents.............................................. 105.4 98.0
Other assets........................................................... 584.9 427.0
---------------- -----------------
Total Assets........................................................... $ 3,766.0 $ 4,839.3
================ =================
Borrowed funds - third party........................................... $ 493.4 $ 1,574.3
Borrowed funds - the Company........................................... 31.2 137.9
Other liabilities...................................................... 284.0 415.8
---------------- -----------------
Total liabilities...................................................... 808.6 2,128.0
---------------- -----------------
Partners' capital...................................................... 2,957.4 2,711.3
---------------- -----------------
Total Liabilities and Partners' Capital................................ $ 3,766.0 $ 4,839.3
================ =================
Equity in partners' capital included above............................. $ 568.5 $ 806.8
Equity in limited partnership interests not included above............. 331.8 201.8
Other.................................................................. 4.3 9.8
---------------- -----------------
Carrying Value......................................................... $ 904.6 $ 1,018.4
================ =================
</TABLE>
F-16
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures............. $ 310.5 $ 348.9 $ 463.5
Revenues of other limited partnership interests.... 506.3 386.1 242.3
Interest expense - third party..................... (91.8) (111.0) (135.3)
Interest expense - the Company..................... (7.2) (30.0) (41.0)
Other expenses..................................... (263.6) (282.5) (397.7)
----------------- ---------------- -----------------
Net Earnings....................................... $ 454.2 $ 311.5 $ 131.8
================= ================ =================
Equity in net earnings included above.............. $ 76.7 $ 73.9 $ 49.1
Equity in net earnings of limited partnerships
interests not included above..................... 69.5 35.8 44.8
Other.............................................. (.9) .9 1.0
-----------------
----------------- ---------------- -----------------
Total Equity in Net Earnings....................... $ 145.3 $ 110.6 $ 94.9
================= ================ =================
</TABLE>
5) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Fixed maturities................................... $ 1,459.4 $ 1,307.4 $ 1,151.1
Mortgage loans on real estate...................... 260.8 303.0 329.0
Equity real estate................................. 390.4 442.4 560.4
Other equity investments........................... 156.9 122.0 76.9
Policy loans....................................... 177.0 160.3 144.4
Other investment income............................ 181.7 217.4 273.0
----------------- ---------------- -----------------
Gross investment income.......................... 2,626.2 2,552.5 2,534.8
----------------- ---------------- -----------------
Investment expenses.............................. 343.4 348.9 446.6
----------------- ---------------- -----------------
Net Investment Income.............................. $ 2,282.8 $ 2,203.6 $ 2,088.2
================= ================ =================
</TABLE>
Investment gains (losses), net, including changes in the valuation
allowances, are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Fixed maturities................................... $ 88.1 $ 60.5 $ 119.9
Mortgage loans on real estate...................... (11.2) (27.3) (40.2)
Equity real estate................................. (391.3) (79.7) (86.6)
Other equity investments........................... 14.1 18.9 12.8
Sale of subsidiaries............................... 252.1 - -
Issuance and sales of Alliance Units............... - 20.6 -
Other.............................................. 3.0 (2.8) (.6)
----------------- ---------------- -----------------
Investment (Losses) Gains, Net..................... $ (45.2) $ (9.8) $ 5.3
================= ================ =================
</TABLE>
F-17
<PAGE>
Writedowns of fixed maturities amounted to $11.7 million, $29.9 million
and $46.7 million for 1997, 1996 and 1995, respectively, and writedowns
of equity real estate subsequent to the adoption of SFAS No. 121
amounted to $136.4 million and $23.7 million for 1997 and 1996,
respectively. In the fourth quarter of 1997, the Company reclassified
$1,095.4 million depreciated cost of equity real estate from real
estate held for the production of income to real estate held for sale.
Additions to valuation allowances of $227.6 million were recorded upon
these transfers. Additionally in the fourth quarter, $132.3 million of
writedowns on real estate held for production of income were recorded.
For 1997, 1996 and 1995, respectively, proceeds received on sales of
fixed maturities classified as available for sale amounted to $9,789.7
million, $8,353.5 million and $8,206.0 million. Gross gains of $166.0
million, $154.2 million and $211.4 million and gross losses of $108.8
million, $92.7 million and $64.2 million, respectively, were realized
on these sales. The change in unrealized investment gains (losses)
related to fixed maturities classified as available for sale for 1997,
1996 and 1995 amounted to $513.4 million, $(258.0) million and $1,077.2
million, respectively.
For 1997, 1996 and 1995, investment results passed through to certain
participating group annuity contracts as interest credited to
policyholders' account balances amounted to $137.5 million, $136.7
million and $131.2 million, respectively.
On June 10, 1997, Equitable Life sold EREIM (other than its interest in
Column Financial, Inc.) ("ERE") to Lend Lease Corporation Limited
("Lend Lease"), a publicly traded, international property and financial
services company based in Sydney, Australia. The total purchase price
was $400.0 million and consisted of $300.0 million in cash and a $100.0
million note maturing in eight years and bearing interest at the rate
of 7.4%, subject to certain adjustments. Equitable Life recognized an
investment gain of $162.4 million, net of Federal income tax of $87.4
million as a result of this transaction. Equitable Life entered into
long-term advisory agreements whereby ERE will continue to provide
substantially the same services to Equitable Life's General Account and
Separate Accounts, for substantially the same fees, as provided prior
to the sale.
Through June 10, 1997 and the years ended December 31, 1996 and 1995,
respectively, the businesses sold reported combined revenues of $91.6
million, $226.1 million and $245.6 million and combined net earnings of
$10.7 million, $30.7 million and $27.9 million. Total combined assets
and liabilities as reported at December 31, 1996 were $171.8 million
and $130.1 million, respectively.
In 1996, Alliance acquired the business of Cursitor-Eaton Asset
Management Company and Cursitor Holdings Limited (collectively,
"Cursitor") for approximately $159.0 million. The purchase price
consisted of $94.3 million in cash, 1.8 million of Alliance's publicly
traded units ("Alliance Units"), 6% notes aggregating $21.5 million
payable ratably over four years, and substantial additional
consideration to be determined at a later date. The excess of the
purchase price, including acquisition costs and minority interest, over
the fair value of Cursitor's net assets acquired resulted in the
recognition of intangible assets consisting of costs assigned to
contracts acquired and goodwill of approximately $122.8 million and
$38.3 million, respectively. The Company recognized an investment gain
of $20.6 million as a result of the issuance of Alliance Units in this
transaction. On June 30, 1997, Alliance reduced the recorded value of
goodwill and contracts associated with Alliance's acquisition of
Cursitor by $120.9 million. This charge reflected Alliance's view that
Cursitor's continuing decline in assets under management and its
reduced profitability, resulting from relative investment
underperformance, no longer supported the carrying value of its
investment. As a result, the Company's earnings from continuing
operations before cumulative effect of accounting change for 1997
included a charge of $59.5 million, net of a Federal income tax benefit
of $10.0 million and minority interest of $51.4 million. The remaining
balance of intangible assets is being amortized over its estimated
useful life of 20 years. At December 31, 1997, the Company's ownership
of Alliance Units was approximately 56.9%.
F-18
<PAGE>
Net unrealized investment gains (losses), included in the consolidated
balance sheets as a component of equity and the changes for the
corresponding years, are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Balance, beginning of year......................... $ 189.9 $ 396.5 $ (220.5)
Changes in unrealized investment gains (losses).... 543.3 (297.6) 1,198.9
Changes in unrealized investment losses
(gains) attributable to:
Participating group annuity contracts.......... 53.2 - (78.1)
DAC............................................ (89.0) 42.3 (216.8)
Deferred Federal income taxes.................. (163.8) 48.7 (287.0)
----------------- ---------------- -----------------
Balance, End of Year............................... $ 533.6 $ 189.9 $ 396.5
================= ================ =================
Balance, end of year comprises:
Unrealized investment gains on:
Fixed maturities............................... $ 871.2 $ 357.8 $ 615.9
Other equity investments....................... 33.7 31.6 31.1
Other, principally Closed Block................ 80.9 53.1 93.1
----------------- ---------------- -----------------
Total........................................ 985.8 442.5 740.1
Amounts of unrealized investment gains
attributable to:
Participating group annuity contracts........ (19.0) (72.2) (72.2)
DAC.......................................... (141.0) (52.0) (94.3)
Deferred Federal income taxes................ (292.2) (128.4) (177.1)
----------------- ---------------- -----------------
Total.............................................. $ 533.6 $ 189.9 $ 396.5
================= ================ =================
</TABLE>
6) CLOSED BLOCK
Summarized financial information for the Closed Block follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost,
$4,059.4 and $3,820.7)........................................... $ 4,231.0 $ 3,889.5
Mortgage loans on real estate........................................ 1,341.6 1,380.7
Policy loans......................................................... 1,700.2 1,765.9
Cash and other invested assets....................................... 282.7 336.1
DAC.................................................................. 775.2 876.5
Other assets......................................................... 235.9 246.3
----------------- -----------------
Total Assets......................................................... $ 8,566.6 $ 8,495.0
================= =================
Liabilities
Future policy benefits and policyholders' account balances........... $ 8,993.2 $ 8,999.7
Other liabilities.................................................... 80.5 91.6
----------------- -----------------
Total Liabilities.................................................... $ 9,073.7 $ 9,091.3
================= =================
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Premiums and other revenue......................... $ 687.1 $ 724.8 $ 753.4
Investment income (net of investment
expenses of $27.0, $27.3 and $26.7).............. 574.9 546.6 538.9
Investment losses, net............................. (42.4) (5.5) (20.2)
----------------- ---------------- -----------------
Total revenues............................... 1,219.6 1,265.9 1,272.1
----------------- ---------------- -----------------
Benefits and Other Deductions
Policyholders' benefits and dividends.............. 1,066.7 1,106.3 1,077.6
Other operating costs and expenses................. 50.4 34.6 51.3
----------------- ---------------- -----------------
Total benefits and other deductions.......... 1,117.1 1,140.9 1,128.9
----------------- ---------------- -----------------
Contribution from the Closed Block................. $ 102.5 $ 125.0 $ 143.2
================= ================ =================
</TABLE>
At December 31, 1997 and 1996, problem mortgage loans on real estate
had an amortized cost of $8.1 million and $4.3 million, respectively,
and mortgage loans on real estate for which the payment terms have been
restructured had an amortized cost of $70.5 million and $114.2 million,
respectively. At December 31, 1996, the restructured mortgage loans on
real estate amount included $.7 million of problem mortgage loans on
real estate.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 109.1 $ 128.1
Impaired mortgage loans without provision for losses................... .6 .6
---------------- -----------------
Recorded investment in impaired mortgages.............................. 109.7 128.7
Provision for losses................................................... (17.4) (12.9)
---------------- -----------------
Net Impaired Mortgage Loans............................................ $ 92.3 $ 115.8
================ =================
</TABLE>
During 1997, 1996 and 1995, the Closed Block's average recorded
investment in impaired mortgage loans was $110.2 million, $153.8
million and $146.9 million, respectively. Interest income recognized on
these impaired mortgage loans totaled $9.4 million, $10.9 million and
$5.9 million ($4.1 million, $4.7 million and $1.3 million recognized on
a cash basis) for 1997, 1996 and 1995, respectively.
Valuation allowances amounted to $18.5 million and $13.8 million on
mortgage loans on real estate and $16.8 million and $3.7 million on
equity real estate at December 31, 1997 and 1996, respectively. As of
January 1, 1996, the adoption of SFAS No. 121 resulted in the
recognition of impairment losses of $5.6 million on real estate held
for production of income. Writedowns of fixed maturities amounted to
$3.5 million, $12.8 million and $16.8 million for 1997, 1996 and 1995,
respectively and writedowns of equity real estate subsequent to the
adoption of SFAS No. 121 amounted to $28.8 million for 1997.
In the fourth quarter of 1997, $72.9 million depreciated cost of equity
real estate held for production of income was reclassified to equity
real estate held for sale. Additions to valuation allowances of $15.4
million were recorded upon these transfers. Additionally, in the fourth
quarter, $28.8 million of writedowns on real estate held for production
of income were recorded.
Many expenses related to Closed Block operations are charged to
operations outside of the Closed Block; accordingly, the contribution
from the Closed Block does not represent the actual profitability of
the Closed Block operations. Operating costs and expenses outside of
the Closed Block are, therefore, disproportionate to the business
outside of the Closed Block.
F-20
<PAGE>
7) DISCONTINUED OPERATIONS
Summarized financial information for discontinued operations follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Mortgage loans on real estate........................................ $ 655.5 $ 1,111.1
Equity real estate................................................... 655.6 925.6
Other equity investments............................................. 209.3 300.5
Short-term investments............................................... 102.0 63.2
Other invested assets................................................ 41.9 50.9
----------------- -----------------
Total investments.................................................. 1,664.3 2,451.3
Cash and cash equivalents............................................ 106.8 42.6
Other assets......................................................... 253.9 242.9
----------------- -----------------
Total Assets......................................................... $ 2,025.0 $ 2,736.8
================= =================
Liabilities
Policyholders' liabilities........................................... $ 1,048.3 $ 1,335.9
Allowance for future losses.......................................... 259.2 262.0
Amounts due to continuing operations................................. 572.8 996.2
Other liabilities.................................................... 144.7 142.7
----------------- -----------------
Total Liabilities.................................................... $ 2,025.0 $ 2,736.8
================= =================
</TABLE>
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Investment income (net of investment
expenses of $97.3, $127.5 and $153.1)............ $ 188.6 $ 245.4 $ 323.6
Investment losses, net............................. (173.7) (18.9) (22.9)
Policy fees, premiums and other income............. .2 .2 .7
----------------- ---------------- -----------------
Total revenues..................................... 15.1 226.7 301.4
Benefits and other deductions...................... 169.5 250.4 326.5
Losses charged to allowance for future losses...... (154.4) (23.7) (25.1)
----------------- ---------------- -----------------
Pre-tax loss from operations....................... - - -
Pre-tax loss from strengthening of the
allowance for future losses...................... (134.1) (129.0) -
Federal income tax benefit......................... 46.9 45.2 -
----------------- ---------------- -----------------
Loss from Discontinued Operations.................. $ (87.2) $ (83.8) $ -
================= ================ =================
</TABLE>
The Company's quarterly process for evaluating the allowance for future
losses applies the current period's results of the discontinued
operations against the allowance, re-estimates future losses, and
adjusts the allowance, if appropriate. Additionally, as part of the
Company's annual planning process which takes place in the fourth
quarter of each year, investment and benefit cash flow projections are
prepared. These updated assumptions and estimates resulted in the need
to strengthen the allowance in 1997 and 1996, respectively.
In the fourth quarter of 1997, $329.9 million depreciated cost of
equity real estate was reclassified from equity real estate held for
production of income to real estate held for sale. Additions to
valuation allowances of $79.8 million were recognized upon these
transfers. Additionally, in the fourth quarter, $92.5 million of
writedown on real estate held for production of income were recognized.
Benefits and other deductions includes $53.3 million, $114.3 million
and $154.6 million of interest expense related to amounts borrowed from
continuing operations in 1997, 1996 and 1995, respectively.
F-21
<PAGE>
Valuation allowances amounted to $28.4 million and $9.0 million on
mortgage loans on real estate and $88.4 million and $20.4 million on
equity real estate at December 31, 1997 and 1996, respectively. As of
January 1, 1996, the adoption of SFAS No. 121 resulted in a release of
existing valuation allowances of $71.9 million on equity real estate
and recognition of impairment losses of $69.8 million on real estate
held for production of income. Writedowns of equity real estate
subsequent to the adoption of SFAS No. 121 amounted to $95.7 million
and $12.3 million for 1997 and 1996, respectively.
