SUPPLEMENT, DATED MAY 1, 1996 TO
PROSPECTUS, DATED MAY 1, 1995, FOR
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT UNITS OF INTEREST UNDER
GROUP ANNUITY CONTRACTS
<TABLE>
<S> <C> <C>
o Money Market Fund o Growth & Income Fund Blended Funds:
o Intermediate Government o Equity Index Fund o Conservative Investors Fund
Securities Fund o Common Stock Fund o Balanced Fund
o Bond Fund o Global Fund o Growth Investors Fund
o Quality Bond Fund o International Fund
o High Yield Fund o Aggressive Stock Fund
</TABLE>
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
- --------------------------------------------------------------------------------
[RIA LOGO]
- --------------------------------------------------------------------------------
This supplement, dated May 1, 1996 (SUPPLEMENT), updates certain information in
the prospectus (PROSPECTUS) for the Retirement Investment Account (RIA) of The
Equitable Life Assurance Society of the United States (EQUITABLE LIFE), dated
May 1, 1995. You should keep the Supplement and the Prospectus for future
reference. We have filed with the Securities and Exchange Commission (SEC) our
Statement of Additional Information dated May 1, 1996, (SAI). If you have
previously received, but do not presently have, a copy of the Prospectus, you
may obtain an additional copy of the Prospectus, as well as a copy of the SAI,
from us, free of charge, if you write to Equitable Life, RIA Service Office,
Attn: SAI Request, 200 Plaza Drive, 1st Floor, Secaucus, NJ 07094-3689, call
(800) 967-4560 or (201) 392-5500 (Business Days, 9 A.M. to 5 P.M. Eastern Time)
or fax (201) 392-2285, 2286, or 2287, or mail in the SAI request form located at
the end of the Prospectus Supplement. The SAI is incorporated by reference into
the Supplement.
In the Supplement, each section of the Prospectus in which a change has been
made is identified and the number of each Prospectus page on which a change
occurs is also noted. Special terms used in the Prospectus have the same meaning
in the Supplement unless otherwise noted.
- --------------------------------------------------------------------------------
888-1114A (5/96)
COPYRIGHT 1996 Cat. No. 126943
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES.
ALL RIGHTS RESERVED.
<PAGE>
ON THE COVER PAGE OF THE PROSPECTUS, THE LAST SENTENCE OF THE FOURTH PARAGRAPH
IS DELETED.
ON PAGE 3, THE FIRST PARAGRAPH UNDER THE HEADING "RIA TERMS" IS DELETED AND
REPLACED BY THE FOLLOWING:
RIA is an investment program designed for employer plans that qualify for
tax-favored treatment under Section 401(a) of the Code. Eligible employer plans
include defined benefit plans, defined contribution plans or profit-sharing
plans, including 401(k) plans. RIA is composed of two group annuity contracts
(CONTRACTS), a MASTER RETIREMENT TRUST agreement, a participation or
installation agreement, an optional participant recordkeeping services (PRS)
agreement and fifteen investment options. The trustee of the Master Retirement
Trust has entered into the two Contracts with us to implement RIA. Currently the
Chase Manhattan Bank, N.A., acts as trustee under the Master Retirement Trust.
The sole responsibility of the Chase Manhattan Bank, N.A., is to serve as a
party to the Contracts. It has no responsibility for the administration of RIA.
ON PAGES 5 THROUGH 7, THE SECTIONS ENTITLED "FEE TABLES" AND "EXAMPLES" ARE
DELETED AND REPLACED BY THE FOLLOWING:
FEE TABLES
The purpose of these Tables is to assist you in understanding the various costs
and expenses which may affect employer plan balances participating in the Funds.
See PART II -- CHARGES AND FEES and PART V -- PROVISIONS OF RIA AND RETIREMENT
BENEFITS for a description of fees for optional PRS, loan fees, annuity purchase
charges and state or local tax charges. If an annuity benefit is elected under
RIA, a $175 annuity benefit charge will be imposed and a charge for any
applicable state or local taxes such as premium tax will be deducted from the
amount applied to provide an annuity benefit. The Tables reflect expenses of
Funds including, for Separate Account No. 51, the corresponding Trust Portfolio,
for the period ended December 31, 1995.
As explained in Part IV, the Guaranteed Interest Account is not a Fund.
Therefore, the only expenses shown in the Table which apply to the Guaranteed
Interest Account are the "Contingent Withdrawal Charge" and the "Ongoing
Operations Fee." In addition, there is a loan fee charged against the Guaranteed
Interest Account which is equal to 1% of the principal amount of the loan.
Certain expenses and fees shown in these Tables may not apply to your plan. To
determine whether a particular item in a Table applies (and the actual amount,
if any), consult the portion of the prospectus indicated in the notes.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON AGGRESSIVE
BOND BALANCED STOCK STOCK
FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PARTICIPATING PLAN
TRANSACTION EXPENSES:
Sales Load on Purchases............................................ [---------------------None------------------------]
Maximum Contingent Withdrawal Charge (as a percentage of
plan balances)(1)............................................... [------------------6% Maximum---------------------]
Maximum Annual Ongoing Operations Fee (as a percentage
of plan balances)(2)............................................ [-----------------1.25% Maximum-------------------]
SEPARATE ACCOUNT ANNUAL EXPENSES:
Administrative Charge.............................................. None None None None
Annual Investment Management Fee Including Financial
Accounting Fees (as a percentage of plan balances in
each Fund)...................................................... 0.50% 0.50% 0.50% 0.50%
---- ---- ---- ----
Total Separate Account Annual Expenses (3) 0.50% 0.50% 0.50% 0.50%
==== ==== ==== ====
TRUST ANNUAL EXPENSES: [----------------not applicable-------------------]
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The contingent withdrawal charge is waived in certain circumstances. The
charge reduces to 2% of the amount withdrawn in the ninth participation
year and cannot be imposed after the ninth anniversary of a plan's
participation in RIA. See PART II -- CHARGES AND FEES -- CONTINGENT
WITHDRAWAL CHARGE.
(2) The annual ongoing operations fee is applied on a decremental scale,
declining to 0.50% on the portion of plan balances over $1,000,000,
except for plans that adopted RIA before February 9, 1986. See PART II --
CHARGES AND FEES.
(3) The Total Separate Account Annual Expenses are reflected in the Unit value.
</FN>
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT FUNDS OF SEPARATE ACCOUNT
NO. 51
---------------------------------------
CONSER-
INTERMEDIATE VATIVE GROWTH
MONEY GOVERNMENT QUALITY HIGH GROWTH & EQUITY INTER- INVES- INVES-
MARKET SECURITIES BOND YIELD INCOME INDEX GLOBAL NATIONAL TORS TORS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PARTICIPATING PLAN TRANSACTION
EXPENSES
Sales Load On Purchases.......... [-------------------------------------None-------------------------------------------------]
Maximum Contingent Withdrawal
Charge (as a percentage of
Plan Balances)(1) ............. [----------------------------------6% Maximum----------------------------------------------]
Maximum Annual Ongoing
Operations Fee (as a
percentage of
Plan Balances)(2).............. [--------------------------------1.25% Maximum---------------------------------------------]
SEPARATE ACCOUNT ANNUAL EXPENSES
Administrative Charge (3)(5)..... [-------------------------------------0.05%------------------------------------------------]
TRUST ANNUAL EXPENSES
Investment Advisory Fee ......... 0.40% 0.50% 0.55% 0.55% 0.55% 0.35% 0.53% 0.90% 0.55% 0.52%
Other Expenses................... 0.04% 0.07% 0.04% 0.05% 0.05% 0.13% 0.08% 0.13% 0.04% 0.04%
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total Annual Expenses
for the Trust(4)(5).......... 0.44% 0.57% 0.59% 0.60% 0.60% 0.48% 0.61% 1.03% 0.59% 0.56%
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
<FN>
Notes:
(1) The contingent withdrawal charge is waived in certain circumstances. The
charge reduces to 2% of the amount withdrawn in the ninth participation
year and cannot be imposed after the ninth anniversary of a plan's
participation in RIA. See PART II -- CHARGES AND FEES -- CONTINGENT
WITHDRAWAL CHARGE.
(2) The annual ongoing operations fee is applied on a decremental scale,
declining to 0.50% on the portion of plan balances over $1,000,000, except
for plans that adopted RIA before February 9, 1986. See PART II -- CHARGES
AND FEES.
(3) Separate Account expenses are shown as a percentage of each Investment
Fund's average value. We reserve the right to increase the separate account
administrative charge upon 90 days written notice to the employer. See PART
II -- CHARGES AND FEES.
(4) The Hudson River Trust expenses are shown as a percentage of each
portfolio's average value. See PART II -- CHARGES AND FEES -- TRUST CHARGES
TO PORTFOLIOS. Expenses shown for all portfolios except the International
Portfolio are for the fiscal year ended December 31, 1995. The amount shown
for the International Portfolio, which was established April 3, 1995, is
annualized. The investment advisory fee for each Portfolio may vary from
year to year depending upon the average daily net assets of the respective
Portfolio of the Trust. The maximum investment advisory fees, however,
cannot be changed without a vote of that Portfolio's shareholders. The
other direct operating expenses will also fluctuate from year to year
depending on actual expenses. The Trust expenses are shown as a percentage
of each Portfolio's average value. See PART II -- CHARGES AND FEES -- TRUST
CHARGES TO PORTFOLIOS.
(5) The Separate Account Annual Expenses and Trust Annual Expenses are
reflected in the Unit value.
</FN>
</TABLE>
3
<PAGE>
EXAMPLES --
The examples below show the expenses that a plan would pay in two hypothetical
situations, assuming a single investment of $1,000 in each Fund listed and a 5%
annual return on assets. For purposes of these examples, the ongoing operations
fee is computed by reference to the actual aggregate annual ongoing operations
fee as a percentage of total assets held under the Contracts invested in
Registered Units. The expenses shown would be lower for corporate plans which
generally have greater total assets. See Note (2) to the Table above. These
examples assume that no loan has been taken and do not reflect PRS or annuity
benefit charges or a charge for premium taxes, none of which may apply to any
particular Participant.
IF THE ENTIRE EMPLOYER PLAN BALANCE IS WITHDRAWN AT THE END OF EACH PERIOD
SHOWN, THE EXPENSE WOULD BE --
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Money Market ................. 75.41 96.79 118.95 156.12
Intermediate Government 76.68 100.73 125.72 171.07
Securities ................ 74.52 94.06 114.25 145.66
Bond ......................... 75.50 97.10 119.47 157.28
Quality Bond ................. 76.88 101.34 126.75 173.36
High Yield ................... 76.97 101.64 127.27 174.49
Growth & Income .............. 76.97 101.64 127.27 174.49
Equity Index ................. 75.80 98.01 121.04 160.74
Common Stock ................. 75.50 97.10 119.47 157.28
Global ....................... 77.07 101.94 127.79 175.63
International ................ 81.18 114.57 149.36 222.44
Aggressive Stock ............. 75.50 97.10 119.47 157.28
Blended Funds:
Conservative Investors..... 76.88 101.34 126.75 173.36
Balanced .................. 75.50 97.10 119.47 157.28
Growth Investors .......... 76.58 100.43 125.20 169.93
IF THE ENTIRE EMPLOYER PLAN BALANCE IS NOT WITHDRAWN AT THE END OF EACH PERIOD
SHOWN, THE EXPENSE WOULD BE --
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Money Market .................. 13.20 41.07 71.03 156.12
Intermediate Government
Securities ................. 14.55 45.22 78.11 171.07
Bond .......................... 13.30 41.39 71.57 157.28
Quality Bond .................. 14.76 45.86 79.19 173.36
High Yield .................... 14.86 46.18 79.73 174.49
Growth & Income ............... 14.86 46.18 79.73 174.49
Equity Index .................. 13.61 42.35 73.21 160.74
Common Stock .................. 13.30 41.39 71.57 157.28
Global ........................ 14.97 46.50 80.28 175.63
International ................. 19.35 59.83 102.84 222.44
Aggressive Stock .............. 13.30 41.39 71.57 157.28
Blended Funds:
Conservative Investors...... 14.76 45.86 79.19 173.36
Balanced ................... 13.30 41.39 71.57 157.28
Growth Investors ........... 14.45 44.90 77.56 169.93
- -------------------------------------------------------------------------------
These examples should not be considered a representation of past or future
expenses for each Fund. 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.
ON PAGES 7 THROUGH 12, THE SECTION ENTITLED "CONDENSED FINANCIAL INFORMATION" IS
DELETED AND REPLACED BY THE FOLLOWING:
CONDENSED FINANCIAL INFORMATION
The following tables give information about income, expenses and capital changes
of the Bond, Balanced, Common Stock and Aggressive Stock Funds, and Unit values
of the Investment Funds of Separate Account No. 51, attributable to a Registered
Unit outstanding for the periods indicated, along with other supplementary data.
Registered Units have been offered under RIA in the Bond, Balanced, Common Stock
and Aggressive Stock Funds as of May 1, 1992, January 23, 1985, April 8, 1985
and July 7, 1986, respectively. Registered and Non-Registered Units for the
Investment Funds of Separate Account No. 51 were first offered under RIA on June
1, 1994. Non-registered Units have been offered under RIA in the Bond Fund since
1991, the Balanced and Common Stock Funds since 1983 and the Aggressive Stock
Fund since 1986.
Condensed Financial Information for the Portfolios is contained in the Hudson
River Trust prospectus attached to the Supplement.
High portfolio turnover rates may result in additional transaction and brokerage
expenses which are reflected in the Unit values.
The selected per unit data and ratios for the years ended December 31, 1995,
1994 and 1993, have been audited by Price Waterhouse LLP, independent
accountants, as stated in their report on the FINANCIAL STATEMENTS contained in
Part III of the SAI. The selected per unit data and ratios for each of the years
prior to 1993 were audited by other independent accountants. The financial
statements of the separate accounts as well as the Consolidated Financial
Statements of Equitable Life are contained in the SAI. These tables should be
read in conjunction with the Financial Statements.
4
<PAGE>
SEPARATE ACCOUNT NO. 13 -- POOLED (BOND FUND) OF THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE
PERIOD INDICATED AND OTHER SUPPLEMENTARY DATA (NOTE F)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
MAY 1, 1992 -
1995 1994 1993 DECEMBER 31, 1992
------------ ------------ ------------ -------------------
<S> <C> <C> <C> <C>
Income............................. $ 3.07 $ 2.32 $ 2.18 $ 0.59
Expenses (Note B).................. (0.23) (0.12) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income ............. 2.84 2.20 2.18 0.59
Net realized and
unrealized gain (loss)
on investments
(Note C)........................ 3.72 (2.99) 1.65 2.37
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Bond Fund
Unit Value....................... 6.56 (0.79) 3.83 2.96
Bond Fund
Unit Value
(Note A):
Beginning of
Period....................... 42.35 43.14 39.31 36.35
- -----------------------------------------------------------------------------------------------------------------------------------
End of Period.................. $48.91 $42.35 $43.14 $39.31
===================================================================================================================================
Ratio of expenses to
average net assets
attributable to Units
(Note B)......................... 0.50% 0.36% N/A N/A
Ratio of net investment income to
average net assets
attributable to Units............ 6.17% 5.12% 5.17% 6.00% (Note D)
Number of registered
Bond Fund Units
outstanding at end of period .... 2,392 1,632 545 288
Portfolio turnover rate (Note E)... 288% 264% 254% 151%
===================================================================================================================================
<FN>
See Notes following tables.
</FN>
</TABLE>
5
<PAGE>
SEPARATE ACCOUNT NO. 10 -- POOLED (BALANCED FUND) OF THE EQUITABLE LIFE
ASSURANCE SOCIETY OF THE UNITED STATES
INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE
PERIODS INDICATED AND OTHER SUPPLEMENTARY DATA (NOTE F)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income .................... $ 3.18 $ 2.63 $ 2.67 $ 2.69 $ 2.63 $ 3.08 $ 3.04 $ 2.30 $ 1.63 $ 1.56
Expenses (Note B) ......... (0.43) (0.23) -- -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income ..... 2.75 2.40 2.67 2.69 2.63 3.08 3.04 2.30 1.63 1.56
Net realized and unrealized
gain (loss) on
investments (Note C) ... 13.34 (9.48) 7.28 (4.51) 20.34 (3.17) 8.66 3.44 (3.54) 4.09
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in Balanced Fund Unit
Value .................. 16.09 (7.08) 9.95 (1.82) 22.97 (0.09) 11.70 5.74 (1.91) 5.65
Balanced Fund Unit Value
(Note A):
Beginning of
Period ............ 78.77 85.85 75.90 77.72 54.75 54.84 43.14 37.40 39.31 33.66
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period ....... $94.86 $78.77 $85.85 $75.90 $77.72 $54.75 $54.84 $43.14 $37.40 $39.31
====================================================================================================================================
Ratio of expenses to
average net assets
attributable to Units
(Note B) ............... 0.50% 0.30% N/A N/A N/A N/A N/A N/A N/A N/A
Ratio of net investment
income to average net
assets attributable to
Units .................. 3.19% 2.94% 3.31% 3.68% 4.15% 5.78% 6.12% 5.70% 3.79% 3.97%
Number of registered
Balanced Fund Units
outstanding at end
of period .............. 73,979 86,914 87,242 81,860 80,964 86,377 86,942 67,815 54,112 31,233
Portfolio turnover rate
(Note E) ............... 170% 107% 102% 90% 114% 199% 175% 172% 238% 230%
====================================================================================================================================
<FN>
See Notes to following tables.
</FN>
</TABLE>
6
<PAGE>
SEPARATE ACCOUNT NO. 4 -- POOLED (COMMON STOCK FUND) OF THE EQUITABLE LIFE
ASSURANCE SOCIETY OF THE UNITED STATES
INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE
PERIODS INDICATED AND OTHER SUPPLEMENTARY DATA (NOTE F)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income ............... $ 3.98 $ 3.83 $ 3.69 $ 3.13 $ 2.74 $ 3.82 $ 3.42 $ 2.52 $ 2.37 $ 2.58
Expenses
(Note B) .......... (2.03) (1.00) -- -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment
income ............ 1.95 2.83 3.69 3.13 2.74 3.82 3.42 2.52 2.37 2.58
Net realized and
unrealized gain
(loss) on
investments
(Note C) .......... 108.54 (8.98) 56.16 1.86 96.86 (26.92) 62.70 19.19 4.86 12.09
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
Common Stock
Fund Unit Value ... 110.49 (6.15) 59.85 4.99 99.60 (23.10) 66.12 21.71 7.23 14.67
Common Stock Fund
Unit Value
(Note A):
Beginning of
Period ....... 346.92 353.07 293.22 288.23 188.63 211.73 145.61 123.90 116.67 102.00
- ------------------------------------------------------------------------------------------------------------------------------------
End of
Period ....... $457.41 $346.92 $353.07 $293.22 $288.23 $188.63 $211.73 $145.61 $123.90 $116.67
====================================================================================================================================
Ratio of
expenses to
average net
assets
attributable
to Units
(Note B)........... 0.50% 0.30% N/A N/A N/A N/A N/A N/A N/A N/A
Ratio of net
investment
income to
average net
assets
attributable
to Units........... 0.49% 0.81% 1.17% 1.13% 1.14% 2.02% 1.85% 1.84% 1.69% 2.18%
Number of
registered
Common Stock
Fund Units
outstanding at
end of period...... 25,937 27,438 24,924 23,331 20,799 18,286 14,129 8,461 5,466 3,508
Portfolio turnover
rate (Note E) ..... 108% 91% 82% 68% 66% 93% 113% 101% 121% 102%
====================================================================================================================================
<FN>
See Notes following tables.
</FN>
</TABLE>
7
<PAGE>
SEPARATE ACCOUNT NO. 3 -- POOLED (AGGRESSIVE STOCK FUND) OF THE EQUITABLE LIFE
ASSURANCE SOCIETY OF THE UNITED STATES
INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE
PERIODS INDICATED AND OTHER SUPPLEMENTARY DATA (NOTE F)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, JULY 7, 1986 -
------------------------------------------------------------------------------------------------ DECEMBER 31,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986,
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income .................... $ 0.98 $ 0.71 $ 1.01 $ 1.21 $ 1.06 $ 1.03 $ 1.06 $ 0.60 $ 0.62 $ 0.24
Expenses (Note B) ......... (0.75) (0.37) -- -- -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net investment
income ................. 0.23 0.34 1.01 1.21 1.06 1.03 1.06 0.60 0.62 0.24
Net realized and unrealized
gain (loss) on
investments
(Note C) ............... 40.49 (5.81) 17.43 (4.23) 55.15 4.45 17.77 0.35 (1.36) (5.79)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
Aggressive Stock Fund
Unit Value ............. 40.72 (5.47) 18.44 (3.02) 56.21 5.48 18.83 0.95 (0.74) (5.55)
Aggressive Stock Fund Unit
Value (Note A):
Beginning of
Period ............ 129.95 135.42 116.98 120.00 63.79 58.31 39.48 38.53 39.27 44.82
- -------------------------------------------------------------------------------------------------------------------------------
End of Period ....... $170.67 $129.95 $135.42 $116.98 $120.00 $63.79 $58.31 $39.48 $38.53 $39.27
====================================================================================================================================
Ratio of expenses to
average net assets
attributable to Units
(Note B) ............... 0.50% 0.30% N/A N/A N/A N/A N/A N/A N/A N/A
Ratio of net investment
income to average
net assets attributable
to Units ............... 0.15% 0.25% 0.82% 1.09% 1.11% 1.72% 2.09% 1.47% 1.35% 1.23%(Note D)
Number of registered
Aggressive Stock Fund
Units outstanding at end
of period................ 26,043 26,964 23,440 21,917 14,830 8,882 5,519 3,823 2,630 651
Portfolio turnover rate
(Note E) ................ 137% 94% 83% 71% 63% 48% 92% 103% 227% 162%
====================================================================================================================================
<FN>
See Notes following tables.
</FN>
</TABLE>
8
<PAGE>
Notes:
A. The values for a Registered Bond Fund, Balanced Fund, Common Stock Fund and
Aggressive Stock Fund Unit on May 1, 1992, January 23, 1985, April 8, 1985
and July 7, 1986, the first date on which payments were allocated to
purchase Registered Units in each Fund, were $36.35, $28.07, $84.15 and
$44.82, respectively.
B. Certain expenses under RIA are borne directly by employer plans
participating in RIA. Accordingly, those charges and fees discussed under
PART II -- CHARGES AND FEES are not included above and did not affect the
Fund Unit values. Those charges and fees are recovered through an
appropriate reduction in the number of Units credited to each employer plan
participating in the Fund unless the charges and fees are billed directly to
the employer. The dollar amount recovered is included in the expenses in the
Statements of Operations and Changes in Net Assets for each Fund, which
appear in PART III -- FINANCIAL STATEMENTS of the SAI.
As of June 1, 1994, the Annual Investment Management and Financial
Accounting Fee is deducted from the assets of the Bond, Balanced, Common
Stock and Aggressive Stock Funds and is reflected in the computation of
their unit values. If all charges and fees had been made directly against
employer plan assets in the Funds and had been reflected in the computation
of Fund Unit Value, RIA Registered Unit expenses would have amounted to
$0.70, $1.28, $6.31 and $2.34 for the year ended December 31, 1995 on a per
Unit basis for the Bond, Balanced, Common Stock and Aggressive Stock Funds,
respectively. For the same reporting periods, the ratio of expenses to
average net assets attributable to Registered Units would have been (on an
annualized basis) 1.52%, 1.49%, 1.56% and 1.57%, for the Bond, Balanced,
Common Stock and Aggressive Stock Funds, respectively.
C. See Note 2 to Financial Statements of Separate Account Nos. 13 (Pooled), 10
(Pooled), 4 (Pooled), 3 (Pooled) and 51 which appear in Part III of the SAI.
D. Annualized basis.
E. The portfolio turnover rate excludes all short-term U.S. Government
securities and all other securities whose maturities at the time of
acquisition were one year or less. The rate stated is the annual turnover
rate for the entire Separate Account Nos. 13 -- Pooled, 10 -- Pooled, 4 --
Pooled and 3 -- Pooled.
F. Income, expenses, gains and losses shown above pertain only to employer
plans' accumulations attributable to RIA Registered Units. Other plans and
trusts also participate in Separate Account Nos. 13 -- Pooled, 10 -- Pooled,
4 -- Pooled and 3 -- Pooled and may have operating results and other
supplementary data different from those shown above.
<TABLE>
<CAPTION>
SEPARATE ACCOUNT NO. 51 (POOLED) UNIT VALUES
INTERMEDIATE
MONEY GOVERNMENT QUALITY HIGH GROWTH EQUITY CONSERVATIVE GROWTH
MARKET SECURITIES BOND YIELD & INCOME INDEX GLOBAL INTERNATIONAL INVESTORS INVESTORS
FUND FUND FUND FUND FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit Value as of:
December 31, 1994 ..... $102.65 $ 98.94 $ 99.83 $ 98.99 $ 99.81 $101.71 $ 99.84 $ -- $ 99.83 $ 99.52
December 31, 1995...... 108.49 112.07 116.76 118.64 123.78 138.75 118.56 104.60 120.14 125.70
Number of Registered Units
Outstanding at
December 31, 1995...... 1,374 248 52 40 1,323 641 6,314 -- 236 4,502
</TABLE>
ON PAGE 13, THE FIRST FOOTNOTE IS DELETED.
ON PAGE 17, THE SECOND AND THIRD PARAGRAPHS UNDER THE HEADING "EQUITABLE LIFE"
ARE DELETED AND REPLACED BY THE FOLLOWING:
Equitable Life is a wholly-owned subsidiary of The Equitable Companies
Incorporated (the "Holding Company"). The largest stockholder of the Holding
Company is AXA, a French insurance holding company. AXA beneficially owns 60.6%
of the outstanding shares of common stock of the Holding Company as well as
$392.2 million stated value of its issued and outstanding Series E Convertible
Preferred Stock. 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 is the principal holding company for most of the
companies in one of the largest insurance groups in Europe. The majority of
AXA's stock is controlled by a group of five French mutual insurance companies.
9
<PAGE>
Equitable Life, the Holding Company and their subsidiaries, managed
approximately $195.3 billion of assets as of December 31, 1995, including third
party assets of approximately $144.4 billion. We are one of the nation's leading
pension fund managers. 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.
ON PAGE 17, THE SECOND PARAGRAPH UNDER THE HEADING "ABOUT OUR FUNDS" IS DELETED
AND REPLACED BY THE FOLLOWING:
We established the Growth Investors, Conservative Investors and Global Funds as
Investment Funds of Separate Account No. 51 under the Insurance Law of New York
State in 1993. The Money Market, Intermediate Government Securities, Quality
Bond, High Yield, Growth & Income and Equity Index Funds were established as
Investment Funds of Separate Account No. 51 in 1994. The International Fund was
established as an investment fund of Separate Account No. 51 on September 1,
1995. The Investment Funds of Separate Account No. 51 invest in shares of a
corresponding Portfolio of the Trust which are actively managed as described in
the attached Trust Prospectus.
ON PAGE 18, THE FIRST PARAGRAPH UNDER THE HEADING "HOW WE DETERMINE THE UNIT
VALUE" IS DELETED AND REPLACED BY THE FOLLOWING:
The Unit values (rounded to the nearest cent) of the Bond, Balanced, Common
Stock and Aggressive Stock Funds were $36.35, $28.07, $84.15, and $44.82,
respectively, on May 1, 1992, January 23, 1985, April 8, 1985 and July 7, 1986,
respectively, the first date on which Registered Units under the Contracts were
purchased in these Funds under RIA. The Unit values (rounded to the nearest
cent) of the Money Market, Intermediate Government Securities, Quality Bond,
High Yield, Growth & Income, Equity Index, Global, Conservative Investors and
Growth Investors Funds were $100.00 on June 1, 1994, the first date on which
Registered Units under the Contracts were purchased in these Funds. The Unit
value (rounded to the nearest cent) of the International Fund was $100.00 on
September 1, 1995, the first date on which Registered Units under the Contracts
were purchased in this Fund.
ON PAGES 19 THROUGH 20, THE INFORMATION UNDER THE HEADING "BALANCED FUND" IS
DELETED AND REPLACED BY THE FOLLOWING:
The Balanced Fund's investment objective is to achieve both appreciation of
capital and current income by investments in a diversified portfolio of common
stocks, other equity-type securities and longer-term fixed income securities,
and current income by investments in publicly traded debt securities and
short-term money market instruments. The investment mix is determined by the
Fund manager.
We will vary the portion of the Balanced Fund's assets invested in each type of
security in accordance with our evaluation of economic conditions, the general
level of common stock prices, anticipated interest rates and other relevant
considerations, including our assessment of the risks associated with each
investment medium. The Fund is subject to the risk that we may incorrectly
predict changes in the relative values of the equity and debt markets.
In general, publicly traded equity securities will comprise the greatest portion
of the Balanced Fund's assets. At the years ended December 31, 1985 through
1995, the percentage of the Balanced Fund's assets invested in equity securities
(including equity-type securities such as convertible preferred stocks or
convertible debt instruments) has ranged from 50% to 57%.
The Fund's non-money market debt securities will consist primarily of publicly
traded securities issued or guaranteed by the United States Government or its
agencies or instrumentalities, and corporate fixed income securities, including,
but not limited to, bank obligations, notes, asset-backed securities, mortgage
pass-through obligations, collateralized mortgage obligations, zero coupon bonds
and preferred stock. The Balanced Fund may also buy debt securities with equity
features such as conversion or exchange rights, or warrants for the acquisition
of stock or participations, based on revenues, sales or profits. The Balanced
Fund's non-money market debt securities will be subject to the same investment
quality criteria at the time of purchase, as are described above for the
non-money market investments of the Bond Fund. The average maturity of the
non-money market debt securities held by the Balanced Fund will vary according
to market conditions and the state of interest rate cycles.
The Balanced Fund may invest in money market securities through our Separate
Account No. 2A or directly. See COMMON STOCK FUND below. The investments the
Balanced Fund makes in money market instruments will be payable only in United
States dollars and will consist principally of securities issued or guaranteed
by the United States Government or one of its agencies or instrumentalities,
negotiable certificates of deposit, bankers' acceptances or bank time deposits,
repurchase agreements (covering securities issued or guaranteed by the United
States Government or one of its agencies or instrumentalities, certificates of
deposit or bankers' acceptances), commercial paper that is rated Prime-1 by
Moody's Investors Services, Inc. (MOODY'S) or A-1 or A-1 Plus by Standard &
Poor's Corporation
10
<PAGE>
(S&P), unrated commercial paper, master demand notes or variable amount floating
rate notes of any issuer that has an outstanding issue of unsecured debt that is
currently rated Aa or better by Moody's or AA or better by S&P with less than
one year to maturity. Such investments may include certificates of deposit and
time deposits of London Branches of United States banks (these investments are
usually referred to as EURODOLLARS) and certificates of deposit and commercial
paper issued by Schedule B Banks (Canadian chartered bond subsidiaries of United
States banks). For additional information concerning the debt instruments in
which the Balanced Fund may invest, see PART I -- FUND INFORMATION -- CERTAIN
INVESTMENTS OF THE BOND AND BALANCED FUNDS in the SAI.
Mortgage pass-through securities and certain collateralized mortgage
obligations, asset-backed securities and other debt instruments in which the
Fund may invest, are subject to prepayments prior to their stated maturity. It
is usually not possible to accurately predict the rate at which prepayments will
be made, which rate may be affected, among other things, by changes in generally
prevailing market interest rates. If prepayments occur, the Fund suffers the
risk that it will not be able to reinvest the proceeds at as high a rate of
interest as it had previously been receiving. Also, the Fund will incur a loss
to the extent that prepayments are made for an amount that is less than the
value at which the security was then being carried by the Fund. Moreover,
securities that may be prepaid tend to increase in value less during times of
declining interest rates, and to decrease in value more during times of
increasing interest rates, than do securities that are not subject to
prepayment.
