<PAGE>
April 27, 1996
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1996
REGISTRATION NO. 333-01301
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM N-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
[X]
Post-Effective Amendment No.
[ ]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
[ ]
Amendment No.
[ ]
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(EXACT NAME OF REGISTRANT)
-------------------
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(NAME OF DEPOSITOR)
787 SEVENTH AVENUE, NEW YORK, NEW YORK 10019
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201) 392-5279
-------------------
ANTHONY A. DREYSPOOL
VICE PRESIDENT AND SENIOR COUNSEL
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
787 SEVENTH AVENUE,
NEW YORK, NEW YORK 10019
(NAME AND ADDRESS OF AGENT FOR SERVICE)
PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
PETER E. PANARITES
FREEDMAN, LEVY, KROLL & SIMONDS
1050 CONNECTICUT AVENUE, N.W.,
WASHINGTON, D.C. 20036
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: CONTINUOUS
IT IS PROPOSED THAT THE FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B) OF RULE 485
[X] ON MAY 1, 1996 PURSUANT TO PARAGRAPH (B) OR RULE 485
[ ] 60 DAYS AFTER FILING PURSUANT TO PRARGRAPH (A)(1) OR RULE 485
[ ] ON MAY 1, 1996 PURSUANT TO PARAGRAPH (A)(1) OR RULE 485
[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(3) OF RULE 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[ ] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
- -------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
SHOWING LOCATION OF INFORMATION IN PROSPECTUS
<TABLE>
<CAPTION>
FORM N-4 ITEM PROSPECTUS CAPTION
- ---------------------------------------------------------- ----------------------------------------------
<S> <C> <C>
1. Cover Page ....................................... Cover Page
2. Definitions ...................................... Not Applicable
3. Synopsis ......................................... Summary of Investment Options; Summary of the
Program; Summary of Fund Expenses
4. Condensed Financial Information .................. Condensed Financial Information
5. General Description of Registrant, Depositor, and
Portfolio Companies .............................. Investment Options; The Equity Funds; The Real
Estate Fund; Equitable Life and The
Investment Manager
6. Deductions and Expenses .......................... Deductions and Charges; Charges Based on
Amounts Invested in the Program; Plan and
Transaction Expenses
7. General Description of Variable Annuity Contracts The Program
8. Annuity Period ................................... The Program--Benefit Payment Options
9. Death Benefit .................................... The Program--Benefits Payable After the Death
of a Participant
10. Purchases and Contract Value ..................... The Equity Funds--How We Calculate the Value
of Amounts Allocated to the Equity Funds; The
Real Estate Fund--How We Calculate the Value
of Amounts Allocated to the Real Estate Fund;
The Program--When Transactions are
Effective--Minimum Investments--Making
Contributions to the Program--Benefit Payment
Options
11. Redemptions ..................................... The Program--Distributions from the
Investment Options--Benefit Payment Options
12. Taxes ............................................ Federal Income Tax Considerations
13. Legal Proceedings ................................ Miscellaneous
14. Table of Contents of the Statment of Additional
Information ...................................... Table of Contents of the Statement of
Additional Information
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
SHOWING LOCATION OF INFORMATION IN
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
FORM N-4 ITEM STATEMENT OF ADDITIONAL INFORMATION CAPTION
- -------------------------------------------------- -----------------------------------------------
<S> <C> <C>
15. Cover Page ............................... Cover Page
16. Table of Contents ........................ Table of Contents
17. General Information and History .......... Not Applicable
18. Services ................................. Not Applicable
19. Purchase of Securities Being Offered .... Underwriter
20. Underwriters ............................. Underwriter
21. Calculation of Performance Data .......... Not Applicable
22. Annuity Payments ......................... Provisions of the Master Plan--Contributions
to Qualified Plans--Contributions to the ADA
Master Plan
23. Financial Statements ..................... Financial Statements
</TABLE>
<PAGE>
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ADA MEMBERS
RETIREMENT PROGRAM
PROSPECTUS
MAY 1, 1996
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<PAGE>
AMERICAN DENTAL ASSOCIATION
MEMBERS RETIREMENT PROGRAM
PROSPECTUS MAY 1, 1996
- -----------------------------------------------------------------------------
The American Dental Association Members Retirement Program offers you ten
investment options from which to choose. This prospectus describes the seven
Separate Accounts under the group annuity contract issued by THE EQUITABLE
LIFE ASSURANCE SOCIETY OF THE UNITED STATES.