At December 31, 1997 and 1996, problem mortgage loans on real estate
had amortized costs of $11.0 million and $7.9 million, respectively,
and mortgage loans on real estate for which the payment terms have been
restructured had amortized costs of $109.4 million and $208.1 million,
respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 101.8 $ 83.5
Impaired mortgage loans without provision for losses................... .2 15.0
---------------- -----------------
Recorded investment in impaired mortgages.............................. 102.0 98.5
Provision for losses................................................... (27.3) (8.8)
---------------- -----------------
Net Impaired Mortgage Loans............................................ $ 74.7 $ 89.7
================ =================
</TABLE>
During 1997, 1996 and 1995, the discontinued operations' average
recorded investment in impaired mortgage loans was $89.2 million,
$134.8 million and $177.4 million, respectively. Interest income
recognized on these impaired mortgage loans totaled $6.6 million, $10.1
million and $4.5 million ($5.3 million, $7.5 million and $.4 million
recognized on a cash basis) for 1997, 1996 and 1995, respectively.
At December 31, 1997 and 1996, discontinued operations had carrying
values of $156.2 million and $263.0 million, respectively, of real
estate acquired in satisfaction of debt.
8) SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
Short-term debt...................................................... $ 422.2 $ 174.1
----------------- -----------------
Long-term debt:
Equitable Life:
6.95% surplus notes scheduled to mature 2005....................... 399.4 399.4
7.70% surplus notes scheduled to mature 2015....................... 199.7 199.6
Other.............................................................. .3 .5
----------------- -----------------
Total Equitable Life........................................... 599.4 599.5
----------------- -----------------
Wholly Owned and Joint Venture Real Estate:
Mortgage notes, 5.87% - 12.00% due through 2006.................... 951.1 968.6
----------------- -----------------
Alliance:
Other.............................................................. 18.5 24.7
----------------- -----------------
Total long-term debt................................................. 1,569.0 1,592.8
----------------- -----------------
Total Short-term and Long-term Debt.................................. $ 1,991.2 $ 1,766.9
================= =================
</TABLE>
F-22
<PAGE>
Short-term Debt
Equitable Life has a $350.0 million bank credit facility available to
fund short-term working capital needs and to facilitate the securities
settlement process. The credit facility consists of two types of
borrowing options with varying interest rates and expires in June 2000.
The interest rates are based on external indices dependent on the type
of borrowing and at December 31, 1997 range from 5.88% to 8.50%. There
were no borrowings outstanding under this bank credit facility at
December 31, 1997.
Equitable Life has a commercial paper program with an issue limit of
$500.0 million. This program is available for general corporate
purposes used to support Equitable Life's liquidity needs and is
supported by Equitable Life's existing $350.0 million bank credit
facility. At December 31, 1997, $50.0 million was outstanding under
this program.
During 1996, Alliance entered into a $250.0 million five-year revolving
credit facility with a group of banks. Under the facility, the interest
rate, at the option of Alliance, is a floating rate generally based
upon a defined prime rate, a rate related to the London Interbank
Offered Rate ("LIBOR") or the Federal funds rate. A facility fee is
payable on the total facility. The revolving credit facility will be
used to provide back-up liquidity for Alliance's $250.0 million
commercial paper program, to fund commission payments to financial
intermediaries for the sale of Class B and C shares under Alliance's
mutual fund distribution system, and for general working capital
purposes. At December 31, 1997, Alliance had $72.0 million in
commercial paper outstanding and there were no borrowings under the
revolving credit facility.
Long-term Debt
Several of the long-term debt agreements have restrictive covenants
related to the total amount of debt, net tangible assets and other
matters. The Company is in compliance with all debt covenants.
On December 18, 1995, Equitable Life issued, in accordance with Section
1307 of the New York Insurance Law, $400.0 million of surplus notes
having an interest rate of 6.95% scheduled to mature in 2005 and $200.0
million of surplus notes having an interest rate of 7.70% scheduled to
mature in 2015 (together, the "Surplus Notes"). Proceeds from the
issuance of the Surplus Notes were $596.6 million, net of related
issuance costs. Payments of interest on, or principal of, the Surplus
Notes are subject to prior approval by the Superintendent.
The Company has pledged real estate, mortgage loans, cash and
securities amounting to $1,164.0 million and $1,406.4 million at
December 31, 1997 and 1996, respectively, as collateral for certain
long-term debt.
At December 31, 1997, aggregate maturities of the long-term debt based
on required principal payments at maturity for 1998 and the succeeding
four years are $565.8 million, $201.4 million, $8.6 million, $1.7
million and $1.8 million, respectively, and $790.6 million thereafter.
9) FEDERAL INCOME TAXES
A summary of the Federal income tax expense in the consolidated
statements of earnings is shown below:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current.......................................... $ 186.5 $ 97.9 $ (11.7)
Deferred......................................... (95.0) (88.2) 132.2
----------------- ---------------- -----------------
Total.............................................. $ 91.5 $ 9.7 $ 120.5
================= ================ =================
</TABLE>
F-23
<PAGE>
The Federal income taxes attributable to consolidated operations are
different from the amounts determined by multiplying the earnings
before Federal income taxes and minority interest by the expected
Federal income tax rate of 35%. The sources of the difference and the
tax effects of each are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Expected Federal income tax expense................ $ 234.7 $ 73.0 $ 173.7
Non-taxable minority interest...................... (38.0) (28.6) (22.0)
Adjustment of tax audit reserves................... (81.7) 6.9 4.1
Equity in unconsolidated subsidiaries.............. (45.1) (32.3) (19.4)
Other.............................................. 21.6 (9.3) (15.9)
----------------- ---------------- -----------------
Federal Income Tax Expense......................... $ 91.5 $ 9.7 $ 120.5
================= ================ =================
</TABLE>
The components of the net deferred Federal income taxes are as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
--------------------------------- ---------------------------------
Assets Liabilities Assets Liabilities
--------------- ---------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C> <C>
Compensation and related benefits...... $ 257.9 $ - $ 259.2 $ -
Other.................................. 30.7 - - 1.8
DAC, reserves and reinsurance.......... - 222.8 - 166.0
Investments............................ - 405.7 - 328.6
--------------- ---------------- --------------- ---------------
Total.................................. $ 288.6 $ 628.5 $ 259.2 $ 496.4
=============== ================ =============== ===============
</TABLE>
The deferred Federal income taxes impacting operations reflect the net
tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes. The sources of these temporary
differences and the tax effects of each are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
DAC, reserves and reinsurance...................... $ 46.2 $ (156.2) $ 63.3
Investments........................................ (113.8) 78.6 13.0
Compensation and related benefits.................. 3.7 22.3 30.8
Other.............................................. (31.1) (32.9) 25.1
----------------- ---------------- -----------------
Deferred Federal Income Tax
(Benefit) Expense................................ $ (95.0) $ (88.2) $ 132.2
================= ================ =================
</TABLE>
The Internal Revenue Service (the "IRS") is in the process of examining
the Company's consolidated Federal income tax returns for the years
1989 through 1991. Management believes these audits will have no
material adverse effect on the Company's results of operations.
F-24
<PAGE>
10) REINSURANCE AGREEMENTS
The Insurance Group assumes and cedes reinsurance with other insurance
companies. The Insurance Group evaluates the financial condition of its
reinsurers to minimize its exposure to significant losses from
reinsurer insolvencies. Ceded reinsurance does not relieve the
originating insurer of liability. The effect of reinsurance (excluding
group life and health) is summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Direct premiums.................................... $ 448.6 $ 461.4 $ 474.2
Reinsurance assumed................................ 198.3 177.5 171.3
Reinsurance ceded.................................. (45.4) (41.3) (38.7)
----------------- ---------------- -----------------
Premiums........................................... $ 601.5 $ 597.6 $ 606.8
================= ================ =================
Universal Life and Investment-type Product
Policy Fee Income Ceded.......................... $ 61.0 $ 48.2 $ 44.0
================= ================ =================
Policyholders' Benefits Ceded...................... $ 70.6 $ 54.1 $ 48.9
================= ================ =================
Interest Credited to Policyholders' Account
Balances Ceded................................... $ 36.4 $ 32.3 $ 28.5
================= ================ =================
</TABLE>
Effective January 1, 1994, all in force business above $5.0 million was
reinsured. During 1996, the Company's retention limit on joint
survivorship policies was increased to $15.0 million. The Insurance
Group also reinsures the entire risk on certain substandard
underwriting risks as well as in certain other cases.
The Insurance Group cedes 100% of its group life and health business to
a third party insurance company. Premiums ceded totaled $1.6 million,
$2.4 million and $260.6 million for 1997, 1996 and 1995, respectively.
Ceded death and disability benefits totaled $4.3 million, $21.2 million
and $188.1 million for 1997, 1996 and 1995, respectively. Insurance
liabilities ceded totaled $593.8 million and $652.4 million at December
31, 1997 and 1996, respectively.
11) EMPLOYEE BENEFIT PLANS
The Company sponsors qualified and non-qualified defined benefit plans
covering substantially all employees (including certain qualified
part-time employees), managers and certain agents. The pension plans
are non-contributory. Equitable Life's benefits are based on a cash
balance formula or years of service and final average earnings, if
greater, under certain grandfathering rules in the plans. Alliance's
benefits are based on years of credited service, average final base
salary and primary social security benefits. The Company's funding
policy is to make the minimum contribution required by the Employee
Retirement Income Security Act of 1974 ("ERISA").
Components of net periodic pension cost (credit) for the qualified and
non-qualified plans are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Service cost....................................... $ 32.5 $ 33.8 $ 30.0
Interest cost on projected benefit obligations..... 128.2 120.8 122.0
Actual return on assets............................ (307.6) (181.4) (309.2)
Net amortization and deferrals..................... 166.6 43.4 155.6
----------------- ---------------- -----------------
Net Periodic Pension Cost (Credit)................. $ 19.7 $ 16.6 $ (1.6)
================= ================ =================
</TABLE>
F-25
<PAGE>
The funded status of the qualified and non-qualified pension plans is
as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Actuarial present value of obligations:
Vested............................................................... $ 1,702.6 $ 1,672.2
Non-vested........................................................... 3.9 10.1
---------------- -----------------
Accumulated Benefit Obligation......................................... $ 1,706.5 $ 1,682.3
================ =================
Plan assets at fair value.............................................. $ 1,867.4 $ 1,626.0
Projected benefit obligations.......................................... 1,801.3 1,765.5
---------------- -----------------
Projected benefit obligations (in excess of) or less than plan assets.. 66.1 (139.5)
Unrecognized prior service cost........................................ (9.9) (17.9)
Unrecognized net loss from past experience different
from that assumed.................................................... 95.0 280.0
Unrecognized net asset at transition................................... 3.1 4.7
Additional minimum liability........................................... - (19.3)
---------------- -----------------
Prepaid Pension Cost.................................................. $ 154.3 $ 108.0
================ =================
</TABLE>
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of projected benefit
obligations were 7.25% and 4.07%, respectively, at December 31, 1997
and 7.5% and 4.25%, respectively, at December 31, 1996. As of January
1, 1997 and 1996, the expected long-term rate of return on assets for
the retirement plan was 10.25%.
The Company recorded, as a reduction of shareholders' equity, an
additional minimum pension liability of $17.3 million and $12.9
million, net of Federal income taxes, at December 31, 1997 and 1996,
respectively, primarily representing the excess of the accumulated
benefit obligation of the qualified pension plan over the accrued
liability.
The pension plan's assets include corporate and government debt
securities, equity securities, equity real estate and shares of group
trusts managed by Alliance.
Prior to 1987, the qualified plan funded participants' benefits through
the purchase of non-participating annuity contracts from Equitable
Life. Benefit payments under these contracts were approximately $33.2
million, $34.7 million and $36.4 million for 1997, 1996 and 1995,
respectively.
The Company provides certain medical and life insurance benefits
(collectively, "postretirement benefits") for qualifying employees,
managers and agents retiring from the Company (i) on or after attaining
age 55 who have at least 10 years of service or (ii) on or after
attaining age 65 or (iii) whose jobs have been abolished and who have
attained age 50 with 20 years of service. The life insurance benefits
are related to age and salary at retirement. The costs of
postretirement benefits are recognized in accordance with the
provisions of SFAS No. 106. The Company continues to fund
postretirement benefits costs on a pay-as-you-go basis and, for 1997,
1996 and 1995, the Company made estimated postretirement benefits
payments of $18.7 million, $18.9 million and $31.1 million,
respectively.
F-26
<PAGE>
The following table sets forth the postretirement benefits plan's
status, reconciled to amounts recognized in the Company's consolidated
financial statements:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Service cost....................................... $ 4.5 $ 5.3 $ 4.0
Interest cost on accumulated postretirement
benefits obligation.............................. 34.7 34.6 34.7
Net amortization and deferrals..................... 1.9 2.4 (2.3)
----------------- ---------------- -----------------
Net Periodic Postretirement Benefits Costs......... $ 41.1 $ 42.3 $ 36.4
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Accumulated postretirement benefits obligation:
Retirees............................................................. $ 388.5 $ 381.8
Fully eligible active plan participants.............................. 45.7 50.7
Other active plan participants....................................... 56.6 60.7
---------------- -----------------
490.8 493.2
Unrecognized prior service cost........................................ 40.3 50.5
Unrecognized net loss from past experience different
from that assumed and from changes in assumptions.................... (140.6) (150.5)
---------------- -----------------
Accrued Postretirement Benefits Cost................................... $ 390.5 $ 393.2
================ =================
</TABLE>
Since January 1, 1994, costs to the Company for providing these medical
benefits available to retirees under age 65 are the same as those
offered to active employees and costs to the Company of providing these
medical benefits will be limited to 200% of 1993 costs for all
participants.
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefits obligation was 8.75% in 1997,
gradually declining to 2.75% in the year 2009 and in 1996 was 9.5%,
gradually declining to 3.5% in the year 2009. The discount rate used in
determining the accumulated postretirement benefits obligation was
7.25% and 7.50% at December 31, 1997 and 1996, respectively.
If the health care cost trend rate assumptions were increased by 1%,
the accumulated postretirement benefits obligation as of December 31,
1997 would be increased 7%. The effect of this change on the sum of the
service cost and interest cost would be an increase of 8%.
12) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivatives
The Insurance Group primarily uses derivatives for asset/liability risk
management and for hedging individual securities. Derivatives mainly
are utilized to reduce the Insurance Group's exposure to interest rate
fluctuations. Accounting for interest rate swap transactions is on an
accrual basis. Gains and losses related to interest rate swap
transactions are amortized as yield adjustments over the remaining life
of the underlying hedged security. Income and expense resulting from
interest rate swap activities are reflected in net investment income.
The notional amount of matched interest rate swaps outstanding at
December 31, 1997 and 1996, respectively, was $1,353.4 million and
$649.9 million. The average unexpired terms at December 31, 1997 ranged
from 1.5 to 3.8 years. At December 31, 1997, the cost of terminating
outstanding matched swaps in a loss position was $10.9 million and the
unrealized gain on outstanding matched swaps in a gain position was
$38.9 million. The Company has no intention of terminating these
contracts prior to maturity. During 1996 and 1995, net gains of $.2
million and $1.4 million, respectively, were recorded in connection
with interest rate swap activity. Equitable Life has implemented an
interest rate cap program designed to hedge crediting rates on
interest-sensitive individual annuities contracts. The outstanding
notional amounts at
F-27
<PAGE>
December 31, 1997 of contracts purchased and sold were $7,250.0 million
and $875.0 million, respectively. The net premium paid by Equitable
Life on these contracts was $48.5 million and is being amortized
ratably over the contract periods ranging from 1 to 5 years. Income and
expense resulting from this program are reflected as an adjustment to
interest credited to policyholders' account balances.
Substantially all of DLJ's activities related to derivatives are, by
their nature trading activities which are primarily for the purpose of
customer accommodations. DLJ enters into certain contractual agreements
referred to as derivatives or off-balance-sheet financial instruments
involving futures, forwards and options. DLJ's derivative activities
consist of writing over-the-counter ("OTC") options to accommodate its
customer needs, trading in forward contracts in U.S. government and
agency issued or guaranteed securities and in futures contracts on
equity-based indices, interest rate instruments and currencies and
issuing structured products based on emerging market financial
instruments and indices. DLJ's involvement in swap contracts and
commodity derivative instruments is not significant.