The Fund may invest up to 10% of its total assets in securities that are not
readily marketable and may invest up to 20% of its total assets in foreign
securities. Certain risks of investment in illiquid or foreign securities are
discussed below under COMMON STOCK FUND. The Balanced Fund may enter into
contracts for the purchase or sale of a specific foreign currency at a future
date at a price set at the time of the contract. Generally, such forward
contracts will be for a period of less than three months. The Fund will enter
into such forward contracts for hedging purposes only. These transactions will
include forward purchases or sales of foreign currencies for the purpose of
protecting the dollar value of securities denominated in a foreign currency, or
protecting the dollar equivalent of interest or dividends to be paid on such
securities. Forward contracts are traded in the inter-bank market, and not on
organized commodities or securities exchanges. Accordingly, the Fund is
dependent upon the good faith and creditworthiness of the other party to the
transaction, as evaluated by the Fund's manager.
The Balanced Fund's investment policies permit hedging transactions, such as
through the use of stock index or interest rate futures. Although the Balanced
Fund currently has no plans to enter into such transactions, information about
such transactions is included in the SAI under PART I -- FUND INFORMATION --
CERTAIN INVESTMENTS OF THE BOND AND BALANCED FUNDS.
The Balanced Fund may enter into forward commitments for the purchase or sale of
securities and may purchase and sell securities on a when-issued or delayed
delivery basis. For more information about these investment techniques see PART
I -- FUND INFORMATION -- CERTAIN INVESTMENTS OF THE BOND AND BALANCED FUNDS in
the SAI.
Because the types and proportions of the Balanced Fund's assets are expected to
change frequently in accordance with market conditions, an annual portfolio
turnover rate cannot be predicted.
ON PAGE 20, THE LAST FULL SENTENCE IN THE FIFTH PARAGRAPH UNDER THE HEADING
"COMMON STOCK FUND" IS DELETED AND REPLACED BY THE FOLLOWING:
As of December 31, 1995, 28.5% of the Common Stock Fund's assets was held in the
securities of four issuers. See PORTFOLIO OF INVESTMENTS in the SAI.
ON PAGE 21, THE THIRD PARAGRAPH UNDER THE HEADING "INVESTMENT MANAGEMENT" IS
DELETED AND REPLACED BY THE FOLLOWING:
Alliance is a registered investment adviser under the Investment Advisors Act of
1940 and acts as an investment adviser to various separate accounts and general
accounts of Equitable Life and other affiliated insurance companies. Alliance's
main office is located at 1345 Avenue of the Americas, New York, New York 10105.
On December 31, 1995, Alliance was managing over $146.5 billion in assets.
ON PAGE 21, THE SECOND PARAGRAPH UNDER THE HEADING "RATES OF RETURN" IS DELETED
AND REPLACED BY THE FOLLOWING:
Performance data for the Bond, Balanced, Common Stock and Aggressive Stock Funds
reflect (i) the investment results of the Fund since inception and (ii) the
investment management and financial accounting fee. We have recalculated
performance prior to June 1, 1994 to reflect the deduction of this fee even
though it did not apply as an asset-based charge. Performance data for the
Investment Funds of Separate Account No. 51 reflect (i) the investment results
of the corresponding Portfolios of the Trust from the date of inception of those
Portfolios, (ii) the actual investment advisory fee and direct operating
expenses of the relevant Portfolio and (iii) the Separate Account Administrative
Charge (although this latter charge was not an asset-based charge before the
Portfolios were available under RIA). None of the data reflects the Ongoing
Operations Fee, which may be paid by a reduction in the number of Units credited
under an employer plan and applied (for employer plans enrolled in RIA on or
after February 9, 1986, on a decremental scale based on employer plan balances),
or loan fee, annuity benefit charge or charge for premium taxes, which may not
be applicable to any particular Participant.
11
<PAGE>
Because rates of return do not reflect the Ongoing Operations Fee or other
charges and fees applicable to employer plans under RIA, the rate of return for
an employer plan would be lower if such charges and fees were reflected.
ON PAGE 22, "INCEPTION DATES AND COMPARATIVE BENCHMARKS" IS DELETED AND REPLACED
BY THE FOLLOWING:
INCEPTION DATES AND COMPARATIVE BENCHMARKS
MONEY MARKET: May 11, 1982; Salomon Brothers Three-Month T-Bill Index (3-Month
T-Bill).
INTERMEDIATE GOVERNMENT SECURITIES: April 1, 1991; Lehman Intermediate
Government Bond Index (Lehman Intermediate Government).
BOND: May 1, 1981; Lehman Intermediate Government/Corporate Bond Index (Lehman
Intermediate GC).
QUALITY BOND: October 1, 1993; Lehman Aggregate Bond Index (Lehman Aggregate).
HIGH YIELD: January 2, 1987; Merrill Lynch High Yield Master Index (Master High
Yield).
GROWTH & INCOME: October 1, 1993; 75% Standard & Poor's 500 Index (S&P 500), and
25% Value Line Convertible Index (75% S&P 500/25% Value Line Conv.).
EQUITY INDEX: March 1, 1994; S&P 500 which includes reinvested dividends.
COMMON STOCK: July 1, 1969; Standard & Poor's 500 Index (S&P 500e), which
includes reinvested dividends.
GLOBAL: August 31, 1987; Morgan Stanley Capital International World Index (MSCI
World).
INTERNATIONAL: April 3, 1995; Morgan Stanley Capital International Europe,
Australia, Far East Index (MSCI EAFE).
AGGRESSIVE STOCK: May 1, 1969; 50% Russell 2000 Small Stock Index and 50% S&P
Mid-Cap Total Return (50% Russell 2000/50% S&P Mid-Cap).
CONSERVATIVE INVESTORS: October 2, 1989; 70% Lehman Treasury Bond Composite
Index and 30% S&P 500 (70% Lehman Treas./30% S&P 500).
BALANCED: June 25, 1979; 50% S&P 500 and 50% Lehman Government/Corporate Bond
Index (50% S&P 500/50% Lehman Corp.).
GROWTH INVESTORS: October 2, 1989; 30% Lehman Government/Corporate Bond Index
and 70% S&P 500 (30% Lehman Treas./70% S&P 500).
The Lipper Mutual Funds Survey (LIPPER) records the performance of over 7,000
mutual funds. According to Lipper Analytical Services, Inc., the data are
presented net of investment management fees, direct operating expenses, and, for
funds with Rule 12b-1 plans, asset-based sales charges. Lipper data provide a
more accurate picture of RIA performance relative to that of other mutual funds
underlying retirement plan products than the market indices.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of return
reflect performance over a stated period of time. Annualized rates of return
represent the annual rate of growth that would have produced the same cumulative
return, if performance had been constant over the entire period.
The performance of the Funds does not represent the actual experience of a
particular participating employer plan; the amount and timing of contributions
affects individual performance, as do Fund expenses. For a discussion of charges
and fees and how they are deducted from a RIA plan, see PART II -- CHARGES AND
FEES.
PAST PERFORMANCE IS NOT A GUARANTEE OR INDICATION OF FUTURE RESULTS. NO
PROVISIONS HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS OR UPON
DISTRIBUTION.
12
<PAGE>
ON PAGE 23, THE HEADING OF THE CHART IS CHANGED TO "ANNUALIZED RATES OF RETURN
FOR PERIODS ENDING DECEMBER 31, 1995" AND THE CHART IS DELETED AND REPLACED BY
THE FOLLOWING:
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET 5.69% 4.19% 4.43% 5.97% -- 7.37% July 31, 1981
Lipper Money Market 5.37 3.89 4.12 5.64 -- 7.15
3-Month T-Bill 5.74 4.34 4.47 5.77 -- 7.09
INTERMEDIATE GOVERNMENT 13.27 6.16 -- -- -- 7.58 April 1, 1991
SECURITIES
Lipper U.S. Government 15.75 6.56 -- -- -- 8.03
Lehman Intermediate Government 14.41 6.74 -- -- -- 8.17
BOND 15.48 7.30 8.44 8.44 -- 10.93 April 28, 1981
Lipper Intermediate
Government Funds Average 17.34 6.96 8.35 8.16 -- 10.50
Lehman Intermediate GC 15.33 7.16 8.61 8.82 -- 11.23
QUALITY BOND 16.97 -- -- -- -- 4.49 Oct 1, 1993
Lipper Corporate Bond A-Rated 18.45 -- -- -- -- 5.38
Lehman Aggregate 18.47 -- -- -- -- 6.46
HIGH YIELD 19.86 12.75 14.89 -- -- 10.15 January 2, 1987
Lipper High Yield 16.44 10.18 16.58 -- -- 8.98
Master High Yield 19.91 11.57 17.17 -- -- 11.28
GROWTH & INCOME 24.01 -- -- -- -- 9.61 October 1, 1993
Lipper Growth & Income 30.82 -- -- -- -- 13.47
75% S&P 500/25% Value Line Conv. 34.93 -- -- -- -- 15.45
EQUITY INDEX 36.41 -- -- -- -- 19.12 March 1, 1994
Lipper S&P Index Funds 36.84 -- -- -- -- 18.92
S&P 500 37.54 -- -- -- -- 19.89
COMMON STOCK 31.85 15.70 18.97 15.70 15.86 13.01 July 1, 1969
Lipper Growth Funds Avg. 30.79 12.45 16.01 12.95 14.79 10.29
S&P 500e 37.54 15.30 16.57 14.87 14.59 11.46
GLOBAL 18.76 18.15 16.44 -- -- 11.32 August 27, 1987
Lipper Global 16.05 13.96 12.28 -- -- 7.87
MSCI World 20.72 15.83 11.74 -- -- 6.75
INTERNATIONAL -- -- -- -- -- 10.66* April 3, 1995
Lipper International -- -- -- -- -- 10.32*
MSCI EAFE -- -- -- -- -- 9.17*
AGGRESSIVE STOCK 31.33 13.15 21.34 15.58 17.03 10.70 May 1, 1969
Lipper Small Company
Growth Funds Avg. 31.55 14.77 20.78 13.62 16.22 9.85
50% Russell 2000/50% S&P Mid-Cap 29.69 13.67 20.16 13.66 N/A N/A
THE BLENDED FUNDS:
CONSERVATIVE INVESTORS 20.34 8.49 10.10 -- -- 9.61 October 2, 1989
Lipper Income 25.08 10.80 12.85 -- -- 10.28
70% Lehman Treas./30% S&P 500 24.11 10.41 11.73 -- -- 10.55
BALANCED 20.43 7.46 11.24 10.45 -- 14.08 June 25, 1979
Lipper Balanced Portfolio 25.16 10.73 13.04 11.40 -- 13.37
50% S&P 500/50% Lehman Govt./Corp. 28.39 12.01 13.39 12.53 -- 13.67
GROWTH INVESTORS 26.31 12.10 17.07 -- -- 16.01 October 2, 1989
Lipper Flexible Portfolio 25.08 10.80 12.85 -- -- 10.28
30% Lehman Corp./70% S&P 500 32.05 13.35 14.70 -- -- 11.97
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
*Unannualized
</FN>
</TABLE>
13
<PAGE>
ON PAGE 24, THE HEADING OF THE CHART IS CHANGED TO "CUMULATIVE RATES OF RETURN
FOR PERIODS ENDING DECEMBER 31, 1995" AND THE CHART IS DELETED AND REPLACED BY
THE FOLLOWING:
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET 5.69% 13.12% 24.22% 78.66% --% 179.66% July 13, 1981
Lipper Money Market 5.37 12.13 22.34 73.21 -- 172.66
3-Month T-Bill 5.74 13.58 24.45 75.23 -- 170.07
INTERMEDIATE GOVERNMENT 13.27 19.66 -- -- -- 41.48 April 1, 1991
SECURITIES
Lipper U.S. Government 15.75 21.09 -- -- -- 44.66
Lehman Intermediate Government 14.41 21.60 -- -- -- 45.17
BOND 15.48 23.55 49.93 124.86 -- 358.05 April 28, 1981
Lipper Intermediate
Government Funds Average 17.34 22.46 49.41 119.56 -- 337.56
Lehman Aggregate GC 15.33 23.05 51.15 132.76 -- 376.88
QUALITY BOND 16.97 -- -- -- -- 10.37 October 1, 1993
Lipper Corporate Bond A-Rated 18.45 -- -- -- -- 12.58
Lehman Aggregate 18.47 -- -- -- -- 15.09
HIGH YIELD 19.86 43.34 100.17 -- -- 138.60 Januuary 2, 1987
Lipper High Yield 16.44 33.90 116.45 -- -- 118.26
Master High Yield 19.91 38.89 120.85 -- -- 161.50
GROWTH & INCOME 24.01 -- -- -- -- 22.91 October 1, 1993
Lipper Growth & Income 30.82 -- -- -- -- 33.24
75% S&P 500/25% Value Line Conv. 34.93 -- -- -- -- 38.14
EQUITY INDEX 36.41 -- -- -- -- 37.83 March 1, 1994
Lipper S&P Index Funds 36.84 -- -- -- -- 37.40
S&P 500 37.54 -- -- -- -- 39.30
COMMON STOCK 31.85 54.89 138.37 329.91 1800.81 2455.37 July 1, 1969
Lipper Growth Funds Avg. 30.79 42.98 113.39 251.64 1534.57 1506.49
S&P 500e 37.54 53.30 115.25 300.11 1425.04 1677.13
GLOBAL 18.76 64.95 114.04 -- -- 144.65 August 27, 1987
Lipper Global 16.05 48.34 79.41 -- -- 90.34
MSCI World 20.72 55.39 74.20 -- -- 72.38
INTERNATIONAL -- -- -- -- -- 10.66* April 3, 1995
Lipper International -- -- -- -- -- 10.32*
MSCI EAFE -- -- -- -- -- 9.17*
AGGRESSIVE STOCK 31.33 44.87 163.01 325.49 2220.84 1405.00 May 1, 1969
Lipper Small Company
Growth Funds Avg. 31.55 52.74 161.35 269.45 2032.27 1271.48
50% Russell 2000/50% S&P Mid-Cap 29.69 46.89 150.49 259.88 N/A N/A
THE BLENDED FUNDS:
CONSERVATIVE INVESTORS 20.34 27.70 61.75 -- -- 77.32 October 2, 1989
Lipper Income 25.08 36.25 84.60 -- -- 85.64
70% Lehman Treas./30% S&P 500 24.11 34.58 74.09 -- -- 87.24
BALANCED 20.43 24.10 70.32 170.17 -- 780.37 June 25, 1979
Lipper Balanced Portfolio 25.16 35.96 86.17 196.13 -- 703.07
50% S&P 500/50% Lehman Govt./ Corp. 28.39 40.53 87.43 225.59 -- 731.07
GROWTH INVESTORS 26.31 40.86 119.90 -- -- 152.80 October 2, 1989
Lipper Flexible Portfolio 25.08 36.25 84.60 -- -- 85.64
30% Lehman Corp./70% S&P 500 32.05 45.64 98.56 -- -- 102.72
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
*Unannualized
</FN>
</TABLE>
14
<PAGE>
ON PAGE 24, THE CHART UNDER THE HEADING "YEAR-BY-YEAR RATES OF RETURN" IS
DELETED AND IS REPLACED BY THE FOLLOWING:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
INTERMEDIATE
MONEY GOVERNMENT QUALITY HIGH GROWTH & EQUITY COMMON
MARKET SECURITIES BOND BOND YIELD INCOME INDEX STOCK
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1985 8.11% --% 19.53% --% --% --% --% 32.06%
1986 6.55 -- 13.79 -- -- -- -- 13.81
1987 6.58 -- 1.58 -- 4.62* -- -- 5.67
1988 7.27 -- 6.21 -- 9.68 -- -- 16.94
1989 9.13 -- 13.29 -- 5.08 -- -- 44.68
1990 8.19 -- 7.82 -- -1.15 -- -- -11.35
1991 6.13 12.03* 14.45 -- 24.40 -- -- 52.03
1992 3.48 5.54 6.03 -- 12.26 -- -- 1.22
1993 2.94 10.52 9.21 -0.52* 23.08 -0.27* -- 19.81
1994 3.96 -4.42 -2.03 -5.15 -2.83 -0.62 1.04* -1.94
1995 5.69 13.27 15.48 16.97 19.86 24.01 36.41 31.85
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
AGGRESSIVE CONSERVATIVE GROWTH
GLOBAL INTERNATIONAL STOCK INVESTORS BALANCED INVESTORS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1985 --% -- 18.07% --% 25.27% --%
1986 -- -- 1.61 -- 16.19 --
1987 -13.28* -- -2.36 -- -5.34 --
1988 10.83 -- 1.94 -- 14.78 --
1989 26.67 -- 46.97 3.08* 26.48 3.98*
1990 -6.11 -- 8.85 6.35 -0.65 10.56
1991 30.49 -- 87.18 19.79 41.23 48.84
1992 -0.56 -- -3.01 5.74 -2.83 4.88
1993 32.06 -- 15.19 10.71 12.54 15.20
1994 5.18 -- -4.24 -4.15 -8.43 -3.19
1995 18.76 10.66* 31.33 20.34 20.43 26.31
- --------------------------------------------------------------------------------------------------------
<FN>
*Unannualized
</FN>
</TABLE>
ON PAGE 25, THE LAST PARAGRAPH OF THE SECTION ENTITLED "CURRENT AND MINIMUM
INTEREST RATES" IS DELETED AND REPLACED BY THE FOLLOWING:
THE CURRENT RATE OF INTEREST FOR 1996, AND THE 1997 AND 1998 MINIMUM RATES OF
INTEREST GUARANTEED FOR EACH CLASS, ARE STATED IN THE PROPOSAL DOCUMENTS
SUBMITTED TO SPONSORS OF PROSPECTIVE RIA EMPLOYER PLANS. The establishment of
new classes will not decrease the rates applicable to employer plans already
assigned to a previous class. The effective current rate for 1997 and the
minimum rates effective for calendar years 1998 and 1999 will be declared in
December 1996.
ON PAGE 31, THE FIRST PARAGRAPH UNDER THE HEADING "MODIFICATION OF CONTRACT
DISCONTINUANCE/TERMINATION" IS DELETED AND REPLACED BY THE FOLLOWING:
The Contracts are group annuity contracts which may be modified between us and
Chase Manhattan Bank, N.A., under the Master Retirement Trust agreement and, by
such agreement, have been amended from time to time. However, no change to the
Contracts can reduce annuities in the course of payment.
ON PAGE 33, THE SECTION ENTITLED "EXPERTS" IS DELETED AND REPLACED BY THE
FOLLOWING:
The financial statements as of December 31, 1995 and for each of the two years
in the period then ended included in the SAI for Separate Account Nos. 13, 10,
4, 3 and 51, and the condensed financial information for each of the two years
in the period ended December 31, 1995 included in the Supplement and the
financial statements as of December 31, 1995, 1994 and 1993, and for each of the
two years in the period ended December 31, 1995 included in the SAI for
Equitable Life, have been so included in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
ON PAGES 34 THROUGH 35, THE FOURTH, SIXTH AND SEVENTH PARAGRAPHS UNDER THE
HEADING "TAX ASPECTS OF CONTRIBUTIONS TO A PLAN" ARE DELETED AND REPLACED BY THE
FOLLOWING:
The deductible limits for corporate plans and Keogh plans which are defined
benefit plans are based on the minimum funding standard determined by the plan
actuary each year. No participant can receive a benefit which exceeds the lesser
of (i) $90,000 ($120,000 as indexed for inflation for the 1996 plan year) or
(ii) 100% of the participant's average compensation for the consecutive
three-year period which results in the highest such average. The $90,000 limit
is actuarially reduced for participants retiring prior to the social security
retirement age (currently age 65) and actuarially increased for participants
retiring after the social security retirement age. Special grandfathering rules
apply to certain participants whose benefits exceed the $90,000 limit.
15
<PAGE>
A participant cannot elect to defer annually more than $7,000 ($9,500 as indexed
for inflation in 1996) under all salary reduction arrangements in which the
individual participates. If an individual's aggregate elective deferrals under
all such salary reduction arrangements exceeds the permitted elective deferral
limit in any taxable year, the individual will be taxed twice on the excess
deferral -- once in the year of the deferral and again when a distribution
occurs. If the participant notifies the affected plan or plans by March 1 of the
following year and by April 15 of such year takes a distribution of the excess
deferral and related income, the excess deferral will only be taxed once in the
year of the distribution. The excess deferral distribution will not be treated
as an impermissible withdrawal or an "eligible rollover distribution," and will
not be subject to the 10% penalty tax on premature distributions, discussed
below.
A qualified plan must not discriminate in favor of highly compensated employees.
In addition to the general nondiscrimination rule that is applicable to all
qualified pension and profit sharing plans, two special nondiscrimination rules
limit contributions and benefits for highly compensated employees in the case of
(1) a 401(k) plan and (2) any defined contribution plan, whether or not a 401(k)
plan, which provides for employer matching contributions to employee after-tax
contributions or elective deferrals. In both cases the special nondiscrimination
tests compare the deferrals or the aggregate contributions, as the case may be,
made by the eligible highly compensated employees with those made by the
non-highly compensated employees. Coordination rules between the two provisions
are prescribed. Highly compensated participants include five percent owners,
employees earning more than $100,000 per year, employees earning more than
$66,000 per year and who are in the top 20% of all employees based on
compensation, and officers (or deemed officers) earning more than $60,000 per
year (in each case after indexing for inflation in 1996).
ON PAGE 36, THE THIRD PARAGRAPH UNDER THE HEADING "ELIGIBLE ROLLOVER
DISTRIBUTIONS" IS DELETED AND REPLACED BY THE FOLLOWING:
In addition, none of the following is treated as an eligible rollover
distribution:
o any distribution, to the extent that it is a minimum distribution required
under Section 401(a)(9) of the Code (see "Distribution Requirements and
Limits" below);
o certain corrective distributions in plans subject to Sections 401(k), 401(m)
or 402(g) of the Code;
o loans that are treated as deemed distributions under Section 72(p) of the
Code;
o P.S. 58 costs (incurred if the plan provides life insurance protection for
participants);
o dividends paid on employer securities as described in Section 401(k) of the
Code; and
o a distribution to a non-spousal beneficiary.
ON PAGE 37, THE LAST PARAGRAPH UNDER THE HEADING "DISTRIBUTION REQUIREMENTS AND
LIMITS" IS DELETED AND REPLACED BY THE FOLLOWING:
A 15% excise tax is imposed on a participant's aggregate excess distributions
from all tax-favored retirement plans. The excise tax is in addition to the
ordinary income tax due, but is reduced by the amount (if any) of the early
distribution penalty tax imposed by the Code. In addition, in certain cases the
estate tax imposed on a deceased participant's estate will be increased if the
accumulated value of the participant's interests in tax-favored retirement plans
is excessive. The aggregate distributions or accumulations in any year will be
subject to excise tax if they exceed applicable prescribed limits ($155,000 for
1996). Whether a lump sum distribution is excessive for excise tax purposes is
separately calculated. The applicable limits are five times the above limits.
16
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
- ------------------------------------------------------------------------------------------
<S> <C>
PART I -- FUND INFORMATION................................................... 2
General................................................................... 2
Restrictions and Requirements of the Bond, Balanced, Common Stock
and Aggressive Stock Funds.............................................. 2
Certain Investments of the Bond Fund...................................... 2
How We Determine the Unit Value........................................... 3
Summary of Unit Value..................................................... 4
Money Market Yield Information............................................ 8
Brokerage Fees and Charges for Securities Transactions.................... 9
Ongoing Operations Fee.................................................... 10
PART II -- MANAGEMENT FOR THE BOND, BALANCED, COMMON STOCK AND AGGRESSIVE
STOCK FUNDS AND EQUITABLE LIFE............................................ 11
Funds .................................................................... 11
Distribution.............................................................. 11
Equitable Life............................................................ 11
Directors............................................................... 11
Officer-Directors....................................................... 12
Other Officers.......................................................... 12
PART III -- FINANCIAL STATEMENTS............................................. 13
Index..................................................................... 13
Financial Statements...................................................... 14
- ------------------------------------------------------------------------------------------
</TABLE>
If you wish to obtain a free copy of the Statement of Additional Information,
send or fax this request form to:
Equitable Life -- RIA Service Office
Attn. SAI Request
200 Plaza Drive 1st Floor
Secaucus, NJ 07094-3689
Tel: (800) 967-4560
(201) 392-5500
(Business Days, 9 A.M. to 5 P.M. Eastern time)
Fax: (201) 392-2285, 2286 or 2287
- --------------------------------------------------------------------------------
Please send me a copy of the Statement of Additional Information for RIA dated
May 1, 1996.
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip Code
- --------------------------------------------------------------------------------
Client Number
- -----
Check here if you would like another copy of the Prospectus
- -----
<PAGE>
================================================================================
[RIA LOGO]
SEPARATE ACCOUNT UNITS OF INTEREST
UNDER GROUP ANNUITY CONTRACTS
<TABLE>
<S> <C> <C>
o Money Market Fund o Growth & Income Fund Blended Funds:
o Intermediate Government o Equity Index Fund o Conservative Investors Fund
Securities Fund o Common Stock Fund o Balanced Fund
o Bond Fund o Global Fund o Growth Investors Fund
o Quality Bond Fund o International Fund
o High Yield Fund o Aggressive Stock Fund
</TABLE>
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
---------------------------------------------------------
RIA SERVICE OFFICE:
Equitable Life
RIA Service Office
200 Plaza Drive, 1st Floor
Secaucus, NJ 07094-3689
Tel.: (800) 967-4560
(201)392-5500
(9 A.M. to 5 P.M. Eastern time)
Fax: (201) 392-2285, 2286 or 2287
(To obtain pre-recorded Fund unit values, use our toll-free number listed above)
ADDRESS FOR CONTRIBUTIONS ONLY:
Equitable Life
RIA/EPP
P.O. Box 13503
Newark, NJ 07188
EXPRESS MAIL ADDRESS FOR CONTRIBUTIONS ONLY:
First Chicago National Processing Center (FCNPC)
300 Harmon Meadow Boulevard, 3rd Floor
Att: Box 13503
Secaucus, NJ 07094
================================================================================
<PAGE>
888-1114A
- --------------------------------------------------------------------------------
THE EQUITABLE
Mailing Address:
2 Penn Plaza
New York, New York 10121
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1996
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT UNITS OF INTEREST UNDER
GROUP ANNUITY CONTRACTS
<TABLE>
<S> <C> <C>
o MONEY MARKET FUND o GROWTH & INCOME FUND BLENDED FUNDS:
o INTERMEDIATE GOVERNMENT o EQUITY INDEX FUND o CONSERVATIVE INVESTORS FUND
SECURITIES FUND o COMMON STOCK FUND o BALANCED FUND
o BOND FUND o GLOBAL FUND o GROWTH INVESTORS FUND
o QUALITY BOND FUND o INTERNATIONAL FUND
o HIGH YIELD FUND o AGGRESSIVE STOCK FUND
</TABLE>
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
- --------------------------------------------------------------------------------
[RIA LOGO]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
TABLE OF CONTENTS PAGE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
PART I -- FUND INFORMATION .................................................................................... 2
General..................................................................................................... 2
Restrictions and Requirements of the Bond, Balanced, Common Stock and Aggressive Stock Funds ............... 2
Certain Investments of the Bond and Balanced Funds.......................................................... 2
How We Determine the Unit Value............................................................................. 4
Summary of Unit Values ..................................................................................... 5
Money Market Yield Information ............................................................................. 9
Brokerage Fees and Charges for Securities Transactions ..................................................... 10
Ongoing Operations Fee ..................................................................................... 11
PART II -- MANAGEMENT FOR THE BOND, BALANCED, COMMON STOCK AND AGGRESSIVE STOCK FUNDS AND EQUITABLE LIFE....... 12
Funds ...................................................................................................... 12
Distribution ............................................................................................... 12
Equitable Life ............................................................................................. 12
Directors................................................................................................... 12
Officer-Directors .......................................................................................... 13
Other Officers ............................................................................................. 13
PART III -- FINANCIAL STATEMENTS .............................................................................. 14
Index ...................................................................................................... 14
Financial Statements........................................................................................ 14
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
This Statement of Additional Information (SAI) is not a prospectus. It should be
read in conjunction with the prospectus for our Retirement Investment Account
(RIA), dated May 1, 1995 (PROSPECTUS), and the supplement dated May 1, 1996 to
the Prospectus and any additional supplements.
Terms defined in the Prospectus have the same meaning in the SAI unless the
context otherwise requires.
You can obtain a copy of the Prospectus, and any supplements to the Prospectus,
from us free of charge by writing or calling the RIA Service Office listed on
the back of this SAI, or by contacting your Equitable Life Agent. Our Home
Office is located at 787 Seventh Avenue, New York, N.Y. 10019 (212) 554-1234.
- --------------------------------------------------------------------------------
888-1115 (5/96) Copyright 1996 The Equitable Life Assurance Society
of the United States.
All rights reserved.
Cat. No. 126944
<PAGE>
- --------------------------------------------------------------------------------
PART I -- FUND INFORMATION
- --------------------------------------------------------------------------------
GENERAL
In our Prospectus we discuss in more detail, among other things, the structure
of the Bond, Balanced, Common Stock and Aggressive Stock Funds, their investment
objectives and policies, including types of portfolio securities they may hold
and levels of investment risks that may be involved and investment management.
We also summarize certain of these matters with respect to the Investment Funds
and their corresponding Portfolios. See PART I -- RIA SUMMARY AND PART III --
EQUITABLE LIFE AND ITS FUNDS in the Prospectus.
Here we will discuss special restrictions, requirements and transaction expenses
that apply to the Bond, Balanced, Common Stock and Aggressive Stock Funds,
certain investments of the Bond Fund and determination of the value of Units for
all Funds, including some historical information. Investment objectives and
policies, as well as restrictions, requirements and risks pertaining to the
corresponding Portfolios of the Money Market, Intermediate Government
Securities, Quality Bond, High Yield, Growth & Income, Equity Index, Global,
International, Conservative Investors and Growth Investors Funds are found in
the Trust Prospectus and SAI.
RESTRICTIONS AND REQUIREMENTS OF THE BOND, BALANCED, COMMON STOCK AND AGGRESSIVE
STOCK FUNDS
Neither the Common Stock Fund nor the Balanced Fund will make an investment in
an industry if that investment would cause the Fund's holding in that industry
to exceed 25% of the Fund's assets.
The Bond Fund, Common Stock Fund and Aggressive Stock Funds will not purchase or
write puts or calls (options). The Balanced Fund's investment policies do not
prohibit hedging transactions such as through the use of put and call options
and stock index or interest rate futures. However, the Balanced Fund currently
has no plans to enter into such transactions.
The following investment restrictions apply to the Bond, Balanced, Common Stock
and Aggressive Stock Funds. None of those Funds will:
o trade in foreign exchange (except transactions incidental to the settlement
of purchases or sales of securities for a Fund and contracts for the purchase
or sale of a specific foreign currency at a future date at a price set at the
time of the contract);
o make an investment in order to exercise control or management over a company;
o underwrite the securities of other companies, including purchasing securities
that are restricted under the 1933 Act or rules or regulations thereunder
(restricted securities cannot be sold publicly until they are registered
under the 1933 Act), except as stated below;
o make short sales, except when the Fund has, by reason of ownership of other
securities, the right to obtain securities of equivalent kind and amount that
will be held so long as they are in a short position;
o trade in commodities or commodity contracts (except the Balanced Fund is not
prohibited from entering into hedging transactions through the use of stock
index or interest rate futures);
o purchase real estate or mortgages, except as stated below. The Funds may buy
shares of real estate investment trusts listed on stock exchanges or reported
on NASDAQ;
o have more than 5% of its assets invested in the securities of any one
registered investment company. A Fund may not own more than 3% of a
registered investment company's outstanding voting securities. The Fund's
total holdings of registered investment company securities may not exceed 10%
of the value of the Fund's assets;
o purchase any security on margin or borrow money except for short-term credits
necessary for clearance of securities transactions;
o make loans, except loans through the purchase of debt obligations or through
entry into repurchase agreements; or
o invest more than 10% of its total assets in restricted securities, real
estate investments, or portfolio securities not readily marketable.
CERTAIN INVESTMENTS OF THE BOND AND BALANCED FUNDS
The following are brief descriptions of certain types of investments which may
be made by the Bond and Balanced Funds and certain risks and investment
techniques.