THE PROGRAM
The American Dental Association Members Retirement Program offers ADA members
and other eligible persons the choice of several plans to accumulate
retirement savings for themselves and their employees.
THE INVESTMENT OPTIONS
The Program allows you to choose from ten Investment Options. The Investment
Options are:
Seven Separate Accounts or "Funds":
o Growth Equity Fund
o Aggressive Equity Fund
o ADA Foreign Fund
o Equity Index Fund
o Real Estate Fund
o Lifecycle Fund--Conservative
o Lifecycle Fund--Moderate
Three Guaranteed Options:
o 3 year Guaranteed Rate
Account
o 5 year Guaranteed Rate
Account
o Money Market Guarantee
Account
These investment options are summarized on page 2 of this prospectus. The
Aggressive Equity Fund, the ADA Foreign Fund, and the Equity Index Fund each
invest in shares of a corresponding mutual fund, the MFS Emerging Growth
Fund, the Templeton Foreign Fund and the Seven Seas S&P 500 Index Fund
respectively. We refer to these as the "underlying mutual funds." The
Lifecycle Funds--Conservative and Moderate ("Lifecycle Funds") each invest in
units of a corresponding group trust maintained by State Street Bank and
Trust Company ("State Street"). We refer to these trusts as the "Lifecycle
Fund Group Trusts." The prospectuses for the underlying mutual funds and our
separate prospectus for the Equity Index Fund and Lifecycle Funds describe
the investment objectives, policies and risks of those Funds and should be
read carefully and retained for future reference. Copies of those
prospectuses may be obtained by writing or calling as indicated below. THIS
PROSPECTUS DESCRIBES, IN DETAIL, ALL INVESTMENT OPTIONS EXCEPT THE EQUITY
INDEX FUND AND THE LIFECYCLE FUNDS, WHICH ARE DESCRIBED, IN DETAIL, IN OUR
SEPARATE PROSPECTUS FOR THOSE FUNDS.
This prospectus provides important information you should be aware of before
investing. Additional information is included in the Statement of Additional
Information (the "SAI") dated May 1, 1996 which has been filed with the
Securities and Exchange Commission. Parts of the SAI have been incorporated
by reference into this prospectus. A table of contents for the SAI appears at
page 53 of this prospectus. To obtain a copy of the SAI free of charge,
complete the SAI request form on page 53 and mail it to us, or call or write:
The Equitable Life Assurance Society of the United States
PO Box 2486 G.P.O.
New York, NY 10116
<TABLE>
<CAPTION>
<S> <C>
Calls for current participants: Calls for all others:
1-800-223-5790 1-800-523-1125
</TABLE>
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE.