Fair Value of Financial Instruments
The Company defines fair value as the quoted market prices for those
instruments that are actively traded in financial markets. In cases
where quoted market prices are not available, fair values are estimated
using present value or other valuation techniques. The fair value
estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument,
including estimates of the timing and amount of expected future cash
flows and the credit standing of counterparties. Such estimates do not
reflect any premium or discount that could result from offering for
sale at one time the Company's entire holdings of a particular
financial instrument, nor do they consider the tax impact of the
realization of unrealized gains or losses. In many cases, the fair
value estimates cannot be substantiated by comparison to independent
markets, nor can the disclosed value be realized in immediate
settlement of the instrument.
Certain financial instruments are excluded, particularly insurance
liabilities other than financial guarantees and investment contracts.
Fair market value of off-balance-sheet financial instruments of the
Insurance Group was not material at December 31, 1997 and 1996.
Fair values for mortgage loans on real estate are estimated by
discounting future contractual cash flows using interest rates at which
loans with similar characteristics and credit quality would be made.
Fair values for foreclosed mortgage loans and problem mortgage loans
are limited to the estimated fair value of the underlying collateral if
lower.
Fair values of policy loans are estimated by discounting the face value
of the loans from the time of the next interest rate review to the
present, at a rate equal to the excess of the current estimated market
rates over the current interest rate charged on the loan.
The estimated fair values for the Company's association plan contracts,
supplementary contracts not involving life contingencies ("SCNILC") and
annuities certain, which are included in policyholders' account
balances, and guaranteed interest contracts are estimated using
projected cash flows discounted at rates reflecting expected current
offering rates.
The estimated fair values for variable deferred annuities and single
premium deferred annuities ("SPDA"), which are included in
policyholders' account balances, are estimated by discounting the
account value back from the time of the next crediting rate review to
the present, at a rate equal to the excess of current estimated market
rates offered on new policies over the current crediting rates.
F-28
<PAGE>
Fair values for long-term debt is determined using published market
values, where available, or contractual cash flows discounted at market
interest rates. The estimated fair values for non-recourse mortgage
debt are determined by discounting contractual cash flows at a rate
which takes into account the level of current market interest rates and
collateral risk. The estimated fair values for recourse mortgage debt
are determined by discounting contractual cash flows at a rate based
upon current interest rates of other companies with credit ratings
similar to the Company. The Company's carrying value of short-term
borrowings approximates their estimated fair value.
The following table discloses carrying value and estimated fair value
for financial instruments not otherwise disclosed in Notes 3, 6 and 7:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------------
1997 1996
--------------------------------- ---------------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
--------------- ---------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C> <C>
Consolidated Financial Instruments:
Mortgage loans on real estate.......... $ 2,611.4 $ 2,822.8 $ 3,133.0 $ 3,394.6
Other limited partnership interests.... 509.4 509.4 467.0 467.0
Policy loans........................... 2,422.9 2,493.9 2,196.1 2,221.6
Policyholders' account balances -
investment contracts................. 12,611.0 12,714.0 12,908.7 12,992.2
Long-term debt......................... 1,569.0 1,531.5 1,592.8 1,557.7
Closed Block Financial Instruments:
Mortgage loans on real estate.......... 1,341.6 1,420.7 1,380.7 1,425.6
Other equity investments............... 86.3 86.3 105.0 105.0
Policy loans........................... 1,700.2 1,784.2 1,765.9 1,798.0
SCNILC liability....................... 27.6 30.3 30.6 34.9
Discontinued Operations Financial
Instruments:
Mortgage loans on real estate.......... 655.5 779.9 1,111.1 1,220.3
Fixed maturities....................... 38.7 38.7 42.5 42.5
Other equity investments............... 209.3 209.3 300.5 300.5
Guaranteed interest contracts.......... 37.0 34.0 290.7 300.5
Long-term debt......................... 102.0 102.1 102.1 102.2
</TABLE>
13) COMMITMENTS AND CONTINGENT LIABILITIES
The Company has provided, from time to time, certain guarantees or
commitments to affiliates, investors and others. These arrangements
include commitments by the Company, under certain conditions: to make
capital contributions of up to $202.6 million to affiliated real estate
joint ventures; and to provide equity financing to certain limited
partnerships of $362.1 million at December 31, 1997, under existing
loan or loan commitment agreements.
Equitable Life is the obligor under certain structured settlement
agreements which it had entered into with unaffiliated insurance
companies and beneficiaries. To satisfy its obligations under these
agreements, Equitable Life owns single premium annuities issued by
previously wholly owned life insurance subsidiaries. Equitable Life has
directed payment under these annuities to be made directly to the
beneficiaries under the structured settlement agreements. A contingent
liability exists with respect to these agreements should the previously
wholly owned subsidiaries be unable to meet their obligations.
Management believes the satisfaction of those obligations by Equitable
Life is remote.
The Insurance Group had $47.4 million of letters of credit outstanding
at December 31, 1997.
F-29
<PAGE>
14) LITIGATION
Equitable Life recently agreed to settle, subject to court approval,
previously disclosed cases brought by persons insured under Lifetime
Guaranteed Renewable Major Medical Insurance Policies issued by
Equitable Life (the "Policies") in New York (Golomb et al. v. The
Equitable Life Assurance Society of the United States), Pennsylvania
(Malvin et al. v. The Equitable Life Assurance Society of the United
States), Texas (Bowler et al. v. The Equitable Life Assurance Society
of the United States), Florida (Bachman v. The Equitable Life Assurance
Society of the United States) and California (Fletcher v. The Equitable
Life Assurance Society of the United States). Plaintiffs in these cases
claimed that Equitable Life's method for determining premium increases
breached the terms of certain forms of the Policies and was
misrepresented. Plaintiffs in Bowler and Fletcher also claimed that
Equitable Life misrepresented to policyholders in Texas and California,
respectively, that premium increases had been approved by insurance
departments in those states and determined annual rate increases in a
manner that discriminated against policyholders in those states in
violation of the terms of the Policies, representations to
policyholders and/or state law. The New York trial court dismissed the
Golomb action with prejudice and plaintiffs appealed. In Bowler and
Fletcher, Equitable Life denied the material allegations of the
complaints and filed motions for summary judgment which have been fully
briefed. The Malvin action was stayed indefinitely pending the outcome
of proceedings in Golomb and in Fletcher the magistrate concluded that
the case should be remanded to California state court and Equitable
Life appealed that determination to the district judge. On December 23,
1997, Equitable Life entered into a settlement agreement, subject to
court approval, which would result in the dismissal with prejudice of
each of the five pending actions and the resolution of all similar
claims on a nationwide basis.
The settlement agreement provides for the creation of a nationwide
class consisting of all persons holding, and paying premiums on, the
Policies at any time since January 1, 1988. An amended complaint will
be filed in the federal district court in Tampa, Florida (where the
Florida action is pending), that would assert claims of the kind
previously made in the cases described above on a nationwide basis, on
behalf of policyholders in the nationwide class, which consists of
approximately 127,000 former and current policyholders. If the
settlement is approved, Equitable Life would pay $14,166,000 in
exchange for release of all claims for past damages on claims of the
type described in the five pending actions and the amended complaint.
Costs of administering the settlement and any attorneys' fees awarded
by the court to plaintiffs' counsel would be deducted from this fund
before distribution of the balance to the class. In addition to this
payment, Equitable Life will provide future relief to current holders
of certain forms of the Policies in the form of an agreement to be
embodied in the court's judgment, restricting the premium increases
Equitable Life can seek on these Policies in the future. The parties
estimate the present value of these restrictions at $23,333,000, before
deduction of any attorneys' fees that may be awarded by the court. The
estimate is based on assumptions about future events that cannot be
predicted with certainty and accordingly the actual value of the future
relief may differ. The parties to the settlement shortly will be asking
the court to approve preliminarily the settlement and settlement class
and to permit distribution of notice of the settlement to
policyholders, establish procedures for objections, an opportunity to
opt out of the settlements as it affects past damages, and a court
hearing on whether the settlement should be finally approved. Equitable
Life cannot predict whether the settlement will be approved or, if it
is not approved, the outcome of the pending litigations. As noted,
proceedings in Malvin were stayed indefinitely; proceedings in the
other actions have been stayed or deferred to accommodate the
settlement approval process.
A number of lawsuits have been filed against life and health insurers
in the jurisdictions in which Equitable Life and its subsidiaries do
business involving insurers' sales practices, alleged agent misconduct,
alleged failure to properly supervise agents, and other matters. Some
of the lawsuits have resulted in the award of substantial judgments
against other insurers, including material amounts of punitive damages,
or in substantial settlements. In some states, juries have substantial
discretion in awarding punitive damages. Equitable Life, Equitable
Variable Life Insurance Company ("EVLICO," which was merged into
Equitable Life effective January 1, 1997, but whose existence continues
for certain limited purposes, including the defense of litigation) and
The Equitable of Colorado, Inc. ("EOC"), like other life and health
insurers, from time to time are involved in such litigation. Among
litigations pending against Equitable Life, EVLICO and EOC of the type
referred to in this paragraph are the litigations described in the
following seven paragraphs.
F-30
<PAGE>
An action was instituted on April 6, 1995 against Equitable Life and
its wholly owned subsidiary, EOC, in New York state court, entitled
Sidney C. Cole, et al. v. The Equitable Life Assurance Society of the
United States and The Equitable of Colorado, Inc. The action is brought
by the holders of a joint survivorship whole life policy issued by EOC.
The action purports to be on behalf of a class consisting of all
persons who from January 1, 1984 purchased life insurance policies sold
by Equitable Life and EOC based upon allegedly uniform sales
presentations and policy illustrations. The complaint puts in issue
various alleged sales practices that plaintiffs assert, among other
things, misrepresented the stated number of years that the annual
premium would need to be paid. Plaintiffs seek damages in an
unspecified amount, imposition of a constructive trust, and seek to
enjoin Equitable Life and EOC from engaging in the challenged sales
practices. In June 1996, the Court issued a decision and order
dismissing with prejudice plaintiffs' causes of action for fraud,
constructive fraud, breach of fiduciary duty, negligence, and unjust
enrichment, and dismissing without prejudice plaintiffs' cause of
action under the New York State consumer protection statute. The only
remaining causes of action are for breach of contract and negligent
misrepresentation. In April 1997, plaintiffs noticed an appeal from the
court's June 1996 order. Subsequently, Equitable Life and EOC noticed a
cross-appeal from so much of the June 1996 order that denied their
motion to dismiss. Briefing on the appeals is scheduled to begin on
February 23, 1998. In June 1997, plaintiffs filed their memorandum of
law and affidavits in support of their motion for class certification.
That memorandum states that plaintiffs seek to certify a class solely
on their breach of contract claims, and not on their negligent
misrepresentation claim. Plaintiffs' class certification motion has
been fully briefed by the parties and is sub judice. In August 1997,
Equitable Life and EOC moved for summary judgment dismissing
plaintiffs' remaining claims of breach of contract and negligent
misrepresentation. Defendants' summary judgment motion has been fully
briefed by the parties. On January 5, 1998, plaintiffs filed a note of
issue (placing the case on the trial calendar).
On May 21, 1996, an action entitled Elton F. Duncan, III v. The
Equitable Life Assurance Society of the United States was commenced
against Equitable Life in the Civil District Court for the Parish of
Orleans, State of Louisiana. The action originally was brought by an
individual who purchased a whole life policy from Equitable Life in
1989. In September 1997, with leave of the court, plaintiff filed a
second amended petition naming six additional policyholder plaintiffs
and three new sales agent defendants. The sole named individual
defendant in the original petition is also named as a defendant in the
second amended petition. Plaintiffs purport to represent a class
consisting of all persons who purchased whole life or universal life
insurance policies from Equitable Life from January 1, 1981 through
July 22, 1992. Plaintiffs allege improper sales practices based on
allegations of misrepresentations concerning one or more of the
following: the number of years that premiums would need to be paid; a
policy's suitability as an investment vehicle; and the extent to which
a policy was a proper replacement policy. Plaintiffs seek damages,
including punitive damages, in an unspecified amount. In October 1997,
Equitable Life filed (i) exceptions to the second amended petition,
asserting deficiencies in pleading of venue and vagueness; and (ii) a
motion to strike certain allegations. On January 23, 1998, the court
heard argument on Equitable Life's exceptions and motion to strike.
Those motions are sub judice. Motion practice regarding discovery
continues.
On July 26, 1996, an action entitled Michael Bradley v. Equitable
Variable Life Insurance Company was commenced in New York state court,
Kings County. The action is brought by the holder of a variable life
insurance policy issued by EVLICO. The plaintiff purports to represent
a class consisting of all persons or entities who purchased one or more
life insurance policies issued by EVLICO from January 1, 1980. The
complaint puts at issue various alleged sales practices and alleges
misrepresentations concerning the extent to which the policy was a
proper replacement policy and the number of years that the annual
premium would need to be paid. Plaintiff seeks damages, including
punitive damages, in an unspecified amount and also seeks injunctive
relief prohibiting EVLICO from canceling policies for failure to make
premium payments beyond the alleged stated number of years that the
annual premium would need to be paid. EVLICO answered the complaint,
denying the material allegations. In September 1996, Equitable Life,
EVLICO and EOC made a motion to have this proceeding moved from Kings
County Supreme Court to New York County for joint trial or
consolidation with the Cole action. The motion was denied by the Court
in Cole in January 1997. Plaintiff then moved for certification of a
nationwide class consisting of all persons or entities who, since
January 1, 1980, were sold one or more life insurance products based on
misrepresentations as to the number of years that the annual premium
would need to be paid, and/or who were allegedly induced to purchase
additional policies from EVLICO using the cash value accumulated in
existing policies. Defendants have opposed this motion. Discovery and
briefing regarding plaintiff's motion for class certification are
ongoing.
F-31
<PAGE>
On December 12, 1996, an action entitled Robert E. Dillon v. The
Equitable Life Assurance Society of the United States and The Equitable
of Colorado, was commenced in the United States District Court for the
Southern District of Florida. The action is brought by an individual
who purchased a joint whole life policy from EOC in 1988. The complaint
puts in issue various alleged sales practices and alleges
misrepresentations concerning the alleged impropriety of replacement
policies issued by Equitable Life and EOC and alleged
misrepresentations regarding the number of years premiums would have to
be paid on the defendants' policies. Plaintiff alleges claims for
breach of contract, fraud, negligent misrepresentation, money had and
received, unjust enrichment and imposition of a constructive trust.
Plaintiff purports to represent two classes of persons. The first is a
"contract class," consisting of all persons who purchased whole or
universal life insurance policies from Equitable Life and EOC and from
whom Equitable Life and EOC have sought additional payments beyond the
number of years allegedly promised by Equitable Life and EOC. The
second is a "fraud class," consisting of all persons with an interest
in policies issued by Equitable Life and EOC at any time since October
1, 1986. Plaintiff seeks damages in an unspecified amount, and also
seeks injunctive relief attaching Equitable Life's and EOC's profits
from their alleged sales practices. In May 1997, plaintiff served a
motion for class certification. In July 1997, the parties submitted to
the Court a joint scheduling report, joint scheduling order and a
confidentiality stipulation and order. The Court signed the latter
stipulation, and the others remain sub judice. Further briefing on
plaintiff's class certification motion will await entry of a scheduling
order and further class certification discovery, which has commenced
and is on-going. In January 1998, the judge assigned to the case
recused himself, and the case was reassigned. Defendants are to serve
their answer in February 1998.