MORTGAGE PASS-THROUGH SECURITIES. The Bond and Balanced Funds may invest in
mortgage pass-through securities, which are securities representing interests in
pools of mortgages. Principal and interest payments made on the mortgages in the
pools are passed through to the holder of such securities. Payment of principal
and interest on some mortgage pass-through securities (but not the market value
of the securities themselves) may be
2
<PAGE>
guaranteed by the full faith and credit of the U.S. Government (in the case of
securities guaranteed by the Government National Mortgage Association, or
"GNMA"), or guaranteed by agencies or instrumentalities of the U.S. Government
(in the case of securities guaranteed by the Federal National Mortgage
Association ("FNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC")
which are supported only by discretionary authority of the U.S. Government to
purchase the agency's obligations). Mortgage pass-through securities created by
non-governmental issuers (such as commercial banks, savings and loan
institutions, private mortgage insurance companies, mortgage bankers, and other
secondary market issuers) may be supported by various forms of insurance or
guarantees, including individual loan, title, pool, and hazard insurance, and
letters of credit, which may be issued by governmental entities, private
insurers or the mortgage poolers.
COLLATERALIZED MORTGAGE OBLIGATIONS. The Bond and Balanced Funds may invest in
collateralized mortgage obligations ("CMOs"). CMOs are debt securities
collateralized by underlying mortgage loans or pools of mortgage pass-through
securities guaranteed by GNMA, FHLMC or FNMA and are generally issued by limited
purpose finance subsidiaries of U.S. Government instrumentalities. CMOs are not,
however, mortgage pass-through securities. Rather, they are pay-through
securities, i.e., securities backed by the cash flow from the underlying
mortgages. Investors in CMOs are not owners of the underlying mortgages, which
serve as collateral for such debt securities, but are simply owners of a debt
security backed by such pledged assets. CMOs are typically structured into
multiple classes, with each class bearing a different stated maturity and having
different payment streams. Monthly payments of principal, including prepayments,
are first returned to investors holding the shortest maturity class; investors
holding longer maturity classes receive principal payments only after the
shorter class or classes have been retired.
ASSET-BACKED SECURITIES. The Bond and Balanced Funds may purchase asset-backed
securities that represent either fractional interests or participation in pools
of leases, retail installment loans or revolving credit receivables held by a
trust or limited purpose finance subsidiary. Such asset-backed securities may be
secured by the underlying assets (such as Certificates for Automobile
Receivables) or may be unsecured (such as Credit Card Receivable Securities).
Depending on the structure of the asset-backed security, monthly or quarterly
payments of principal and interest or interest only are passed-through like
mortgage pass-through securities or paid through (like CMOs) to certificate
holders. Asset-backed securities may be guaranteed up to certain amounts by
guarantees, insurance or letters of credit issued by a financial institution
affiliated or unaffiliated with the originator of the pool.
Underlying automobile sales contracts and credit card receivables are, of
course, subject to prepayment (although to a lesser degree than mortgage
pass-through securities), which may shorten the securities' weighted average
life and reduce their overall return to certificate holders. Certificate holders
may also experience delays in payment if the full amounts due on underlying
loans, leases or receivables are not realized because of unanticipated legal or
administrative costs of enforcing the contracts or because of depreciation or
damage to the collateral (usually automobiles) securing certain contracts, or
other factors. The value of these securities also may change because of changes
in the market's perception of the creditworthiness of the servicing agent for
the pool, the originator of the pool, or the financial institution providing
credit support enhancement for the pool. If consistent with its investment
objective and policies, the Bond and Balanced Funds may invest in other
asset-backed securities that may be developed in the future.
ZERO-COUPON BONDS. The Bond and Balanced Funds may invest in zero-coupon bonds.
Such bonds may be issued directly by agencies and instrumentalities of the U.S.
Government or by private corporations. Zero-coupon bonds may originate as such
or may be created by stripping an outstanding bond. Zero-coupon bonds do not
make regular interest payments. Instead, they are sold at a deep discount from
their face value. Because a zero-coupon bond does not pay current income, its
price can be very volatile when interest rates change.
REPURCHASE AGREEMENTS. In repurchase agreements, the Bond or Balanced Fund buys
securities from a seller, usually a bank or brokerage firm, with the
understanding that the seller will repurchase the securities at a higher price
at a future date. During the term of the repurchase agreement the Fund retains
the securities subject to the repurchase agreement as collateral securing the
seller's repurchase obligation, continually monitors on a daily basis the market
value of the securities subject to the agreement and requires the seller to
deposit with the Fund collateral equal to any amount by which the market value
of the securities subject to the repurchase agreement falls below the resale
amount provided under the repurchase agreement. We evaluate the creditworthiness
of sellers with whom we enter into repurchase agreements. Such transactions
afford an opportunity for the Fund to earn a fixed rate of return on available
cash at minimal market risk, although the Fund may be subject to various delays
and risks of loss if the seller is unable to meet its obligation to repurchase.
The Funds currently treat repurchase agreements maturing in more than seven days
as illiquid securities.
DEBT SECURITIES SUBJECT TO PREPAYMENT RISKS. Mortgage pass-through securities
and certain collateralized mortgage obligations, asset-backed securities and
other debt instruments in which the Balanced Fund may invest are subject to
prepayments prior to their stated maturity. It is usually not possible to
accurately predict the rate at which prepayments will be made, which rate may be
affected, among other things, by changes in generally
3
<PAGE>
prevailing market interest rates. If prepayments occur, the Fund suffers the
risk that it will not be able to reinvest the proceeds at as high a rate of
interest as it had previously been receiving. Also, the Fund will incur a loss
to the extent that prepayments are made for an amount that is less than the
value at which the security was then being carried by the Fund. Moreover,
securities that may be prepaid tend to increase in value less during times of
declining interest rates, and to decrease in value more during times of
increasing interest rates, than do securities that are not subject to
prepayment.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Bond and Balanced Funds may
purchase and sell securities on a when-issued or delayed delivery basis. In
these transactions, securities are purchased or sold by a Fund with payment and
delivery taking place in the future in order to secure what is considered to be
an advantageous price or yield to the Fund at the time of entering into the
transaction. However, the market value of such securities at the time of
settlement may be more or less than the purchase price then payable. When a Fund
engages in when-issued or delayed delivery transactions, the Fund relies on the
other party to consummate the transaction. Failure to consummate the transaction
may result in the Fund missing the opportunity of obtaining a price or yield
considered to be advantageous. When-issued and delayed delivery transactions are
generally expected to settle within three months from the date the transactions
are entered into, although the Fund may close out its position prior to the
settlement date. A Fund will sell on a forward settlement basis only securities
it owns or has the right to acquire.
FOREIGN CURRENCY FORWARD CONTRACTS. The Balance Fund may enter into contracts
for the purchase or sale of a specific foreign currency at a future date at a
price set at the time of the contract. Generally, such forward contracts will be
for a period of less than three months. The Fund will enter into such forward
contracts for hedging purposes only. These transactions will include forward
purchases or sales of foreign currencies for the purpose of protecting the
dollar value of securities denominated in a foreign currency or protecting the
dollar equivalent of interest or dividends to be paid on such securities.
Forward contracts are traded in the inter-bank market, and not on organized
commodities or securities exchanges. Accordingly, the Fund is dependent upon the
good faith and creditworthiness of the other party to the transaction, as
evaluated by the Fund's manager. To the extent inconsistent with any
restrictions in the SAI concerning the Fund's trading in foreign exchange, this
paragraph will control.
HEDGING TRANSACTIONS. The Balanced Fund may engage in hedging transactions which
are designed to protect against anticipated adverse price movements in
securities owned or intended to be purchased by the Fund. When interest rates go
up, the market value of outstanding debt securities declines and vice versa. In
recent years the volatility of the market for debt securities has increased
significantly, and market prices of longer-term obligations have been subject to
wide fluctuations, particularly as contrasted with those of short-term
instruments. The Fund will take certain risks into consideration when
determining which, if any, options or financial futures contracts it will use.
If the price movements of hedged portfolio securities are in fact favorable to
the Fund, the hedging transactions will tend to reduce and may eliminate the
economic benefit to the Fund which otherwise would result. Also, the price
movements of options and futures used for hedging purposes may not correlate as
anticipated with price movements of the securities being hedged. This can make a
hedge transaction less effective than anticipated and could result in a loss.
The options and futures markets can sometimes become illiquid and the exchanges
on which such instruments are traded may impose trading halts or delays on the
exercise of options and liquidation of futures positions in certain
circumstances. This could in some cases operate to the Fund's detriment.
HOW WE DETERMINE THE UNIT VALUE
In our Prospectus, we discuss how employer plan assets are put into and taken
out of the Funds by the purchase and redemption of Units under the Contracts,
respectively. See PART III -- EQUITABLE LIFE AND ITS FUNDS in the Prospectus.
Here we will discuss how we determine the value of Units.
When contributions are invested in the Funds, the number of Units outstanding
attributable to each Fund is correspondingly increased; and when amounts are
withdrawn from one of these Funds, the number of Units outstanding attributable
to that Fund is correspondingly decreased.
We calculate Unit values at the end of each Business Day. For the Bond,
Balanced, Common Stock and Aggressive Stock Funds, the Unit values reflect
investment performance and investment management and financial accounting fees.
We determine the respective Unit values for these Funds by multiplying the Unit
value for the preceding Business Day by the net investment factor for that
subsequent day. We determine the net investment factor as follows:
o First, we take the value of the Fund's assets at the close of business on the
preceding Business Day.
o Next, we add the investment income and capital gains, realized and
unrealized, that are credited to the assets of the Fund during the Business
Day for which the net investment factor is being determined.
o Then, we subtract the capital losses, realized and unrealized, and investment
management and financial accounting fees charged to the Fund during that
Business Day.
4
<PAGE>
o Finally, we divide this amount by the value of the Fund's assets at the close
of the preceding Business Day.
Prior to June 1, 1994, for the Bond, Balanced, Common Stock and Aggressive Stock
Funds, the investment management and financial accounting fees were deducted
monthly from employer plan balances in these Funds.
Assets of the Bond, Balanced, Common Stock and Aggressive Stock Funds are valued
as follows:
o Common stocks and other equity-type securities listed on national securities
exchanges and certain over-the-counter issues traded on the NASDAQ system are
valued at the last sale price or, if no sale, at the latest available bid
price. Other unlisted securities reported on the NASDAQ system are valued at
inside (highest) quoted bid prices.
o Foreign securities not traded directly, or in ADR form in the United States
are valued at the last sale price in the local currency on an exchange in the
country of origin. Foreign currency is converted into dollars at current
exchange rates.
o United States Treasury securities and other obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities are valued
at representative quoted prices.
o Long-term (i.e., maturing in more than a year) publicly traded corporate
bonds are valued at prices obtained from a bond pricing service of a major
dealer in bonds when such prices are available; however, in circumstances
where it is deemed appropriate to do so, an over-the-counter or exchange
quotation may be used.
o Short-term debt securities maturing in 60 days or less are valued at
amortized cost, which approximates market value. Short-term debt securities
maturing in more than 60 days are valued at representative quoted prices. The
Funds can acquire short-term debt securities directly or through the
acquisition of units in our Separate Account No. 2A. See PART III --
EQUITABLE LIFE AND ITS FUNDS in the Prospectus.
o Convertible preferred stocks listed on national securities exchanges are
valued as of their last sale price or, if there is no last sale, at the
latest available bid price.
o Convertible bonds and unlisted convertible preferred stocks are valued at bid
prices obtained from one or more major dealers in such securities; where
there is a discrepancy between dealers, values may be adjusted based on
recent premium spreads to the underlying common stock.
o The unit value of Separate Account No. 2A is calculated each day the New York
Stock Exchange is open for trading by dividing (i) the value of the portfolio
securities and other assets of Separate Account No. 2A at the close of the
business on that day (before giving effect to amounts contributed or
withdrawn during that day), by (ii) the total number of units outstanding at
the close of business on the preceding day. Separate Account No. 2A invests
in short-term securities which mature in 60 days or less from the date of
purchase or are subject to a repurchase agreement requiring repurchase in 60
days or less. The assets of Separate Account No. 2A are valued as described
with respect to the Separate Accounts.
The Unit value for an Investment Fund of Separate Account No. 51 for any
Business Day (together with any preceding non-Business Days (VALUATION PERIOD)
is equal to the Unit value for the preceding Valuation Period multiplied by the
net investment factor for that Investment Fund for that Valuation Period. The
net investment factor for a Valuation Period is
(a\b) - c
where
a is the value of the Investment Fund's shares of the corresponding Portfolio
at the end of the Valuation Period before giving effect to any amounts
allocated to or withdrawn from the Investment Fund for the Valuation Period.
For this purpose, we use the share value reported to us by the Trust. This
share value is after deduction for investment advisory fees and other
expenses of the Trust.
b is the value of the Investment Fund's shares of the corresponding Portfolio
at the end of the preceding Valuation Period (after any amounts are allocated
or withdrawn for that Valuation Period).
c is the daily factor for the Separate Account Administrative Charge multiplied
by the number of calendar days in the Valuation Period.
Our investment officers and the Trust's investment adviser determine in good
faith the fair value of securities and other assets that do not have a readily
available market price in accordance with accepted accounting practices and
applicable laws and regulations.
See PART III -- EQUITABLE LIFE AND ITS FUNDS in the Prospectus.
SUMMARY OF UNIT VALUES
All of the Funds were established by us pursuant to the New York Insurance Law.
The Bond, Balanced, Common Stock and Aggressive Stock Funds were established in
1981, 1979, 1969 and 1969, respectively. We show in the tables below the Unit
values of these Funds on the last Business Day of each year since each Fund
began operations. However, Units in the Funds were not made available under RIA
until subsequent dates.
5
<PAGE>
Prior to June 1, 1994, the Unit values quoted for the Bond, Balanced, Common
Stock and Aggressive Stock Funds did not reflect the deduction of the Investment
Management and Financial Accounting Fee. That fee was assessed by reducing the
number of Units that the employer plan had in these Funds. The Unit values shown
for the periods included in the following table through the last business day of
December, 1993 reflect the actual performance of the Funds before the Investment
Management and Financial Accounting Fee had been reflected in their computation.
The Investment Management and Financial Accounting Fee is reflected in Unit
values for the last business day of 1994 and 1995.
We established the Growth Investors, Conservative Investors and Global Investors
Funds as Investment Funds of Separate Account No. 51 in 1993. The Money Market,
Intermediate Government Securities, Quality Bond, High Yield, Growth & Income
and Equity Index Funds were established as Investment Funds of Separate Account
No. 51 in 1994 and the International Fund was established on September 1, 1995.
The tables below set forth the Unit values as of the end of each year since each
Fund began operations.
See GENERAL in this SAI. In computing the Unit values, no provisions have been
made for the effect of taxes on income and gains or upon distribution.
THE UNIT VALUES REFLECT THOSE CHARGES AND FEES AS DESCRIBED IN THE RIA
PROSPECTUS UNDER PART II. ALSO DESCRIBED IN PART II ARE CHARGES AND FEES WHICH
ARE PAID BY THE REDUCTION OF THE NUMBER OF UNITS CREDITED TO AN EMPLOYER PLAN
UNDER RIA.
6
<PAGE>
The following Unit values are provided to demonstrate the changes for the period
shown.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
BOND FUND
(SEPARATE ACCOUNT NO. 13 -- POOLED)
- ------------------------------------------------------------------------------------------------------------------------------
Last Business Last Business
Day of Fund Day of Fund
December Unit Value December Unit Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1981 $11.11 1989 $29.59
1982 14.18 1990 32.07
1983 15.15 1991 36.89
1984 17.36 1992 39.31
1985 20.85 1993 43.14
1986 23.85 1994 42.35*
1987 24.35 1995 48.91*
1988 25.99
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
BALANCED FUND
(SEPARATE ACCOUNT NO. 10 -- POOLED)
- ------------------------------------------------------------------------------------------------------------------------------
Last Business Last Business
Day of Fund Day of Fund
December Unit Value December Unit Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1979 $11.17 1988 $43.14
1980 16.32 1989 54.84
1981 15.41 1990 54.75
1982 22.32 1991 77.72
1983 26.13 1992 75.90
1984 26.74 1993 85.85
1985 33.66 1994 78.77*
1986 39.31 1995 94.86*
1987 37.40
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK FUND
(SEPARATE ACCOUNT NO. 4 -- POOLED)
- ------------------------------------------------------------------------------------------------------------------------------
Last Business Last Business
Day of Fund Day of Fund
December Unit Value December Unit Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1969 $15.47 1983 $ 78.26
1970 15.87 1984 76.85
1971 20.18 1985 102.00
1972 25.40 1986 116.67
1973 23.46 1987 123.90
1974 17.06 1988 145.61
1975 21.94 1989 211.73
1976 26.01 1990 188.63
1977 23.79 1991 288.23
1978 26.56 1992 293.22
1979 35.21 1993 353.07
1980 52.91 1994 346.92*
1981 51.22 1995 457.41*
1982 64.94
</TABLE>
- ----------------
* The 1994 and 1995 Unit values reflect the deduction of the Investment
Management and Financial Accounting Fee.
7
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
AGGRESSIVE STOCK FUND
(SEPARATE ACCOUNT NO. 3 -- POOLED)
- ------------------------------------------------------------------------------------------------------------------------------
Last Business Last Business
Day of Fund Day of Fund
December Unit Value December Unit Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1969 $ 8.69 1983 $ 36.05
1970 7.26 1984 32.41
1971 8.63 1985 38.45
1972 9.73 1986 39.27
1973 7.07 1987 38.53
1974 4.72 1988 39.48
1975 6.71 1989 58.31
1976 7.91 1990 63.79
1977 7.52 1991 120.00
1978 8.95 1992 116.98
1979 14.66 1993 135.42
1980 23.81 1994 129.95*
1981 20.76 1995 170.67*
1982 27.45
</TABLE>
- ----------------
*The 1994 and 1995 Unit value reflects the deduction of the Investment
Management and Financial Accounting Fee.
- --------------------------------------------------------------------------------
MONEY MARKET FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $102.65
1995 108.49
- --------------------------------------------------------------------------------
INTERMEDIATE GOVERNMENT SECURITIES FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $ 98.94
1995 112.07
- --------------------------------------------------------------------------------
QUALITY BOND FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $ 99.83
1995 116.76
- --------------------------------------------------------------------------------
HIGH YIELD FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $ 98.99
1995 118.64
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $ 99.81
1995 123.78
- --------------------------------------------------------------------------------
EQUITY INDEX FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $101.71
1995 138.75
- --------------------------------------------------------------------------------
GLOBAL FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $ 99.84
1995 118.56
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1995 $104.60
- --------------------------------------------------------------------------------
CONSERVATIVE INVESTORS FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $ 99.83
1995 120.14
- --------------------------------------------------------------------------------
GROWTH INVESTORS FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $ 99.52
1995 125.70
MONEY MARKET YIELD INFORMATION
The Money Market Fund calculates yield information for seven-day periods. The
seven-day current yield calculation is based on a hypothetical employer plan
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 Ongoing Operations Fee factor
(explained below). This reduction is made to recognize the deduction of the
Ongoing Operations Fee which is not reflected in the Unit value. See
9
<PAGE>
ONGOING OPERATIONS FEE IN PART II -- CHARGES AND FEES of the prospectus.
Accumulation Unit Values reflect all other accrued expenses of the 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 Ongoing Operations Fee that is deducted from the
Money Market Fund will vary for each employer plan depending upon how the plan's
balance is allocated among the Investment Options. To determine the effect of
the Ongoing Operations Fee on the yield, we start with the total dollar amount
of the fees deducted from the Fund on the last Business Day of the prior month.
This amount is multiplied by 7/30.417 to produce an average Ongoing Operations
Fee factor which is used in all weekly yield computations for the ensuing
quarter. The average Ongoing Operations Fee factor and the Separate Account
Administrative Charge is then divided by the number of Money Market Fund Units
as of the end of the prior month, 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 Money Market Fund yield 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 Money Market Fund yield reflects charges that are not normally reflected in
the yields of other investments and therefore may be lower when compared with
yields of other investments. 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 Interest Account 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 earnings in dividends which accrue
on a daily basis.
The Money Market Fund's seven-day current yield for the RIA Contracts was 4.60%
for the period ended December 31, 1995. The effective yield for that period was
4.71%. Because these yields reflect the deduction of the Ongoing Operations Fee
and the Separate Account Administrative Charge, they are lower than the
corresponding yield figures for the Money Market Portfolio which reflect only
the deduction of Trust-level expenses.
BROKERAGE FEES AND CHARGES FOR SECURITIES TRANSACTIONS
We discuss in the Prospectus that we are the investment manager of the Bond,
Balanced, Common Stock and Aggressive Stock Funds. As the investment manager of
these Funds, we invest and reinvest the assets of these Funds in a manner
consistent with the policies described in the Prospectus. In providing these
services we currently use the personnel and facilities of our majority-owned
subsidiary, Alliance, for portfolio selection and transaction services,
including arranging the execution of portfolio transactions. Alliance is also
the investment manager for the Trust. Information on brokerage fees and charges
for securities transactions for the Trust's Portfolios is provided in the Trust
prospectus. See PART III -- EQUITABLE LIFE AND ITS FUNDS -- INVESTMENT
MANAGEMENT in the Prospectus.
The Bond, Balanced, Common Stock and Aggressive Stock Funds are charged for
securities brokers commissions, transfer taxes and other fees and expenses
relating to their operation. Transactions in equity securities for a Fund are
executed primarily through brokers which receive a commission paid by the Fund.
Brokers are selected by Alliance. Alliance seeks to obtain the best price and
execution of all orders placed for the portfolio of the Funds, considering all
the circumstances. If transactions are executed in the over-the-counter market
Alliance will deal with the principal market makers, unless more favorable
prices or better execution is otherwise obtainable. There are occasions on which
portfolio transactions for the Funds may be executed as part of concurrent
authorizations to purchase or sell the same security for certain other accounts
or clients advised by Alliance. Although these concurrent authorizations
potentially can be either advantageous or disadvantageous to the Funds, they are
effected only when it is believed that to do so is in the best interest of the
Funds. When these concurrent authorizations occur, the objective is to allocate
the executions among the accounts or clients in a fair manner.
We try to choose only brokers which we believe will obtain the best prices and
executions on securities transactions. Subject to this general requirement, we
also consider the amount and quality of securities research services provided by
a broker. Typical research services include general economic information and
analyses and specific information on and analyses of companies, industries and
markets. Factors in evaluating research services include the diversity of
sources used by the broker and the broker's experience, analytical ability and
professional stature.
The receipt of research services from brokers tends to reduce our expenses in
managing the Bond, Balanced, Common Stock and Aggressive Stock Funds. This is
taken into account when setting the expense charges. Brokers who provide
research services may charge
10
<PAGE>
somewhat higher commissions than those who do not. However, we will select only
brokers whose commissions we believe are reasonable in all the circumstances.
We periodically evaluate the services provided by brokers and prepare internal
proposals for allocating among those various brokers business for all the
accounts we manage or advise. That evaluation involves consideration of the
overall capacity of the broker to execute transactions, its financial condition,
its past performance and the value of research services provided by the broker
in servicing the various accounts advised or managed by us. Generally, we do not
tell brokers that we will try to allocate a particular amount of business to
them. We do occasionally let brokers know how their performance has been
evaluated.
Research information obtained by us may be used in servicing all clients or
accounts under our management, including our general account. Similarly, not all
research provided by a broker or dealer with which the Funds transact business
will necessarily be used in connection with those Funds.
Transactions for the Bond, Balanced, Common Stock and Aggressive Stock Funds in
the over-the-counter market are normally executed as principal transactions with
a dealer that is a principal market maker in the security, unless a better price
or better execution can be obtained from another source. Under these
circumstances, the Funds pay no commission. Similarly, portfolio transactions in
money market and debt securities will normally be executed through dealers or
underwriters under circumstances where the Fund pays no commission.
When making securities transactions for the Bond, Balanced, Common Stock and
Aggressive Stock Funds that do not involve paying a brokerage commission (such
as the purchase of short-term debt securities), we seek to obtain prompt
execution in an effective manner at the best price. Subject to this general
objective, we may give orders to dealers or underwriters who provide investment
research. None of the Funds will pay a higher price, however, and the fact that
we may benefit from such research is not considered in setting the expense
charges.
In addition to using brokers and dealers to execute portfolio securities
transactions for clients or accounts we manage, we may enter into other types of
business transactions with brokers or dealers. These other transactions will be
unrelated to allocation of the Funds' portfolio transactions.
We own Donaldson, Lufkin & Jenrette Inc. (DLJ). A DLJ subsidiary, Donaldson,
Lufkin & Jenrette Securities Corporation (DLJ SECURITIES CORP.), is one of the
nation's largest investment banking and securities firms. Another DLJ
subsidiary, Autranet, Inc., is a securities broker that markets independently
originated research to institutions. Through the Pershing Division of DLJ
Securities Corp., DLJ supplies correspondent services, including order
execution, securities clearance and other financial services to numerous
independent regional securities firms and banks.
To the extent permitted by law, and consistent with the Fund transaction
practices discussed in this SAI and the Prospectus, the Bond, Balanced, Common
Stock and Aggressive Stock Funds may engage in securities and other transactions
with the above entities or may invest in shares of the investment companies with
which those entities have affiliations. During 1993, there were no transactions
effected through DLJ subsidiaries and therefore no commissions were paid.
For 1995, 1994 and 1993, total brokerage commissions for Separate Account No. 10
- -- Pooled were $1,016,342, $801,704 and $820,212, respectively; for Separate
Account 4 -- Pooled were $6,044,623, $4,738,796 and $3,407,006, respectively;
and for Separate Account No. 3 -- Pooled were $1,547,073, $908,990 and $616,015,
respectively. For 1995, total brokerage commissions for Separate Account No. 13
- -- Pooled were $0. During 1995, commissions of $979,372, $5,731,568 and
$1,501,282 were paid to brokers providing research services to Separate Account
No. 10 -- Pooled, Separate Account No. 4 -- Pooled and Separate Account No. 3 --
Pooled, respectively, on portfolio transactions of $511,780,144, $3,120,414,654
and $606,654,623, respectively.
ONGOING OPERATIONS FEE
We determine the Ongoing Operations Fee based on the combined net balances of an
employer plan in all the Investment Options (including any outstanding loan
balances) at the close of business on the last Business Day of each month. For
employer plans that adopted RIA on or before February 9, 1986, we use the rate
schedule set forth below, and apply it to the employer plan balances at the
close of business on the last Business Day of the following month. For employer
plans that adopted RIA after February 9, 1986 we use the rate schedule set forth
in the Prospectus. See PART II -- CHARGES AND FEES in the Prospectus.
COMBINED BALANCE MONTHLY
OF INVESTMENT OPTIONS RATE
- ----------------------------------------------------------------
First $ 150,000 1/12 of 1.25%
Next $ 350,000 1/12 of 1.00%
Next $ 500,000 1/12 of 0.75%
Next $1,500,000 1/12 of 0.50%
Over $2,500,000 1/12 of 0.25%
11
<PAGE>
- --------------------------------------------------------------------------------
PART II -- MANAGEMENT FOR THE BOND, BALANCED, COMMON
STOCK AND AGGRESSIVE STOCK FUNDS AND EQUITABLE LIFE
- --------------------------------------------------------------------------------
FUNDS
In the Prospectus we give information about us, our Bond, Balanced, Common Stock
and Aggressive Stock Funds and how we, together with Alliance, provide
investment management for the investments and operations of these Funds. See
PART III -- EQUITABLE LIFE AND ITS FUNDS in the Prospectus. The amounts of the
investment management and financial accounting fees we received from employer
plans participating through registered Contracts in the Balanced, Common Stock
and Aggressive Stock Funds in 1995 were $35,578, $55,579 and $20,636
respectively; in 1994 were $36,984, $46,821 and $16,789, respectively; in 1993
were $34,038, $38,179, and $13,873, respectively. The amount of such fees
received under the Bond Fund in 1995, 1994 and 1993 were $455, $219 and $70,
respectively.
DISTRIBUTION
Equico Securities, Inc. (Equico), a wholly-owned subsidiary of Equitable Life,
on or about May 1, 1996 will change its name to EQ Financial Consultants, Inc.
Equico performs all sales functions for the Separate Accounts and may be deemed
to be their principal underwriter under the 1940 Act and is also the principal
underwriter of the Trust. Equico 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. Equico's principal business
address is 1755 Broadway, New York, New York 10019. The contracts are
distributed through Equitable's Agents who are registered representatives of
Equico.
EQUITABLE LIFE
We are managed by a Board of Directors. See PART III -- EQUITABLE LIFE AND ITS
FUNDS in the Prospectus. Our Directors, certain of our executive officers and
their principal occupations are set forth below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
Name Principal Occupation
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Claude Bebear Chairman and Chief Executive Officer, AXA
Christopher Brocksom Chief Executive Officer, AXA Equity and Law Life Assurance Society
Francoise Colloc'h Executive Vice President -- Culture -- Management -- Communications, AXA
*Henri de Castries Executive Vice President -- Finance, AXA
Joseph L. Dionne Chairman and Chief Executive Officer, The McGraw-Hill Companies
*William T. Esrey Chairman and Chief Executive Officer, Sprint Corporation
Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone-Poulenc, S.A.
Norman C. Francis President, Xavier University of Louisiana
Donald J. Greene Counselor-at-Law, Partner, LeBoeuf, Lamb, Greene & MacRae
Anthony J. Hamilton Chairman and Chief Executive Officer, Fox-Pitt, Kelton Limited
John T. Hartley Retired Chairman and Chief Executive Officer, Harris Corporation
*John H. F. Haskell, Jr. Director and Managing Director, Dillon, Read & Co., Inc.
*W. Edwin Jarmain President, Jarmain Group, Inc.
Don Johnston Retired Chairman and Chief Executive Officer, JWT Group, Inc.
*Winthrop Knowlton Chairman, Knowlton Brothers, Inc.
Arthur L. Liman Counselor-at-Law, Partner, Paul, Weiss, Rifkind, Wharton & Garrison
George T. Lowy Counselor-at-Law, Partner, Cravath, Swaine & Moore
Didier Pineau-Valencienne Chairman and Chief Executive Officer, Schneider S.A.
*George J. Sella, Jr. Retired Chairman and Chief Executive Officer, American Cyanamid Company
*Dave H. Williams Chairman and Chief Executive Officer, Alliance Capital Management, L.P.
<FN>
- ---------------
* MEMBERS OF OUR INVESTMENT COMMITTEE
</FN>
</TABLE>
12
<PAGE>
Unless otherwise indicated, the following persons have been involved in the
management of Equitable Life in various executive positions during the last five
years.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
OFFICER-DIRECTORS
Name Principal Occupation
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
*James M. Benson President and Chief Executive Officer; prior thereto, President, Management
Compensation Group
*William T. McCaffrey Senior Executive Vice President and Chief Operating Officer,
Equitable Life
*Joseph P. Melone President and Chief Executive Officer, The Equitable Companies
Incorporated; Chairman of the Board, Equitable Life prior thereto,
President, The Prudential Insurance Company of America
- --------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
Name Principal Occupation
- --------------------------------------------------------------------------------------------------------------------------------
Jerry M. de St. Paer Senior Executive Vice President and Chief Financial Officer
Robert E. Garber Executive Vice President and General Counsel
Peter D. Noris Executive Vice President and Chief Investment Officer; prior thereto
Vice President / Manager Insurance Company Investment Strategies
Group, Salomon Brothers, Inc.