- -----------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
SUMMARY OF INVESTMENT OPTIONS ..................... 2
SUMMARY OF THE PROGRAM ............................ 3
SUMMARY OF FUND EXPENSES .......................... 4
CONDENSED FINANCIAL INFORMATION ................... 9
INVESTMENT OPTIONS ................................ 12
THE EQUITY FUNDS
The Growth Equity Fund ........................... 12
The Aggressive Equity Fund ....................... 13
The ADA Foreign Fund ............................. 14
The Equity Index Fund ............................ 15
Lifecycle Funds--Conservative and Moderate ..... 16
The Lifecycle Fund Group Trusts .................. 16
Lifecycle Fund Group Trust--Conservative ........ 16
Lifecycle Fund Group Trust--Moderate ............. 17
The Underlying Funds ............................. 17
Risks and Investment Techniques--
Equity Funds ..................................... 17
How We Calculate the Value of Amounts
Allocated to the Equity Funds ................... 19
THE REAL ESTATE FUND
Real Estate Fund Objectives and Investment
Policies ........................................ 21
Special Risks Related to The Real Estate Fund .. 23
Conflicts of Interest Related to Prime Property
Fund ............................................. 23
How We Calculate The Value of Amounts
Allocated to The Real Estate Fund ............... 24
THE GUARANTEED OPTIONS
Guaranteed Rate Accounts ......................... 26
Money Market Guarantee Account ................... 27
EQUITABLE LIFE AND THE INVESTMENT MANAGERS
Equitable Life ................................... 29
The Separate Accounts ............................ 29
Investment Management of the Equity Funds ...... 30
Investment Management of the Real Estate Fund .. 31
INVESTMENT PERFORMANCE
Measuring the Investment Performance of the
Funds ............................................ 32
Unmanaged Market Indices ......................... 32
How Performance Data Are Presented ............... 33
Annual Percentage Change in Fund Unit
Values .......................................... 33
Average Annual Percentage Change in
Fund Unit Values--Years Ending December 31,
1995 ............................................. 34
Cumulative Value Examples ........................ 34
How We Calculate Performance Data ................ 36
THE PROGRAM
Employers Who May Participate in the
Program ......................................... 37
Choices for the Employer ......................... 37
Summary of the Plans And Trusts .................. 37
Information on Joining the Program ............... 38
Choosing the Right Plan .......................... 38
Getting Started In The Program After
Choosing A Plan ................................. 38
Communicating With Us After you Enroll .......... 39
Your Responsibilities As the Employer ............ 39
When Transactions Are Effective .................. 40
Minimum Investments .............................. 40
Making Contributions to the Program .............. 40
Our Account Investment Management (AIM) System . 40
Allocating Contributions Among the
Investment Options .............................. 41
Transfers Among the Investment Options .......... 41
Distributions From the Investment Options ....... 41
Special Rules For Distributions and Transfers
from the Real Estate Fund ....................... 42
When Distributions Are Available to
Participants .................................... 43
Participant Loans ................................ 43
Benefit Payment Options .......................... 44
Spousal Consent Rules ............................ 44
Spousal Consent Requirements ..................... 44
Benefits Payable After the Death of a
Participant ..................................... 45
DEDUCTIONS AND CHARGES ............................ 46
CHARGES BASED ON AMOUNTS
INVESTED IN THE PROGRAM
Program Expense Charge ........................... 46
Administration and Investment Management
Fees ............................................ 47
Other Expenses Borne Directly by the Funds ..... 48
PLAN AND TRANSACTION EXPENSES
ADA Retirement Plan, Prototype
Self-Directed Plan and
Individually-Designed Plan Fees ................. 49
Individual Annuity Charges ....................... 49
General Information On Fees And Charges ......... 49
FEDERAL INCOME TAX
CONSIDERATIONS
Adopting the Program ............................ 50
Income Taxation of Distributions to Qualified
Plan Participants ............................. 50
Other Tax Consequences .......................... 51
MISCELLANEOUS ..................................... 51
Table of Contents of Statement of Additional
Information ................................... 53
</TABLE>
<PAGE>
SUMMARY OF INVESTMENT OPTIONS
EQUITY FUNDS
THE GROWTH EQUITY FUND (Separate Account No. 4 (Pooled))
Seeks to achieve long-term growth of capital by investing primarily in common
stocks and other equity-type securities of any capitalization but primarily
in securities of large and intermediate-sized companies.
THE AGGRESSIVE EQUITY FUND (Separate Account No. 200)
Seeks to achieve long-term capital growth by investing in shares of the
Massachusetts Financial Services Company ("MFS") Emerging Growth Fund, which
in turn invests primarily in companies that MFS believes are early in their
life cycle but which have the potential to become major enterprises (emerging
growth companies).