On January 3, 1996, an amended complaint was filed in an action
entitled Frank Franze Jr. and George Busher, individually and on behalf
of all others similarly situated v. The Equitable Life Assurance
Society of the United States, and Equitable Variable Life Insurance
Company, No. 94-2036 in the United States District Court for the
Southern District of Florida. The action was brought by two individuals
who purchased variable life insurance policies. The plaintiffs purport
to represent a nationwide class consisting of all persons who purchased
variable life insurance policies from Equitable Life and EVLICO since
September 30, 1991. The amended complaint alleges that Equitable Life's
and EVLICO's agents were trained not to disclose fully that the product
being sold was life insurance. Plaintiffs allege violations of the
Federal securities laws and seek rescission of the contracts or
compensatory damages and attorneys' fees and expenses. Equitable Life
and EVLICO have answered the amended complaint, denying the material
allegations and asserting certain affirmative defenses. Motion practice
regarding discovery continues.
On January 9, 1997, an action entitled Rosemarie Chaviano, individually
and on behalf of all others similarly situated v. The Equitable Life
Assurance Society of the United States, and Equitable Variable Life
Insurance Company, was filed in Massachusetts state court making claims
similar to those in the Franze action and alleging violations of the
Massachusetts securities laws. The plaintiff purports to represent all
persons in Massachusetts who purchased variable life insurance
contracts from Equitable Life and EVLICO from January 9, 1993 to the
present. The Massachusetts action seeks rescission of the contracts or
compensatory damages, attorneys' fees, expenses and injunctive relief.
Plaintiff filed an amended complaint in April 1997. In July 1997,
Equitable Life served a motion to dismiss the amended complaint or, in
the alternative, for summary judgment. On September 12, 1997, plaintiff
moved for class certification. This motion is scheduled for hearing on
February 18, 1998.
On September 11, 1997, an action entitled Pamela L. and James A.
Luther, individually and as representatives of all people similarly
situated v. The Equitable Life Assurance Society of the United States,
The Equitable Companies Incorporated, and Casey Cammack, individually
and as agent for The Equitable Life Assurance Society of the United
States and The Equitable Companies Incorporated, was filed in Texas
state court. The action was brought by holders of a whole life policy
and the beneficiary under that policy. Plaintiffs purport to represent
a nationwide class of persons having an ownership or beneficial
interest in whole and universal life policies issued by Equitable Life
from January 1, 1982 through December 31, 1996. Also included in the
purported class are persons having an ownership interest in variable
annuities purchased from Equitable Life from January 1, 1992 to the
present. The complaint puts in issue the allegations that uniform sales
presentations, illustrations, and materials that Equitable Life agents
used misrepresented the stated number of years that premiums would need
to be paid and misrepresented the extent to which the policies at issue
were
F-32
<PAGE>
proper replacement policies. Plaintiffs seek compensatory damages,
attorneys' fees and expenses. In October 1997, Equitable Life served a
general denial of the allegations against it. The same day, the Holding
Company entered a special appearance contesting the court's
jurisdiction over it. In November 1997, Equitable Life filed a plea in
abatement, which, under Texas law, stayed further proceedings in the
case because plaintiffs had not served a demand letter. Plaintiffs
served a demand letter upon Equitable Life and the Holding Company, the
response to which is due 60 days thereafter. Although the outcome of
litigation cannot be predicted with certainty, particularly in the
early stages of an action, the Company's management believes that the
ultimate resolution of the Cole, Duncan, Bradley, Dillon, Franze,
Chaviano and Luther litigations should not have a material adverse
effect on the financial position of the Company. The Company's
management cannot make an estimate of loss, if any, or predict whether
or not any such litigation will have a material adverse effect on the
Company's results of operations in any particular period.
On September 12, 1997, the United States District Court for the
Northern District of Alabama, Southern Division, entered an order
certifying James Brown as the representative of a class consisting of
"[a]ll African-Americans who applied but were not hired for, were
discouraged from applying for, or would have applied for the position
of Sales Agent in the absence of the discriminatory practices, and/or
procedures in the [former] Southern Region of The Equitable from May
16, 1987 to the present." The second amended complaint in James W.
Brown, on behalf of others similarly situated v. The Equitable Life
Assurance Society of the United States, alleges, among other things,
that Equitable Life discriminated on the basis of race against
African-American applicants and potential applicants in hiring
individuals as sales agents. Plaintiffs seek a declaratory judgment and
affirmative and negative injunctive relief, including the payment of
back-pay, pension and other compensation. Although the outcome of any
litigation cannot be predicted with certainty, the Company's management
believes that the ultimate resolution of this matter should not have a
material adverse effect on the financial position of the Company. The
Company's management cannot make an estimate of loss, if any, or
predict whether or not such matter will have a material adverse effect
on the Company's results of operations in any particular period.
The U.S. Department of Labor ("DOL") is conducting an investigation of
Equitable Life's management of the Prime Property Fund ("PPF"). PPF is
an open-end, commingled real estate separate account of Equitable Life
for pension clients. Equitable Life serves as investment manager in PPF
and retains EREIM as advisor. Equitable Life agreed to indemnify the
purchaser of EREIM (which Equitable Life sold in June 1997) with
respect to any fines, penalties and rebates to clients in connection
with this investigation. In early 1995, the DOL commenced a national
investigation of commingled real estate funds with pension investors,
including PPF. The investigation appears to be focused principally on
appraisal and valuation procedures in respect of fund properties. The
most recent request from the DOL seems to reflect, at least in part, an
interest in the relationship between the valuations for those
properties reflected in appraisals prepared for local property tax
proceedings and the valuations used by PPF for other purposes. At no
time has the DOL made any specific allegation that Equitable Life or
EREIM has acted improperly and Equitable Life and EREIM believe that
any such allegation would be without foundation. While the outcome of
this investigation cannot be predicted with certainty, the Company's
management believes that the ultimate resolution of this matter should
not have a material adverse effect on the financial position of the
Company. The Company's management cannot make an estimate of loss, if
any, or predict whether or not this investigation will have a material
adverse effect on the Company's results of operations in any particular
period.
On July 25, 1995, a Consolidated and Supplemental Class Action
Complaint ("Complaint") was filed against Alliance North American
Government Income Trust, Inc. (the "Fund"), Alliance and certain other
defendants affiliated with Alliance, including the Holding Company,
alleging violations of Federal securities laws, fraud and breach of
fiduciary duty in connection with the Fund's investments in Mexican and
Argentine securities. The Complaint, which sought certification of a
plaintiff class of persons who purchased or owned Class A, B or C
shares of the Fund from March 27, 1992 through December 23, 1994,
sought an unspecified amount of damages, costs, attorneys' fees and
punitive damages. The principal allegations are that the Fund purchased
debt securities issued by the Mexican and Argentine governments in
amounts that were not permitted by the Fund's investment objective, and
that there was no shareholder vote to change the investment objective
to permit purchases in such amounts. The Complaint further alleged that
the decline in the value of the Mexican and Argentine securities held
by the Fund caused the Fund's net asset value to decline to the
detriment of the Fund's shareholders. On September 26, 1996, the United
States District Court for the Southern District of
F-33
<PAGE>
New York granted the defendants' motion to dismiss all counts of the
Complaint ("First Decision"). On October 11, 1996, plaintiffs filed a
motion for reconsideration of the First Decision. On November 25, 1996,
the court denied plaintiffs' motion for reconsideration of the First
Decision. On October 29, 1997, the United States Court of Appeals for
the Second Circuit issued an order granting defendants' motion to
strike and dismissing plaintiffs' appeal of the First Decision. On
October 29, 1996, plaintiffs filed a motion for leave to file an
amended complaint. The principal allegations of the proposed amended
complaint are that (i) the Fund failed to hedge against the risks of
investing in foreign securities despite representations that it would
do so, (ii) the Fund did not properly disclose that it planned to
invest in mortgage-backed derivative securities and (iii) two
advertisements used by the Fund misrepresented the risks of investing
in the Fund. On July 15, 1997, the District Court denied plaintiffs'
motion for leave to file an amended complaint and ordered that the case
be dismissed ("Second Decision"). The plaintiffs have appealed the
Second Decision to the United States Court of Appeals for the Second
Circuit. While the ultimate outcome of this matter cannot be determined
at this time, management of Alliance does not expect that it will have
a material adverse effect on Alliance's results of operations or
financial condition.
On January 26, 1996, a purported purchaser of certain notes and
warrants to purchase shares of common stock of Rickel Home Centers,
Inc. ("Rickel") filed a class action complaint against Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJSC") and certain other
defendants for unspecified compensatory and punitive damages in the U.
S. District Court for the Southern District of New York. The suit was
brought on behalf of the purchasers of 126,457 units consisting of
$126,457,000 aggregate principal amount of 13 1/2% senior notes due
2001 and 126,457 warrants to purchase shares of common stock of Rickel
issued by Rickel in October 1994. The complaint alleges violations of
federal securities laws and common law fraud against DLJSC, as the
underwriter of the units and as an owner of 7.3% of the common stock of
Rickel, Eos Partners, L.P., and General Electric Capital Corporation,
each as owners of 44.2% of the common stock of Rickel, and members of
the board of directors of Rickel, including a DLJSC managing director.
The complaint seeks to hold DLJSC liable for alleged misstatements and
omissions contained in the prospectus and registration statement filed
in connection with the offering of the units, alleging that the
defendants knew of financial losses and a decline in value of Rickel in
the months prior to the offering and did not disclose such information.
The complaint also alleges that Rickel failed to pay its semi-annual
interest payment due on the units on December 15, 1995, and that Rickel
filed a voluntary petition for reorganization pursuant to Chapter 11 of
the Bankruptcy Code on January 10, 1996. DLJSC intends to defend itself
vigorously against all of the allegations contained in the complaint.
Although there can be no assurance, DLJ does not believe that the
outcome of this litigation will have a material adverse effect on its
financial condition. Due to the early stage of this litigation, based
on the information currently available to it, DLJ's management cannot
make an estimate of loss, if any, or predict whether or not such
litigation will have a material adverse effect on DLJ's results of
operations in any particular period.
In October 1995, DLJSC was named as a defendant in a purported class
action filed in a Texas State Court on behalf of the holders of $550.0
million principal amount of subordinated redeemable discount debentures
of National Gypsum Corporation ("NGC") canceled in connection with a
Chapter 11 plan of reorganization for NGC consummated in July 1993. The
named plaintiff in the State Court action also filed an adversary
proceeding in the U.S. Bankruptcy Court for the Northern District of
Texas seeking a declaratory judgment that the confirmed NGC plan of
reorganization does not bar the class action claims. Subsequent to the
consummation of NGC's plan of reorganization, NGC's shares traded for
values substantially in excess of, and in 1995 NGC was acquired for a
value substantially in excess of, the values upon which NGC's plan of
reorganization was based. The two actions arise out of DLJSC's
activities as financial advisor to NGC in the course of NGC's Chapter
11 reorganization proceedings. The class action complaint alleges that
the plan of reorganization submitted by NGC was based upon projections
by NGC and DLJSC which intentionally understated forecasts, and
provided misleading and incorrect information in order to hide NGC's
true value and that defendants breached their fiduciary duties by,
among other things, providing false, misleading or incomplete
information to deliberately understate the value of NGC. The class
action complaint seeks compensatory and punitive damages purportedly
sustained by the class. On October 10, 1997, DLJSC and
F-34
<PAGE>
others were named as defendants in a new adversary proceeding in the
Bankruptcy Court brought by the NGC Settlement Trust, an entity created
by the NGC plan of reorganization to deal with asbestos-related claims.
The Trust's allegations are substantially similar to the claims in the
State Court action. In court papers dated October 16, 1997, the State
Court plaintiff indicated that he would intervene in the Trust's
adversary proceeding. On January 21, 1998, the Bankruptcy Court ruled
that the State Court plaintiff's claims were not barred by the NGC plan
of reorganization insofar as they alleged nondisclosure of certain cost
reductions announced by NGC in October 1993. The Texas State Court
action, which had been removed to the Bankruptcy Court, has been
remanded back to the state court, which remand is being opposed by
DLJSC. DLJSC intends to defend itself vigorously against all of the
allegations contained in the complaints. Although there can be no
assurance, DLJ does not believe that the ultimate outcome of this
litigation will have a material adverse effect on its financial
condition. Due to the early stage of such litigation, based upon the
information currently available to it, DLJ's management cannot make an
estimate of loss, if any, or predict whether or not such litigation
will have a material adverse effect on DLJ's results of operations in
any particular period.
In November and December 1995, DLJSC, along with various other parties,
was named as a defendant in a number of purported class actions filed
in the U.S. District Court for the Eastern District of Louisiana. The
complaints allege violations of the federal securities laws arising out
of a public offering in 1994 of $435.0 million of first mortgage notes
of Harrah's Jazz Company and Harrah's Jazz Finance Corp. The complaints
seek to hold DLJSC liable for various alleged misstatements and
omissions contained in the prospectus dated November 9, 1994. On
February 26, 1997, the parties agreed to a settlement of these actions,
subject to the District Court's approval, which was granted on July 31,
1997. The settlement is also subject to approval by the U.S. Bankruptcy
Court for the Eastern District of Louisiana of proposed modifications
to a confirmed plan of reorganization for Harrah's Jazz Company and
Harrah's Jazz Finance Corp., and the satisfaction or waiver of all
conditions to the effectiveness of the plan, as provided in the plan.
There can be no assurance of the Bankruptcy Court's approval of the
modifications to the plan of reorganization, or that the conditions to
the effectiveness of the plan will be satisfied or waived. In the
opinion of DLJ's management, the settlement, if approved, will not have
a material adverse effect on DLJ's results of operations or on its
consolidated financial condition.
In addition to the matters described above, Equitable Life and its
subsidiaries and DLJ and its subsidiaries are involved in various legal
actions and proceedings in connection with their businesses. Some of
the actions and proceedings have been brought on behalf of various
alleged classes of claimants and certain of these claimants seek
damages of unspecified amounts. While the ultimate outcome of such
matters cannot be predicted with certainty, in the opinion of
management no such matter is likely to have a material adverse effect
on the Company's consolidated financial position or results of
operations.
15) LEASES
The Company has entered into operating leases for office space and
certain other assets, principally data processing equipment and office
furniture and equipment. Future minimum payments under noncancelable
leases for 1998 and the succeeding four years are $93.5 million, $84.4
million, $70.2 million, $56.4 million, $47.0 million and $489.3 million
thereafter. Minimum future sub-lease rental income on these
noncancelable leases for 1998 and the succeeding four years are $7.3
million, $5.9 million, $3.8 million, $2.4 million, $.8 million and $2.9
million thereafter.
At December 31, 1997, the minimum future rental income on noncancelable
operating leases for wholly owned investments in real estate for 1997
and the succeeding four years are $247.0 million, $238.1 million,
$218.7 million, $197.9 million, $169.1 million and $813.0 million
thereafter.
F-35
<PAGE>
16) OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Compensation costs................................. $ 721.5 $ 704.8 $ 628.4
Commissions........................................ 409.6 329.5 314.3
Short-term debt interest expense................... 31.7 8.0 11.4
Long-term debt interest expense.................... 121.2 137.3 108.1
Amortization of policy acquisition costs........... 287.3 405.2 317.8
Capitalization of policy acquisition costs......... (508.0) (391.9) (391.0)
Rent expense, net of sub-lease income.............. 101.8 113.7 109.3
Cursitor intangible assets writedown............... 120.9 - -
Other.............................................. 917.9 769.1 677.5
----------------- ---------------- -----------------
Total.............................................. $ 2,203.9 $ 2,075.7 $ 1,775.8
================= ================ =================
</TABLE>
During 1997, 1996 and 1995, the Company restructured certain operations
in connection with cost reduction programs and recorded pre-tax
provisions of $42.4 million, $24.4 million and $32.0 million,
respectively. The amounts paid during 1997, associated with cost
reduction programs, totaled $22.8 million. At December 31, 1997, the
liabilities associated with cost reduction programs amounted to $62.0
million. The 1997 cost reduction program include costs related to
employee termination and exit costs. The 1996 cost reduction program
included restructuring costs related to the consolidation of insurance
operations' service centers. The 1995 cost reduction program included
relocation expenses, including the accelerated amortization of building
improvements associated with the relocation of the home office.