Jose Suquet Executive Vice President and Chief Agency Officer
Gordon G. Dinsmore Senior Vice President
Alvin H. Fenichel Senior Vice President and Controller
J. Thomas Liddle, Jr. Senior Vice President and Chief Valuation Actuary
Kevin R. Byrne Vice President and Treasurer
Paul J. Flora Vice President and Auditor
Pauline Sherman Vice President, Secretary and Associate General Counsel
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
- ---------------
* MEMBERS OF OUR INVESTMENT COMMITTEE
</FN>
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
PART III -- FINANCIAL STATEMENTS
INDEX
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
SEPARATE ACCOUNT NOS. 13
(POOLED), 10(POOLED), 4(POOLED), Report of Independent Accountants --...............................................FSA-1
3(POOLED) AND 51 (POOLED)
- -----------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Statement of Assets and Liabilities, December 31, 1995............................ FSA-2
NO. 13(POOLED) Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1995 and 1994............................................ FSA-3
Portfolio of Investments, December 31, 1995....................................... FSA-4
- -----------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Statement of Assets and Liabilities, December 31, 1995............................ FSA-5
NO. 10(POOLED) Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1995 and 1994............................................ FSA-6
Portfolio of Investments, December 31, 1995....................................... FSA-7
- -----------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Statement of Assets and Liabilities, December 31, 1995............................ FSA-15
NO. 4(POOLED) Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1995 and 1994............................................ FSA-16
Portfolio of Investments, December 31, 1995....................................... FSA-17
- -----------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Statement of Assets and Liabilities, December 31, 1995............................ FSA-21
NO. 3(POOLED) Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1995 and 1994............................................ FSA-22
Portfolio of Investments, December 31, 1995....................................... FSA-23
- -----------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Statement of Assets and Liabilities, December 31, 1995............................ FSA-27
NO. 51(POOLED) The Money Market and Intermediate Government Securities
(THE MONEY MARKET, Funds Statements of Operations and Changes in Net Assets
INTERMEDIATE GOVERNMENT for the Year Ended December 31, 1995 and for the Period
SECURITIES, QUALITY BOND, June 1, 1994 to December 31, 1994................................................. FSA-30
HIGH YIELD, GROWTH & INCOME, The Quality Bond and High Yield Funds Statements of
EQUITY INDEX, GLOBAL, Operations and Changes in Net Assets for the Period
INTERNATIONAL, CONSERVATIVE June 1, 1994 to December 31, 1995................................................. FSA-31
INVESTORS AND GROWTH The Growth & Income and Equity Index Funds Statements
INVESTORS FUNDS) of Operations and Changes in Net Assets for the Year
Ended December 31, 1995 and for the Period June 1, 1994
to December 31, 1994.............................................................. FSA-32
The Global Fund Statements of Operations and Changes in Net
Assets for the Years Ended December 31, 1995 and 1994,
and the International Fund Statement of Operations and
Changes in Net Assets for the Period September 19, 1995
to December 31, 1995.............................................................. FSA-33
The Conservative Investors and Growth Investors Funds
Statements of Operations and Changes in Net Assets for
the Years Ended December 31, 1995 and 1994........................................ FSA-34
- -----------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NOS. 13 Notes to Financial Statements..................................................... FSA-35
(POOLED), 10(POOLED),
4(POOLED), 3(POOLED)
AND 51(POOLED)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Page
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
THE EQUITABLE LIFE ASSURANCE Report of Independent Accountants--............................................... F-1
SOCIETY OF THE UNITED STATES Independent Auditors' Report--.................................................... F-2
Consolidated Balance Sheets as of December 31, 1995 and 1994 ..................... F-3
Consolidated Statements of Earnings for the Years Ended
December 31, 1995, 1994 and 1993 ................................................. F-4
Consolidated Statement of Shareholder's Equity Years Ended
December 31, 1995, 1994 and 1993 ................................................. F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993 ................................................. F-6
Notes to Consolidated Financial Statements ....................................... F-7
- -----------------------------------------------------------------------------------------------------------------------------------
The financial statements of the Funds reflect fees, charges and other expenses of the
Separate Accounts applicable to Contracts under RIA as in effect during the periods
covered, as well as the expense charges made in accordance with the terms of all other
contracts participating in the respective Funds.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
================================================================================
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED),
3 (POOLED) AND 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and the Participants in the
Retirement Investment Account
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and
changes in net assets present fairly, in all material respects, the financial
position of Separate Account Nos. 13, 10, 4 and 3, and Money Market Fund,
Intermediate Government Securities Fund, Quality Bond Fund, High Yield Fund,
Growth & Income Fund, Equity Index Fund, Global Fund, International Fund,
Conservative Investors Fund and Growth Investors Fund (constituting Separate
Account No. 51, hereafter referred to as "Separate Account No. 51") of The
Equitable Life Assurance Society of the United States ("Equitable Life") at
December 31, 1995 and each of their results of operations and changes in net
assets for each of the two years in the period then ended for Separate Account
Nos. 13, 10, 4 and 3, and for the periods indicated for Separate Account No. 51,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of Equitable Life's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1995 by correspondence with the custodian and brokers, the
application of alternative auditing procedures where confirmations from brokers
were not received and confirmation of shares owned in The Hudson River Trust
with the transfer agent, provide a reasonable basis for the opinion expressed
above.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The selected per unit information
(appearing under "Condensed Financial Information" in the prospectus supplement)
is presented for the purpose of satisfying regulatory reporting requirements and
is not a required part of the basic financial statements. Such selected per unit
information has been subjected to auditing procedures applied during the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
PRICE WATERHOUSE LLP
New York, NY
February 7, 1996
FSA-1
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 13 (POOLED) (THE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments (Notes 2 and 3):
Long-term debt securities -- at value (amortized cost: $194,022,796)....................... $200,668,959
Participation in Separate Account No. 2A -- at amortized cost, which
approximates market value, equivalent to 33,456 units at $241.89......................... 8,092,702
Cash ......................................................................................... 2,073
Receivables:
Interest................................................................................... 4,890,148
Other...................................................................................... 17,217
- --------------------------------------------------------------------------------------------------------------
Total assets............................................................................. 213,671,099
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Due to Equitable Life's General Account.................................................... 35,921
Investment management fees payable......................................................... 801
Accrued expenses.............................................................................. 32,077
- --------------------------------------------------------------------------------------------------------------
Total liabilities........................................................................ 68,799
- --------------------------------------------------------------------------------------------------------------
NET ASSETS.................................................................................... $213,602,300
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-2
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 13 (POOLED) (THE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- --------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME -- Interest (Note 2)................................. $ 16,735,643 $ 17,244,470
EXPENSES -- (NOTE 4)................................................... (1,643,257) (1,847,130)
- --------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME.................................................. 15,092,386 15,397,340
- --------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain (loss) from security transactions ....................... 12,461,336 (22,020,938)
- --------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year................................................... (2,530,637) (2,161,801)
End of year......................................................... 6,646,163 (2,530,637)
- --------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation ........................ 9,176,800 (368,836)
- --------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................ 21,638,136 (22,389,774)
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to operations........... 36,730,522 (6,992,434)
- --------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions.......................................................... 26,805,952 73,568,948
Withdrawals............................................................ (159,649,077) (99,090,582)
- --------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals... (132,843,125) (25,521,634)
- --------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS ................................................ (96,112,603) (32,514,068)
NET ASSETS -- BEGINNING OF YEAR ....................................... 309,714,903 342,228,971
- --------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR ............................................. $213,602,300 $309,714,903
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-3
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
SEPARATE ACCOUNT NO. 13 (POOLED) (THE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995
- ---------------------------------------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG-TERM DEBT SECURITIES:
BUSINESS SERVICES (3.8%)
PRINTING, PUBLISHING & BROADCASTING
Tele-Communications, Inc.
8.0%, 2005 ........................................................ $ 7,700,000 $ 8,173,473
-------------
CREDIT-SENSITIVE
BANKS (12.5%)
Abbey National PLC
6.69%, 2005........................................................ 3,750,000 3,891,863
Chemical Banking Corp.
8.625% Sub. Deb., 2002............................................. 7,000,000 7,916,860
Citicorp
7.125%, 2005....................................................... 6,000,000 6,379,044
First Union Corp.
7.05%, 2005........................................................ 8,000,000 8,417,440
-------------
26,605,207
-------------
FINANCIAL SERVICES (3.3%)
Lehman Brothers Holdings, Inc.
7.125%, 2003....................................................... 6,850,000 7,067,556
-------------
INSURANCE (3.3%)
Prudential Insurance America
6.875%, 2003....................................................... 7,000,000 7,119,980
-------------
MORTGAGE-RELATED (5.3%)
Premier Auto Trust
7.15% Series 95-A5, 1999........................................... 11,000,000 11,254,320
-------------
U.S. GOVERNMENT (65.7%)
U.S. Treasury
5.625% Note, 1997.................................................. 17,000,000 17,111,554
7.25% Note, 1998................................................... 27,000,000 28,071,549
7.75% Note, 1999................................................... 44,135,000 47,914,059
5.875% Note, 2000.................................................. 11,000,000 11,226,875
5.75% Note, 2003................................................... 16,000,000 16,194,992
5.875% Note, 2005.................................................. 13,000,000 13,292,500
6.5% Note, 2005.................................................... 6,230,000 6,636,894
-------------
140,448,423
-------------
TOTAL CREDIT-SENSITIVE (90.1%)........................................ 192,495,486
-------------
TOTAL LONG-TERM DEBT SECURITIES (93.9%)
(Amortized Cost $194,022,796)...................................... 200,668,959
-------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates market value, equivalent
to 33,456 units at $241.89 each (3.8%)............................. 8,092,702
-------------
TOTAL INVESTMENTS (97.7%)
(Amortized Cost $202,115,498)...................................... 208,761,661
CASH AND RECEIVABLES LESS LIABILITIES (2.3%).......................... 4,840,639
-------------
NET ASSETS (100.0%)................................................... $213,602,300
=============
</TABLE>
See Notes to Financial Statements.
FSA-4
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments (Notes 2 and 3):
Common stocks -- at value (cost: $169,295,717)........................................... $194,746,029
Preferred stocks -- at value (cost: $3,966,336).......................................... 4,441,963
Long-term debt securities -- at value (amortized cost: $150,540,283)..................... 158,739,835
Participation in Separate Account No. 2A -- at amortized cost, which
approximates market value, equivalent to 59,604 units at $241.89....................... 14,417,728
Cash ....................................................................................... 256,781
Receivables:
Interest................................................................................. 3,239,084
Securities sold.......................................................................... 1,028,693
Dividends................................................................................ 260,201
- --------------------------------------------------------------------------------------------------------------
Total assets........................................................................... 377,130,314
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Securities purchased..................................................................... 1,048,475
Due to Equitable Life's General Account.................................................. 1,666,465
Investment management fees payable....................................................... 3,933
Accrued expenses............................................................................ 227,291
- --------------------------------------------------------------------------------------------------------------
Total liabilities...................................................................... 2,946,164
- --------------------------------------------------------------------------------------------------------------
NET ASSETS.................................................................................. $374,184,150
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-5
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- ---------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Interest................................................................ $ 11,113,819 $ 10,445,862
Dividends............................................................... 3,014,441 3,797,850
- ---------------------------------------------------------------------------------------------------------------
Total................................................................... 14,128,260 14,243,712
EXPENSES -- (NOTE 4).................................................... (5,349,200) (6,108,541)
- ---------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME................................................... 8,779,060 8,135,171
- ---------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain (loss) from security transactions......................... 16,986,767 (2,337,066)
- ---------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year.................................................... (8,178,659) 41,745,407
End of year.......................................................... 34,125,491 (8,178,659)
- ---------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation.......................... 42,304,150 (49,924,066)
- ---------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS.................. 59,290,917 (52,261,132)
- ---------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to operations............ 68,069,977 (44,125,961)
- ---------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions........................................................... 65,614,609 104,824,794
Withdrawals............................................................. (153,764,130) (138,822,093)
- ---------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals.... (88,149,521) (33,997,299)
- ---------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS.................................................. (20,079,544) (78,123,260)
NET ASSETS -- BEGINNING OF YEAR......................................... 394,263,694 472,386,954
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR............................................... $374,184,150 $394,263,694
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-6
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995
- --------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS (3.4%)
Freeport-McMoRan, Inc. ................................................ 24,000 $ 888,000
Hercules, Inc. ........................................................ 44,000 2,480,500
IMC Global, Inc. ...................................................... 72,000 2,943,000
Monsanto Co. .......................................................... 51,200 6,272,000
-----------
12,583,500
-----------
CHEMICALS -- SPECIALTY (1.0%)
Morton International, Inc. ............................................ 40,000 1,435,000
UCAR International, Inc.*.............................................. 42,000 1,417,500
Wellman, Inc. ......................................................... 48,500 1,103,375
-----------
3,955,875
-----------
METALS & MINING (0.2%)
Alumax, Inc.*.......................................................... 25,300 774,813
-----------
PAPER (0.2%)
Champion International Corp. .......................................... 16,000 672,000
-----------
TOTAL BASIC MATERIALS (4.8%)........................................... 17,986,188
-----------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.4%)
WMX Technologies, Inc. ................................................ 44,000 1,314,500
-----------
PRINTING, PUBLISHING & BROADCASTING (3.2%)
Cablevision Systems Corp. (Class A)*................................... 35,500 1,925,875
Clear Channel Communications, Inc.*.................................... 67,600 2,982,850
Comcast Corp. (Class A) SPL............................................ 82,500 1,500,469
Infinity Broadcasting Corp. (Class A)*................................. 35,650 1,327,962
Liberty Media Group (Class A)*......................................... 85,000 2,284,375
Tele-Communications, Inc. (Class A)*................................... 60,000 1,192,500
Tele-Communications International, Inc.*............................... 5,000 113,750
Time Warner, Inc. ..................................................... 19,000 719,625
-----------
12,047,406
-----------
PROFESSIONAL SERVICES (0.2%)
Ideon Group, Inc. ..................................................... 82,000 830,250
-----------
TRUCKING, SHIPPING (0.1%)
Sea Containers Ltd. ................................................... 30,000 521,250
-----------
TOTAL BUSINESS SERVICES (3.9%)......................................... 14,713,406
-----------
CAPITAL GOODS
AEROSPACE (0.4%)
Boeing Co. ............................................................ 10,000 783,750
Coltec Industries, Inc.* .............................................. 55,000 639,375
-----------
1,423,125
-----------
BUILDING MATERIALS & FOREST PRODUCTS (0.3%)
Martin Marietta Materials, Inc. ....................................... 50,000 1,031,250
-----------
BUILDING & CONSTRUCTION (0.2%)
American Standard Companies, Inc.* .................................... 30,000 840,000
-----------
Machinery (0.4%)
Solectron Corp.* ...................................................... 34,100 1,504,663
-----------
TOTAL CAPITAL GOODS (1.3%)............................................. 4,799,038
-----------
</TABLE>
FSA-7
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995 (Continued)
- ---------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS
AIRLINES (0.2%)
Northwest Airlines Corp. (Class A)*....................................... 18,000 $ 918,000
-----------
AUTOS & TRUCKS (0.4%)
Autozone, Inc.*........................................................... 55,000 1,588,125
-----------
FOOD SERVICES, LODGING (0.7%)
La Quinta Motor Inns, Inc. ............................................... 28,000 766,500
McDonald's Corp. ......................................................... 40,000 1,805,000
-----------
2,571,500
-----------
HOUSEHOLD FURNITURE, APPLIANCES (0.2%)
First Brands Corporation.................................................. 12,100 576,263
-----------
LEISURE-RELATED (2.0%)
Carnival Corp. ........................................................... 80,000 1,950,000
Cyrk, Inc.* .............................................................. 56,500 550,875
Disney (Walt) Co. ........................................................ 30,000 1,770,000
ITT Corp. ................................................................ 58,800 3,116,400
-----------
7,387,275
-----------
PHOTO & OPTICAL (0.3%)
Eastman Kodak Co. ........................................................ 17,000 1,139,000
-----------
RETAIL -- GENERAL (0.8%)
Fingerhut Co., Inc. ...................................................... 127,500 1,769,062
Payless Cashways, Inc.* .................................................. 125,000 531,250
Tandy Corp. .............................................................. 15,000 622,500
-----------
2,922,812
-----------
TOTAL CONSUMER CYCLICALS (4.6%)........................................... 17,102,975
-----------
CONSUMER NONCYCLICALS
BEVERAGES (1.9%)
Coca-Cola Co. ............................................................ 20,000 1,485,000
Pepsico, Inc. ............................................................ 100,000 5,587,500
-----------
7,072,500
-----------
DRUGS (4.0%)
Biogen, Inc.* ............................................................ 10,000 615,000
Centocor, Inc. ........................................................... 33,700 1,040,488
Lilly (Eli) & Co. ........................................................ 25,000 1,406,250
Merck & Co., Inc. ........................................................ 45,000 2,958,750
Pfizer, Inc. ............................................................. 35,000 2,205,000
Pharmacia & Upjohn, Inc. ................................................. 43,595 1,689,306
Schering Plough Corp. .................................................... 40,000 2,190,000
Warner-Lambert Co. ....................................................... 31,300 3,040,012
-----------
15,144,806
-----------
HOSPITAL SUPPLIES & SERVICES (2.8%)
Amsco International, Inc.*................................................ 54,400 809,200
Columbia/HCA Healthcare Corp. ............................................ 70,000 3,552,500
Guidant Corp. ............................................................ 15,000 633,750
Healthsource, Inc.* ...................................................... 54,000 1,944,000
Summit Technology, Inc.*.................................................. 18,000 607,500
United Healthcare Corp. .................................................. 30,000 1,965,000
U.S. Healthcare, Inc. .................................................... 24,000 1,116,000
-----------
10,627,950
-----------
</TABLE>
FSA-8
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995 (Continued)
- --------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RETAIL -- FOOD (0.1%)
Kroger Co.*............................................................. 8,410 $ 315,375
-----------
SOAPS & TOILETRIES (0.9%)
Gillette Corp. ......................................................... 65,000 3,388,125
-----------
TOBACCO (3.6%)
Loews Corp. ............................................................ 40,000 3,135,000
Philip Morris Cos., Inc. ............................................... 112,500 10,181,250
-----------
13,316,250
-----------
TOTAL CONSUMER NONCYCLICALS (13.3%)..................................... 49,865,006
-----------
CREDIT-SENSITIVE
BANKS (0.6%)
NationsBank Corp. ...................................................... 30,000 2,088,750
-----------
FINANCIAL SERVICES (1.2%)
Household International, Inc. .......................................... 15,000 886,875
MBNA Corp. ............................................................. 50,000 1,843,750
Merrill Lynch & Co., Inc. .............................................. 37,000 1,887,000
-----------
4,617,625
-----------
INSURANCE (6.2%)
Aetna Life & Casualty Co. .............................................. 24,000 1,662,000
American International Group, Inc. ..................................... 30,000 2,775,000
CNA Financial Corp.* ................................................... 4,500 510,750
General Re Corp. ....................................................... 7,000 1,085,000
ITT Hartford Group, Inc. ............................................... 46,100 2,230,088
Life Re Corp. .......................................................... 57,500 1,437,500
MGIC Investment Corp. .................................................. 25,000 1,356,250
NAC Re Corp. ........................................................... 30,000 1,080,000
PMI Group, Inc. ........................................................ 27,000 1,221,750
TIG Holdings, Inc. ..................................................... 55,500 1,581,750
Transatlantic Holdings, Inc. ........................................... 25,000 1,834,375
Travelers Group, Inc. .................................................. 102,500 6,444,687
-----------
23,219,150
-----------
UTILITY -- GAS (0.7%)
ENRON Corp. ............................................................ 70,000 2,668,750
-----------
UTILITY -- TELEPHONE (1.4%)
AT&T Corp. ............................................................. 62,000 4,014,500
Telephone & Data Systems, Inc. ......................................... 33,000 1,303,500
-----------
5,318,000
-----------
TOTAL CREDIT-SENSITIVE (10.1%).......................................... 37,912,275
-----------
ENERGY
OIL -- DOMESTIC (1.5%)
Atlantic Richfield Co. ................................................. 17,000 1,882,750
Tom Brown, Inc.* ....................................................... 40,000 585,000
Louis Dreyfus Natural Gas Corp.* ....................................... 62,900 951,363
Louisiana Land & Exploration Corp. ..................................... 25,900 1,110,462
Occidental Petroleum Corp. ............................................. 45,000 961,875
-----------
5,491,450
-----------
RAILROADS (0.3%)
Union Pacific Corp. .................................................... 17,000 1,122,000
-----------
TOTAL ENERGY (1.8%)..................................................... 6,613,450
-----------
</TABLE>
FSA-9
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995 (Continued)
- --------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY
ELECTRONICS (4.7%)
Altera Corp.*............................................................. 20,500 $ 1,019,875
Applied Materials, Inc. .................................................. 70,000 2,756,250
Arrow Electronics, Inc.* ................................................. 6,549 282,426
Bay Networks, Inc.*....................................................... 43,200 1,776,600
Cisco Systems, Inc.*...................................................... 28,000 2,089,500
General Instrument Corp.*................................................. 55,000 1,285,625
Intel Corp. .............................................................. 50,000 2,837,500
ITT Industries, Inc. ..................................................... 58,800 1,411,200
Lam Research Corp.*....................................................... 13,000 594,750
Motorola, Inc. ........................................................... 10,000 570,000
National Semiconductor Corp.* ............................................ 66,985 1,490,415
3Com Corp.* .............................................................. 32,000 1,492,000
-------------
17,606,141
-------------
OFFICE EQUIPMENT (1.9%)
Ceridian Corp.* .......................................................... 82,400 3,399,000
Compaq Computer Corp.*.................................................... 55,000 2,640,000
Compuware Corp.*.......................................................... 54,700 1,011,950
-------------
7,050,950
-------------
OFFICE EQUIPMENT SERVICES (1.7%)
First Data Corp. ......................................................... 23,000 1,538,125
General Motors Corp. (Class E)............................................ 30,000 1,560,000
Informix Corp.* .......................................................... 12,000 360,000
Microsoft Corp.* ......................................................... 12,000 1,053,000
Oracle Corp.*............................................................. 45,000 1,906,875
-------------
6,418,000
-------------
TELECOMMUNICATIONS (2.9%)
AirTouch Communications, Inc.* ........................................... 86,400 2,440,800
Cox Communications, Inc. (Class A)*....................................... 99,800 1,946,100
Glenayre Technologies, Inc.*.............................................. 10,000 622,500
MCI Communications Corp. ................................................. 134,000 3,500,750
Millicom International Cellular S.A.*..................................... 5,900 179,950
Scientific Atlanta, Inc. ................................................. 80,800 1,212,000
Tellabs, Inc.*............................................................ 22,000 814,000
-------------
10,716,100
-------------
TOTAL TECHNOLOGY (11.2%).................................................. 41,791,191
-------------
DIVERSIFIED
MISCELLANEOUS (1.0%)
Alco Standard Corp. ...................................................... 40,000 1,825,000
Allied Signal, Inc. ...................................................... 45,000 2,137,500
-------------
TOTAL DIVERSIFIED (1.0%).................................................. 3,962,500
-------------
TOTAL COMMON STOCKS (52.0%)
(Cost $169,295,717).................................................... 194,746,029
-------------
PREFERRED STOCKS:
BASIC MATERIALS (0.1%)
PAPER
James River Corp.
9.0% Conv. ............................................................ 5,100 119,213
-------------
</TABLE>
FSA-10
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995 (Continued)
- --------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL GOODS (0.1%)
ELECTRICAL EQUIPMENT
Westinghouse Electric Corp.
$1.30 Conv.* ........................................................ 32,400 $ 514,350
-------------
CONSUMER CYCLICALS (0.1%)
AIRLINES
Continental Air Finance Trust
8.5% Conv.*.......................................................... 8,800 470,800
-------------
CONSUMER NONCYCLICALS (0.1%)
HOSPITAL SUPPLIES & SERVICES
FHP International Corp.
5.0% Conv., Series A ................................................ 12,300 327,488
-------------
CREDIT-SENSITIVE
BANKS (0.1%)
First Chicago NBD Corp.
5.75% Conv., Series B ............................................... 8,000 536,000
-------------
FINANCIAL SERVICES (0.2%)
Allstate Corp.
$2.30 Conv. ......................................................... 6,200 254,200
First USA, Inc.
6.25% Conv. ......................................................... 9,300 367,350
-------------
621,550
-------------
INSURANCE (0.1%)
Travelers Group, Inc.
5.5% Conv., Series B ................................................ 4,200 366,450
-------------
UTILITY -- TELEPHONE (0.2%)
LCI International, Inc.
5.0% Conv............................................................ 15,700 839,950
-------------
TOTAL CREDIT-SENSITIVE (0.6%)........................................... 2,363,950
-------------
ENERGY (0.1%)
OIL -- DOMESTIC
Enron Corp.
6.25% Conv.* ........................................................ 11,100 266,400
-------------
TECHNOLOGY (0.1%)
TELECOMMUNICATIONS
MFS Communications Co., Inc.
8.0% Conv.*.......................................................... 7,800 379,762
-------------
TOTAL PREFERRED STOCKS (1.2%)
(Cost $3,966,336).................................................... 4,441,963
-------------
</TABLE>
FSA-11
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995 (Continued)
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG-TERM DEBT SECURITIES:
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.3%)
Thermo Electron Corp.
5.0% Euro Conv., 2001................................................ $ 570,000 $ 964,725
------------
PRINTING, PUBLISHING & BROADCASTING (2.5%)
Tele-Communications, Inc.
10.125%, 2022........................................................ 4,000,000 5,011,520
Time Warner Entertainment Co.
8.375%, 2023......................................................... 3,900,000 4,198,389
------------
9,209,909
------------
PROFESSIONAL SERVICES (0.4%)
Career Horizons, Inc.
7.0% Conv., 2002..................................................... 210,000 238,875
Danka Business Systems PLC
6.75% Conv., 2002.................................................... 450,000 637,313
First Financial Management Corp.
5.0% Conv., 1999..................................................... 480,000 778,800
------------
1,654,988
------------
TOTAL BUSINESS SERVICES (3.2%).......................................... 11,829,622
------------
CAPITAL GOODS
MACHINERY (0.4%)
Solectron Corp.
Zero Coupon Sub. Note, 2012.......................................... 1,070,000 981,725
Titan Wheel International, Inc.
4.75% Conv., 2000.................................................... 310,000 409,587
------------
TOTAL CAPITAL GOODS (0.4%).............................................. 1,391,312
------------
CONSUMER CYCLICALS
FOOD SERVICES, LODGING (0.1%)
HFS, Inc.
4.5% Conv., 1999..................................................... 270,000 623,700
------------
Retail -- General (0.2%)
Federated Department Stores, Inc.
5.0% Conv., 2003..................................................... 295,000 295,000
Lowes Cos., Inc.
3.0% Conv., 2003..................................................... 310,000 404,163
------------
699,163
------------
TOTAL CONSUMER CYCLICALS (0.3%)......................................... 1,322,863
------------
CONSUMER NONCYCLICALS
DRUGS (0.1%)
Genzyme Corp.
6.75% Conv., 2001.................................................... 240,000 298,500
------------
HOSPITAL SUPPLIES & SERVICES (0.3%)
Healthsouth Corp.
5.0% Conv., 2001..................................................... 300,000 484,500
Integrated Health Services, Inc.
5.75% Conv., 2001.................................................... 590,000 593,687
------------
1,078,187
------------
TOTAL CONSUMER NONCYCLICALS (0.4%)...................................... 1,376,687
------------
</TABLE>
FSA-12
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995 (Continued)
- --------------------------------------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CREDIT-SENSITIVE
BANKS (2.0%)
Abbey National PLC
6.69%, 2005 ........................................................ $ 2,250,000 $ 2,335,118
St. George Bank Ltd.
7.15%, 2005 ........................................................ 4,850,000 5,020,041
-------------
7,355,159
-------------
FINANCIAL SERVICES (3.4%)
Commercial Credit Co.
6.125%, 2005 ....................................................... 2,400,000 2,376,958
Lehman Brothers Holdings, Inc.
8.75%, 2005 ........................................................ 4,525,000 5,145,378
Liberty Mutual Insurance Co.
8.5%, 2025 ......................................................... 4,050,000 4,507,488
Medaphis Corp.
6.5% Conv., 2000.................................................... 221,000 587,584
-------------
12,617,408
-------------
FOREIGN GOVERNMENT (1.3%)
Italy Global Bond
6.875%, 2023 ....................................................... 5,000,000 4,882,750
-------------
U.S. GOVERNMENT (30.0%)
U.S. Treasury:
5.5% Note, 1998 .................................................... 10,000,000 10,071,870
7.25% Note, 1998 ................................................... 27,000,000 28,071,549
7.75% Note, 1999 ................................................... 10,000,000 10,856,250
5.75% Note, 2000 ................................................... 14,000,000 14,214,368
7.75% Note, 2000 ................................................... 22,250,000 24,176,004
6.5% Note, 2005 .................................................... 11,770,000 12,538,722
6.875% Bond, 2025 .................................................. 5,575,000 6,289,296
7.625% Bond, 2025 .................................................. 5,250,000 6,414,843
-------------
112,632,902
-------------
UTILITY -- TELEPHONE (0.2%)
Worldcom, Inc.
5.0% Conv., 2003.................................................... 770,000 816,200
-------------
TOTAL CREDIT-SENSITIVE (36.9%)......................................... 138,304,419
-------------
TECHNOLOGY
ELECTRONICS (0.8%)
Altera Corp.
5.75% Conv. Sub. Note, 2002......................................... 310,000 361,150
Cypress Semiconductor Corp.
3.15% Conv., 2001................................................... 220,000 223,850
Integrated Device Technology, Inc.
5.5% Conv., 2002.................................................... 430,000 351,525
LSI Logic Corp.
5.5% Conv., 2001.................................................... 150,000 407,063
Lam Research Corp.
6.0% Conv. Sub. Deb., 2003.......................................... 260,000 482,950
Motorola, Inc.
Zero Coupon Conv., 2013............................................. 115,000 87,688
</TABLE>
FSA-13
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995 (Concluded)
- --------------------------------------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ELECTRONICS (CONTINUED)
Sanmina Corp.
5.5% Conv., 2002.................................................... $ 475,000 $ 519,531
3Com Corp.
10.25% Conv., 2001.................................................. 375,000 599,063
------------
3,032,820
------------
OFFICE EQUIPMENT (0.1%)
Telxon Corp.
5.75% Conv., 2003................................................... 220,000 236,500
------------
TELECOMMUNICATIONS (0.3%)
Bay Networks, Inc.
5.25% Conv., 2003................................................... 545,000 589,962
U.S. Cellular Corp.
Zero Coupon Conv., 2015 ............................................ 1,860,000 655,650
------------
1,245,612
------------
TOTAL TECHNOLOGY (1.2%)................................................ 4,514,932
------------
TOTAL LONG-TERM DEBT SECURITIES (42.4%)
(Amortized Cost $150,540,283)....................................... 158,739,835
------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 59,604 units
at $241.89 each (3.9%) ............................................. 14,417,728
------------
TOTAL INVESTMENTS (99.5%)
(Cost/Amortized Cost $338,220,064).................................. 372,345,555
CASH AND RECEIVABLES LESS LIABILITIES (0.5%)........................... 1,838,595
------------
NET ASSETS (100.0%).................................................... $374,184,150
============
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
FSA-14
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED) (THE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities -- December 31, 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments (Notes 2 and 3):
Common stocks -- at value (cost: $1,772,607,539)........................................ $2,071,380,232
Long-term debt securities -- at value (amortized cost: $43,389,734)..................... 35,481,250
Participation in Separate Account No. 2A -- at amortized cost, which
approximates market value, equivalent to 62,384 units at $241.89...................... 15,090,212
Cash....................................................................................... 3,285,960
Receivables:
Securities sold......................................................................... 15,481,889
Dividends............................................................................... 1,693,035
Interest................................................................................ 59,583
- --------------------------------------------------------------------------------------------------------------
Total assets........................................................................... 2,142,472,161
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Securities purchased.................................................................... 10,088,399
Due to Equitable Life's General Account................................................. 5,686,050
Investment management fees payable...................................................... 7,255
Accrued expenses........................................................................... 521,041
Amount retained by Equitable Life in Separate Account No. 4 (Note 1)....................... 1,044,875
- --------------------------------------------------------------------------------------------------------------
Total liabilities...................................................................... 17,347,620
- --------------------------------------------------------------------------------------------------------------
NET ASSETS (NOTE 1):
Net assets attributable to participants' accumulations..................................... 2,102,751,745
Reserves and other contract liabilities attributable to annuity benefits................... 22,372,796
- --------------------------------------------------------------------------------------------------------------
NET ASSETS................................................................................. $2,125,124,541
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-15
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED) (THE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends (net of foreign taxes withheld -- 1995: $239,657
and 1994: $280,079)............................................... $ 19,610,344 $ 18,981,135
Interest and amortization of premium................................. (852,218) 120,286
- -------------------------------------------------------------------------------------------------------------
Total................................................................ 18,758,126 19,101,421
EXPENSES -- (NOTE 4)................................................. (16,007,109) (14,943,802)
- -------------------------------------------------------------------------------------------------------------
NET INCOME........................................................... 2,751,017 4,157,619
- -------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from security and foreign currency transactions........ 260,870,246 121,640,003
- -------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments
and foreign currency transactions:
Beginning of year................................................. 41,831,973 211,185,607
End of year....................................................... 290,870,386 41,831,973
- -------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation....................... 249,038,413 (169,353,634)
- -------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS............... 509,908,659 (47,713,631)
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to operations......... 512,659,676 (43,556,012)
- -------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions........................................................ 422,289,107 435,940,867
Withdrawals.......................................................... (474,530,080) (528,069,361)
- -------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals. (52,240,973) (92,128,494)
- -------------------------------------------------------------------------------------------------------------
Decrease in accumulated amount retained by Equitable Life in
Separate Account No. 4 (Note 1)................................... 113,489 449,257
- -------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS.................................... 460,532,192 (135,235,249)
NET ASSETS -- BEGINNING OF YEAR...................................... 1,664,592,349 1,799,827,598
- -------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR............................................ $2,125,124,541 $1,664,592,349
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
FSA-16
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED) (THE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995
- -------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS (0.3%)
CHEMICALS -- SPECIALTY
UCAR International, Inc.* .............................................. 175,000 $ 5,906,250
-------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.2%)
Rollins Environmental Services, Inc.* .................................. 1,054,700 3,032,263
USA Waste Services, Inc.*............................................... 120,000 2,265,000
-------------
5,297,263
-------------
PRINTING, PUBLISHING & BROADCASTING (1.2%)
Australis Media Ltd. ................................................... 4,500,250 3,846,532
Australis Media Ltd.
CONV. NOTE* ......................................................... 22,000,000 18,804,225
IVI Publishing, Inc.* .................................................. 121,700 1,597,313
-------------
24,248,070
-------------
PROFESSIONAL SERVICES (0.1%)
Loewen Group, Inc. ..................................................... 50,000 1,265,625
-------------
TOTAL BUSINESS SERVICES (1.5%).......................................... 30,810,958
-------------
CAPITAL GOODS (2.3%)
AEROSPACE
General Motors Corp. (Class H) ......................................... 1,000,000 49,125,000
-------------
CONSUMER CYCLICALS
AIRLINES (1.9%)
America West Airlines, Inc. (Class B)*.................................. 750,000 12,750,000
Delta Air Lines, Inc. .................................................. 160,000 11,820,000
USAir Group, Inc.* ..................................................... 1,000,000 13,250,000
Worldcorp, Inc.* ....................................................... 339,300 3,393,000
-------------
41,213,000
-------------
APPAREL, TEXTILE (0.5%)
Cone Mills Corp.* ...................................................... 371,000 4,173,750
Nine West Group, Inc.* ................................................. 200,000 7,500,000
-------------
11,673,750
-------------
FOOD SERVICES, LODGING (0.3%)
La Quinta Motor Inns, Inc. ............................................. 200,000 5,475,000
-------------
HOUSEHOLD FURNITURE, APPLIANCES (1.0%)
Industrie Natuzzi (ADR)................................................. 480,000 21,780,000
-------------
LEISURE-RELATED (2.0%)
ITT Corp. .............................................................. 800,000 42,400,000
-------------
RETAIL -- GENERAL (2.6%)
Federated Department Stores, Inc.* ..................................... 750,000 20,625,000
Lowes Cos., Inc. ....................................................... 450,000 15,075,000
Office Depot, Inc.* .................................................... 300,000 5,925,000
Office Max, Inc.* ...................................................... 100,000 2,237,500
Tandy Corp. ............................................................ 260,000 10,790,000
-------------
54,652,500
-------------
TOTAL CONSUMER CYCLICALS (8.3%)......................................... 177,194,250
-------------
</TABLE>
FSA-17
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED) (THE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995 (Continued)
- -------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NONCYCLICALS
DRUGS (1.0%)
Biogen, Inc.* ............................................................ 45,000 $ 2,767,500
Centocor, Inc.* .......................................................... 325,000 10,034,375
MedImmune, Inc.* ......................................................... 145,400 2,908,000
Merck & Co., Inc. ........................................................ 70,000 4,602,500
-------------
20,312,375
-------------
HOSPITAL SUPPLIES & SERVICES (6.3%)
Amsco International, Inc.* ............................................... 150,000 2,231,250
Columbia/HCA Healthcare Corp. ............................................ 800,000 40,600,000
Sun Healthcare Group, Inc.* .............................................. 1,191,000 16,078,500
Surgical Care Affiliates, Inc. ........................................... 2,188,300 74,402,200
-------------
133,311,950
-------------
TOBACCO (10.4%)
Loews Corp. .............................................................. 2,250,000 176,343,750
Philip Morris Cos., Inc. ................................................. 500,000 45,250,000
-------------
221,593,750
-------------
TOTAL CONSUMER NONCYCLICALS (17.7%)....................................... 375,218,075
-------------
CREDIT-SENSITIVE
FINANCIAL SERVICES (3.1%)
Dean Witter Discover & Co. ............................................... 50,000 2,350,000
A.G. Edwards, Inc. ....................................................... 220,000 5,252,500
Household International, Inc. ............................................ 130,000 7,686,250
Legg Mason, Inc. ......................................................... 850,000 23,375,000
Merrill Lynch & Co., Inc. ................................................ 550,000 28,050,000
-------------
66,713,750
-------------
INSURANCE (12.5%)
CNA Financial Corp.* ..................................................... 1,552,500 176,208,750
ITT Hartford Group, Inc. ................................................. 800,000 38,700,000
Life Re Corp. ............................................................ 700,000 17,500,000
NAC Re Corp. ............................................................. 575,000 20,700,000
Travelers Group, Inc. .................................................... 200,000 12,575,000
-------------
265,683,750
-------------
REAL ESTATE (0.3%)
Walden Residential Properties, Inc. ...................................... 308,000 6,429,500
-------------
UTILITY -- TELEPHONE (7.7%)
Century Telephone Enterprises, Inc. ...................................... 397,800 12,630,150
Telephone & Data Systems, Inc. ........................................... 3,825,000 151,087,500
-------------
163,717,650
-------------
TOTAL CREDIT-SENSITIVE (23.6%)............................................ 502,544,650
-------------
ENERGY
COAL & GAS PIPELINES (0.0%)
Abraxas Petroleum Corp.* ................................................. 100,000 625,000
-------------
OIL -- DOMESTIC (0.7%)
Louisiana Land & Exploration Corp. ....................................... 200,000 8,575,000
Snyder Oil Corp. ......................................................... 500,000 6,062,500
-------------
14,637,500
-------------
</TABLE>
FSA-18
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED) (THE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995 (Continued)
- -------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OIL -- INTERNATIONAL (1.6%)
Gulf Canada Resources Ltd. ORD* ........................................ 530,000 $ 2,186,250
Imperial Oil Ltd. ...................................................... 859,000 31,031,375
-------------
33,217,625
-------------
OIL -- SUPPLIES & CONSTRUCTION (4.5%)
ENSCO International, Inc.* ............................................. 500,000 11,500,000
Noble Drilling Corp.* .................................................. 1,000,000 9,000,000
Parker Drilling Co.* ................................................... 6,000,000 36,750,000
Rowan Cos., Inc.* ...................................................... 3,300,000 32,587,500
Seagull Energy Corp.* .................................................. 250,000 5,562,500
-------------
95,400,000
-------------
RAILROADS (0.3%)
Union Pacific Corp. .................................................... 100,000 6,600,000
-------------
TOTAL ENERGY (7.1%)..................................................... 150,480,125
-------------
TECHNOLOGY
ELECTRONICS (13.5%)
American Superconductor Corp.* ......................................... 149,000 2,160,500
Bay Networks, Inc.* .................................................... 300,000 12,337,500
Cisco Systems, Inc.* ................................................... 1,315,000 98,131,875
General Instrument Corp.* .............................................. 3,260,000 76,202,500
ITT Industries, Inc. ................................................... 800,000 19,200,000
National Semiconductor Corp.* .......................................... 2,000,000 44,500,000
Texas Instruments, Inc. ................................................ 200,000 10,350,000
3Com Corp.* ............................................................ 500,000 23,312,500
-------------
286,194,875
-------------
OFFICE EQUIPMENT (1.8%)
Compaq Computer Corp.* ................................................. 500,000 24,000,000
Sun Microsystems, Inc.* ................................................ 300,000 13,687,500
-------------
37,687,500
-------------
OFFICE EQUIPMENT SERVICES (0.2%)
Informix Corp.* ........................................................ 55,000 1,650,000
Oracle Corp.* .......................................................... 80,000 3,390,000
-------------
5,040,000
-------------
TELECOMMUNICATIONS (21.2%)
AirTouch Communications, Inc.* ......................................... 40,000 1,130,000
American Satellite Network -- Rights* .................................. 70,000 0
Cellular Communications, Inc. (Class A)* ............................... 869,268 43,246,083
Cellular Communications Puerto Rico, Inc.* ............................. 322,500 8,949,375
DSC Communications Corp.* .............................................. 650,000 23,968,750
Mannesmann AG .......................................................... 120,000 38,196,841
Mannesmann AG (ADR) .................................................... 200,000 63,600,000
Millicom International Cellular S.A.* .................................. 1,700,000 51,850,000
Nokia Corp. (ADR) ...................................................... 600,000 23,325,000
Rogers Cantel Mobile Communications, Inc. (Class B) (ADR)* ............. 900,000 23,850,000
Scientific Atlanta, Inc. ............................................... 2,035,000 30,525,000
Tellabs, Inc.* ......................................................... 450,000 16,650,000
U.S. Cellular Corp.* ................................................... 2,650,000 89,437,500
Vanguard Cellular Systems, Inc. (Class A)* ............................. 1,800,000 36,450,000
-------------
451,178,549
-------------
TOTAL TECHNOLOGY (36.7%)................................................ 780,100,924
-------------
</TABLE>
FSA-19
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED) (THE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995 (Concluded)
- ---------------------------------------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TOTAL COMMON STOCKS (97.5%)
(Cost $1,772,607,539)............................................... $2,071,380,232
--------------
LONG-TERM DEBT SECURITIES:
BUSINESS SERVICES (0.2%)
PROFESSIONAL SERVICES
First Financial Management Corp.
5.0% Conv., 1999.................................................... $ 2,000,000 3,245,000
--------------
TECHNOLOGY
ELECTRONICS (1.4%)
General Instrument Corp.
5.0% Conv., 2000 ................................................... 26,600,000 29,592,500
--------------
TELECOMMUNICATIONS (0.1%)
U.S. Cellular Corp.
Zero Coupon Conv., 2015 ............................................ 7,500,000 2,643,750
--------------
TOTAL TECHNOLOGY (1.5%)................................................ 32,236,250
--------------
TOTAL LONG-TERM DEBT SECURITIES (1.7%)
(Amortized Cost $43,389,734)........................................ 35,481,250
--------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 62,384 units
at $241.89 each (0.7%).............................................. 15,090,212
--------------
TOTAL INVESTMENTS (99.9%)
(Cost/Amortized Cost $1,831,087,485) .............................. 2,121,951,694
CASH AND RECEIVABLES LESS LIABILITIES (0.1%)........................... 4,217,722
AMOUNT RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT NO. 4 (0.0%) (NOTE 1).............................. (1,044,875)
--------------
NET ASSETS (100.0%) (Note 1)........................................... $2,125,124,541
==============
Reserves attributable to participants' accumulations................... $2,102,751,745
Reserves and other contract liabilities attributable to annuity
benefits............................................................ 22,372,796
--------------
NET ASSETS............................................................. $2,125,124,541
==============
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
FSA-20
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED) (THE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments (Notes 2 and 3):
Common stocks -- at value (cost: $274,102,539)........................................... $336,946,517
Participation in Separate Account No. 2A
-- at amortized cost, which approximates market value,
equivalent to 17,601 units at $241.89................................................ 4,257,425
Cash........................................................................................ 891,904
Receivables:
Securities sold.......................................................................... 2,490,920
Dividends................................................................................ 8,919
- ---------------------------------------------------------------------------------------------------------------
Total assets............................................................................ 344,595,685
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Securities purchased..................................................................... 1,122,353
Due to Equitable Life's General Account.................................................. 1,587,720
Investment management fees payable....................................................... 3,146
Accrued expenses............................................................................ 179,212
- ---------------------------------------------------------------------------------------------------------------
Total liabilities....................................................................... 2,892,431
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS.................................................................................. $341,703,254
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-21
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED) (THE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- --------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends (net of foreign taxes withheld --
1995: $21,522 and 1994: $19,204)........................................ $ 1,552,241 $ 1,382,831
Interest................................................................... 729,465 262,574
- --------------------------------------------------------------------------------------------------------------
Total...................................................................... 2,281,706 1,645,405
EXPENSES -- (NOTE 4)....................................................... (4,967,053) (4,244,367)
- --------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS........................................................ (2,685,347) (2,598,962)
- --------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain (loss) from security and foreign currency transactions....... 75,694,748 (7,572,930)
- --------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year....................................................... 42,542,366 46,444,593
End of year............................................................. 62,843,978 42,542,366
- --------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation............................. 20,301,612 (3,902,227)
- --------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS..................... 95,996,360 (11,475,157)
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to operations............... 93,311,013 (14,074,119)
- --------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions.............................................................. 205,540,949 213,517,834
Withdrawals................................................................ (266,542,005) (179,711,235)
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to contributions and
withdrawals............................................................. (61,001,056) 33,806,599
- --------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS..................................................... 32,309,957 19,732,480
NET ASSETS -- BEGINNING OF YEAR............................................ 309,393,297 289,660,817
- --------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR.................................................. $ 341,703,254 $309,393,297
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-22
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED) (THE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995
- --------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS -- SPECIALTY (1.4%)
Cytec Industries, Inc.* ................................................... 31,000 $ 1,933,625
UCAR International, Inc.* ................................................. 89,800 3,030,750
--------------
4,964,375
--------------
METALS & MINING (0.8%)
Newmont Mining Corp. ...................................................... 60,000 2,715,000
--------------
TOTAL BASIC MATERIALS (2.2%)............................................... 7,679,375
--------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (1.8%)
USA Waste Services, Inc.* ................................................. 320,300 6,045,663
--------------
PRINTING, PUBLISHING & BROADCASTING (2.5%)
Infinity Broadcasting Corp. (Class A)* .................................... 196,200 7,308,450
Playboy Enterprises, Inc.* ................................................ 127,900 1,071,163
--------------
8,379,613
--------------
PROFESSIONAL SERVICES (0.5%)
Loewen Group, Inc. ........................................................ 71,600 1,812,375
--------------
Trucking, Shipping (2.2%)
TNT Freightways Corp. ..................................................... 61,300 1,233,662
Xtra Corp. ................................................................ 152,300 6,472,750
--------------
7,706,412
--------------
TOTAL BUSINESS SERVICES (7.0%)............................................. 23,944,063
--------------
CONSUMER CYCLICALS
AIRLINES (5.1%)
America West Airlines, Inc. (Class B)* .................................... 197,400 3,355,800
Delta Air Lines, Inc. ..................................................... 33,000 2,437,875
Northwest Airlines Corp. (Class A)* ....................................... 79,900 4,074,900
Southwest Airlines Co. .................................................... 108,900 2,531,925
USAir Group, Inc.* ........................................................ 379,300 5,025,725
--------------
17,426,225
--------------
APPAREL, TEXTILE (3.8 %)
Jones Apparel Group, Inc.* ................................................ 48,200 1,897,875
Nine West Group, Inc.* .................................................... 299,100 11,216,250
--------------
13,114,125
--------------
FOOD SERVICES, LODGING (3.9%)
Extended Stay America, Inc.* .............................................. 62,300 1,713,250
HFS, Inc.* ................................................................ 83,100 6,793,425
Host Marriott Corp.* ...................................................... 358,800 4,754,100
--------------
13,260,775
--------------
HOUSEHOLD FURNITURE, APPLIANCES (1.8%)
Industrie Natuzzi (ADR) ................................................... 138,600 6,288,975
--------------
</TABLE>
FSA-23
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED) (THE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995 (Continued)
- --------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LEISURE-RELATED (4.9%)
Ascent Entertainment Group, Inc.* ...................................... 51,000 $ 803,250
Heritage Media Corp. (Class A)* ........................................ 88,875 2,277,422
ITT Corp. .............................................................. 134,400 7,123,200
Mirage Resorts, Inc.* .................................................. 100,900 3,481,050
Sierra On-line, Inc.* .................................................. 100,800 2,898,000
------------
16,582,922
------------
PHOTO & OPTICAL (0.2%)
Luxottica Group (ADR) .................................................. 11,700 684,450
------------
RETAIL -- GENERAL (10.8%)
Bed Bath & Beyond, Inc.* ............................................... 171,400 6,652,462
Federated Department Stores, Inc.* ..................................... 478,300 13,153,250
Office Depot, Inc.* .................................................... 362,450 7,158,387
Office Max, Inc.* ...................................................... 390,400 8,735,200
Staples, Inc.* ......................................................... 48,650 1,185,844
------------
36,885,143
------------
TOTAL CONSUMER CYCLICALS (30.5%)........................................ 104,242,615
------------
CONSUMER NONCYCLICALS
DRUGS (3.9%)
Amgen, Inc.* ........................................................... 53,800 3,194,375
Biogen, Inc.* .......................................................... 46,000 2,829,000
Centocor, Inc.* ........................................................ 141,200 4,359,550
Cephalon, Inc.* ........................................................ 59,550 2,426,662
Pharmacyclics, Inc.* ................................................... 27,000 378,000
------------
13,187,587
------------
HOSPITAL SUPPLIES & SERVICES (14.5%)
Apria Healthcare Group, Inc.* .......................................... 154,960 4,377,620
Boston Scientific Corp.* ............................................... 108,900 5,336,100
Healthsouth Corp.* ..................................................... 457,200 13,315,950
Healthwise of America, Inc.* ........................................... 121,445 4,736,355
Manor Care, Inc. ....................................................... 89,400 3,129,000
Saint Jude Medical, Inc.* .............................................. 98,050 4,216,150
Summit Technology, Inc.* ............................................... 69,550 2,347,313
Sun Healthcare Group, Inc.* ............................................ 316,920 4,278,420
Surgical Care Affiliates, Inc. ......................................... 230,100 7,823,400
------------
49,560,308
------------
TOTAL CONSUMER NONCYCLICALS (18.4%)..................................... 62,747,895
------------
CREDIT-SENSITIVE
INSURANCE (6.6%)
CNA Financial Corp.* ................................................... 141,600 16,071,600
ITT Hartford Group, Inc. ............................................... 134,400 6,501,600
------------
22,573,200
------------
UTILITY -- TELEPHONE (4.4%)
Telephone & Data Systems, Inc. ......................................... 382,200 15,096,900
------------
TOTAL CREDIT-SENSITIVE (11.0%).......................................... 37,670,100
------------
</TABLE>
FSA-24
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED) (THE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995 (Continued)
- --------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY
OIL -- DOMESTIC (1.0%)
Diamond Shamrock, Inc. ................................................... 54,900 $ 1,420,537
Snyder Oil Corp. ......................................................... 157,600 1,910,900
-------------
3,331,437
-------------
OIL -- SUPPLIES & CONSTRUCTION (10.1%)
Arethusa (Off-Shore) Ltd. ................................................ 96,600 2,704,800
Diamond Offshore Drilling, Inc.* ......................................... 251,600 8,491,500
Global Marine, Inc.* ..................................................... 806,500 7,056,875
Noble Drilling Corp.* .................................................... 496,900 4,472,100
Reading & Bates Corp.* ................................................... 319,000 4,785,000
Rowan Cos., Inc.* ........................................................ 528,400 5,217,950
Sonat Offshore Drilling, Inc. ............................................ 45,500 2,036,125
-------------
34,764,350
-------------
TOTAL ENERGY (11.1%)...................................................... 38,095,787
-------------
TECHNOLOGY
ELECTRONICS (3.3%)
Applied Materials, Inc.* ................................................. 35,400 1,393,875
Bay Networks, Inc.* ...................................................... 45,604 1,875,465
ITT Industries, Inc. ..................................................... 134,400 3,225,600
Parametric Technology Corp.* ............................................. 72,800 4,841,200
-------------
11,336,140
-------------
OFFICE EQUIPMENT (0.9%)
Dell Computer Corp.* ..................................................... 40,900 1,416,163
Storage Technology Corp.* ................................................ 74,000 1,766,750
-------------
3,182,913
-------------
OFFICE EQUIPMENT SERVICES (2.7%)
Hummingbird Communications Ltd.* ......................................... 14,100 571,050
Informix Corp.* .......................................................... 221,500 6,645,000
Sybase, Inc.* ............................................................ 57,700 2,077,200
-------------
9,293,250
-------------
TELECOMMUNICATIONS (10.3%)
American Satellite Network -- Rights* .................................... 9,550 0
Andrew Corp.* ............................................................ 74,000 2,830,500
Ascend Communications, Inc.* ............................................. 23,800 1,930,775
Cellular Communications, Inc. (Class A)* ................................. 77,654 3,863,286
DSC Communications Corp.* ................................................ 66,800 2,463,250
Mannesmann AG (ADR) ...................................................... 31,200 9,921,600
Millicom International Cellular S.A.* .................................... 149,360 4,555,480
Tellabs, Inc.* ........................................................... 64,900 2,401,300
U.S. Cellular Corp.* ..................................................... 133,700 4,512,375
Vanguard Cellular Systems, Inc. (Class A)* ............................... 125,850 2,548,463
-------------
35,027,029
-------------
TOTAL TECHNOLOGY (17.2%).................................................. 58,839,332
-------------
DIVERSIFIED (1.2%)
MISCELLANEOUS
Pittston Services Group .................................................. 118,800 3,727,350
-------------
</TABLE>
FSA-25
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED) (THE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1995 (Concluded)
- --------------------------------------------------------------------------------------------------------------
VALUE
(NOTE 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C>
TOTAL COMMON STOCKS (98.6%)
(Cost $274,102,539)..................................................... $336,946,517
------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 17,601 units
at $241.89 each (1.3%)................................................... 4,257,425
------------
TOTAL INVESTMENTS (99.9%)
(Cost/Amortized Cost $278,359,964)...................................... 341,203,942
CASH AND RECEIVABLES LESS LIABILITIES (0.1%)............................... 499,312
============
NET ASSETS (100.0%)........................................................ $341,703,254
============
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
FSA-26
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities -- December 31, 1995
- ---------------------------------------------------------------------------------------------------------------
INTERMEDIATE
MONEY GOVERNMENT QUALITY HIGH
MARKET SECURITIES BOND YIELD
FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in shares of The Hudson River Trust, at value
(Cost: Money Market Portfolio -- $2,133,227;
Intermediate Government Securities
Portfolio -- $653,102;
Quality Bond Portfolio -- $1,308,305;
High Yield Portfolio -- $867,939) (Note 1)..... $2,126,645 $671,731 $1,358,928 $893,208
Receivable for The Hudson River Trust shares sold........ -- 36 744 11,654
Due from Equitable Life's General Account................ 551,683 410 -- --
- ---------------------------------------------------------------------------------------------------------------
Total assets......................................... 2,678,328 672,177 1,359,672 904,862
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for The Hudson River Trust shares purchased...... 550,611 -- -- --
Due to Equitable Life's General Account.................. -- -- -- 11,192
Accrued expenses......................................... 1,072 444 744 462
- ---------------------------------------------------------------------------------------------------------------
Total liabilities.................................... 551,683 444 744 11,654
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS............................................... $2,126,645 $671,733 $1,358,928 $893,208
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-27
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities (Continued)
December 31, 1995
- ------------------------------------------------------------------------------------------------------------
GROWTH & EQUITY
INCOME INDEX GLOBAL
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments in shares of The Hudson River Trust, at value
(Cost: Growth and Income Portfolio -- $3,937,179;
Equity Index Portfolio -- $5,051,554;
Global Portfolio - $26,282,287) (Note 1).............. $4,430,408 $5,480,970 $28,593,444
Receivable for The Hudson River Trust shares sold............... -- -- --
Due from Equitable Life's General Account....................... 5,778 70,301 55,852
- ------------------------------------------------------------------------------------------------------------
Total assets................................................ 4,436,186 5,551,271 28,649,296
- ------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for The Hudson River Trust shares purchased............. 3,500 67,202 38,154
Accrued expenses................................................ 2,278 3,099 23,058
- ------------------------------------------------------------------------------------------------------------
Total liabilities........................................... 5,778 70,301 61,212
- ------------------------------------------------------------------------------------------------------------
NET ASSETS...................................................... $4,430,408 $5,480,970 $28,588,084
============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-28
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities (Concluded)
December 31, 1995
- -------------------------------------------------------------------------------------------------------------
CONSERVATIVE GROWTH
INTERNATIONAL INVESTORS INVESTORS
FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments in shares of The Hudson River Trust, at value
(Cost: International Portfolio -- $46,014;
Conservative Investors Portfolio -- $4,895,468;
Growth Investors Portfolio - $24,944,438) (Note 1)... $45,787 $5,200,407 $27,425,238
Receivable for The Hudson River Trust shares sold.............. 7 3,225 --
Due from Equitable Life's General Account...................... -- 1,335 231,872
- -------------------------------------------------------------------------------------------------------------
Total assets............................................... 45,794 5,204,967 27,657,110
- -------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for The Hudson River Trust shares purchased............ -- -- 218,551
Accrued expenses............................................... 7 7,688 16,800
- -------------------------------------------------------------------------------------------------------------
Total liabilities.......................................... 7 7,688 235,351
- -------------------------------------------------------------------------------------------------------------
NET ASSETS..................................................... $45,787 $5,197,279 $27,421,759
=============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-29
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -----------------------------------------------------------------------------------------------------------------
Intermediate
Government Securities
Money Market Fund
--------------------------- -----------------------------
Year Ended June 1, 1994* to Year Ended June 1, 1994* to
December 31, December 31, December 31, December 31,
1995 1994 1995 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME -- Dividends from
The Hudson River Trust (Note 2)................... $ 80,788 $9,131 $28,574 $ 4,525
EXPENSES (NOTE 4).................................... (19,421) (1,015) (4,425) (271)
- ---------------------------------------------------------------------------------------------------------------
Net Investment Income................................ 61,367 8,116 24,149 4,254
- ---------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) from share transactions......... 54,144 7 615 (39)
- ---------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of period............................... (3,998) -- (4,096) --
End of period .................................... (6,582) (3,998) 18,629 (4,096)
- ---------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation....... (2,584) (3,998) 22,725 (4,096)
- ---------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................... 51,560 (3,991) 23,340 (4,135)
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations.... 112,927 4,125 47,489 119
- ---------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions........................................ 14,683,341 505,249 481,568 213,228
Withdrawals.......................................... (13,165,708) (13,289) (69,809) (862)
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to contributions
and withdrawals................................... 1,517,633 491,960 411,759 212,366
- ---------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS............................... 1,630,560 496,085 459,248 212,485
NET ASSETS -- BEGINNING OF PERIOD.................... 496,085 -- 212,485 --
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF PERIOD.......................... $ 2,126,645 $496,085 $671,733 $212,485
===============================================================================================================
</TABLE>
*Commencement of operations.
See Notes to Financial Statements.
FSA-30
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Continued)
- ---------------------------------------------------------------------------------------------------------------------
QUALITY BOND FUND HIGH YIELD FUND
----------------------------- --------------------------------
YEAR ENDED JUNE 1, 1994* TO YEAR ENDED JUNE 1, 1994* TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME -- Dividends from
The Hudson River Trust (Note 2)................... $ 54,553 $ 3,687 $ 74,333 $ 8,293
Expenses (Note 4).................................... (7,642) (462) (6,076) (437)
- ---------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME................................ 46,911 3,225 68,257 7,856
- ---------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) from share transactions......... 4,452 (179) 3,294 (21)
- ---------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of period............................... (4,701) -- (9,640) --
End of period .................................... 50,623 (4,701) 25,269 (9,640)
- ---------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation....... 55,324 (4,701) 34,909 (9,640)
- ---------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................... 59,776 (4,880) 38,203 (9,661)
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to
operations........................................ 106,687 (1,655) 106,460 (1,805)
- ---------------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions........................................ 1,137,163 264,446 669,898 258,270
Withdrawals.......................................... (147,179) (534) (138,615) (1,000)
- ---------------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to contributions
and withdrawals................................... 989,984 263,912 531,283 257,270
- ---------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS............................... 1,096,671 262,257 637,743 255,465
NET ASSETS -- BEGINNING OF PERIOD.................... 262,257 -- 255,465 --
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF PERIOD.......................... $1,358,928 $262,257 $893,208 $255,465
=====================================================================================================================
</TABLE>
*Commencement of operations.
See Notes to Financial Statements.
FSA-31
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Continued)
- -------------------------------------------------------------------------------------------------------------------
GROWTH & INCOME FUND EQUITY INDEX FUND
----------------------------- ------------------------------
YEAR ENDED JUNE 1, 1994* TO YEAR ENDED JUNE 1, 1994* TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME -- Dividends from
The Hudson River Trust (Note 2).................. $ 99,630 $ 11,570 $ 56,386 $ 2,792
EXPENSES (NOTE 4)................................... (28,920) (2,157) (22,767) (624)
- -------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME............................... 70,710 9,413 33,619 2,168
- -------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) from share transactions........ 63,019 (405) 178,220 --
Realized gain distribution from The Hudson
River Trust...................................... -- -- 40,549 1,341
- -------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS)............................ 63,019 (405) 218,769 1,341
- -------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of period.............................. (32,204) -- (6,547) --
End of period ................................... 493,229 (32,204) 429,416 (6,547)
- -------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation...... 525,433 (32,204) 435,963 (6,547)
- -------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS................................... 588,452 (32,609) 654,732 (5,206)
- -------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to
operations....................................... 659,162 (23,196) 688,351 (3,038)
- -------------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions....................................... 3,483,888 1,390,974 6,054,127 316,080
Withdrawals......................................... (1,048,180) (32,240) (1,574,510) (40)
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to contributions
and withdrawals.................................. 2,435,708 1,358,734 4,479,617 316,040
- -------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS.............................. 3,094,870 1,335,538 5,167,968 313,002
NET ASSETS -- BEGINNING OF PERIOD................... 1,335,538 -- 313,002 --
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF PERIOD......................... $4,430,408 $1,335,538 $5,480,970 $313,002
===================================================================================================================
</TABLE>
*Commencement of operations.
See Notes to Financial Statements.
FSA-32
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Continued)
- --------------------------------------------------------------------------------------------------------------
INTERNATIONAL
GLOBAL FUND FUND
---------------------------- --------------
SEPTEMBER 19,
YEAR ENDED 1995* TO
DECEMBER 31, DECEMBER 31,
1995 1994 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME -- Dividends from
The Hudson River Trust (Note 2)......................... $ 400,157 $ 84,653 $ 510
Expenses (Note 4).......................................... (224,839) (68,052) (12)
- --------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME...................................... 175,318 16,601 498
- --------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) from share transactions............... 55,631 2,308 (7)
Realized gain distribution from The Hudson
River Trust............................................. 788,817 238,966 189
- --------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN ......................................... 844,448 241,274 182
- --------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of period..................................... (467,857) (72,115) --
End of period .......................................... 2,311,157 (467,857) (227)
- --------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation............. 2,779,014 (395,742) (227)
- --------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.......................................... 3,623,462 (154,468) (45)
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to
operations.............................................. 3,798,780 (137,867) 453
- --------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions.............................................. 19,143,847 12,404,705 45,334
Withdrawals................................................ (6,358,047) (1,857,754) --
- --------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to contributions
and withdrawals......................................... 12,785,800 10,546,951 45,334
- --------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS..................................... 16,584,580 10,409,084 45,787
NET ASSETS -- BEGINNING OF PERIOD.......................... 12,003,504 1,594,420 --
- --------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF PERIOD................................ $28,588,084 $12,003,504 $45,787
==============================================================================================================
</TABLE>
*Commencement of operations.