Amortization of DAC in 1996 included a $145.0 million writeoff of DAC
related to DI contracts.
17) INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
Equitable Life is restricted as to the amounts it may pay as dividends
to the Holding Company. Under the New York Insurance Law, the
Superintendent has broad discretion to determine whether the financial
condition of a stock life insurance company would support the payment
of dividends to its shareholders. For 1997, 1996 and 1995, statutory
net loss totaled $351.7 million, $351.1 million and $352.4 million,
respectively. No amounts are expected to be available for dividends
from Equitable Life to the Holding Company in 1998.
At December 31, 1997, the Insurance Group, in accordance with various
government and state regulations, had $19.7 million of securities
deposited with such government or state agencies.
F-36
<PAGE>
Accounting practices used to prepare statutory financial statements for
regulatory filings of stock life insurance companies differ in certain
instances from GAAP. The following reconciles the Insurance Group's
statutory change in surplus and capital stock and statutory surplus and
capital stock determined in accordance with accounting practices
prescribed by the New York Insurance Department with net earnings and
equity on a GAAP basis.
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Net change in statutory surplus and
capital stock.................................... $ 203.6 $ 56.0 $ 78.1
Change in asset valuation reserves................. 147.1 (48.4) 365.7
----------------- ---------------- -----------------
Net change in statutory surplus, capital stock
and asset valuation reserves..................... 350.7 7.6 443.8
Adjustments:
Future policy benefits and policyholders'
account balances............................... (31.1) (298.5) (66.0)
DAC.............................................. 220.7 (13.3) 73.2
Deferred Federal income taxes.................... 103.1 108.0 (158.1)
Valuation of investments......................... 46.8 289.8 189.1
Valuation of investment subsidiary............... (555.8) (117.7) (188.6)
Limited risk reinsurance......................... 82.3 92.5 416.9
Issuance of surplus notes........................ - - (538.9)
Postretirement benefits.......................... (3.1) 28.9 (26.7)
Other, net....................................... 30.3 12.4 115.1
GAAP adjustments of Closed Block................. 3.6 (9.8) 15.7
GAAP adjustments of discontinued operations...... 189.7 (89.6) 37.3
----------------- ---------------- -----------------
Net Earnings of the Insurance Group................ $ 437.2 $ 10.3 $ 312.8
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Statutory surplus and capital stock................ $ 2,462.5 $ 2,258.9 $ 2,202.9
Asset valuation reserves........................... 1,444.6 1,297.5 1,345.9
----------------- ---------------- -----------------
Statutory surplus, capital stock and asset
valuation reserves............................... 3,907.1 3,556.4 3,548.8
Adjustments:
Future policy benefits and policyholders'
account balances............................... (1,336.1) (1,305.0) (1,006.5)
DAC.............................................. 3,236.6 3,104.9 3,075.8
Deferred Federal income taxes.................... (370.8) (306.1) (452.0)
Valuation of investments......................... 783.5 286.8 417.7
Valuation of investment subsidiary............... (1,338.6) (782.8) (665.1)
Limited risk reinsurance......................... (254.2) (336.5) (429.0)
Issuance of surplus notes........................ (539.0) (539.0) (538.9)
Postretirement benefits.......................... (317.5) (314.4) (343.3)
Other, net....................................... 203.7 126.3 4.4
GAAP adjustments of Closed Block................. 814.3 783.7 830.8
GAAP adjustments of discontinued operations...... 71.5 (190.3) (184.6)
----------------- ---------------- -----------------
Equity of the Insurance Group...................... $ 4,860.5 $ 4,084.0 $ 4,258.1
================= ================ =================
</TABLE>
F-37
<PAGE>
18) BUSINESS SEGMENT INFORMATION
The Company has two major business segments: Insurance Operations and
Investment Services. Interest expense related to debt not specific to
either business segment is presented as Corporate interest expense.
Information for all periods is presented on a comparable basis.
Insurance Operations offers a variety of traditional, variable and
interest-sensitive life insurance products, disability income, annuity
products, mutual fund and other investment products to individuals and
small groups and administers traditional participating group annuity
contracts with conversion features, generally for corporate qualified
pension plans, and association plans which provide full service
retirement programs for individuals affiliated with professional and
trade associations. This segment includes Separate Accounts for
individual insurance and annuity products.
Investment Services provides investment fund management, primarily to
institutional clients. This segment includes the Company's equity
interest in DLJ and Separate Accounts which provide various investment
options for group clients through pooled or single group accounts.
Intersegment investment advisory and other fees of approximately $81.9
million, $127.5 million and $124.1 million for 1997, 1996 and 1995,
respectively, are included in total revenues of the Investment Services
segment. These fees, excluding amounts related to the GIC Segment of
$5.1 million, $15.7 million and $14.7 million for 1997, 1996 and 1995,
respectively, are eliminated in consolidation.
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Insurance operations............................... $ 3,684.2 $ 3,770.6 $ 3,614.6
Investment services................................ 1,455.1 1,126.1 949.1
Consolidation/elimination.......................... (19.9) (24.5) (34.9)
----------------- ---------------- -----------------
Total.............................................. $ 5,119.4 $ 4,872.2 $ 4,528.8
================= ================ =================
Earnings (loss) from continuing operations before Federal income taxes,
minority interest and cumulative effect of accounting change
Insurance operations............................... $ 250.3 $ (36.6) $ 303.1
Investment services................................ 485.7 311.9 224.0
Consolidation/elimination.......................... - .2 (3.1)
----------------- ---------------- -----------------
Subtotal..................................... 736.0 275.5 524.0
Corporate interest expense......................... (65.3) (66.9) (27.9)
----------------- ---------------- -----------------
Total.............................................. $ 670.7 $ 208.6 $ 496.1
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Insurance operations................................................... $ 68,305.9 $ 60,464.9
Investment services.................................................... 13,719.8 13,542.5
Consolidation/elimination.............................................. (403.6) (399.6)
---------------- -----------------
Total.................................................................. $ 81,622.1 $ 73,607.8
================ =================
</TABLE>
F-38
<PAGE>
19) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations for 1997 and 1996, are summarized
below:
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------------------------
March 31 June 30 September 30 December 31
----------------- ----------------- ------------------ ------------------
(In Millions)
<S> <C> <C> <C> <C>
1997
Total Revenues................ $ 1,266.0 $ 1,552.8 $ 1,279.0 $ 1,021.6
================= ================= ================== ==================
Earnings from Continuing
Operations before
Cumulative Effect
of Accounting Change........ $ 117.4 $ 222.5 $ 145.1 $ 39.4
================= ================= ================== ==================
Net Earnings (Loss)........... $ 114.1 $ 223.1 $ 144.9 $ (44.9)
================= ================= ================== ==================
1996
Total Revenues................ $ 1,176.5 $ 1,199.4 $ 1,198.4 $ 1,297.9
================= ================= ================== ==================
Earnings (Loss) from
Continuing Operations
before Cumulative Effect
of Accounting Change........ $ 94.8 $ 87.1 $ 93.2 $ (157.9)
================= ================= ================== ==================
Net Earnings (Loss)........... $ 71.7 $ 87.1 $ 93.2 $ (241.7)
================= ================= ================== ==================
</TABLE>
Net earnings for the three months ended December 31, 1997 includes a
charge of $212.0 million related to additions to valuation allowances
on and writeoffs of real estate of $225.2 million, and reserve
strengthening on discontinued operations of $84.3 million offset by a
reversal of prior years tax reserves of $97.5 million. Net earnings for
the three months ended December 31, 1996 includes a charge of $339.3
million related to writeoffs of DAC on DI contracts of $94.3 million
and reserve strengthenings on DI business of $113.7 million, Pension
Par of $47.5 million and Discontinued Operations of $83.8 million.
20) INVESTMENT IN DLJ
At December 31, 1997, the Company's ownership of DLJ interest was
approximately 34.4%. The Company's ownership interest will be further
reduced upon the issuance of common stock after the vesting of
forfeitable restricted stock units acquired by and/or the exercise of
options granted to certain DLJ employees. DLJ restricted stock units
represents forfeitable rights to receive approximately 5.2 million
shares of DLJ common stock through February 2000.
The results of operations of DLJ are accounted for on the equity basis
and are included in commissions, fees and other income in the
consolidated statements of earnings. The Company's carrying value of
DLJ is included in investment in and loans to affiliates in the
consolidated balance sheets.
F-39
<PAGE>
Summarized balance sheets information for DLJ, reconciled to the
Company's carrying value of DLJ, are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Assets:
Trading account securities, at market value............................ $ 16,535.7 $ 15,728.1
Securities purchased under resale agreements........................... 22,628.8 20,598.7
Broker-dealer related receivables...................................... 28,159.3 16,858.8
Other assets........................................................... 3,182.0 2,318.1
---------------- -----------------
Total Assets........................................................... $ 70,505.8 $ 55,503.7
================ =================
Liabilities:
Securities sold under repurchase agreements............................ $ 36,006.7 $ 29,378.3
Broker-dealer related payables......................................... 25,706.1 19,409.7
Short-term and long-term debt.......................................... 3,670.6 2,704.5
Other liabilities...................................................... 2,860.9 2,164.0
---------------- -----------------
Total liabilities...................................................... 68,244.3 53,656.5
DLJ's company-obligated mandatorily redeemed preferred
securities of subsidiary trust holding solely debentures of DLJ...... 200.0 200.0
Total shareholders' equity............................................. 2,061.5 1,647.2
---------------- -----------------
Total Liabilities, Cumulative Exchangeable Preferred Stock and
Shareholders' Equity................................................. $ 70,505.8 $ 55,503.7
================ =================
DLJ's equity as reported............................................... $ 2,061.5 $ 1,647.2
Unamortized cost in excess of net assets acquired in 1985
and other adjustments................................................ 23.5 23.9
The Holding Company's equity ownership in DLJ.......................... (740.2) (590.2)
Minority interest in DLJ............................................... (729.3) (588.6)
---------------- -----------------
The Company's Carrying Value of DLJ.................................... $ 615.5 $ 492.3
================ =================
</TABLE>
Summarized statements of earnings information for DLJ reconciled to the
Company's equity in earnings of DLJ is as follows:
<TABLE>
<CAPTION>
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Commission, fees and other income...................................... $ 2,356.8 $ 1,818.2
Net investment income.................................................. 1,652.1 1,074.2
Dealer, trading and investment gains, net.............................. 631.6 598.4
---------------- -----------------
Total revenues......................................................... 4,640.5 3,490.8
Total expenses including income taxes.................................. 4,232.3 3,199.5
---------------- -----------------
Net earnings........................................................... 408.2 291.3
Dividends on preferred stock........................................... 12.1 18.7
---------------- -----------------
Earnings Applicable to Common Shares................................... $ 396.1 $ 272.6
================ =================
DLJ's earnings applicable to common shares as reported................. $ 396.1 $ 272.6
Amortization of cost in excess of net assets acquired in 1985.......... (1.3) (3.1)
The Holding Company's equity in DLJ's earnings......................... (156.8) (107.8)
Minority interest in DLJ............................................... (109.1) (73.4)
---------------- -----------------
The Company's Equity in DLJ's Earnings................................. $ 128.9 $ 88.3
================ =================
</TABLE>
F-40
<PAGE>
21) ACCOUNTING FOR STOCK-BASED COMPENSATION
The Holding Company sponsors a stock option plan for employees of
Equitable Life. DLJ and Alliance each sponsor their own stock option
plans for certain employees. The Company has elected to continue to
account for stock-based compensation using the intrinsic value method
prescribed in APB No. 25. Had compensation expense for the Holding
Company, DLJ and Alliance Stock Option Incentive Plan options been
determined based on SFAS No. 123's fair value based method, the
Company's pro forma net earnings for 1997, 1996 and 1995 would have
been:
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C>
Net Earnings:
As Reported............................................. $ 437.2 $ 10.3 $ 312.8
Pro Forma............................................... $ 426.3 $ 3.3 $ 311.3
</TABLE>
The fair value of options granted after December 31, 1994, used as a
basis for the above pro forma disclosures, was estimated as of the date
of grants using the Black-Scholes option pricing model. The option
pricing assumptions for 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
Holding Company DLJ Alliance
------------------------------ ------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
-------------------- --------- ---------- ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividend yield.... 0.48% 0.80% 0.96% 0.86% 1.54% 1.85% 8.00% 8.00% 8.00%
Expected volatility 20.00% 20.00% 20.00% 33.00% 25.00% 25.00% 26.00% 23.00% 23.00%
Risk-free interest
rate............ 5.99% 5.92% 6.83% 5.96% 6.07% 5.86% 5.70% 5.80% 6.00%
Expected life..... 5 years 5 years 5 years 5 years 5 years 5 years 7.6 years 7.43 years 7.43 years
Weighted average
grant-date fair
value per option $12.25 $6.94 $5.90 $22.45 $9.35 $7.36 $4.36 $2.69 $2.24
</TABLE>
F-41
<PAGE>
A summary of the Holding Company, DLJ and Alliance's option plans is as
follows:
<TABLE>
<CAPTION>
Holding Company DLJ Alliance
----------------------------- ----------------------------- -----------------------------
Options Options Options
Outstanding Outstanding Outstanding
Weighted Weighted Weighted
Average Average Average
Shares Exercise Shares Exercise Units Exercise
(In Millions) Price (In Millions) Price (In Millions) Price
--------------- ------------- --------------- ------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of
January 1, 1995........ 6.8 $20.31 - 3.8 $15.46
Granted................ .4 $20.27 9.2 $27.00 1.8 $20.54
Exercised.............. (.1) $20.00 - (.5) $11.20
Expired................ (.1) $20.00 - -
Forfeited.............. (.3) $22.24 - (.3) $16.64
--------------- ------------- ---------------
Balance as of
December 31, 1995...... 6.7 $20.27 9.2 $27.00 4.8 $17.72
Granted................ .7 $24.94 2.1 $32.54 .7 $25.12
Exercised.............. (.1) $19.91 - (.4) $13.64
Expired................ - - -
Forfeited.............. (.6) $20.21 (.2) $27.00 (.1) $19.32
--------------- ------------- ---------------
Balance as of
December 31, 1996...... 6.7 $20.79 11.1 $28.06 5.0 $19.07
Granted................ 3.2 $41.85 3.2 $61.07 1.1 $36.56
Exercised.............. (1.6) $20.26 (.1) $32.03 (.6) $16.11
Forfeited.............. (.4) $23.43 (.1) $27.51 (.2) $21.28
--------------- ------------- ---------------
Balance as of
December 31, 1997...... 7.9 $29.05 14.1 $35.56 5.3 $22.82
=============== ============= ===============
</TABLE>
F-42
<PAGE>
Information about options outstanding and exercisable at December 31,
1997 is as follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------------- ------------------------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices (In Millions) Life (Years) Price (In Millions) Price
--------------------- ----------------- ----------------- --------------- ------------------- ----------------
Holding
Company
----------------------
<S> <C> <C> <C> <C> <C>
$18.125 -$27.75 4.8 5.84 $20.94 3.0 $20.41
$28.50 -$45.25 3.1 9.57 $41.84 - -
----------------- -------------------
$18.125 -$45.25 7.9 7.29 $29.05 3.0 $20.41
================= ================= =============== =================== ================
DLJ
----------------------
$27.00 -$35.99 10.9 8.0 $28.05 4.9 $27.58
$36.00 -$50.99 .8 9.3 $40.04 - -
$51.00 -$76.00 2.4 9.8 $67.77 - -
----------------- -------------------
$27.00 -$76.00 14.1 8.4 $35.56 4.9 $27.58
================= ================= ================ =================== =================
Alliance
----------------------
$ 6.0625 -$17.75 1.1 3.86 $13.20 1.0 $13.04
$19.375 -$19.75 .8 7.34 $19.39 .3 $19.39
$19.875 -$21.375 1.1 8.28 $20.13 .6 $20.19
$22.25 -$27.50 1.3 9.81 $23.81 .4 $23.29
$36.9375 -$37.5625 1.0 9.95 $36.95 - -
----------------- -------------------
$ 6.0625 -$37.5625 5.3 7.58 $22.82 2.3 $17.43
================= ================== ============== ====================== =============
</TABLE>
F-43
<PAGE>
PART C
OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part B.