See Notes to Financial Statements.
FSA-33
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Concluded)
- ----------------------------------------------------------------------------------------------------------------------
CONSERVATIVE INVESTORS
FUND GROWTH INVESTORS FUND
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME -- Dividends from
The Hudson River Trust (Note 2)............... $ 224,858 $105,562 $ 602,858 $113,283
EXPENSES (NOTE 4)................................ (56,285) (37,272) (136,295) (41,929)
- ----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME............................ 168,573 68,290 466,563 71,354
- ----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized loss from share transactions............ (21,293) (66,443) (5,408) (14,850)
Realized gain distribution from The Hudson
River Trust................................... 32,181 -- 362,984 --
- ----------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS)......................... 10,888 (66,443) 357,576 (14,850)
- ----------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year............................. (216,587) (98,372) (263,697) (56,176)
End of year .................................. 304,939 (216,587) 2,480,800 (263,697)
- ----------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation... 521,526 (118,215) 2,744,497 (207,521)
- ----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS................................ 532,414 (184,658) 3,102,073 (222,371)
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to
operations.................................... 700,987 (116,368) 3,568,636 (151,017)
- ----------------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions.................................... 2,281,637 1,652,385 20,374,439 5,339,146
Withdrawals...................................... (508,945) (920,352) (2,640,877) (622,957)
- ----------------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to
contributions and withdrawals.................... 1,772,692 732,033 17,733,562 4,716,189
- ----------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS........................... 2,473,679 615,665 21,302,198 4,565,172
NET ASSETS -- BEGINNING OF YEAR.................. 2,723,600 2,107,935 6,119,561 1,554,389
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR........................ $5,197,279 $2,723,600 $27,421,759 $6,119,561
======================================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-34
<PAGE>
================================================================================
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED),
3 (POOLED) AND 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Separate Account Nos. 13 (Pooled) (the Bond Fund), 10 (Pooled) (the Balanced
Fund), 4 (Pooled) (the Common Stock Fund), 3 (Pooled) (the Aggressive Stock
Fund), and 51 (Pooled) (the Money Market, Intermediate Government Securities,
Quality Bond, High Yield, Growth & Income, Equity Index, Global,
International, Conservative Investors and Growth Investors Funds) (the Funds)
of The Equitable Life Assurance Society of the United States (Equitable
Life), a wholly-owned subsidiary of The Equitable Companies Incorporated,
were established in conformity with the New York State Insurance Law.
Pursuant to such law, to the extent provided in the applicable contracts, the
net assets in the Funds are not chargeable with liabilities arising out of
any other business of Equitable Life. The excess of assets over reserves and
other contract liabilities amounting to $1,044,875 as shown in the Statement
of Assets and Liabilities in Separate Account No. 4 may be transferred to
Equitable Life's General Account.
Separate Account No. 51 was established as of the opening of business on July
1, 1993. Retirement Investment Account participant contributions were first
allocated to the Separate Account on June 1, 1994.
Interests of retirement and investment plans for employees, managers and
agents of Equitable Life in Separate Account Nos. 10, 4 and 3 aggregated
$22,742,258 (6.1%), $246,531,777 (11.6%) and $68,328,503 (20.0%),
respectively, at December 31, 1995 and $20,002,961 (5.1%), $184,086,304
(11.1%) and $48,123,292 (15.6%), respectively, at December 31, 1994, of the
net assets in these Funds.
Equitable Life is the investment manager for the Funds. Alliance Capital
Management L.P. (Alliance) serves as the investment adviser to Equitable Life
with respect to the management of Separate Account Nos. 13, 10, 4 and 3 (the
Equitable Funds). Alliance is a publicly-traded limited partnership which is
indirectly majority-owned by Equitable Life.
Separate Account No. 51 has ten investment funds which invest in shares of
corresponding portfolios of The Hudson River Trust (Trust). The Trust is an
open-end, diversified management investment company that invests the assets
of separate accounts of insurance companies. Alliance is the investment
adviser to the Trust.
Equitable Life and Alliance seek to obtain the best price and execution of
all orders placed for the portfolios of the Equitable Funds considering all
circumstances. In addition to using brokers and dealers to execute portfolio
security transactions for accounts under their management, Equitable Life and
Alliance may also enter into other types of business and securities
transactions with brokers and dealers, which will be unrelated to allocation
of the Equitable Funds' portfolio transactions.
2. Security transactions are recorded on the trade date. Amortized cost of debt
securities consists of cost, adjusted where applicable, for amortization of
premium or accretion of discount. Dividend income is recorded on the
ex-dividend date; interest income (including amortization of premium and
discount on securities using the effective yield method) is accrued daily.
Realized gains and losses on the sale of investments are computed on the
basis of the identified cost of the related investments sold. For Separate
Account No. 51, realized gains and losses on investments include gains and
losses on redemptions of the Trust's shares (determined on the identified
cost basis) and capital gain distributions from the Trust. Dividends and
realized gain distributions from The Hudson River Trust are recorded on
ex-date.
Transactions denominated in foreign currencies are recorded at the rate
prevailing at the date of such transactions. Asset and liability accounts
that are denominated in a foreign currency are adjusted to reflect the
current exchange rate at the end of the period. Transaction gains or losses
resulting from changes in the exchange rate during the reporting period or
upon settlement of the foreign currency transactions are reflected under
"Realized and Unrealized Gain (Loss) on Investments" in the Statements of
Operations and Changes in Net Assets.
FSA-35
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED),
3 (POOLED) AND 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
- -----------------------------------------------------------------------------------------------------------
Equitable Life's internal short-term investment account, Separate Account No.
2A, was established to provide a more flexible and efficient vehicle to
combine and invest temporary cash positions of certain eligible accounts
(Participating Funds) under Equitable Life's management. Separate Account No.
2A invests in debt securities maturing in sixty days or less from the date of
the acquisition. At December 31, 1995, the amortized cost of investments held
in Separate Account No. 2A consists of the following:
- -----------------------------------------------------------------------------------------------------------
Amortized
Cost %
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Certificates of Deposit, 5.80% due 01/31/96............................ $ 20,000,000 6.7%
Commercial Paper, 5.53% - 5.87% due 01/12/96 through 02/23/96.......... 262,329,329 88.0
Time Deposits, 5.875% due 01/02/96..................................... 800,000 0.3
Variable Rate LIBOR, 5.968% due 01/08/96............................... 15,000,000 5.0
--------------------------------------------------------------------------------------------------------
Total Investments...................................................... 298,129,329 100.0
Cash and Receivables Less Liabilities.................................. 63,333 0.0
--------------------------------------------------------------------------------------------------------
Net Assets of Separate Account No. 2A.................................. $298,192,662 100.0%
========================================================================================================
Units Outstanding...................................................... 1,232,756
Unit Value............................................................. $241.89
========================================================================================================
</TABLE>
Participating Funds purchase or redeem units depending on each participating
account's excess cash availability or cash needs to meet its liabilities.
Separate Account No. 2A is not subject to investment management fees.
Short-term debt securities may also be purchased directly by the Equitable
Funds.
For 1995 and 1994, investment security transactions, excluding short-term
debt securities, were as follows:
<TABLE>
<CAPTION>
Separate Account No. 13 Separate Account No. 10
------------------------------ -------------------------------
Cost of Net Proceeds Cost of Net Proceeds
Purchases of Sales Purchases of Sales
------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Stocks and long-term corporate
debt securities:
1995....................... $155,464,426 $155,157,632 $374,948,659 $389,169,100
1994....................... 173,055,780 185,754,025 205,954,001 260,871,268
U.S. Government obligations:
1995....................... $487,651,584 $504,632,056 $219,815,471 $172,433,013
1994....................... 529,658,852 604,841,830 153,502,598 195,600,942
</TABLE>
<TABLE>
<CAPTION>
Separate Account No. 4 Separate Account No. 3
------------------------------- --------------------------------
Cost of Net Proceeds Cost of Net Proceeds
Purchases of Sales Purchases of Sales
-------------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Stocks and long-term corporate
debt securities:
1995....................... $2,037,876,834 $2,082,648,235 $460,486,634 $525,937,180
1994....................... 1,556,068,225 1,644,508,525 314,667,935 272,832,266
U.S. Government obligations:
1995....................... -- -- -- --
1994....................... -- -- -- --
</TABLE>
FSA-36
<PAGE>
================================================================================
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED),
3 (POOLED) AND 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Concluded)
- --------------------------------------------------------------------------------
3. Investment securities for the Equitable Funds are valued as follows:
Stocks listed on national securities exchanges and certain over-the-counter
issues traded on the National Association of Securities Dealers, Inc.
automated quotation (NASDAQ) national market system are valued at the last
sale price, or, if there is no sale, at the latest available bid price.
Foreign securities not traded directly, or in American Depository Receipt
(ADR) form in the United States, are valued at the last sale price in the
local currency on an exchange in the country of origin. Foreign currency is
converted into its U.S. dollar equivalent at current exchange rates.
United States Treasury securities and other obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities are valued
at representative quoted prices.
Long-term (i.e., maturing in more than a year) publicly-traded corporate
bonds are valued at prices obtained from a bond pricing service of a major
dealer in bonds when such prices are available; however, in circumstances
where Equitable Life and Alliance deem it appropriate to do so, an
over-the-counter or exchange quotation may be used.
Convertible preferred stocks listed on national securities exchanges are
valued at their last sale price or, if there is no sale, at the latest
available bid price.
Convertible bonds and unlisted convertible preferred stocks are valued at bid
prices obtained from one or more major dealers in such securities; where
there is a discrepancy between dealers, values may be adjusted based on
recent premium spreads to the underlying common stock.
Other assets that do not have a readily available market price are valued at
fair value as determined in good faith by Equitable Life's investment
officers.
The value of the investments of the Money Market, Intermediate Government
Securities, Quality Bond, High Yield, Growth & Income, Equity Index, Global,
International, Conservative Investors and Growth Investors Funds in the
corresponding Hudson River Trust Portfolios is calculated by multiplying the
number of shares held by Separate Account No. 51 in each Portfolio by the net
asset value per share of that Portfolio determined as of the close of
business on the same day as the respective unit values of the Money Market,
Intermediate Government Securities, Quality Bond, High Yield, Growth &
Income, Equity Index, Global, International, Conservative Investors and
Growth Investors Funds are determined.
Separate Account No. 2A is valued daily at amortized cost, which approximates
market value. Short-term debt securities purchased directly by the Equitable
Funds which mature in 60 days or less are valued at amortized cost.
Short-term debt securities which mature in more than 60 days are valued at
representative quoted prices.
4. Charges and fees relating to the Funds are deducted in accordance with the
terms of the various contracts which participate in the Funds. These expenses
consist of asset management fees, administrative and sales-related fees, and
operating expenses, as specified in each contract. Depending upon the terms
of a contract, sales related fees and operating expenses are paid (i) by a
reduction of an appropriate number of Fund Units or (ii) by a direct payment.
These charges and fees are recorded as expenses in the accompanying
Statements of Operations and Changes in Net Assets, and as an offsetting
contribution to the Funds from the contract holders. Asset management fee is
deducted in the daily unit values for the Equitable Funds. Administrative
charge for the investment funds of Separate Account No. 51 is deducted in the
daily unit value for each investment fund.
Investments in Separate Account No. 51 are also subject to the expenses
incurred in the underlying portfolios of the Trust, which are reflected
through the portfolios' net asset values.
5. No Federal income tax based on net income or realized and unrealized capital
gains was applicable to contracts participating in the Funds by reason of
applicable provisions of the Internal Revenue Code and no Federal income tax
payable by Equitable Life will affect such contracts. Accordingly, no Federal
income tax provision is required.
FSA-37
<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, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, 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 loan impairments in 1995, for
postemployment benefits in 1994 and for investment securities in 1993.
PRICE WATERHOUSE LLP
New York, New York
February 7, 1996
F-1
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value............................. $ 15,899.9 $ 7,586.0
Held to maturity, at amortized cost..................................... - 5,223.0
Mortgage loans on real estate............................................. 3,638.3 4,018.0
Equity real estate........................................................ 3,916.2 4,446.4
Policy loans.............................................................. 1,976.4 1,731.2
Other equity investments.................................................. 621.1 678.5
Investment in and loans to affiliates..................................... 636.6 560.2
Other invested assets..................................................... 706.1 489.3
----------------- -----------------
Total investments..................................................... 27,394.6 24,732.6
Cash and cash equivalents................................................... 774.7 693.6
Deferred policy acquisition costs........................................... 3,083.3 3,221.1
Amounts due from discontinued GIC Segment................................... 2,097.1 2,108.6
Other assets................................................................ 2,713.1 2,078.6
Closed Block assets......................................................... 8,612.8 8,105.5
Separate Accounts assets.................................................... 24,566.6 20,469.5
----------------- -----------------
TOTAL ASSETS................................................................ $ 69,242.2 $ 61,409.5
================= =================
LIABILITIES
Policyholders' account balances............................................. $ 21,752.6 $ 21,238.0
Future policy benefits and other policyholders' liabilities................. 4,171.8 3,840.8
Short-term and long-term debt............................................... 1,899.3 1,337.4
Other liabilities........................................................... 3,379.5 2,300.1
Closed Block liabilities.................................................... 9,507.2 9,069.5
Separate Accounts liabilities............................................... 24,531.0 20,429.3
----------------- -----------------
Total liabilities..................................................... 65,241.4 58,215.1
----------------- -----------------
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.............................................. 2,913.6 2,913.6
Retained earnings........................................................... 781.6 484.0
Net unrealized investment gains (losses).................................... 338.2 (203.0)
Minimum pension liability................................................... (35.1) (2.7)
----------------- -----------------
Total shareholder's equity............................................ 4,000.8 3,194.4
----------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY.................................. $ 69,242.2 $ 61,409.5
================= =================
</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, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------------- ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee
income...................................................... $ 771.0 $ 715.0 $ 644.5
Premiums...................................................... 606.8 625.6 599.1
Net investment income......................................... 2,127.7 2,030.9 2,599.3
Investment gains, net......................................... 5.3 91.8 533.4
Commissions, fees and other income............................ 886.8 845.4 1,717.2
Contribution from the Closed Block............................ 124.4 151.0 128.3
----------------- ----------------- -----------------
Total revenues.......................................... 4,522.0 4,459.7 6,221.8
----------------- ----------------- -----------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances.......... 1,244.2 1,201.3 1,330.0
Policyholders' benefits....................................... 1,011.3 920.6 1,003.9
Other operating costs and expenses............................ 1,856.5 1,943.1 3,584.2
----------------- ----------------- -----------------
Total benefits and other deductions..................... 4,112.0 4,065.0 5,918.1
----------------- ----------------- -----------------
Earnings before Federal income taxes and cumulative
effect of accounting change................................. 410.0 394.7 303.7
Federal income taxes.......................................... 112.4 101.2 91.3
----------------- ----------------- -----------------
Earnings before cumulative effect of accounting change........ 297.6 293.5 212.4
Cumulative effect of accounting change, net of Federal
income taxes................................................ - (27.1) -
----------------- ----------------- -----------------
Net Earnings.................................................. $ 297.6 $ 266.4 $ 212.4
================= ================= =================
</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, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------------- ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Common stock, at par value, beginning of year................. $ 2.5 $ 2.5 $ 2.0
Increase in par value......................................... - - .5
----------------- ----------------- -----------------
Common stock, at par value, end of year....................... 2.5 2.5 2.5
----------------- ----------------- -----------------
Capital in excess of par value, beginning of year............. 2,913.6 2,613.6 2,273.9
Additional capital in excess of par value..................... - 300.0 340.2
Increase in par value......................................... - - (.5)
----------------- ----------------- -----------------
Capital in excess of par value, end of year................... 2,913.6 2,913.6 2,613.6
----------------- ----------------- -----------------
Retained earnings, beginning of year.......................... 484.0 217.6 5.2
Net earnings.................................................. 297.6 266.4 212.4
----------------- ----------------- -----------------
Retained earnings, end of year................................ 781.6 484.0 217.6
----------------- ----------------- -----------------
Net unrealized investment (losses) gains, beginning of year... (203.0) 131.9 78.8
Change in unrealized investment gains (losses)................ 541.2 (334.9) (9.5)
Effect of adopting new accounting standard.................... - - 62.6
----------------- ----------------- -----------------
Net unrealized investment gains (losses), end of year......... 338.2 (203.0) 131.9
----------------- ----------------- -----------------
Minimum pension liability, beginning of year.................. (2.7) (15.0) -
Change in minimum pension liability........................... (32.4) 12.3 (15.0)
----------------- ----------------- -----------------
Minimum pension liability, end of year........................ (35.1) (2.7) (15.0)
----------------- ----------------- -----------------
TOTAL SHAREHOLDER'S EQUITY, END OF YEAR....................... $ 4,000.8 $ 3,194.4 $ 2,950.6
================= ================= =================
</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, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------------- ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Net earnings.................................................. $ 297.6 $ 266.4 $ 212.4
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Net change in trading activities and broker-dealer
related receivables/payables.............................. - - (4,177.8)
Increase in matched resale agreements....................... - - (2,900.5)
Increase in matched repurchase agreements................... - - 2,900.5
Investment gains, net of dealer and trading gains........... (5.3) (91.8) (160.8)
Change in amounts due from discontinued GIC Segment......... - 57.3 47.8
General Account policy charges.............................. (769.7) (711.9) (623.4)
Interest credited to policyholders' account balances........ 1,244.2 1,201.3 1,330.0
Changes in Closed Block assets and liabilities, net......... (69.6) (95.1) (73.3)
Other, net.................................................. 627.1 7.8 (416.1)
----------------- ----------------- -----------------
Net cash provided (used) by operating activities.............. 1,324.3 634.0 (3,861.2)
----------------- ----------------- -----------------
Cash flows from investing activities:
Maturities and repayments................................... 1,863.1 2,319.7 3,479.6
Sales....................................................... 8,901.4 5,661.9 7,399.2
Return of capital from joint ventures and limited
partnerships.............................................. 65.2 39.0 119.5
Purchases................................................... (11,675.5) (7,417.6) (11,184.2)
Decrease (increase) in loans to discontinued GIC Segment.... 1,226.9 (40.0) (880.0)
Cash received on sale of 61% interest in DLJ................ - - 346.7
Other, net.................................................. (625.5) (371.1) (317.0)
----------------- ----------------- -----------------
Net cash (used) provided by investing activities.............. (244.4) 191.9 (1,036.2)
----------------- ----------------- -----------------
Cash flows from financing activities:
Policyholders' account balances:
Deposits.................................................. 2,414.9 2,082.7 2,410.7
Withdrawals............................................... (2,692.7) (2,887.4) (2,433.5)
Net (decrease) increase in short-term financings............ (16.4) (173.0) 4,717.2
Additions to long-term debt................................. 599.7 51.8 97.7
Repayments of long-term debt................................ (40.7) (199.8) (64.4)
Proceeds from issuance of Alliance units.................... - 100.0 -
Payment of obligation to fund accumulated deficit of
discontinued GIC Segment.................................. (1,215.4) - -
Capital contribution from the Holding Company............... - 300.0 -
Other, net.................................................. (48.2) - -
----------------- ----------------- -----------------
Net cash (used) provided by financing activities.............. (998.8) (725.7) 4,727.7
----------------- ----------------- -----------------
Change in cash and cash equivalents........................... 81.1 100.2 (169.7)
Cash and cash equivalents, beginning of year.................. 693.6 593.4 763.1
----------------- ----------------- -----------------
Cash and Cash Equivalents, End of Year........................ $ 774.7 $ 693.6 $ 593.4
================= ================= =================
Supplemental cash flow information
Interest Paid............................................... $ 89.6 $ 34.9 $ 1,437.2
================= ================= =================
Income Taxes (Refunded) Paid................................ $ (82.7) $ 49.2 $ 41.0
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) ORGANIZATION
The Equitable Life Assurance Society of the United States ("Equitable
Life") converted to a stock life insurance company on July 22, 1992 and
became a wholly owned subsidiary of The Equitable Companies Incorporated
(the "Holding Company"). Equitable Life's insurance business, which is
comprised of an Individual Insurance and Annuities segment and a Group
Pension segment is conducted principally by Equitable Life and its
wholly owned life insurance subsidiary, Equitable Variable Life
Insurance Company ("EVLICO"). Equitable Life's investment management
business, which comprises the Investment Services segment, is conducted
principally by Alliance Capital Management L.P. ("Alliance"), Equitable
Real Estate Investment Management, Inc. ("EREIM") and Donaldson, Lufkin
and Jenrette, Inc. ("DLJ"), an investment banking and brokerage
affiliate. AXA, a French holding company for an international group of
insurance and related financial services companies is the Holding
Company's largest shareholder, owning approximately 60.6% at December
31, 1995 (63.5% assuming conversion of Series E Convertible Preferred
Stock held by AXA and 54.2% if all securities convertible into, or
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").
The accompanying consolidated financial statements include the accounts
of Equitable Life and its wholly owned life insurance subsidiaries
(collectively, the "Insurance Group"); non-insurance subsidiaries,
principally Alliance, an investment advisory subsidiary and EREIM, a
real estate investment management subsidiary; and those partnerships and
joint ventures in which the Company has control and a majority economic
interest (collectively, including its consolidated subsidiaries, the
"Company"). The consolidated statement of earnings and cash flow for the
year ended December 31, 1993 include the results of operations and cash
flow of DLJ, an investment banking and brokerage affiliate, on a
consolidated basis through December 15, 1993 (see Note 20). Subsequent
to that date, DLJ is accounted for on the equity basis. The 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.
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.
All significant intercompany transactions and balances have been
eliminated in consolidation other than intercompany transactions and
balances with the Closed Block and the discontinued Guaranteed Interest
Contract ("GIC") Segment (see Note 7).
Certain reclassifications have been made in the amounts presented for
prior periods to conform these periods with the 1995 presentation.
F-6
<PAGE>
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.
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. The plan of demutualization
prohibits the reallocation, transfer, borrowing or lending of assets
between the Closed Block and other portions of Equitable Life's General
Account, any of its Separate Accounts or to any affiliate of Equitable
Life without the approval of the New York Superintendent of Insurance.
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. If the actual
contribution from the Closed Block in any given period equals or exceeds
the expected contribution for such period as determined at the
establishment of the Closed Block, the expected contribution would be
recognized in income for that period. Any excess of the actual
contribution over the expected contribution would also be recognized in
income to the extent that the aggregate expected contribution for all
prior periods exceeded the aggregate actual contribution. Any remaining
excess of actual contribution over expected contributions would be
accrued in the Closed Block as a liability for future dividends to be
paid to the Closed Block policyholders. If, over the period the policies
and contracts in the Closed Block remain in force, the actual
contribution from the Closed Block is less than the expected
contribution from the Closed Block, only such actual contribution would
be recognized in income.
Discontinued Operations
-----------------------
In 1991, the Company's management adopted a plan to discontinue the
business operations of the GIC Segment, consisting of the Guaranteed
Interest Contract and Group Non-Participating Wind-Up Annuities lines of
business. The Company established a pre-tax provision for the estimated
future losses of the GIC line of business and a premium deficiency
reserve for the Group Non-Participating Wind-Up Annuities. Subsequent
losses incurred have been charged to the allowance for future losses and
the premium deficiency reserve. Total allowances are based upon
management's best judgment and there is no assurance that the ultimate
losses will not differ.
Accounting Changes
------------------
In the first quarter of 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for
Impairment of a Loan". This statement applies to all loans, including
loans restructured in a troubled debt restructuring involving a
modification of terms. This statement addresses the accounting for
impairment of a loan by specifying how allowances for credit losses
should be determined. Impaired loans within the scope of this statement
are 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 Company provides for impairment of loans
through an allowance for possible losses. The adoption of this statement
did not have a material effect on the level of these allowances or on
the Company's consolidated statements of earnings and shareholder's
equity.
F-7
<PAGE>
In the fourth quarter of 1994 (effective as of January 1, 1994), the
Company adopted SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," which required employers to recognize the obligation to
provide postemployment benefits. Implementation of this statement
resulted in a charge for the cumulative effect of accounting change of
$27.1 million, net of a Federal income tax benefit of $14.6 million.
At December 31, 1993, the Company adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," which expanded the
use of fair value accounting for those securities that a company does
not have positive intent and ability to hold to maturity. Implementation
of this statement increased consolidated shareholder's equity by $62.6
million, net of deferred policy acquisition costs, amounts attributable
to participating group annuity contracts and deferred Federal income
tax. Beginning coincident with issuance of SFAS No. 115 implementation
guidance in November 1995, the Financial Accounting Standards Board
("FASB") permitted companies a one-time opportunity, through December
31, 1995, to reassess the appropriateness of the classification of all
securities held at that time. On December 1, 1995, the Company
transferred $4,794.9 million of securities classified as held to
maturity to the available for sale portfolio. As a result consolidated
shareholder's equity increased by $126.2 million, net of deferred policy
acquisition costs, amounts attributable to participating group annuity
contracts and deferred Federal income tax.
New Accounting Pronouncements
-----------------------------
In January 1995, the FASB issued SFAS No. 120, "Accounting and Reporting
by Mutual Life Insurance Enterprises and by Insurance Enterprises for
Certain Long-Duration Participating Contracts," which permits, but does
not require, stock life insurance companies with participating life
contracts to account for those contracts in accordance with Statement of
Position No. 95-1, "Accounting for Certain Insurance Activities of
Mutual Life Insurance Enterprises". The Company has decided to retain
the existing methodology to account for traditional participating
policies and, therefore, will not adopt this statement.
In March 1995, the FASB issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," which requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of such assets may not be
recoverable. The Company will implement this statement as of January 1,
1996. The cumulative effect of this accounting change will be a charge
of $23.4 million, net of a Federal income tax benefit of $12.1 million,
due to the writedown to fair value of building improvements relating to
facilities being vacated beginning in 1996. The Company currently
provides allowances for possible losses for other assets under the scope
of this statement. Management has not yet determined the impact of this
statement on assets to be held and used.
In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage
Servicing Rights," which requires a mortgage banking enterprise to
recognize rights to service mortgage loans for others as separate assets
however those servicing rights are acquired. It further requires
capitalized mortgage servicing rights be assessed for impairment based
on the fair value of those rights. The Company will implement this
statement as of January 1, 1996. Implementation of this statement will
not have a material effect on the Company's consolidated financial
statements.
In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation". This statement defines a fair value based
method of accounting for stock-based employee compensation plans while
continuing to allow an entity to measure compensation cost for such
plans using the intrinsic value based method of accounting. Management
has decided to retain the current compensation cost methodology
prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees".
F-8
<PAGE>
Valuation of Investments
------------------------
Fixed maturities, which the Company has both the ability and the intent
to hold to maturity, are stated principally at amortized cost. 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.
Mortgage loans on real estate are stated at unpaid principal balances,
net of unamortized discounts and valuation allowances. Effective with
the adoption of SFAS No. 114 on January 1, 1995, the 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. Prior to the adoption of SFAS No. 114, the valuation
allowances were based on losses expected by management to be realized on
transfers of mortgage loans to real estate (upon foreclosure or
in-substance foreclosure), on the disposition or settlement of mortgage
loans and on mortgage loans management believed may not be collectible
in full. In establishing valuation allowances, management previously
considered, among other things the estimated fair value of the
underlying collateral.
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. Valuation
allowances on real estate held for the production of income are computed
using the forecasted cash flows of the respective properties discounted
at a rate equal to the Company's cost of funds; valuation allowances on
real estate available for sale are computed using the lower of current
estimated fair value, net of disposition costs, or depreciated cost.
Policy loans are stated at unpaid principal balances.
Partnerships and joint venture interests in which the Company does not
have control and 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.
Investment Results and Unrealized Investment Gains (Losses)
-----------------------------------------------------------
Net investment income and realized investment gains and losses
(collectively, "investment results") related to certain participating
group annuity contracts are passed through to the contractholders as
interest credited to policyholders' account balances.
Realized investment gains and losses are determined by specific
identification and are presented as a component of revenue. Valuation
allowances are netted against the asset categories to which they apply
and changes in the 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 the discontinued GIC
Segment, Closed Block, participating group annuity contracts and
deferred policy acquisition costs related to universal life and
investment-type products.
F-9
<PAGE>
Recognition of Insurance Income and Related Expenses
----------------------------------------------------
Premiums from universal life and investment-type contracts are reported
as deposits to policyholders' account balances. Revenues from these
contracts consist of amounts assessed during the period against
policyholders' account balances for mortality charges, policy
administration charges and surrender charges. Policy benefits and claims
that are charged to expense include benefit claims incurred in the
period in excess of related policyholders' account balances.
Premiums from 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. Deferred policy acquisition costs are 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, deferred
policy acquisition costs are amortized over the expected average life of
the contracts (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 deferred policy acquisition costs of revisions to
estimated gross profits is reflected in earnings in the period such
estimated gross profits are revised. The effect on the deferred policy
acquisition cost 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 traditional life and annuity policies with life contingencies,
deferred policy acquisition costs are 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 estimated life
of the policy.
For individual health benefit insurance, deferred policy acquisition
costs are amortized over the expected average life of the contracts (10
years for major medical policies and 20 years for disability income
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 represent an accumulation of gross premium payments plus credited
interest less expense and mortality charges and withdrawals.
F-10
<PAGE>
For traditional life insurance policies, future policy benefit and
dividend 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,
provide 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, deferred policy acquisition
costs are 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.
Individual health benefit liabilities for active lives are estimated
using the net level premium method, and assumptions as to future
morbidity, withdrawals and interest which provide a margin for adverse
deviation. Benefit liabilities for disabled lives are estimated using
the present value of benefits method and experience assumptions as to
claim terminations, expenses and interest.
Claim reserves and associated liabilities for individual disability
income and major medical policies were $639.6 million, $570.6 million at
December 31, 1995 and 1994, respectively. Incurred benefits (benefits
paid plus changes in claim reserves) and benefits paid for individual
disability income and major medical policies are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Incurred benefits related to current year.......... $ 176.0 $ 188.6 $ 193.1
Incurred benefits related to prior years........... 67.8 28.7 106.1
----------------- ---------------- -----------------
Total Incurred Benefits............................ $ 243.8 $ 217.3 $ 299.2
================= ================ =================
Benefits paid related to current year.............. $ 37.0 $ 43.7 $ 48.9
Benefits paid related to prior years............... 137.8 132.3 123.1
----------------- ---------------- -----------------
Total Benefits Paid................................ $ 174.8 $ 176.0 $ 172.0
================= ================ =================
</TABLE>
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.
Equitable Life is subject to limitations on the amount of statutory
profits which can be retained with respect to certain classes of
individual participating policies that were in force on July 22, 1992
which are not included in the Closed Block and with respect to
participating policies issued subsequent to July 22, 1992. Excess
statutory profits, if any, will be distributed over time to such
policyholders and will not be available to Equitable Life's shareholder.
Earnings in excess of limitations are accrued as policyholders'
dividends.
At December 31, 1995, participating policies including those in the
Closed Block represent approximately 27.2% ($58.4 billion) of directly
written life insurance in force, net of amounts ceded. Participating
policies represent primarily all of the premium income as reflected in
the consolidated statements of earnings and in the results of the Closed
Block.
F-11
<PAGE>
Federal Income Taxes
--------------------
Equitable Life and its life insurance and non-life insurance
subsidiaries file a consolidated Federal income tax return with the
Holding Company and its non-life insurance 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 the 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 the years ended December 31, 1995, 1994 and
1993, investment results of such Separate Accounts were $1,956.3
million, $676.3 million and $1,676.5 million, respectively.
Deposits to all 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.
F-12
<PAGE>
3) INVESTMENTS
The following tables provide additional information relating to fixed
maturities and equity securities:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
----------------- ----------------- ---------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1995
-----------------
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 10,910.7 $ 617.6 $ 118.1 $ 11,410.2
Mortgage-backed.................... 1,838.0 31.2 1.2 1,868.0
U.S. Treasury securities and
U.S. government and
agency securities................ 2,257.0 77.8 4.1 2,330.7
States and political subdivisions.. 45.7 5.2 - 50.9
Foreign governments................ 124.5 11.0 .2 135.3
Redeemable preferred stock......... 108.1 5.3 8.6 104.8
----------------- ----------------- ---------------- ---------------
Total Available for Sale............... $ 15,284.0 $ 748.1 $ 132.2 $ 15,899.9
================= ================= ================ ===============
Equity Securities:
Common stock......................... $ 97.3 $ 49.1 $ 18.0 $ 128.4
================= ================= ================ ===============
December 31, 1994
-----------------
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 5,663.4 $ 34.6 $ 368.0 $ 5,330.0
Mortgage-backed.................... 686.0 2.9 44.8 644.1
U.S. Treasury securities and
U.S. government and
agency securities................ 1,519.3 6.7 71.9 1,454.1
States and political subdivisions.. 23.4 .1 .7 22.8
Foreign governments................ 43.8 .3 4.2 39.9
Redeemable preferred stock......... 108.4 .4 13.7 95.1
----------------- ----------------- ---------------- ---------------
Total Available for Sale............... $ 8,044.3 $ 45.0 $ 503.3 $ 7,586.0
================= ================= ================ ===============
Held to Maturity:
Corporate.......................... $ 4,661.0 $ 67.9 $ 233.8 $ 4,495.1
U.S. Treasury securities and
U.S. government and
agency securities................ 428.9 4.6 44.2 389.3
States and political subdivisions.. 63.4 .9 3.7 60.6
Foreign governments................ 69.7 4.2 2.0 71.9
================= ================= ================ ===============
Total Held to Maturity................. $ 5,223.0 $ 77.6 $ 283.7 $ 5,016.9
================= ================= ================ ===============
Equity Securities:
Common stock......................... $ 126.4 $ 31.2 $ 23.5 $ 134.1
================= ================= ================ ===============
</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 upon the
assumption that such securities will be held to maturity. Estimated fair
value for equity securities, substantially all of which do not have a
readily ascertainable market value, has 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, 1995 and 1994, securities
without a readily ascertainable market value having an amortized cost of
$3,748.9 million and $3,980.4 million, respectively, had estimated fair
values of $3,981.8 million and $3,858.7 million, respectively.
The contractual maturity of bonds at December 31, 1995 is shown below:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
------------------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less................................................ $ 357.9 $ 360.0
Due in years two through five.......................................... 3,773.1 3,847.1
Due in years six through ten........................................... 4,709.8 4,821.8
Due after ten years.................................................... 4,497.1 4,898.2
Mortgage-backed securities............................................. 1,838.0 1,868.0
---------------- -----------------
Total.................................................................. $ 15,175.9 $ 15,795.1
================ =================
</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.
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Balances, beginning of year........................ $ 284.9 $ 355.6 $ 512.0
Additions charged to income........................ 136.0 51.0 92.8
Deductions for writedowns and asset dispositions... (95.6) (121.7) (249.2)
----------------- ---------------- -----------------
Balances, End of Year.............................. $ 325.3 $ 284.9 $ 355.6
================= ================ =================
Balances, end of year comprise:
Mortgage loans on real estate.................... $ 65.5 $ 64.2 $ 144.4
Equity real estate............................... 259.8 220.7 211.2
----------------- ---------------- -----------------
Total.............................................. $ 325.3 $ 284.9 $ 355.6
================= ================ =================
</TABLE>
Deductions for writedowns and asset dispositions for 1993 include an
$87.1 million writedown of fixed maturity investments at December 31,
1993 as a result of adopting a new accounting statement for the
valuation of these investments that requires specific writedowns instead
of valuation allowances.
At December 31, 1995, 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 $37.2 million
of fixed maturities and $84.7 million of mortgage loans on real estate.
F-14
<PAGE>
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,
1995, approximately 15.57% of the $15,139.9 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.
The Company has restructured or modified the terms of certain fixed
maturity investments. The fixed maturity portfolio, based on amortized
cost, includes $15.9 million and $30.5 million at December 31, 1995 and
1994, respectively, of such restructured securities. These amounts
include fixed maturities which are in default as to principal and/or
interest payments, are to be restructured pursuant to commenced
negotiations or where the borrowers went into bankruptcy subsequent to
acquisition (collectively, "problem fixed maturities") of $1.6 million
and $9.7 million as of December 31, 1995 and 1994, respectively. Gross
interest income that would have been recorded in accordance with the
original terms of restructured fixed maturities amounted to $3.0
million, $7.5 million and $11.7 million in 1995, 1994 and 1993,
respectively. Gross interest income on these fixed maturities included
in net investment income aggregated $2.9 million, $6.8 million and $9.7
million in 1995, 1994 and 1993, respectively.
At December 31, 1995 and 1994, 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 $87.7 million (2.4% of total
mortgage loans on real estate) and $96.9 million (2.3% 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 $531.5
million and $447.9 million at December 31, 1995 and 1994, respectively.
These amounts include $3.8 million and $1.0 million of problem mortgage
loans on real estate at December 31, 1995 and 1994, 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 $52.1 million, $44.9 million and $51.8 million in 1995, 1994
and 1993, respectively. Gross interest income on these loans included in
net investment income aggregated $37.4 million, $32.8 million and $46.0
million in 1995, 1994 and 1993, respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31, 1995
-------------------
(IN MILLIONS)
<S> <C>
Impaired mortgage loans with provision for losses....................................... $ 310.1
Impaired mortgage loans with no provision for losses.................................... 160.8
-------------------
Recorded investment in impaired mortgage loans.......................................... 470.9
Provision for losses.................................................................... 62.7
-------------------
Net Impaired Mortgage Loans............................................................. $ 408.2
===================
</TABLE>
F-15
<PAGE>
Impaired mortgage loans with no provision for losses are loans where the
fair value of the collateral or the net present value of the loan equals
or exceeds the recorded investment. Interest income earned on loans
where the collateral value is used to measure impairment is recorded on
a cash basis. Interest income on loans where the present value method is
used to measure impairment is accrued on the net carrying value amount
of the loan at the interest rate used to discount the cash flows.
Changes in the present value attributable to changes in the amount or
timing of expected cash flows are reported as investment gains or
losses.
During the year ended December 31, 1995, the Company's average recorded
investment in impaired mortgage loans was $429.0 million. Interest
income recognized on these impaired mortgage loans totaled $27.9 million
for the year ended December 31, 1995, including $13.4 million recognized
on a cash basis.
At December 31, 1995, investments owned of any one issuer, including its
affiliates, for which the aggregate carrying values are 10% or more of
total shareholders' equity, were $508.3 million relating to Trammell
Crow and affiliates (including holdings of the Closed Block and the
discontinued GIC Segment). The amount includes restructured mortgage
loans on real estate with an amortized cost of $152.4 million. A $294.0
million commercial loan package which was in bankruptcy at the beginning
of the year was resolved in 1995, with part of the package reclassified
as restructured and the remainder reclassified as equity real estate.
The Insurance Group's investment in equity real estate is through direct
ownership and through investments in real estate joint ventures. At
December 31, 1995 and 1994, the carrying value of equity real estate
available for sale amounted to $255.5 million and $447.8 million,
respectively. For the years ended December 31, 1995, 1994 and 1993,
respectively, real estate of $35.3 million, $189.8 million and $261.8
million was acquired in satisfaction of debt. At December 31, 1995 and
1994, the Company owned $862.7 million and $1,086.9 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 $662.4
million and $703.1 million at December 31, 1995 and 1994, respectively.
Depreciation expense on real estate totaled $121.7 million, $117.0
million and $115.3 million for the years ended December 31, 1995, 1994
and 1993, respectively.
F-16
<PAGE>
4) JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information of real estate joint ventures
(38 and 47 individual ventures as of December 31, 1995 and 1994,
respectively) and of 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,
------------------------------------
1995 1994
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
FINANCIAL POSITION
Investments in real estate, at depreciated cost........................ $ 2,684.1 $ 2,786.7
Investments in securities, generally at estimated fair value........... 2,459.8 3,071.2
Cash and cash equivalents.............................................. 489.1 359.8
Other assets........................................................... 270.8 398.7
---------------- -----------------
Total assets........................................................... 5,903.8 6,616.4
---------------- -----------------
Borrowed funds - third party........................................... 1,782.3 1,759.6
Borrowed funds - the Company........................................... 220.5 238.0
Other liabilities...................................................... 593.9 987.7
---------------- -----------------
Total liabilities...................................................... 2,596.7 2,985.3
---------------- -----------------
Partners' Capital...................................................... $ 3,307.1 $ 3,631.1
================ =================
Equity in partners' capital included above............................. $ 902.2 $ 964.2
Equity in limited partnership interests not included above............. 212.8 224.6
Excess (deficit) of equity in partners' capital over investment cost
and equity earnings.................................................. 3.6 (1.8)
Notes receivable from joint venture.................................... 5.3 6.1
---------------- -----------------
Carrying Value......................................................... $ 1,123.9 $ 1,193.1
================ =================
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures............. $ 463.5 $ 537.7 $ 602.7
Revenues of other limited partnership interests.... 242.3 103.4 319.1
Interest expense - third party..................... (135.3) (114.9) (118.8)
Interest expense - the Company..................... (41.0) (36.9) (52.1)
Other expenses..................................... (397.7) (430.9) (531.7)
----------------- ---------------- -----------------
Net Earnings....................................... $ 131.8 $ 58.4 $ 219.2
================= ================ =================
Equity in net earnings included above.............. $ 49.1 $ 18.9 $ 71.6
Equity in net earnings of limited partnerships
interests not included above..................... 44.8 25.3 46.3
Excess of earnings in joint ventures over equity
ownership percentage and amortization of
differences in bases............................. .9 1.8 9.2
Interest on notes receivable....................... .1 - .5
----------------- ---------------- -----------------
Total Equity in Net Earnings....................... $ 94.9 $ 46.0 $ 127.6
================= ================ =================
</TABLE>
F-17
<PAGE>
5) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities................................... $ 1,151.0 $ 1,024.5 $ 981.7
Trading account securities......................... - - 709.3
Securities purchased under resale agreements....... - - 533.8
Mortgage loans on real estate...................... 329.0 384.3 457.4
Equity real estate................................. 560.4 561.8 539.1
Other equity investments........................... 76.9 35.7 110.4
Policy loans....................................... 144.4 122.7 117.0
Broker-dealer related receivables.................. - - 292.2
Other investment income............................ 279.7 336.3 304.9
----------------- ---------------- -----------------
Gross investment income.......................... 2,541.4 2,465.3 4,045.8
----------------- ---------------- -----------------
Interest expense to finance short-term trading
instruments...................................... - - 983.4
Other investment expenses.......................... 413.7 434.4 463.1
----------------- ---------------- -----------------
Investment expenses.............................. 413.7 434.4 1,446.5
----------------- ---------------- -----------------
Net Investment Income.............................. $ 2,127.7 $ 2,030.9 $ 2,599.3
================= ================ =================
</TABLE>
Investment gains (losses), net, including changes in the valuation
allowances, are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities................................... $ 119.9 $ (14.1) $ 123.1
Mortgage loans on real estate...................... (40.2) (43.1) (65.1)
Equity real estate................................. (86.6) 20.6 (18.5)
Other equity investments........................... 12.8 76.0 119.5
Dealer and trading gains........................... - - 372.5
Sales of newly issued Alliance Units............... - 52.4 -
Other.............................................. (.6) - 1.9
----------------- ---------------- -----------------
Investment Gains, Net.............................. $ 5.3 $ 91.8 $ 533.4
================= ================ =================
</TABLE>
Writedowns of fixed maturities amounted to $46.7 million, $30.8 million
and $5.4 million for the years ended December 31, 1995, 1994 and 1993,
respectively.
For the years ended December 31, 1995 and 1994, respectively, proceeds
received on sales of fixed maturities classified as available for sale
amounted to $8,206.0 million and $5,253.9 million. Gross gains of $211.4
million and $65.2 million and gross losses of $64.2 million and $50.8
million, respectively, were realized on these sales. The change in
unrealized investment gains (losses) related to fixed maturities
classified as available for sale for the years ended December 31, 1995
and 1994 amounted to $1,077.2 million and $(742.2) million,
respectively.
Gross gains of $188.5 million and gross losses of $145.0 million were
realized on sales of investments in fixed maturities held for investment
and available for sale for the year ended December 31, 1993.
F-18
<PAGE>
During each of the years ended December 31, 1995 and 1994, one security
classified as held to maturity was sold and during the eleven months
ended November 30, 1995 and the year ended December 31, 1994,
respectively, twelve and six securities so classified were transferred
to the available for sale portfolio. All actions were taken as a result
of a significant deterioration in creditworthiness. The aggregate
amortized cost of the securities sold were $1.0 million and $19.9
million with a related investment gain of $-0- million and $.8 million
recognized in 1995 and 1994, respectively; the aggregate amortized cost
of the securities transferred was $116.0 million and $42.8 million with
gross unrealized investment losses of $3.2 million and $3.1 million
charged to consolidated shareholders' equity for the eleven months ended
November 30, 1995 and the year ended December 31, 1994, respectively. On
December 1, 1995, the Company transferred $4,794.9 million of securities
classified as held to maturity to the available for sale portfolio. As a
result, unrealized gains on fixed maturities increased $307.0 million,
offset by deferred policy acquisition costs of $73.7 million, amounts
attributable to participating group annuity contracts of $39.2 million
and deferred Federal income tax of $67.9 million.
Investment gains from other equity investments for the year ended
December 31, 1993, included $79.9 million generated by DLJ's involvement
in long-term corporate development investments.
For the years ended December 31, 1995, 1994 and 1993, investment results
passed through to certain participating group annuity contracts as
interest credited to policyholders' account balances amounted to $131.2
million, $175.8 million and $243.2 million, respectively.
During 1995, Alliance entered into an agreement to acquire the business
of Cursitor-Eaton Asset Management Company and Cursitor Holdings Limited
(collectively, "Cursitor") for approximately $141.5 million consisting
of $84.9 million in cash, 1,764,115 of Alliance's publicly traded units
("Alliance Units"), 6% notes aggregating $21.5 million payable ratably
over four years, and substantial additional consideration which will be
determined at a later date. The transaction, which is expected to be
completed during the first quarter of 1996, is subject to the receipt of
consents, regulatory approvals, and certain other closing conditions,
including client approval of the transfer of Cursitor accounts. Upon
completion of this transaction, the Company's ownership percentage of
Alliance will be reduced.
In 1994, Alliance sold 4.96 million newly issued Alliance Units to third
parties at prevailing market prices. The sales decreased the Company's
ownership of Alliance's Units from 63.2% to 59.2%. In addition, the
Company continues to hold its 1% general partnership interest in
Alliance. The Company recognized an investment gain of $52.4 million as
a result of these transactions.
The Company's ownership interest in Alliance will be further reduced
upon the exercise of options granted to certain Alliance employees. At
December 31, 1995, Alliance had options outstanding to purchase an
aggregate of 4.8 million Alliance Units at a price ranging from $6.0625
to $22.25 per unit. Options are exercisable at a rate of 20% on each of
the first five anniversary dates from the date of grant.
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>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year......................... $ (203.0) $ 131.9 $ 78.8
Changes in unrealized investment (losses) gains.... 1,117.7 (823.8) (14.1)
Effect of adopting SFAS No. 115.................... - - 283.9
Changes in unrealized investment (gains)
losses attributable to:
Participating group annuity contracts.......... (78.1) 40.8 (36.2)
Deferred policy acquisition costs.............. (208.4) 269.5 (150.5)
Deferred Federal income taxes.................. (290.0) 178.6 (30.0)
----------------- ---------------- -----------------
Balance, End of Year............................... $ 338.2 $ (203.0) $ 131.9
================= ================ =================
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Balance, end of year comprises:
Unrealized investment (losses) gains on:
Fixed maturities............................... $ 615.9 $ (461.3) $ 283.9
Other equity investments....................... 31.1 7.7 75.8
Other.......................................... 31.6 14.5 25.0
----------------- ---------------- -----------------
Total........................................ 678.6 (439.1) 384.7
Amounts of unrealized investment (gains)
losses attributable to:
Participating group annuity contracts........ (72.2) 5.9 (34.9)
Deferred policy acquisition costs............ (89.4) 119.0 (150.5)
Deferred Federal income taxes................ (178.8) 111.2 (67.4)
----------------- ---------------- -----------------
Total.............................................. $ 338.2 $ (203.0) $ 131.9
================= ================ =================
</TABLE>
6) CLOSED BLOCK
Summarized financial information of the Closed Block follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1995 1994
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost,
$3,662.8 and $1,270.3)........................................... $ 3,896.2 $ 1,197.0
Held to maturity, at amortized cost (estimated fair value of
$1,785.0 in 1994)................................................ - 1,927.8
Mortgage loans on real estate........................................ 1,368.8 1,543.7
Policy loans......................................................... 1,797.2 1,827.9
Cash and other invested assets....................................... 440.9 442.5
Deferred policy acquisition costs.................................... 823.6 878.1
Other assets......................................................... 286.1 288.5
----------------- -----------------
Total Assets......................................................... $ 8,612.8 $ 8,105.5
================= =================
Liabilities
Future policy benefits and policyholders' account balances........... $ 9,346.7 $ 8,965.3
Other liabilities.................................................... 160.5 104.2
----------------- -----------------
Total Liabilities.................................................... $ 9,507.2 $ 9,069.5
================= =================
</TABLE>
F-20
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other revenue......................... $ 753.4 $ 798.1 $ 860.2
Investment income (net of investment
expenses of $26.7, $19.0 and $17.3).............. 538.9 523.0 526.5
Investment losses, net............................. (20.2) (24.0) (15.0)
----------------- ---------------- -----------------
Total revenues............................... 1,272.1 1,297.1 1,371.7
----------------- ---------------- -----------------
Benefits and Other Deductions
Policyholders' benefits and dividends.............. 1,085.1 1,075.6 1,141.4
Other operating costs and expenses................. 62.6 70.5 102.0
----------------- ---------------- -----------------
Total benefits and other deductions.......... 1,147.7 1,146.1 1,243.4
----------------- ---------------- -----------------
Contribution from the Closed Block................. $ 124.4 $ 151.0 $ 128.3
================= ================ =================
</TABLE>
The fixed maturity portfolio, based on amortized cost, includes $4.3
million and $23.8 million at December 31, 1995 and 1994, respectively,
of restructured securities which includes problem fixed maturities of
$1.9 million and $6.4 million, respectively.
During the eleven months ended November 30, 1995, one security
classified as held to maturity was sold and ten securities classified as
held to maturity were transferred to the available for sale portfolio.
All actions resulted from a significant deterioration in
creditworthiness. The amortized cost of the security sold was $4.2
million. The aggregate amortized cost of the securities transferred was
$81.3 million with gross unrealized investment losses of $.1 million
transferred to equity. At December 1, 1995, $1,750.7 million of
securities classified as held to maturity were transferred to the
available for sale portfolio. As a result, unrealized gains of $88.5
million on fixed maturities were recognized and offset by an increase to
the deferred dividend liability. Implementation of SFAS No. 115 for the
valuation of fixed maturities at December 31, 1993 resulted in the
recognition of a deferred dividend liability of $49.6 million.
At December 31, 1995 and 1994, problem mortgage loans on real estate had
an amortized cost of $36.5 million and $27.6 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had an amortized cost of $137.7 million and $179.2 million,
respectively. At December 31, 1995 and 1994, the restructured mortgage
loans on real estate amount included $8.8 million and $.7 million,
respectively, of problem mortgage loans on real estate.
Valuation allowances amounted to $18.4 million and $46.2 million on
mortgage loans on real estate and $4.3 million and $2.6 million on
equity real estate at December 31, 1995 and 1994, respectively.
Writedowns of fixed maturities amounted to $16.8 million and $15.9
million and $1.7 million for the years ended December 31, 1995, 1994 and
1993, respectively.
Many expenses related to Closed Block operations are charged to
operations outside of the Closed Block; accordingly, the contribution
from the Closed Block does not represent the actual profitability of the
Closed Block operations. Operating costs and expenses outside of the
Closed Block are, therefore, disproportionate to the business outside of
the Closed Block.
F-21
<PAGE>
7) DISCONTINUED OPERATIONS
Summarized financial information of the GIC Segment follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1995 1994
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets
Mortgage loans on real estate........................................ $ 1,485.8 $ 1,730.5
Equity real estate................................................... 1,122.1 1,194.8
Other invested assets................................................ 665.2 978.8
Other assets......................................................... 579.3 529.5
----------------- -----------------
Total Assets......................................................... $ 3,852.4 $ 4,433.6
================= =================
Liabilities
Policyholders' liabilities........................................... $ 1,399.8 $ 1,924.0
Allowance for future losses.......................................... 164.2 185.6
Amounts due to continuing operations................................. 2,097.1 2,108.6
Other liabilities.................................................... 191.3 215.4
----------------- -----------------
Total Liabilities.................................................... $ 3,852.4 $ 4,433.6
================= =================
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Investment income (net of investment expenses
of $143.8, $174.0 and $175.8).................... $ 325.1 $ 395.0 $ 535.1
Investment (losses) gains, net..................... (22.9) 26.8 (22.6)
Policy fees, premiums and other income............. .7 .3 8.7
----------------- ---------------- -----------------
Total revenues..................................... 302.9 422.1 521.2
Benefits and other deductions...................... 328.0 443.8 545.9
----------------- ---------------- -----------------
Losses Charged to Allowance for Future Losses...... $ (25.1) $ (21.7) $ (24.7)
================= ================ =================
</TABLE>
In 1991, the Company established a pre-tax provision of $396.7 million
for the estimated future losses of the GIC Segment. At December 31,
1993, implementation of SFAS No. 115 for the valuation of fixed
maturities resulted in a benefit of $13.1 million, offset by a
corresponding addition to the allowance for future losses.
The amounts due to continuing operations at December 31, 1994 consisted
of $3,324.0 million borrowed by the GIC Segment from continuing
operations, offset by $1,215.4 million representing an obligation of
continuing operations to provide assets to fund the accumulated deficit
of the GIC Segment. In January 1995, continuing operations transferred
$1,215.4 million in cash to the GIC Segment in settlement of its
obligation. Subsequently, the GIC Segment remitted $1,155.4 million in
cash to continuing operations in partial repayment of borrowings by the
GIC Segment. No gains or losses were recognized on these transactions.
Amounts due to continuing operations at December 31, 1995, consisted of
$2,097.1 million borrowed by the discontinued GIC Segment.
F-22
<PAGE>
Investment income included $88.2 million and $97.7 million of interest
income for the years ended December 31, 1994 and 1993, respectively, on
amounts due from continuing operations. Benefits and other deductions
includes $154.6 million, $219.7 million and $197.1 million of interest
expense related to amounts borrowed from continuing operations in 1995,
1994 and 1993, respectively.
Valuation allowances amounted to $19.2 million and $50.2 million on
mortgage loans on real estate and $77.9 million and $74.7 million on
equity real estate at December 31, 1995 and 1994, respectively.
Writedowns of fixed maturities amounted to $8.1 million, $17.8 million
and $1.1 million for the years ended December 31, 1995, 1994 and 1993,
respectively.
The fixed maturity portfolio, based on amortized cost, includes $15.1
million and $43.3 million at December 31, 1995 and 1994, respectively,
of restructured securities. These amounts include problem fixed
maturities of $6.1 million and $9.7 million at December 31, 1995 and
1994, respectively.
At December 31, 1995 and 1994, problem mortgage loans on real estate had
amortized costs of $35.4 million and $14.9 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had amortized costs of $289.3 million and $371.2 million,
respectively.
At December 31, 1995 and 1994, the GIC Segment had $310.9 million and
$312.2 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,
--------------------------------------
1995 1994
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Short-term debt...................................................... $ - $ 20.0
----------------- -----------------
Long-term debt:
Equitable Life:
Surplus notes, 6.95%, scheduled to mature 2005..................... 399.3 -
Surplus notes, 7.70%, scheduled to mature 2015..................... 199.6 -
Eurodollar notes, 10.375% due 1995................................. - 34.6
Eurodollar notes, 10.5% due 1997................................... 76.2 76.2
Zero coupon note, 11.25% due 1997.................................. 120.1 107.8
Other.............................................................. 16.3 14.3
----------------- -----------------
Total Equitable Life........................................... 811.5 232.9
----------------- -----------------
Wholly Owned and Joint Venture Real Estate:
Mortgage notes, 4.98% - 12.75% due through 2019.................... 1,084.4 1,080.6
----------------- -----------------
Alliance:
Other.............................................................. 3.4 3.9
----------------- -----------------
Total long-term debt................................................. 1,899.3 1,317.4
----------------- -----------------
Total Short-term and Long-term Debt.................................. $ 1,899.3 $ 1,337.4
================= =================
</TABLE>
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. The interest rates are
based on external indices dependent on the type of borrowing and at
December 31, 1995 range from 5.8% (the London Interbank Offering Rate
plus 22.5 basis points) to 8.5% (the prime rate). There were no
borrowings outstanding under this bank credit facility at December 31,
1995.
F-23
<PAGE>
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 five-year bank credit facility.
There were no borrowings outstanding under this program at December 31,
1995.
In 1994, Alliance established a $100.0 million revolving credit facility
with several banks. On March 31, 1997, the revolving credit facility
converts into a term loan payable in quarterly installments through
March 31, 1999. Outstanding borrowings generally bear interest at the
Eurodollar rate plus .875% per annum through March 31, 1997 and at the
Eurodollar rate plus 1.125% per annum after conversion through March 31,
1999. In addition, a quarterly commitment fee of .25% per annum is paid
on the average daily unused amount. At December 31, 1995, there were no
amounts outstanding under the facility.
In 1994, Alliance also established a $100.0 million commercial paper
program and entered into a three-year $100.0 million revolving credit
facility with a group of commercial banks to support commercial paper to
be issued under the program and for general corporate purposes. Amounts
outstanding under the facility bear interest at an annual rate ranging
from the Eurodollar rate plus .225% to the Eurodollar rate plus .2875%.
A fee of .125% per annum is paid quarterly on the entire facility. At
December 31, 1995, Alliance had not issued any commercial paper and
there were no amounts outstanding under the revolving credit facility.
During 1994, EREIM established two bank lines of credit totaling $30.0
million of which $20.0 million was outstanding at December 31, 1994.
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. Proceeds from the issuance of the surplus notes were
$596.6 million, net of related issuance costs. The unamortized discount
on the surplus notes was $1.1 million at December 31, 1995. Payments of
interest on or principal of the surplus notes are subject to prior
approval by the New York Insurance Department.
The Company has pledged real estate, mortgage loans, cash and securities
amounting to $1,629.7 million and $1,744.4 million at December 31, 1995
and 1994, respectively, as collateral for certain long-term debt.
At December 31, 1995, aggregate maturities of the long-term debt based
on required principal payments at maturity for 1996 and the succeeding
four years are $124.0 million, $466.6 million, $309.5 million, $15.8
million, respectively, and $1,015.0 million thereafter.
9) FEDERAL INCOME TAXES
A summary of the Federal income tax expense (benefit) in the
consolidated statements of earnings is shown below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current.......................................... $ (11.7) $ 4.0 $ 115.8
Deferred......................................... 124.1 97.2 (24.5)
----------------- ---------------- -----------------
Total.............................................. $ 112.4 $ 101.2 $ 91.3
================= ================ =================
</TABLE>
F-24
<PAGE>
The Federal income taxes attributable to consolidated operations are
different from the amounts determined by multiplying the earnings before
Federal income taxes and cumulative effect of accounting change 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>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Expected Federal income tax expense................ $ 143.5 $ 138.1 $ 106.3
Differential earnings amount....................... - (16.8) (23.2)
Adjustment of tax audit reserves................... 4.1 (4.6) 22.9
Tax rate adjustment................................ - - (5.0)
Other.............................................. (35.2) (15.5) (9.7)
----------------- --------------- -----------------
Federal Income Tax Expense......................... $ 112.4 $ 101.2 $ 91.3
================= ================ =================
</TABLE>
Prior to the date of demutualization, Equitable Life reduced its
deduction for policyholder dividends by the differential earnings
amount. This amount was computed, for each tax year, by multiplying
Equitable Life's average equity base, as determined for tax purposes, by
an estimate of the excess of an imputed earnings rate for stock life
insurance companies over the average mutual life insurance companies'
earnings rate. The differential earnings amount for each tax year was
subsequently recomputed when actual earnings rates were published by the
Internal Revenue Service. As a stock life insurance company, Equitable
Life is no longer required to reduce its policyholder dividend deduction
by the differential earnings amount, but differential earnings amounts
for pre-demutualization years were still being recomputed in 1994 and
1993.
The components of the net deferred Federal income tax asset are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 December 31, 1994
--------------------------------- ---------------------------------
ASSETS LIABILITIES Assets Liabilities
--------------- ---------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Deferred policy acquisition costs,
reserves and reinsurance............. $ - $ 303.2 $ - $ 220.3
Investments............................ - 326.9 - 18.7
Compensation and related benefits...... 293.0 - 307.3 -
Other.................................. - 32.3 - 5.8
--------------- ---------------- --------------- ---------------
Total.................................. $ 293.0 $ 662.4 $ 307.3 $ 244.8
=============== ================ =============== ===============
</TABLE>
The deferred Federal income tax expense (benefit) 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>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Deferred policy acquisition costs, reserves
and reinsurance.................................. $ 55.1 $ 13.0 $ (46.7)
Investments........................................ 13.0 89.3 60.4
Compensation and related benefits.................. 30.8 10.0 (50.1)
Other.............................................. 25.2 (15.1) 11.9
----------------- ---------------- -----------------
Deferred Federal Income Tax Expense (Benefit)...... $ 124.1 $ 97.2 $ (24.5)
================= ================ =================
</TABLE>
F-25
<PAGE>
The Internal Revenue Service completed its audit of the Company's
Federal income tax returns for the years 1984 through 1988. There was no
material effect on the Company's consolidated results of operations.
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. The effect of reinsurance (excluding group life and
health) is summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Direct premiums.................................... $ 474.2 $ 476.7 $ 458.8
Reinsurance assumed................................ 171.3 180.5 169.9
Reinsurance ceded.................................. (38.7) (31.6) (29.6)
----------------- ---------------- -----------------
Premiums........................................... $ 606.8 $ 625.6 $ 599.1
================= ================ =================
Universal Life and Investment-type Product
Policy Fee Income Ceded.......................... $ 38.9 $ 27.5 $ 33.7
================= ================ =================
Policyholders' Benefits Ceded...................... $ 48.2 $ 20.7 $ 72.3
================= ================ =================
Interest Credited to Policyholders' Account
Balances Ceded................................... $ 28.5 $ 25.4 $ 24.1
================= ================ =================
</TABLE>
In February 1993, management established a practice limiting the risk
retention on new policies issued by the Insurance Group to a maximum of
$5.0 million. In addition, effective January 1, 1994, all in force
business above $5.0 million was reinsured. 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 $260.6 million,
$241.0 million and $895.1 million for the years ended December 31, 1995,
1994 and 1993, respectively. Ceded death and disability benefits totaled
$188.1 million, $235.5 million and $787.8 million for the years ended
December 31, 1995, 1994 and 1993, respectively. Insurance liabilities
ceded totaled $724.2 million and $833.4 million at December 31, 1995 and
1994, 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 and 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. The Company's funding policy is to
make the minimum contribution required by the Employee Retirement Income
Security Act of 1974.