1. Separate Account No. 301:
- Statements of Assets and Liabilities for the Year Ended
December 31, 1997;
- Statements of Operations for the Year Ended December 31, 1997
- Statements of Changes in Net Assets for the Years Ended
December 31, 1997 and 1996
- Notes to Financial Statements
- Report of Independent Accountants - Price Waterhouse LLP
2. The Equitable Life Assurance Society of the United States:
- Report of Independent Accountants - Price Waterhouse LLP
- Consolidated Balance Sheets as of December 31, 1997 and 1996
- Consolidated Statements of Earnings for Years Ended December 31,
1997, 1996 and 1995
- Consolidated Statements of Equity for Years Ended December 31,
1997, 1996 and 1995
- Consolidated Statements of Cash Flows for Years Ended December
31, 1997, 1996 and 1995
- Notes to Consolidated Financial Statements
(b) Exhibits.
The following exhibits are filed herewith:
1. (a) Resolutions of the Board of Directors of The Equitable Life
Assurance Society of the United States ("Equitable")
authorizing the establishment of the Registrant, previously
filed with this Registration Statement No. 2-74667 on
September 19, 1986.
(b) Resolutions of the Board of Directors of Equitable dated
July 17, 1986 authorizing the reorganization of Separate
Account Nos. 301, 302, 303 and 304 into one continuing
separate account, refiled herewith electronically.
2. Not applicable.
3. (a) Form of Sales Agreement, previously filed with this
Registration Statement No. 2-74667 on September 19, 1986.
(b) Sales Agreement among Equitable, Separate Account No. 301
and Equitable Variable Life Insurance Company, as principal
underwriter for The Hudson River Trust, previously filed
with this Registration Statement No. 2-74667 on April 29,
1993.
C-1
<PAGE>
(c) Distribution and Servicing Agreement among Equico
Securities, Inc.,("Equico") Equitable and Equitable
Variable dated as of May 1, 1994, previously filed with
this Registration Statement No. 2-74667 on April 4, 1995.
(d) Distribution Agreement by and between The Hudson River
Trust and Equico dated as of January 1, 1995, previously
filed with this Registration Statement No. 2-74667 on April
4, 1995.
(e) Sales Agreement among Equico, Equitable and Equitable's
Separate Account A, Separate Account No. 301 and Separate
Account No. 51 dated as of January 1, 1995, previously
filed with this Registration Statement No. 2-74667 on April
4, 1995.
4. (a) (1) Form of group variable annuity contract, as amended
(TSA), previously filed with this Registration
Statement No. 2-74667 on April 24, 1987.
(2) Rider No. PF 94,177 to group variable annuity contract,
as amended (TSA), previously filed with this
Registration Statement No. 2-74667 on April 15, 1988.
(b) (1) Form of group variable annuity certificate, as amended
(TSA), previously filed with this Registration
Statement No. 2-74667 on April 24, 1987.
(2) Rider No. PF 94,178 to group variable annuity
certificate, as amended (TSA), previously filed with
this Registration Statement No. 2-74667 on April 15,
1988.
(c) (1) Rider No. PF 94,189 to group variable annuity contract,
as amended (TSA), previously filed with this
Registration Statement No. 2-74667 on April 17, 1990.
(2) Rider No. PF 94,188 to group variable annuity
certificate, as amended (TSA), previously filed with
this Registration Statement. No. 2-74667 on April 17,
1990.
(d) (1) Form of group variable annuity contract, as amended
(IRA), previously filed with this Registration
Statement No. 2-74667 on April 24, 1987.
(2) Rider No. PF 96,000 to group variable annuity contract,
as amended (IRA), previously filed with this
Registration Statement No. 2-74667 on April 15, 1988.
(3) Rider No. PF 10,000 to group variable annuity contract,
as amended (IRA), previously filed with this
Registration Statement No. 2-74667 on December 14,
1993.
(e) (1) Form of group variable annuity certificate, as amended
(IRA), previously filed with this Registration
Statement No. 2-74667 on April 24, 1987.
(2) Rider No. PF 96,100 to group variable annuity
certificate, as amended (IRA), previously filed with
this Registration Statement No. 2-74667 on April 15,
1988.
C-2
<PAGE>
(3) Rider No. PF 10,001 to group variable annuity
certificate, as amended (IRA), previously filed with
this Registration Statement No. 2-74667 on December 14,
1993.
(f) Plan of Operations, as amended, previously filed with this
Registration Statement No. 2-74667 on April 24, 1987.
5. (a) Form of application for group variable annuity contract, as
amended (TSA), previously filed with this Registration
Statement No. 2-74667 on April 15, 1988.
(b) Form of participant enrollment for group variable annuity
contract, as amended (IRA), previously filed with this
Registration Statement No. 2-74667 on April 15, 1988.
6. (a) Copy of the Restated Charter of The Equitable Life
Assurance Society of the United States, as amended January
1, 1997, previously filed with this Registration Statement
No. 2-74667 on April 24, 1997.
(b) By-Laws of The Equitable Life Assurance Society of the
United States, as amended November 21, 1996, previously
filed with this Registration Statement No. 2-74667 on
April 29, 1997.
C-3
<PAGE>
7. Not applicable.
8. (a) Agreement, dated as of March 15, 1985, between Integrity
Life Insurance Company ("Integrity") and Equitable for
cooperative and joint use of personnel, property and
services, previously filed with this Registration Statement
No. 2-74667 on September 19, 1986.
(b) Administration and Servicing Agreement, dated as of May 1,
1987, by and between Equitable and Integrity, previously
filed with this Registration Statement No. 2-74667 on May
4, 1987.
(c) Amendment, dated September 30, 1988, to Administration and
Servicing Agreement by and between Equitable and Integrity,
previously filed with this Registration Statement No.
2-74667 on April 19, 1989.
9. (a) Opinion of Hebert P. Shyer, Executive Vice President and
General Counsel of Equitable, previously filed with this
Registration Statement No. 2-74667 on November 6, 1983.
(b) Opinion of Hebert P. Shyer, Executive Vice President and
General Counsel of Equitable, as to the legality of the
securities being registered, previously filed with this
Registration Statement No. 2-74667 on April 24, 1987.
10. (a) Consent of Price Waterhouse LLP.
(b) Powers of Attorney.
11. Not applicable.
12. Not applicable.
13. Not applicable.
C-4
<PAGE>
Item 25: Directors and Officers of Equitable.
Set forth below is information regarding the directors and principal
officers of Equitable. Equitable's address is 1290 Avenue of the
Americas, New York, New York 10104. The business address of the
persons whose names are preceded by an asterisk is that of Equitable.
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS EQUITABLE
- ---------------- ---------
DIRECTORS
Francoise Colloc'h Director
AXA-UAP
23, Avenue Matignon
75008 Paris, France
Henri de Castries Director
AXA-UAP
23, Avenue Matignon
75008 Paris, France
Joseph L. Dionne Director
The McGraw-Hill Companies
1221 Avenue of the Americas
New York, NY 10020
Denis Duverne Director
AXA-UAP
23, Avenue Matignon
75008 Paris, France
William T. Esrey Director
Sprint Corporation
P.O. Box 11315
Kansas City, MO 64112
Jean-Rene Fourtou Director
Rhone-Poulenc S.A.
25 Quai Paul Doumer
92408 Courbevoie Cedex,
France
C-5
<PAGE>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH EQUITABLE
- ---------------- --------------
Norman C. Francis Director
Xavier University of Louisiana
7325 Palmetto Street
New Orleans, LA 70125
Donald J. Greene Director
LeBouef, Lamb, Greene & MacRae
125 West 55th Street
New York, NY 10019-4513
John T. Hartley Director
Harris Corporation
1025 NASA Boulevard
Melbourne, FL 32919
John H.F. Haskell, Jr. Director
Dillion, Read & Co., Inc.
535 Madison Avenue
New York, NY 10028
Mary R. (Nina) Henderson Director
Bestfoods Grocery
BESTFOODS
International Plaza
700 Sylvan Avenue
Englewood Cliffs, NJ 07632-9976
W. Edwin Jarmain Director
Jarmain Group Inc.
121 King Street West
Suite 2525
Toronto, Ontario M5H 3T9,
Canada
G. Donald Johnston, Jr. Director
184-400 Ocean Road
John's Island
Vero Beach, FL 32963
C-6
<PAGE>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH EQUITABLE
- ---------------- --------------
George T. Lowy Director
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Didier Pineau-Valencienne Director
Schneider S.A.
64/70 Avenue Jean-Baptiste Clement
92646 Boulogne-Billancourt Cedex
France
George J. Sella, Jr. Director
P.O. Box 397
Newton, NJ 07860
Dave H. Williams Director
Alliance Capital Management Corporation
1345 Avenue of the Americas
New York, NY 10105
OFFICER-DIRECTORS
- -----------------
*Michael Hegarty President, Chief Operating Officer
and Director
*Edward D. Miller Chairman of the Board and Chief
Executive Officer
*Stanley B. Tulin Vice Chairman of the Board, Chief
Financial Officer and Director
OTHER OFFICERS
- --------------
*Leon Billis Executive Vice President and
Chief Information Officer
*Harvey Blitz Senior Vice President and Deputy
Chief Financial Officer
*Kevin R. Byrne Senior Vice President and
Treasurer
*Alvin H. Fenichel Senior Vice President and
Controller
C-7
<PAGE>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH EQUITABLE
- ---------------- --------------
*Paul J. Flora Senior Vice President and Auditor
*Robert E. Garber Executive Vice President and General
Counsel
*Jerome S. Golden Executive Vice President
*John D. Goodwin Vice President
*Mark A. Hug Senior Vice President
*Donald R. Kaplan Vice President and Chief Compliance
Officer and Associate General
Counsel
*Michael S. Martin Senior Vice President and Chief
Marketing Officer
*Douglas Menkes Senior Vice President and Corporate
Actuary
*Peter D. Noris Executive Vice President and Chief
Investment Officer
*Anthony C. Pasquale Senior Vice President
*Pauline Sherman Vice President, Secretary and
Associate General Counsel
*Samuel B. Shlesinger Senior Vice President
*Richard V. Silver Senior Vice President and Deputy
General Counsel
*Jose Suquet Executive Vice President and Chief
Distribution Officer
*Naomi J. Weinstein Vice President
*Maureen K. Wolfson Vice President
C-8
<PAGE>
Item 26. Persons Controlled by or Under Common Control with Equitable or
Registrant
Separate Account No. 301 of The Equitable Life Assurance Society of
the United States (the "Separate Account") is a separate account of Equitable.
Equitable, a New York stock life insurance company, is a wholly owned
subsidiary of The Equitable Companies Incorporated (the "Holding Company"), a
publicly traded company.
The largest stockholder of the Holding Company is AXA-UAP. As of
December 31, 1997, AXA-UAP beneficially owned 58.7% of the outstanding common
stock of the Holding Company (assuming conversion of the convertible preferred
stock held by AXA-UAP). Under its investment arrangements with Equitable Life
and the Holding Company, AXA-UAP is able to exercise significant influence over
the operations and capital structure of the Holding Company and its
subsidiaries, including Equitable Life. AXA-UAP, a French company, is the
holding company for an international group of insurance and related financial
services companies.
C-9
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
The Equitable Companies Incorporated (l991) (Delaware)
Donaldson, Lufkin & Jenrette, Inc. (1993) (Delaware) (41.8%) (See
Addendum B(1) for subsidiaries)
The Equitable Life Assurance Society of the United States (1859)
(New York) (a)(b)
The Equitable of Colorado, Inc. (l983) (Colorado)
EVLICO, INC. (1995) (Delaware)
EVLICO East Ridge, Inc. (1995) (California)
GP/EQ Southwest, Inc. (1995) (Texas) (5.885%)
Franconom, Inc. (1985) (Pennsylvania)
Frontier Trust Company (1987) (North Dakota)
Gateway Center Buildings, Garage, and Apartment Hotel, Inc.
(inactive) (pre-l970) (Pennsylvania)
Equitable Deal Flow Fund, L.P.
Equitable Managed Assets (Delaware)
EREIM LP Associates (99%)
EML Associates, L.P. (19.8%)
Alliance Capital Management L.P. (2.7% limited partnership
interest)
ACMC, Inc. (1991) (Delaware)(s)
Alliance Capital Management L.P. (1988) (Delaware)
(39.6% limited partnership interest)
EVCO, Inc. (1991) (New Jersey)
EVSA, Inc. (1992) (Pennsylvania)
Prime Property Funding, Inc. (1993) (Delaware)
Wil Gro, Inc. (1992) (Pennsylvania)
Equitable Underwriting and Sales Agency (Bahamas) Limited (1993)
(Bahamas)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-10
<PAGE>
The Equitable Companies Incorporated (cont.)
Donaldson Lufkin & Jenrette, Inc.
The Equitable Life Assurance Society of the United States (cont.)
Fox Run Inc. (1994) (Massachusetts)
STCS, Inc. (1992) (Delaware)
CCMI Corporation (1994) (Maryland)
FTM Corporation (1994) (Maryland)
HVM Corporation (1994) (Maryland)
Equitable BJVS, Inc. (1992) (California)
Equitable Rowes Wharf, Inc. (1995) (Massachusetts)
GP/EQ Southwest, Inc. (1995) (Texas) (94.132%)
Camelback JVS, Inc. (1995) (Arizona)
ELAS Realty, Inc. (1996) (Delaware)
100 Federal Street Realty Corporation (Massachusetts)
Equitable Structured Settlement Corporation (1996) (Delaware)
Prime Property Funding II, Inc. (1977) (Delaware)
Sarasota Prime Hotels, Inc. (1977) (Florida)
ECLL, Inc. (1977) (Michigan)
Equitable Holdings, LLC (1997) (New York) (into which Equitable
Holding Corporation was merged in 1997)
EQ Financial Consultants, Inc. (formerly
Equico Securities, Inc.) (l97l) (Delaware) (a) (b)
ELAS Securities Acquisition Corp. (l980) (Delaware)
100 Federal Street Funding Corporation (Massachusetts)
EquiSource of New York, Inc. (1986) (New York) (See
Addendum A for subsidiaries)
Equitable Casualty Insurance Company (l986) (Vermont)
EREIM LP Corp. (1986) (Delaware)
EREIM LP Associates (1%)
EML Associates (.02%)
Six-Pac G.P., Inc. (1990) (Georgia)
Equitable Distributors, Inc. (1988) (Delaware) (a)
(a) Registered Broker/Dealer b) Registered Investment Advisor
C-11
<PAGE>
The Equitable Companies Incorporated (cont.)
Donaldson Lufkin & Jenrette, Inc.
The Equitable Life Assurance Society of the United States (cont.)
Equitable Holdings, LLC (cont.)
Equitable JVS, Inc. (1988) (Delaware)
Astor/Broadway Acquisition Corp. (1990) (New York)
Astor Times Square Corp. (1990) (New York)
PC Landmark, Inc. (1990) (Texas)
Equitable JVS II, Inc. (1994) (Maryland)
EJSVS, Inc. (1995) (New Jersey)
Donaldson, Lufkin & Jenrette, Inc. (1985 by EIC; 1993 by EQ and
EHC) (Delaware) (34.4%) (See Addendum B(1) for
subsidiaries)
JMR Realty Services, Inc. (1994) (Delaware)
Equitable Investment Corporation (l97l) (New York)
Stelas North Carolina Limited Partnership (50% limited
partnership interest) (l984)
Equitable JV Holding Corporation (1989) (Delaware)
Alliance Capital Management Corporation (l991) (Delaware) (b)
(See Addendum B(2) for subsidiaries)
Equitable Capital Management Corporation (l985) (Delaware) (b)
Alliance Capital Management L.P. (1988) (Delaware)
(14.6% limited partnership interest)
EQ Services, Inc. (1992) (Delaware)
EREIM Managers Corp. (1996) (Delaware)
ML/EQ Real Estate Portfolio, L.P.
EML Associates, L.P.
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-12
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
ADDENDUM A - SUBSIDIARY
OF EQUITABLE HOLDINGS, LLC
HAVING MORE THAN FIVE SUBSIDIARIES
----------------------------------------------------
EquiSource of New York, Inc. (formerly Traditional Equinet Business Corporation
of New York) has the following subsidiaries that are brokerage companies to
make available to Equitable Agents within each state traditional (non-equity)
products and services not manufactured by Equitable:
EquiSource of Alabama, Inc. (1986) (Alabama)
EquiSource of Arizona, Inc. (1986) (Arizona)
EquiSource of Arkansas, Inc. (1987) (Arkansas)
EquiSource Insurance Agency of California, Inc. (1987) (California)
EquiSource of Colorado, Inc. (1986) (Colorado)
EquiSource of Delaware, Inc. (1986) (Delaware)
EquiSource of Hawaii, Inc. (1987) (Hawaii)
EquiSource of Maine, Inc. (1987) (Maine)
EquiSource Insurance Agency of Massachusetts, Inc. (1988) (Massachusetts)
EquiSource of Montana, Inc. (1986) (Montana)
EquiSource of Nevada, Inc. (1986) (Nevada)
EquiSource of New Mexico, Inc. (1987) (New Mexico)
EquiSource of Pennsylvania, Inc. (1986) (Pennsylvania)
EquiSource Insurance Agency of Utah, Inc. (1986) (Utah)
EquiSource of Washington, Inc. (1987) (Washington)
EquiSource of Wyoming, Inc. (1986) (Wyoming)
C-13
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
ADDENDUM B - INVESTMENT SUBSIDIARIES
HAVING MORE THAN FIVE SUBSIDIARIES
--------------------------------------------
Donaldson, Lufkin & Jenrette, Inc. has the following subsidiaries, and
approximately 150 other subsidiaries, most of which are special purpose
subsidiaries (the number fluctuates according to business needs):
Donaldson, Lufkin & Jenrette, Securities Corporation (1985)
(Delaware) (a) (b)
Wood, Struthers & Winthrop Management Corp. (1985) (Delaware) (b)
Autranet, Inc. (1985) (Delaware) (a)
DLJ Real Estate, Inc.
DLJ Capital Corporation (b)
DLJ Mortgage Capital, Inc. (1988) (Delaware)
Column Financial, Inc. (1993) (Delaware) (50%)
Alliance Capital Management Corporation (as general partner) (b)has the
following subsidiaries:
Alliance Capital Management L.P. (1988) (Delaware) (b)
Alliance Capital Management Corporation of Delaware, Inc.
(Delaware)
Alliance Fund Services, Inc. (Delaware) (a)
Alliance Fund Distributors, Inc. (Delaware) (a)
Alliance Capital Oceanic Corp. (Delaware)
Alliance Capital Management Australia Pty. Ltd. (Australia)
Meiji - Alliance Capital Corp. (Delaware) (50%)
Alliance Capital (Luxembourg) S.A. (99.98%)
Alliance Eastern Europe Inc. (Delaware)
Alliance Barra Research Institute, Inc. (Delaware) (50%)
Alliance Capital Management Canada, Inc. (Canada) (99.99%)
Alliance Capital Management (Brazil) Llda
Alliance Capital Global Derivatives Corp. (Delaware)
Alliance International Fund Services S.A. Luxembourg)
Alliance Capital Management (India) Ltd. (Delaware)
Alliance Capital Mauritius Ltd.
Alliance Corporate Finance Group, Incorporated (Delaware)
Equitable Capital Diversified Holdings, L.P. I
Equitable Capital Diversified Holdings, L.P. II
Curisitor Alliance L.L.C. (Delaware)
Curisitor Holdings Limited (UK)
Alliance Capital Management (Japan), Inc.
Alliance Capital Management (Asia) Ltd.
Alliance Capital Management (Turkey), Ltd.
Cursitor Alliance Management Limited (UK)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-14
<PAGE>
AXA-UAP GROUP CHART
The information listed below is dated as of December 31, 1997; percentages
shown represent voting power. The name of the owner is noted when AXA-UAP
indirectly controls the company.
AXA-UAP INSURANCE AND REINSURANCE BUSINESS HOLDING
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA Assurances Iard France 100% by AXA France Assurance
AXA Assurances Vie France 100% by AXA France Assurance
AXA Courtage Iard France 97.4% by AXA France Assurance
and UAP Iard
AXA Courtage Vie France 100% by AXA France Assurance
Alpha Assurances Vie France 100% by AXA France Assurance
AXA Direct France 100%
Direct Assurances Iard France 100% by AXA Direct
Direct Assurance Vie France 100% by AXA Direct
AXA Tellit Versicherung Germany 50% owned by AXA Direct and
50% by CKAG
Axiva France 100% by AXA France Assurance
Juridica France 88.4% by UAP Iard, 10.9% by
AXA France Assurance
AXA Assistance France France 100% by AXA Assistance SA
Monvoisin Assurances France 99.9% by different companies
and Mutuals
Societe Beaujon France 100%
Lor Finance France 100%
Jour Finance France 100% by AXA Conseil Iard and
by AXA Assurances Iard
Financiere 45 France 99.8%
Mofipar France 100%
Compagnie Auxiliaire pour le France 99.8% by Societe Beaujon
Commerce and l'Industrie
C.F.G.A. France 99.96% owned by Mutuals and
Finaxa
AXA Global Risks France 100% owned by AXA France
Assurance, UAP Iard and
Mutuals
Argovie France 100% by Axiva and SCA Argos
C-15
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Astral Finance France 99.33% by AXA Courtage Vie
Argos France N.S.
AXA France Assurance France 100%
UAP Incendie Accidents France 100% by AXA France
Assurance
UAP Vie France 100% by AXA France
Assurance
UAP Collectives France 50% by AXA Assurances
Iard, 3.3% by AXA Conseil
Iard and 46.6% UAP Vie
Thema Vie France 30% by Axiva, 11.9% by
UAP Collectives, 10.9% by
UAP Iard and 46.8% by UAP Vie.
La Reunion Francaise France 49% by UAP Iard and 51% by
AXA Global Risks
UAP Assistance France 52% by UAP Incendie-Accidents
and 48% by UAP Vie
UAP International France 50.1% by AXA-UAP and 49.9% by
AXA Global Risks
Sofinad France 100%
AXA-Colonia Konzern AG (AXA-
CKAG) Germany 39.7% by Vinci BV, 25.6% by
Kolnische Verwaltungs and
5.5% by AXA-UAP
Finaxa Belgium Belgium 100%
AXA Belgium Belgium 27.1% by AXA-UAP and 72.6%
by Finaxa Belgium
De Kortrijske Verzekering Belgium 99.8% by AXA Belgium
Juris Belgium 100% owned by Finaxa Belgium
Royale Vendome Belgium 49% by AXA-UAP and 20.2% by
AXA Global Risks
Royale Belge Belgium 51.2% by Royale Vendome and
9.5% by different companies
of the Group
Royale Belge 1994 Belgium 97.9% by Royale Belge and 2%
by UAB
UAB Belgium 99.9% by Royale Belge
Ardenne Prevoyante Belgium 99.4% by Royale Belge
GB Lex Belgium 55% by Royale Belge, 25% by
Royale Belge 1994, 10% by
Juridica and 10% by AXA
Conseil Assurance
Royale Belge Re Belgium 99.9% by Royale Belge
Parcolvi Belgium 100% by Vinci Belgium
Vinci Belgium Belgium 99.5% by Vinci BV
Finaxa Luxembourg Luxembourg 100%
AXA Assurance IARD Luxembourg Luxembourg 99.9%
AXA Assurance Vie Luxembourg Luxembourg 99.9%
Royale UAP Luxembourg 100% by Royale Belge
Paneurolife Luxembourg 90% by different companies of
the AXA-UAP Group
Paneurore Luxembourg 90% by different companies of
the AXA-UAP Group
Crealux Luxembourg 100% by Royale Belge
Futur Re Luxembourg 100% by AXA Global Risks
General Re-CKAG Luxembourg 37.8% by AXA-CKAG and 12.1%
by Colonia Nordstern
Versicherung
Royale Belge Investissements Luxembourg 100% by Royale Belge
AXA Aurora Spain 30% owned by AXA-UAP and 40%
by UAP International
Aurora Polar SA de Seguros y Spain 99.4% owned by AXA Aurora
Reaseguros
Aurora Vida SA de Seguros y Spain 90% owned by Aurora Polar and
Reaseguros 5% by AXA-UAP
AXA Gestion de Seguros y Spain 99.1% owned by AXA Aurora
Reaseguros
Hilo Direct Seguros Spain 71.4% by AXA Aurora
Ayuda Legal Spain 59% owned by Aurora Polar,
29% by AXA Gestion and 12%
by Aurora Vida
UAP Iberica Spain 100% by UAP International
General Europea (GESA) Spain 100% by Societe Generale
d'Assistance
AXA Assicurazioni Italy 100%
Eurovita Italy 30% owned by AXA Assicurazioni
Gruppo UAP Italia (GUI) Italy 97% by UAP International and
3% by UAP Vie
UAP Italiana Italy 96% by AXA-UAP and 4% by GUI
UAP Vita Italy 62.2% by GUI and 37.8% by UAP
Vie
Allsecures Assicurazioni Italy 90% by GUI and 10% by UAP
Italiana
Allsecures Vita Italy 92.9% by GUI and 7% by AXA-UAP
Centurion Assicurazioni Italy 100% by GUI
AXA Equity & Law plc U.K. 100%
AXA Equity & Law Life U.K. 100% by SLPH
Assurance Society
AXA Insurance U.K. 100% owned by SLPH
AXA Global Risks U.K. 51% owned by AXA Global
Risks (France) and 49% by
AXA Courtage IARD
Sun Life and Provincial U.K. 71.6% by AXA-UAP and AXA
Holdings (SLPH) Equity & Law Plc
Sun Life Corporation Plc U.K. 100% by AXA Sun Life Holding
Sun Life Assurance U.K. 100% by AXA Sun Life Holding
UAP Provincial Insurance U.K. 100% by SLPH
English & Scottish U.K. 100% by AXA UK
Servco U.K. 100% by AXA Sun Life Holding
AXA Sun Life U.K. 100% by AXA Sun Life Holding
AXA Leven The Nether- 100% by AXA Equity & Law Life
lands Assurance Society
UAP Nieuw Rotterdam The Nether- 51% by Royale Belge, 38.9% by
Holding BV lands Gelderland BV and 4.1% by
AXA-UAP
UNIROBE Groep BV The Nether- 100% by UAP Nieuw Rotterdam
lands Holding BV
UAP Nieuw Rotterdam Verzkerigen The Nether- 100% by UAP Nieuw Rotterdam
lands Holding BV
UAP Nieuw Rotterdam Schade The Nether- 100% by UAP Nieuw Rotterdam
lands Verzekerigen
UAP Nieuw Rotterdam Leven The Nether- 100% by UAP Nieuw Rotterdam
lands Verzekerigen
UAP Nieuw Rotterdam Zorg The Nether- 100% by UAP Nieuw Rotterdam
lands Schade
Societe Generale d'Assistance The Nether- 51% by UAP Incendie-Accidents,
lands 29% by UAP Vie and 20% by
AXA-UAP
Gelderland BV The Nether- 100% by UAP Vie
lands
Royale Belge International The Nether- 100% by Royale Belge
lands Investissements
Vinci BV The Nether- 94.8% by AXA-UAP and 5.2% by
lands Parcolvi
AXA Portugal Companhia de Portugal 43.1% by different companies
Serguros SA of the AXA-UAP Group
AXA Portugal Companhia de Portugal 95.1% by UAP Vie and 7.5% UAP
Serguros de Vida SA International
Union UAP Switzerland 99.9% by UAP International
Union UAP Vie Switzerland 95% by UAP International
AXA Oyak Hayat Sigorta Turkey 60% owned by AXA-UAP
Oyak Sigorta Turkey 11% owned by AXA-UAP
Al Amane Assurances Morocco 52% by UAP International
AXA Canada Inc. Canada 100%
AXA Boreal Insurance Inc. Canada 100% owned by Gestion Fracapar
Inc
AXA Assurances Inc Canada 100% owned by AXA Canada Inc
C-16
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA Insurance Inc Canada 100% owned by AXA Canada Inc.
and AXA Assurance Inc
Anglo Canada General Insurance Canada 100% owned by AXA Canada Inc.
Cy
AXA Pacific Insurance Cy Canada 100% by AXA Boreal Insurance
Inc
AXA Boreal Assurances Canada 100% by AXA Boreal Insurance
Agricoles Inc Inc
AXA Life Insurance Japan 100%
Dongbu AXA Life Korea 50%
Insurance Co. Ltd.
Sime AXA Berhad Malaysia 30% owned by AXA-UAP and
AXA Reassurance
AXA Investment Holdings Pte Ltd Singapore 100%
AXA Insurance Singapore 100% owned by AXA Investment
Holdings Pte Ltd
AXA Insurance Hong Kong 100% owned by AXA Investment
Holdings Pte Ltd
AXA Life Insurance Hong Kong 100%
PT Asuransi AXA Indonesia Indonesia 80%
The Equitable Companies U.S.A. 58.7% of which AXA-UAP owns
Incorporated 42.0%, Financiere 45, 3.2%,
Lorfinance 6.4%, AXA Equity
& Law Life Association Society
4.1% and AXA Reassurance 3.0%
The Equitable Life Assurance U.S.A. 100% owned by The Equitable
Society of the United States Companies Incorporated
(ELAS)
National Mutual Holdings Ltd Australia 51% between AXA-UAP, 42.1%
and AXA Equity & Law Life
Assurance Society 8.9%
The National Mutual Life Australia 100% owned by National Mutual
Association of Australasia Ltd Holdings Ltd
National Mutual International Australia 100% owned by National Mutual
Pty Ltd Holdings Ltd
National Mutual (Bermuda) Ltd Australia 100% owned by National Mutual
International Pty Ltd
National Mutual Asia Ltd Australia 41% owned by National Mutual
Holdings Ltd, 20% by Datura
Ltd and 13% by National Mutual
Life Association of
Australasia
Australian Casualty & Life Ltd Australia 100% owned by National Mutual
Holdings Ltd
National Mutual Health Australia 100% owned by National Mutual
Insurance Pty Ltd Holdings Ltd
C-17
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA Reassurance France 100% owned by AXA-UAP, AXA
Assurances Iard and AXA Global
Risks
AXA Re Finance France 79% owned by AXA Reassurance
AXA Cessions France 100%
AXA Re Asia Singapore 100% owned by AXA Reassurance
AXA Re U.K. Plc U.K. 100% owned by AXA Re U.K.
Holding
AXA Re U.K. Holding U.K. 100% owned by AXA Reassurance
AXA Re U.S.A. U.S.A. 100% owned by AXA America
AXA America U.S.A. 100% owned by AXA Reassurance
AXA Space U.S.A. 80% owned by AXA America
AXA Re Life U.S.A. 100% owned by AXA America
C.G.R.M. Monaco 100% owned by AXA Reassurance
C-18
<PAGE>
AXA-UAP FINANCIAL BUSINESS
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Compagnie Financiere de Paris France 97.2% (100% with Mutuals)
(C.F.P.)
AXA Banque France 98.7% owned by C.F.P.
AXA Credit France 65% owned by C.F.P.
AXA Gestion Interessement France 100% owned by AXA Investment
Managers
Sofapi France 100% owned by C.F.P.
Soffim France 100% owned by C.F.P.