Components of net periodic pension (credit) cost for the qualified and
non-qualified plans are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost....................................... $ 30.0 $ 30.3 $ 29.8
Interest cost on projected benefit obligations..... 122.0 111.0 108.0
Actual return on assets............................ (309.2) 24.4 (178.6)
Net amortization and deferrals..................... 155.6 (142.5) 55.3
----------------- ---------------- -----------------
Net Periodic Pension (Credit) Cost................. $ (1.6) $ 23.2 $ 14.5
================= ================ =================
</TABLE>
F-26
<PAGE>
The funded status of the qualified and non-qualified pension plans is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1995 1994
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Actuarial present value of obligations:
Vested............................................................... $ 1,642.4 $ 1,295.5
Non-vested........................................................... 10.9 8.7
--------------- -----------------
Accumulated Benefit Obligation......................................... $ 1,653.3 $ 1,304.2
================ =================
Plan assets at fair value.............................................. $ 1,503.8 $ 1,193.5
Projected benefit obligation........................................... 1,743.0 1,403.4
---------------- -----------------
Projected benefit obligation in excess of plan assets.................. (239.2) (209.9)
Unrecognized prior service cost........................................ (25.5) (33.2)
Unrecognized net loss from past experience different from that
assumed.............................................................. 368.2 298.9
Unrecognized net asset at transition................................... (7.3) (20.8)
Additional minimum liability........................................... (51.9) (37.8)
---------------- -----------------
Prepaid (Accrued) Pension Cost......................................... $ 44.3 $ (2.8)
================ =================
</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 4.50%, respectively, at December 31, 1995 and
8.75% and 4.88%, respectively, at December 31, 1994. As of January 1,
1995 and 1994, the expected long-term rate of return on assets for the
retirement plan was 11% and 10%, respectively.
The Company recorded, as a reduction of shareholder's equity, an
additional minimum pension liability of $35.1 million and $2.7 million,
net of Federal income taxes, at December 31, 1995 and 1994,
respectively, representing the excess of the accumulated benefit
obligation over the fair value of plan assets and accrued pension
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.
As of December 31, 1993, the Company changed the method of determining
the market-related value of plan assets from fair value to a calculated
value. This change in estimate had no material effect on the Company's
consolidated statements of earnings.
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 $36.4 million,
$38.1 million and $39.9 million for the years ended December 31, 1995,
1994 and 1993, respectively.
The Company provides certain medical and life insurance benefits
(collectively, "postretirement benefits") for qualifying employees,
managers and agents retiring from the Company on or after attaining age
55 who have at least 10 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 the years ended December 31, 1995, 1994 and
1993, the Company made estimated postretirement benefits payments of
$31.1 million, $29.8 million and $29.7 million, respectively.
F-27
<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>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost....................................... $ 4.0 $ 3.9 $ 5.3
Interest cost on accumulated postretirement
benefits obligation.............................. 34.7 28.6 29.2
Unrecognized prior service cost.................... (2.3) (3.9) (6.9)
Net amortization and deferrals..................... - - 1.5
----------------- ---------------- -----------------
Net Periodic Postretirement Benefits Costs......... $ 36.4 $ 28.6 $ 29.1
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1995 1994
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Accumulated postretirement benefits obligation:
Retirees............................................................. $ 391.8 $ 300.4
Fully eligible active plan participants.............................. 50.4 33.0
Other active plan participants....................................... 64.2 44.0
---------------- -----------------
506.4 377.4
Unrecognized benefit of plan amendments................................ - 3.2
Unrecognized prior service cost........................................ 56.3 61.9
Unrecognized net loss from past experience different from that
assumed and from changes in assumptions.............................. (181.3) (64.7)
---------------- -----------------
Accrued Postretirement Benefits Cost................................... $ 381.4 $ 377.8
================ =================
</TABLE>
In 1993, the Company amended the cost sharing provisions of
postretirement medical benefits. At January 1, 1994, medical benefits
available to retirees under age 65 are the same as those offered to
active employees and medical benefits will be limited to 200% of 1993
costs for all participants.
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefits obligation was 10% in 1995,
gradually declining to 3.5% in the year 2008 and in 1994 was 10%,
gradually declining to 5% in the year 2004. The discount rate used in
determining the accumulated postretirement benefits obligation was 7.25%
and 8.75% at December 31, 1995 and 1994, respectively.
If the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefits obligation as of December 31, 1995
would be increased 6.5%. The effect of this change on the sum of the
service cost and interest cost would be an increase of 6.7%.
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
except for hedging transactions related to insurance liabilities. The
notional amount of matched interest rate swaps outstanding at December
31, 1995 was $1,120.8 million. The average unexpired terms at December
31, 1995 range from 2.5 to 3.0 years. At December 31, 1995, the cost of
terminating outstanding matched swaps in a loss position was $15.9
million and the unrealized gain on
F-28
<PAGE>
outstanding matched swaps in a gain position was $19.0 million. The
Company has no intention of terminating these contracts prior to
maturity. During 1995, 1994 and 1993, net gains (losses) of $1.4
million, $(.2) million and $-0- 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 December 31, 1995 of contracts purchased
and sold were $2,625.0 million and $300.0 million, respectively. The net
premium paid by Equitable Life on these contracts was $12.5 million and
is being amortized ratably over the contract periods ranging from 3 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 business related derivatives is by its nature
trading activities which are primarily for the purpose of customer
accommodations. DLJ's derivative activities consist of option writing
and trading in forward and futures contracts. Derivative financial
instruments have both on-and-off balance sheet implications depending on
the nature of the contracts. DLJ's involvement in swap contracts 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 timing, 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, 1995 and 1994.
Fair value 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.
The estimated fair values for the Company's liabilities under GIC and
association plan contracts are estimated using contractual cash flows
discounted based on the T. Rowe Price GIC Index Rate for the appropriate
duration. For durations in excess of the published index rate, the
appropriate Treasury rate is used plus a spread equal to the longest
duration GIC rate spread published.
The estimated fair values for those group annuity contracts which are
classified as investment contracts are measured at the estimated fair
value of the underlying assets. Deposit administration contracts
(included with group annuity contracts) classified as insurance
contracts are measured at estimated fair value of the underlying assets.
The estimated fair values for single premium deferred annuities ("SPDA")
are estimated using projected cash flows discounted at current offering
rates. The estimated fair values for supplementary contracts not
involving life contingencies ("SCNILC") and annuities certain are
derived using discounted cash flows based upon the estimated current
offering rate.
Fair value 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 fair value of short-term
borrowings approximates their carrying value.
F-29
<PAGE>
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,
--------------------------------------------------------------------
1995 1994
--------------------------------- ---------------------------------
CARRYING ESTIMATED Carrying Estimated
VALUE FAIR VALUE Value Fair Value
--------------- ---------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Consolidated Financial Instruments:
-----------------------------------
Mortgage loans on real estate.......... $ 3,638.3 $ 3,973.6 $ 4,018.0 $ 3,919.4
Other joint ventures................... 492.7 492.7 544.4 544.4
Policy loans........................... 1,976.4 2,057.5 1,731.2 1,676.6
Policyholders' account balances:
Association plans.................... 101.0 100.0 141.0 141.0
Group annuity contracts.............. 2,335.0 2,395.0 2,450.0 2,469.0
SPDA................................. 1,265.8 1,272.0 1,744.3 1,732.7
Annuities certain and SCNILC......... 649.1 680.7 599.1 624.7
Long-term debt......................... 1,899.3 1,962.9 1,317.4 1,249.2
Closed Block Financial Instruments:
-----------------------------------
Mortgage loans on real estate.......... 1,368.8 1,461.4 1,543.7 1,477.8
Other equity investments............... 151.6 151.6 179.5 179.5
Policy loans........................... 1,797.2 1,891.4 1,827.9 1,721.9
SCNILC liability....................... 34.8 34.5 39.5 37.0
GIC Segment Financial Instruments:
----------------------------------
Mortgage loans on real estate.......... 1,485.8 1,666.1 1,730.5 1,743.7
Fixed maturities....................... 107.4 107.4 219.3 219.3
Other equity investments............... 455.9 455.9 591.8 591.8
Guaranteed interest contracts.......... 329.0 352.0 835.0 855.0
Long-term debt......................... 135.1 136.0 134.8 127.9
</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
liquidity advances to cover delinquent principal and interest and
property protection expenses with respect to loan servicing agreements
for securitized mortgage loans which at December 31, 1995 totaled $2.8
billion (as of December 31, 1995, $4.0 million have been advanced under
these commitments); to make capital contributions of up to $246.7
million to affiliated real estate joint ventures; to provide equity
financing to certain limited partnerships of $129.4 million at December
31, 1995, under existing loan or loan commitment agreements; and to
provide short-term financing loans which at December 31, 1995 totaled
$45.8 million. Management believes the Company will not incur any
material losses as a result of these commitments.
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.
At December 31, 1995, the Insurance Group had $29.0 million of letters
of credit outstanding.
F-30
<PAGE>
14) LITIGATION
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,
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 and its
insurance subsidiaries, like other life and health insurers, from time
to time are involved in such litigation. To date, no such lawsuit has
resulted in an award or settlement of any material amount against the
Company. Among litigations pending against Equitable Life and its
insurance subsidiaries of the type referred to in this paragraph are the
litigations described in the following two paragraphs.
An action entitled Golomb et al. v. The Equitable Life Assurance Society
of the United States was filed on January 20, 1995 in New York County
Supreme Court. The action purports to be brought on behalf of a class of
persons insured after 1983 under Lifetime Guaranteed Renewable Major
Medical Insurance Policies issued by Equitable Life (the "policies").
The complaint alleges that premium increases for these policies after
1983, all of which were filed with and approved by the New York State
Insurance Department and certain other state insurance departments,
breached the terms of the insurance policies, and that statements in the
policies and elsewhere concerning premium increases constituted
fraudulent concealment, misrepresentations in violation of New York
Insurance Law Section 4226 and deceptive practices under New York
General Business Law Section 349. The complaint seeks a declaratory
judgment, injunctive relief restricting the methods by which Equitable
Life increases premiums on the policies in the future, a refund of
premiums, and punitive damages. Plaintiffs also have indicated that they
will seek damages in an unspecified amount. Equitable Life has moved to
dismiss the complaint in its entirety on the grounds that it fails to
state a claim and that uncontroverted documentary evidence establishes a
complete defense to the claims. That motion is awaiting decision by the
court. In January 1996, separate actions were filed in Pennsylvania and
Texas state courts (entitled, respectively, Malvin et al. v. The
Equitable Life Assurance Society of the United States and Bowler et al.
v. The Equitable Life Assurance Society of the United States), making
claims similar to those in the New York action described above. These
new actions are asserted on behalf of proposed classes of Pennsylvania
issued or renewed policyholders and Texas issued or renewed
policyholders, insured under the policies. The Pennsylvania and Texas
actions seek compensatory and punitive damages and injunctive relief
restricting the methods by which Equitable Life increases premiums in
the future based on the common law and statutes of those states.
Although the outcome of any litigation cannot be predicted with
certainty, particularly in the early stages of an action, Equitable
Life's management believes that the ultimate resolution of those
litigations should not have a material adverse effect on the financial
position of the Company. Due to the early stage of such litigation,
Equitable Life's management cannot make an estimate of loss, if any, or
predict whether or not such litigation will have a material adverse
effect on the Company's results of operations in any particular period.
An action was instituted on April 6, 1995 against Equitable Life and its
wholly owned subsidiary, The Equitable of Colorado, Inc. ("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., No. 95/108611 (N.Y. County). 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 their 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. Equitable Life and EOC
intend to defend vigorously and believe that they have meritorious
defenses which, if successful, would dispose of the action completely.
Equitable Life and EOC further do not believe that this case is an
appropriate class action. Although the outcome of any litigation cannot
be predicted with certainty, particularly in the early stages of an
action, Equitable Life's management believes that the ultimate
F-31
<PAGE>
resolution of this litigation should not have a material adverse effect
on the financial position of the Company. Due to the early stage of such
litigation, the Company's management cannot make an estimate of loss, if
any, or predict whether or not such litigation will have a material
adverse effect on the Company's results of operations in any particular
period.
Equitable Casualty Insurance Company ("Casualty"), a captive property
and casualty insurance company organized under the laws of Vermont,
which is an indirect wholly owned subsidiary of Equitable Life, is a
party to an arbitration proceeding that commenced in August 1995 with
the selection of three arbitrators. The arbitration will resolve a
dispute among Casualty, Houston General Insurance Company ("Houston
General"), and GEICO General Insurance Company ("GEICO General")
regarding the interpretation of a reinsurance agreement that was entered
into as part of a 1980 transaction whereby Equitable General Insurance
Company ("Equitable General"), formerly an indirect subsidiary of
Equitable Life and the predecessor of GEICO General, sold its commercial
lines business along with the stock of Houston General to subsidiaries
of Tokio Marine & Fire Insurance Company, Ltd. ("Tokio Marine").
Casualty and GEICO General maintain that, under the reinsurance
agreement, Houston General assumed liability for all losses insured
under commercial lines policies written by Equitable General and its
predecessors in order to effect the transfer of that business to Tokio
Marine's subsidiaries. Houston General contends that it did not assume
reinsurance liability for losses insured under certain of those
commercial lines policies. The arbitration panel determined to begin
hearing evidence in the arbitration in June 1996. The result of the
arbitration is expected to resolve two litigations that were commenced
by Houston General and that have been stayed by the presiding courts
pending the completion of the arbitration (in one case, Houston General
named as a defendant only GEICO General but Casualty intervened as a
defendant with GEICO General, and in the other case, Houston General
named GEICO General and Equitable Life). The arbitration is expected to
be completed during the second half of 1996. While the ultimate outcome
of the arbitration cannot be predicted with certainty, the Company's
management believes that the arbitrators will recognize that Houston
General's position is without merit and contrary to the way in which the
reinsurance industry operates and therefore the ultimate resolution of
this matter should not have a material adverse effect on the Company's
financial position or results of operations.
On July 25, 1995, a Consolidated and Supplemental Class Action Complaint
("Complaint") was filed against the 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. A similar complaint was filed on November 7, 1995 and was
subsequently consolidated with the Complaint. The Complaint, which seeks
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, seeks an unspecified amount of damages, costs, attorneys' fees
and punitive damages. The principal allegations of the Complaint 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 alleges 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, 1995, the defendants jointly filed a motion to dismiss the
Complaint which has not yet been decided by the Court. Alliance believes
that the allegations in the Complaint are without merit and intends to
vigorously defend against these claims. While the ultimate results of
this action cannot be determined, management of Alliance does not expect
that this action will have a material adverse effect on Alliance's
business.
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"), a wholly owned subsidiary of
DLJ, and certain other defendants for unspecified compensatory and
punitive damages in the United States 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 (the "Units") issued by Rickel in October
1994. The complaint alleges violations of Federal securities laws and
common law fraud against DLJSC, as the underwriter of
F-32
<PAGE>
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 United States 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 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 or predict whether or not such litigation will have
a material adverse effect on DLJ's results of operations in any
particular period.
On June 12, 1995, a purported purchaser of certain securities issued by
Spectravision, Inc. ("Spectravision") filed a class action complaint
against DLJSC and certain other defendants for unspecified damages in
the U.S. District Court for the Northern District of Texas. The suit was
brought on behalf of the purchasers of $260,795,000 of securities issued
by Spectravision in November 1992, and alleges violations of the Federal
securities laws and the Texas Securities Act, common law fraud and
negligent misrepresentation. The securities were issued by Spectravision
pursuant to a prepackaged bankruptcy reorganization plan. DLJSC served
as financial advisor to Spectravision in its reorganization and as
Dealer Manager for Spectravision's 1992 issuance of the securities.
DLJSC is also being sued as a seller of certain notes of Spectravision
acquired and resold by DLJSC. The complaint seeks to hold DLJSC liable
for various alleged misstatements and omissions contained in
prospectuses and other materials issued between July 1992 and June 1994.
DLJSC intends to defend itself vigorously against all of the allegations
contained in the complaint. On June 8, 1995, Spectravision filed a
Chapter 11 petition in the United States Bankruptcy Court for the
District of Delaware. On January 5, 1996, the district court in the
litigation involving DLJSC ordered a partial stay of discovery until
Spectravision has emerged from bankruptcy or six months from the date of
the stipulated stay (whichever comes first). Accordingly, discovery of
DLJSC has not yet occurred. 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 information currently available to
it, DLJ's management cannot make an estimate of loss or predict whether
or not such litigation will have a material adverse effect on DLJ's
results of operations in any particular period. Plaintiff's counsel in
the class action against DLJSC described above has also filed another
securities class action based on similar factual allegations. Such suit
names as defendants Spectravision and its directors, and was brought on
behalf of a class of purchasers of $209.0 million of stock and $77.0
million of notes issued by Spectravision in October 1993. DLJSC served
as the managing underwriter for both of these issuances. DLJSC has not
been named as a defendant in this suit, although it has been reported to
DLJSC that plaintiff's counsel is contemplating seeking to amend the
complaint to add DLJSC as a defendant in that action.
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 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. The Texas State
F-33
<PAGE>
Court action has subsequently been removed to the Bankruptcy Court,
which removal is being opposed by the plaintiff. 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 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 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. 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 this litigation, based upon the information currently available
to it, DLJ's management cannot make an estimate of loss or predict
whether or not such litigation will have a material adverse effect on
DLJ's results of operations in any particular period.
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 1996 and the succeeding four years are $114.8 million, $101.8
million, $90.0 million, $73.6 million, $57.7 million and $487.0 million
thereafter. Minimum future sublease rental income on these noncancelable
leases for 1996 and the succeeding four years are $11.0 million, $8.7
million, $6.9 million, $4.6 million, $2.9 million and $1.1 million
thereafter.
At December 31, 1995, the minimum future rental income on noncancelable
operating leases for wholly owned investments in real estate for 1996
and the succeeding four years are $292.9 million, $271.2 million, $248.1
million, $226.4 million, $195.5 million and $1,018.8 million thereafter.
F-34
<PAGE>
16) OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Compensation costs................................. $ 595.9 $ 690.0 $ 1,452.3
Commissions........................................ 314.3 313.0 551.1
Short-term debt interest expense................... 11.4 19.0 317.1
Long-term debt interest expense.................... 108.1 98.3 86.0
Amortization of policy acquisition costs........... 320.4 318.1 275.9
Capitalization of policy acquisition costs......... (391.0) (410.9) (397.8)
Rent expense, net of sub-lease income.............. 124.8 128.9 159.5
Other.............................................. 772.6 786.7 1,140.1
----------------- ---------------- -----------------
Total.............................................. $ 1,856.5 $ 1,943.1 $ 3,584.2
================= ================ =================
</TABLE>
During the years ended December 31, 1995, 1994 and 1993, the Company
restructured certain operations in connection with cost reduction
programs and recorded pre-tax provisions of $32.0 million, $20.4 million
and $96.4 million, respectively. The amounts paid during 1995,
associated with the 1995 and 1994 cost reduction programs, totaled $24.0
million. At December 31, 1995, the liabilities associated with the 1995
and 1994 cost reduction programs amounted to $37.8 million. The 1995
cost reduction program included relocation expenses, including the
accelerated amortization of building improvements associated with the
relocation of the home office. The 1994 cost reduction program included
costs associated with the termination of operating leases and employee
severance benefits in connection with the consolidation of 16 insurance
agencies. The 1993 cost reduction program primarily reflected severance
benefits of terminated employees in connection with the combination of a
wholly owned subsidiary of the Company with Alliance.
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 New York
Superintendent has broad discretion to determine whether the financia1
condition of a stock life insurance company would support the payment of
dividends to its shareholders. For the years ended December 31, 1995,
1994 and 1993, statutory (loss) earnings totaled $(352.4) million, $67.5
million and $324.0 million, respectively. No amounts are expected to be
available for dividends from Equitable Life to the Holding Company in
1996.
At December 31, 1995, the Insurance Group, in accordance with various
government and state regulations, had $18.9 million of securities
deposited with such government or state agencies.
F-35
<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 Company'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>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Net change in statutory surplus and capital stock.. $ 78.1 $ 292.4 $ 190.8
Change in asset valuation reserves................. 365.7 (285.2) 639.1
----------------- ---------------- -----------------
Net change in statutory surplus, capital stock
and asset valuation reserves..................... 443.8 7.2 829.9
Adjustments:
Future policy benefits and policyholders'
account balances............................... (67.9) (11.0) (171.0)
Deferred policy acquisition costs................ 70.6 92.8 121.8
Deferred Federal income taxes.................... (150.0) (59.7) (57.5)
Valuation of investments......................... 189.1 45.2 202.3
Valuation of investment subsidiary............... (188.6) 396.6 (464.9)
Limited risk reinsurance......................... 416.9 74.9 85.2
Issuance of surplus notes........................ (538.9) - -
Sale of subsidiary and joint venture............. - - (366.5)
Contribution from the Holding Company............ - (300.0) -
Postretirement benefits.......................... (26.7) 17.1 23.8
Other, net....................................... 115.1 (44.0) 60.3
GAAP adjustments of Closed Block................. (3.1) 4.5 (16.0)
GAAP adjustments of discontinued GIC
Segment........................................ 37.3 42.8 (35.0)
----------------- ---------------- -----------------
Net Earnings....................................... $ 297.6 $ 266.4 $ 212.4
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Statutory surplus and capital stock................ $ 2,202.9 $ 2,124.8 $ 1,832.4
Asset valuation reserves........................... 1,345.9 980.2 1,265.4
----------------- ---------------- -----------------
Statutory surplus, capital stock and asset
valuation reserves............................... 3,548.8 3,105.0 3,097.8
Adjustments:
Future policy benefits and policyholders'
account balances............................... (1,017.4) (949.5) (938.5)
Deferred policy acquisition costs................ 3,083.3 3,221.1 2,858.8
Deferred Federal income taxes.................... (450.8) (26.8) (137.8)
Valuation of investments......................... 417.7 (794.1) (29.8)
Valuation of investment subsidiary............... (665.1) (476.5) (873.1)
Limited risk reinsurance......................... (429.0) (845.9) (920.8)
Issuance of surplus notes........................ (538.9) - -
Postretirement benefits.......................... (343.3) (316.6) (333.7)
Other, net....................................... 4.4 (79.2) (81.9)
GAAP adjustments of Closed Block................. 575.7 578.8 574.2
GAAP adjustments of discontinued GIC
Segment........................................ (184.6) (221.9) (264.6)
----------------- ---------------- -----------------
Total Shareholder's Equity......................... $ 4,000.8 $ 3,194.4 $ 2,950.6
================= ================ =================
</TABLE>
F-36
<PAGE>
18) BUSINESS SEGMENT INFORMATION
The Company has three major business segments: Individual Insurance and
Annuities; Investment Services and Group Pension. Consolidation/elimina-
tion principally includes debt not specific to any business segment.
Attributed Insurance Capital represents net assets and related revenues
and earnings of the Insurance Group not assigned to the insurance
segments. Interest expense related to debt not specific to any business
segment is presented within Corporate interest expense. Information for
all periods is presented on a comparable basis.
The Individual Insurance and Annuities segment offers a variety of
traditional, variable and interest-sensitive life insurance products,
disability income, annuity products and mutual fund and other investment
products to individuals and small groups. This segment includes Separate
Accounts for certain individual insurance and annuity products.
The Investment Services segment provides investment fund management,
primarily to institutional clients. This segment includes Separate
Accounts which provide various investment options for group clients
through pooled or single group accounts.
Intersegment investment advisory and other fees of approximately $124.1
million, $135.3 million and $128.6 million for 1995, 1994 and 1993,
respectively, are included in total revenues of the Investment Services
segment. These fees, excluding amounts related to the discontinued GIC
Segment of $14.7 million, $27.4 million and $17.0 million for 1995, 1994
and 1993, respectively, are eliminated in consolidation.
The Group Pension segment 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.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Individual insurance and annuities................. $ 3,254.6 $ 3,110.7 $ 2,981.5
Group pension...................................... 292.0 359.1 426.6
Attributed insurance capital....................... 61.2 79.4 61.6
----------------- ---------------- -----------------
Insurance operations............................. 3,607.8 3,549.2 3,469.7
Investment services................................ 949.1 935.2 2,792.6
Consolidation/elimination.......................... (34.9) (24.7) (40.5)
----------------- ---------------- -----------------
Total.............................................. $ 4,522.0 $ 4,459.7 $ 6,221.8
================= ================ =================
Earnings (loss) before Federal income taxes
and cumulative effect of accounting change
Individual insurance and annuities................. $ 274.4 $ 245.5 $ 76.2
Group pension...................................... (13.3) 15.8 2.0
Attributed insurance capital....................... 18.7 69.8 49.0
----------------- ---------------- -----------------
Insurance operations............................. 279.8 331.1 127.2
Investment services................................ 161.2 177.5 302.1
Consolidation/elimination.......................... (3.1) .3 .5
----------------- ---------------- -----------------
Subtotal..................................... 437.9 508.9 429.8
Corporate interest expense......................... (27.9) (114.2) (126.1)
----------------- ---------------- -----------------
Total.............................................. $ 410.0 $ 394.7 $ 303.7
================= ================ =================
</TABLE>
F-37
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1995 1994
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets
Individual insurance and annuities..................................... $ 50,328.8 $ 44,063.4
Group pension.......................................................... 4,033.3 4,222.8
Attributed insurance capital........................................... 2,391.6 2,609.8
---------------- -----------------
Insurance operations................................................. 56,753.7 50,896.0
Investment services.................................................... 12,842.9 12,127.9
Consolidation/elimination.............................................. (354.4) (1,614.4)
---------------- -----------------
Total.................................................................. $ 69,242.2 $ 61,409.5
================ =================
</TABLE>
19) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations for the years ended December 31,
1995, 1994 and 1993, are summarized below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED,
------------------------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
----------------- ----------------- ------------------ ------------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1995
----
Total Revenues................ $ 1,074.7 $ 1,158.4 $ 1,127.1 $ 1,161.8
================= ================= ================== ==================
Net Earnings.................. $ 59.0 $ 94.3 $ 91.2 $ 53.1
================= ================= ================== ==================
1994
----
Total Revenues................ $ 1,107.4 $ 1,075.0 $ 1,153.8 $ 1,123.5
================= ================= ================== ==================
Earnings before Cumulative
Effect of Accounting
Change...................... $ 64.0 $ 68.4 $ 89.1 $ 72.0
================= ================= ================== ==================
Net Earnings.................. $ 36.9 $ 68.4 $ 89.1 $ 72.0
================= ================= ================== ==================
1993
----
Total Revenues................ $ 1,502.2 $ 1,539.7 $ 1,679.4 $ 1,500.5
================= ================= ================== ==================
Net Earnings.................. $ 32.3 $ 47.1 $ 68.8 $ 64.2
================= ================= ================== ==================
</TABLE>
20) INVESTMENT IN DLJ
On December 15, 1993, the Company sold a 61% interest in DLJ to the
Holding Company for $800.0 million in cash and securities. The excess of
the proceeds over the book value in DLJ at the date of sale of $340.2
million has been reflected as a capital contribution. In 1995, DLJ
completed the initial public offering ("IPO") of 10.58 million shares of
its common stock, which included 7.28 million of the Holding Company's
shares in DLJ, priced at $27 per share. Concurrent with the IPO, the
Company contributed equity securities to DLJ having a market value of
$21.2 million. Upon completion of the IPO, the Company's ownership
percentage was reduced to 36.1%. 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. At December 31, 1995, DLJ had
options
F-38
<PAGE>
outstanding to purchase approximately 9.2 million shares of DLJ common
stock at $27.00 per share. Options are exercisable over a period of up
to ten years. 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 and cash flows of DLJ through the date of sale
are included in the consolidated statements of earnings and cash flow
for the year ended December 31, 1993. For the period subsequent to the
date of sale, the results of operations of DLJ are accounted for on the
equity basis and are included in commissions, fees and other income in
the consolidated statements of earnings. The Company's carrying value of
DLJ is included in investment in and loans to affiliates in the
consolidated balance sheets.
Summarized balance sheets information for DLJ, reconciled to the
Company's carrying value of DLJ, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1995 1994
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets:
Trading account securities, at market value............................ $ 10,911.4 $ 8,970.0
Securities purchased under resale agreements........................... 18,748.2 10,476.4
Broker-dealer related receivables...................................... 13,023.7 11,784.8
Other assets........................................................... 1,893.2 2,030.4
---------------- -----------------
Total Assets........................................................... $ 44,576.5 $ 33,261.6
================ =================
Liabilities:
Securities sold under repurchase agreements............................ $ 26,744.8 $ 18,356.7
Broker-dealer related payables......................................... 12,915.5 10,618.0
Short-term and long-term debt.......................................... 1,717.5 1,956.5
Other liabilities...................................................... 1,775.0 1,285.1
---------------- -----------------
Total liabilities...................................................... 43,152.8 32,216.3
Cumulative exchangeable preferred stock................................ 225.0 225.0
Total shareholders' equity............................................. 1,198.7 820.3
---------------- -----------------
Total Liabilities, Cumulative Exchangeable Preferred Stock and
Shareholders' Equity................................................. $ 44,576.5 $ 33,261.6
================ =================
DLJ's equity as reported............................................... $ 1,198.7 $ 820.3
Unamortized cost in excess of net assets acquired in 1985
and other adjustments................................................ 40.5 50.8
The Holding Company's equity ownership in DLJ.......................... (499.0) (532.1)
Minority interest in DLJ............................................... (324.3) -
---------------- -----------------
The Company's Carrying Value of DLJ.................................... $ 415.9 $ 339.0
================ =================
</TABLE>
F-39
<PAGE>
Summarized statements of earnings information for DLJ reconciled to the
Company's equity in earnings of DLJ is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Commission, fees and other income...................................... $ 1,325.9 $ 953.5
Net investment income.................................................. 904.1 791.9
Dealer, trading and investment gains, net.............................. 528.6 263.3
---------------- -----------------
Total Revenues......................................................... 2,758.6 2,008.7
Total expenses including income taxes.................................. 2,579.5 1,885.7
---------------- -----------------
Net earnings........................................................... 179.1 123.0
Dividends on preferred stock........................................... 19.9 20.9
---------------- -----------------
Earnings Applicable to Common Shares................................... $ 159.2 $ 102.1
================ =================
DLJ's earnings applicable to common shares as reported................. $ 159.2 $ 102.1
Amortization of cost in excess of net assets acquired in 1985.......... (3.9) (3.1)
The Holding Company's equity in DLJ's earnings......................... (90.4) (60.9)
Minority interest in DLJ............................................... (6.5) -
---------------- -----------------
The Company's Equity in DLJ's Earnings................................. $ 58.4 $ 38.1
================ =================
</TABLE>
21) RELATED PARTY TRANSACTIONS
On August 31, 1993, the Company sold $661.0 million of primarily
privately placed below investment grade fixed maturities to EQ Asset
Trust 1993, a limited purpose business trust, wholly owned by the
Holding Company. The Company recognized a $4.1 million gain net of
related deferred policy acquisition costs, deferred Federal income tax
and amounts attributable to participating group annuity contracts. In
conjunction with this transaction, the Company received $200.0 million
of Class B Notes issued by EQ Asset Trust 1993. These notes have
interest rates ranging from 6.85% to 9.45%. The Class B Notes are
reflected in investments in and loans to affiliates on the consolidated
balance sheets.
F-40
<PAGE>
================================================================================
[RIA LOGO]
SEPARATE ACCOUNT UNITS OF INTEREST
UNDER GROUP ANNUITY CONTRACTS
<TABLE>
<S> <C> <C>
o Money Market Fund o Growth & Income Fund Blended Funds:
o Intermediate Government o Equity Index Fund o Conservative Investors Fund
Securities Fund o Common Stock Fund o Balanced Fund
o Bond Fund o Global Fund o Growth Investors Fund
o Quality Bond Fund o International Fund
o High Yield Fund o Aggressive Stock Fund
</TABLE>
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
---------------------------------------------------------
RIA SERVICE OFFICE:
Equitable Life
RIA Service Office
200 Plaza Drive, 1st Floor
Secaucus, NJ 07094-3689
Tel.: (800) 967-4560
(201)392-5500
(9 A.M. to 5 P.M. Eastern time)
Fax: (201) 392-2285, 2286 or 2287
(To obtain pre-recorded Fund unit values, use our toll-free number listed above)
ADDRESS FOR CONTRIBUTIONS ONLY:
Equitable Life
RIA/EPP
P.O. Box 13503
Newark, NJ 07188
EXPRESS MAIL ADDRESS FOR CONTRIBUTIONS ONLY:
First Chicago National Processing Center (FCNPC)
300 Harmon Meadow Boulevard, 3rd Floor
Att: Box 13503
Secaucus, NJ 07094
================================================================================
<PAGE>
[EQUITABLE LOGO]