Societe de Placements France 98.8% with Mutuals
Selectionnes S.P.S.
Presence et Initiative France 100% with Mutuals
Vamopar France 100% owned by Societe Beaujon
Financiere Mermoz France 100%
AXA Investment Managers France 100% by some AXA-UAP Group
companies
AXA Asset Management France 100% owned by AXA Investment
Partenaires Managers
AXA Investment Managers Paris France 100% owned by AXA Investment
Managers
AXA Asset Management France 99.6% owned by AXA Investment
Distribution Managers
UAP Gestione Financiere France 99.9 by AXA-UAP
Assurinvestissements France 50% by UAP Vie, 30% UAP
Collectives, 20% UAP
Incendie-Accidents
Banque Worms France 51% by CFP and 49% by
three UAP insurance companies
Colonia Bausbykasse Germany 97.8% by AXA-CKAG
Banque Ippa Belgium 99.9% by Royale Belge
Banque Bruxelles Lambert Belgium 9.3% by Royale Belge, 3.1%
Royale Belge 1994, 0.2% by
AXA Belgium
AXA Equity & Law Home Loans U.K. 100% owned by AXA Equity & Law
Plc
AXA Equity & Law Commercial U.K. 100% owned by AXA Equity & Law
Loans Plc Loans
Sun Life Asset Management U.K. 66.7% owned by SLPH and 33.4%
by AXA Asset Management Ltd.
C-19
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Alliance Capital Management U.S.A. 57.9% held by ELAS
Donaldson Lufkin & Jenrette U.S.A. 76.2% owned by Equitable
Holdings LLC and ELAS
National Mutual Funds Australia 100% owned by National
Management (Global) Ltd Mutual Holdings Ltd
National Mutual Funds USA 100% by National Mutual Funds
Management North America Management (Global) Ltd.
Holding Inc.
Cogefin Luxembourg 100% owned by AXA Belgium
ORIA France 100% owned by AXA Millesimes
AXA Oeuvres d'Art France 100% by Mutuals
AXA Cantenac Brown France 100%
AXA Suduiraut France 99.6% owned by AXA-UAP and
Societe Beaujon
C-20
<PAGE>
AXA-UAP REAL ESTATE BUSINESS
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Prebail France 100% owned by AXA Immobilier
Axamur France 100% by different companies
and Mutuals
Parimmo France 100% by different companies
and Mutuals
S.G.C.I. France 100% by different companies
and Mutuals
Transaxim France 100% owned by S.G.C.I. and
C.P.P.
Compagnie Parisienne de France 100% owned by S.G.C.I.
Participations (C.P.P.)
Monte Scopeto France 100% owned by C.P.P.
Matipierre France 100% by different companies
Securimo France 87.12% by different companies
and Mutuals
Paris Orleans France 100% by different companies
AXA Courtage Iard
Colisee Bureaux France 100% by different companies
and Mutuals
Colisee Premiere France 100% by different companies
and Mutuals
Colisee Laffitte France 100% by Colisee Bureaux
Fonciere Carnot Laforge France 100% by Colisee Premiere
Parc Camoin France 100% by Colisee Premiere
Delta Point du Jour France 100% owned by Matipierre
Paroi Nord de l'Arche France 100% owned by Matipierre
Falival France 100% owned by AXA Reassurance
Compagnie du Gaz d'Avignon France 100% owned by AXA Assurances
Iard
Ahorro Familiar France 44% owned by AXA Assurances
Iard, 1% by AXA Aurora Polar
and 1% by AXA Seguros
Fonciere du Val d'Oise France 100% owned by C.P.P.
Sodarec France 100% owned by C.P.P.
C-21
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Centrexpo France 99.3% owned by C.P.P.
Fonciere de la Ville du Bois France 99.6% owned by Centrexpo
Colisee Seine France 100% owned by different
companies
Translot France 100% owned by SGCI
Colisee Alpha France 100% owned by Colisee Bureaux
Colisee Silly France 100% owned by Colisee Bureaux
S.N.C. Dumont d'Urville France 100% owned by Colisee Premiere
Colisee Federation France 100% by SGCI
Colisee Saint Georges France 100% by SGCI
Drouot Industrie France 50% by SGCI and 50% by Axamur
Colisee Vauban France 99.6% by Matipierre
Fonciere Colisee France 100% by Matipierre and other
companies of the AXA-UAP Group
AXA Pierre S.C.I. France 97.6% owned by different
companies and Mutuals
AXA Millesimes France 85.4% owned by AXA-UAP and the
Mutuals
Chateau Suduirault France 100% owned by AXA Millesimes
Diznoko Hungary 95% owned by AXA Millesimes
Compagnie Fonciere Matignon France 100% by different companies
and Mutuals
Fidei France 20.7% owned by C.F.P. and
10.8% by Axamur
Fonciere Saint Sebastien France 99.9% by UAP Vie
Fonciere Vendome France 91% by different companies of
the Group
La Holding Vendome France 99.9% by AXA Global Risks
10, boulevard Haussmann France 69% by La Fonciere Vendome and
31% by AXA Conseil Iard
37-39 Le Peletier France 100% by AXA Courage Iard
Ugici France 100% by different companies of
the AXA-UAP Group of which
93.1% by UAP Vie
Ugicomi France 100% by different companies of
the AXA-UAP Group of which
63.8% by UAP Vie
Ugif France 100% by different companies of
the AXA-UAP Group of which
59.6% by UAP Vie and 32.6%
by UAP Collectives
Ugil France 93.9% by different companies
of the AXA-UAP Group of which
65.8% by UAP Vie
Ugipar France 100% by different companies
of the AXA-UAP Group of which
39.4% by UAP Vie, 35.4% by AXA
Courtage Iard and 20.8% by UAP
Collectives
AXA Immobiller France 100% by AXA UAP
Quinta do Noval Vinhos S.A. Portugal 99.6% owned by AXA Millesimes
C-22
<PAGE>
OTHER AXA-UAP BUSINESS
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
A.N.F. France 95.4% owned by Finaxa
Lucia France 20.6% owned by AXA Assurances
Iard and 8.6% by Mutuals
Schneider S.A. France 10.4%
C-23
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
NOTES
-----
1. The year of formation or acquisition and state or country of incorporation
of each affiliate is shown.
2. The chart omits certain relatively inactive special purpose real estate
subsidiaries, partnerships, and joint ventures formed to operate or
develop a single real estate property or a group of related properties,
and certain inactive name-holding corporations.
3. All ownership interests on the chart are 100% common stock ownership
except: (a) The Equitable Companies Incorporated's 41.8% interest in
Donaldson, Lufkin & Jenrette, Inc. and Equitable Holdings, LLC's
34.4% interest in same; (b) as noted for certain partnership interests;
(c) Equitable Life's ACMC, Inc.'s and Equitable Capital Management
Corporation's limited partnership interests in Alliance Capital Management
L.P.; and (d) as noted for certain subsidiaries of Alliance Capital
Management Corp. of Delaware, Inc.
4. The operational status of the entities shown as having been formed or
authorized but "not yet fully operational" should be checked with the
appropriate operating areas, especially for those that are start-up
situations.
5. The following entities are not included in this chart because, while they
have an affiliation with The Equitable, their relationship is not the
ongoing equity-based form of control and ownership that is characteristic
of the affiliations on the chart, and, in the case of the first entity,
it is under the direction of at least a majority of "outside" trustees:
The Hudson River Trust
EQ Advisors Trust
Separate Accounts
6. This chart was last revised on April 1, 1998.
C-24
<PAGE>
Item 27. Number of Contractowners
As of March 31, 1998 qualified annuity contracts covering 4,296
participants had been issued by the registrant.
Item 28. Indemnification
(a) Indemnification of Principal Underwriter: to the extent permitted
by law of the State of New York and subject to all applicable
requirements thereof, Equitable undertook to indemnify each of
its directors and officers who is made or threatened to be made a
party to any action or proceeding, whether civil or criminal, by
reason of the fact that he, his testator or intestate, is or was
a director or officer of Equitable.
(b) Undertaking: insofar as indemnification for liability arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Item 29. Principal Underwriters
(a) EQ Financial Consultants, Inc. ("EQ Financial") (formerly Equico
Securities, Inc.), a wholly-owned subsidiary of Equitable, is
the principal underwriter and depositor for its Separate Account
No. 301, Separate Account A, Separate Account I and Separate
Account FP. EQ Financial's principal business address is 1290
Avenue of the Americas, NY, NY 10104.
(b) See Item 25.
(c) Not applicable.
C-25
<PAGE>
Item 30. Location of Accounts and Records
The records required to be maintained by Section 31(a) of the Company
Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are maintained by
Equitable at: 200 Plaza Drive, Secaucus, New Jersey 07094; 1290 Avenue of the
Americas, New York, New York 10104; and 135 West 50th Street, New York, New
York 10020.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement
as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more
than 16 months old for so long as payments under the variable
annuity contracts may be accepted;
(b) to include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included
in the prospectus that the applicant can remove to send for a
Statement of Additional Information;
(c) to deliver any Statement of Additional Information and any
financial statements required to be made available under this
Form promptly upon written or oral request; and
(d) Equitable represents that the fees and charges deducted under
the Contract described in this Registration Statement, in the
aggregate, are reasonable in relation to the services rendered,
the expenses to be incurred, and the risks assumed by Equitable
under the Contract. Equitable bases its representation on its
assessment of all of the facts and circumstances, including such
relevant factors as: the nature and extent of such services,
expenses and risks, the need for Equitable to earn a profit, the
degree to which the Contract includes 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 Contracts sold pursuant to this Registration
Statement, including those sold on the terms specifically
described in the prospectuses contained herein, or any
variations therein, based on supplements, endorsements, data
pages or riders to any Contract or prospectus, or otherwise.
The Registrant hereby represents that it is relying on the November
28, 1988 no-action letter (Ref. No. IP-6-88) relating to variable annuity
contracts offered as funding vehicles for retirement plans meeting the
requirements of Section 403(b) of the Internal Revenue Code. Registrant further
represents that it complies with the provisions of paragraphs (1) - (4) of that
letter.
C-26
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness of this amended Registration
Statement and has caused this amended Registration Statement to be signed on
its behalf in the City and State of New York, on this 30th day of April, 1998.
SEPARATE ACCOUNT NO. 301 OF
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
(Registrant)
By: The Equitable Life Assurance
Society of the United States
By: /s/ Maureen K. Wolfson
---------------------------
Maureen K. Wolfson
Vice President
C-27
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Depositor certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness of this amended Registration
Statement and has caused this amended Registration Statement to be signed on
its behalf, in the City and State of New York, on the 30th day of April, 1998.
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
(Depositor)
By: /s/ Maureen K. Wolfson
--------------------------
Maureen K. Wolfson
Vice President
As required by the Securities Act of 1933, this amended 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, Chief Executive
Officer and Director
*Michael Hegarty President, Chief Operating Officer
and Director
PRINCIPAL FINANCIAL OFFICER:
*Stanley B. Tulin Vice Chairman of the Board, Chief
Financial Officer and Director
PRINCIPAL ACCOUNTING OFFICER:
/s/ Alvin H. Fenichel
- ---------------------
Alvin H. Fenichel Senior Vice President and
April 30, 1998 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.
William T. Esrey Mary R. (Nina) Henderson Stanley B. Tulin
Jean-Rene Fourtou W. Edwin Jarmain Dave H. Williams
Norman C. Francis G. Donald Johnston, Jr.
*/s/ Maureen K. Wolfson
- ----------------------
Maureen K. Wolfson
Attorney-in-Fact
April 30, 1998
C-28
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. PAGE NO.
- ----------- --------
1.(b) Resolutions dated July 17, 1986 re Reorganization
of Separate Account Nos. 301-304
10.(a) Consent of Price Waterhouse LLP.
10.(b) Powers of Attorney.
C-29
<PAGE>
EXHIBIT 1A
The undersigned, Kevin Keefe, Vice President and Assistant Secretary
of The Equitable Life Assurance Society of the United States, does hereby
certify that at a meeting of the Board of Directors held on July 17, 1986,
at which a quorum was present, the resolution attached hereto, upon motion
duly made, seconded and carried, was unanimously adopted.
I further certify that the aforesaid resolution has not been in any
way modified or rescinded as of this date.
Dated: September 18, 1986
/s/ Kevin Keefe
----------------------
<PAGE>
OFFICIAL NOTICE
Bd. Res. 55-86, adopted by
Board of Directors
July 17, 1986
/s/ B.H. Walker
----------------------
Vice President and Secretary
RESOLUTIONS RE
REORGANIZATION OF SEPARATE ACCOUNTS NOS. 301-304
------------------------------------------------
WHEREAS, it has been recommended (i) that Equitable reorganize Separate
Accounts Nos. 301-304 (the "Separate Accounts") into one separate account
organized as a unit investment trust ("UIT") with an underlying mutual fund
(the "Fund"), (ii) that POA's existing group variable annuity contracts
for the IRA and TSA markets (the "Contracts") currently being funded through
the Separate Accounts be funded through the UIT, and (iii) that Integrity Life
Insurance Company ("Integrity") perform administrative, recordkeeping and
investment advisory functions for the Contracts and the UIT now being
performed by POA, all as more fully set forth in the memorandum dated July 1,
1986, from Senior Vice President Hart and Integrity President Maisano to
Executive Vice President and Chief Investment Officer Walsh and Executive Vice
President Wilde, submitted to and filed with the records of this meeting;
NOW, THEREFORE, BE IT
RESOLVED, That the proposed reorganization of the Separate Accounts, as
set forth in the memorandum of Senior Vice President Hart and Integrity
President Maisano, is hereby authorized and approved; and
FURTHER RESOLVED, That all matters contemplated by the reorganization,
including but not limited to:
1) the combination of the Separate Accounts into one separate account
organized as a UIT,
2) the investment of the assets of the UIT in the Fund, and
3) the assumption of administrative, recordkeeping and investment
responsibilities for the Contracts and the Fund by Integrity,
are hereby authorized and approved, subject to regulatory and participant
approval of the reorganization.
RESOLVED, That authority is hereby granted to seek all necessary
regulatory approvals, including without limitation, the amendment of the
registration statements of the Separate Accounts and the filing of exemptive
applications and amendments thereto, and to take all further necessary or
desirable actions in connection with the reorganization of the Separate
Accounts and the transfer of administration of the Contracts to Integrity.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 29 to the Registration
Statement No. 2-74667 on Form N-4 (the "Registration Statement") of (1) our
report dated February 10, 1998 relating to the financial statements of
Separate Account No. 301 of The Equitable Life Assurance Society of the United
States for the year ended December 31, 1997, and (2) our report dated
February 10, 1998 relating to the consolidated financial statements of The
Equitable Life Assurance Society of the United States for the year ended
December 31, 1997, which reports appear in such Statement of Additional
Information, and to the incorporation by reference of our reports into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the headings "Condensed Financial
Information" and "Experts" in the Statement of Additional Information.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
New York, New York
April 27, 1998
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 20th day of February, 1998
/s/ Francoise Colloc'h
----------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 2nd day of March, 1998
/s/ Henri de Castries
---------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Joseph L. Dionne
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Denis Duverne
-----------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ William T. Esrey
--------------------
William T. Esrey
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 23th day of February, 1998
/s/ Jean-Rene Fourtou
---------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Norman C. Francis
---------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Donald J. Greene
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ John T. Hartley
-------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ John H.F. Haskell, Jr.
--------------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 26th day of January, 1998
/s/ Michael Hegarty
-------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Mary R. (Nina) Henderson
----------------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 29th day of January, 1998
/s/ W. Edwin Jarmain
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 2nd day of February, 1998
/s/ G. Donald Johnston, Jr.
---------------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ George T. Lowy
------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Edward D. Miller
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 17th day of February, 1998
/s/ Didier Pineau-Valencienne
-----------------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 4th day of February, 1998
/s/ George J. Sella Jr.
-----------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Stanley B. Tulin
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Dave H. Williams
--------------------
59838