THE ADA FOREIGN FUND (Separate Account No. 191)
Invests in shares of the Templeton Foreign Fund, which in turn seeks
long-term capital growth through a flexible policy of investing in common
stocks of companies outside the United States.
THE EQUITY INDEX FUND (Separate Account No. 195)
Invests in shares of the Seven Seas S&P 500 Index Fund, which in turn seeks
to achieve a total return which parallels that of the Standard and Poor's 500
Composite Stock Price Index by investing in the stocks in the Index.
THE LIFECYCLE FUND--CONSERVATIVE (Separate Account No. 197)
Invests in units of the Lifecycle Fund Group Trust--Conservative, maintained
by State Street, which in turn invests in units of five underlying collective
funds ("the Underlying Funds") maintained by State Street to provide current
income and a low to moderate growth of capital.
THE LIFECYCLE FUND--MODERATE (Separate Account No. 198)
Invests in units of the Lifecycle Fund Group Trust--Moderate, maintained by
State Street, which in turn invests in units of five Underlying Funds
maintained by State Street to provide growth of capital and a reasonable
level of current income.
REAL ESTATE FUND
THE REAL ESTATE FUND (Separate Account No. 30 (Pooled))
Invests primarily in units of our Prime Property Fund, which in turn seeks to
achieve a stable rate of return over an extended period of time by investing
primarily in high-grade, income-producing real property.
There is no assurance that the Funds will achieve their respective
objectives.
GUARANTEED OPTIONS
GUARANTEED RATE ACCOUNTS
Contributions to the Guaranteed Rate Accounts will be invested through group
annuity contracts issued by a major insurance company. The Guaranteed Rate
Accounts have maturities of approximately three and five years.
MONEY MARKET GUARANTEE ACCOUNT
The Money Market Guarantee Account is credited with interest which will
approximate the average rate of money market funds considered "domestic
prime," but not less than a minimum rate which we set annually. We guarantee
the contributions and interest credited to this Account.
- -----------------------------------------------------------------------------
No person is authorized by The Equitable Life Assurance Society of the United
States to give any information or make any representations other than those
contained in this prospectus and the SAI, or in other printed or written
material issued by Equitable Life. You should not rely on any other
information or representation.
2
<PAGE>
SUMMARY OF THE PROGRAM
THE AMERICAN DENTAL ASSOCIATION MEMBERS RETIREMENT PROGRAM
The American Dental Association Members Retirement Program consists of
several types of retirement plans and two retirement plan Trusts, the Master
Trust and the Pooled Trust. Each of the Trusts invests exclusively in the
group annuity contracts described in this prospectus. The purpose of the
Program is to provide members of the American Dental Association (the "ADA")
and their employees with plans to invest, accumulate, and then distribute
funds for retirement. The Program is sponsored by the ADA, and the Trustees
under the Master and Pooled Trusts are the members of the Council on
Insurance of the ADA (the "Trustees"). The Program had 20,072 participants
and $1.0 billion in assets at December 31, 1995.
EQUITABLE LIFE
The Equitable Life Assurance Society of the United States ("Equitable Life")
is a diversified financial services organization serving a variety of
insurance, investment management and investment banking customers. We are one
of the largest life insurance companies in the United States, and have been
in business since 1859. In this prospectus, the terms "we," "our," and "us"
means Equitable Life.
THE INVESTMENT OPTIONS
Ten Investment Options are available under the Program. Seven of the
Investment Options are Separate Accounts, or Funds, consisting of six Equity
Funds and the Real Estate Fund. The Funds operate like mutual funds in many
ways. However, because of exclusionary provisions, the Funds are not subject
to regulation under the Investment Company Act of 1940 ("1940 Act").
The three additional Investment Options are guaranteed options. They include
two Guaranteed Rate Accounts and the Money Market Guarantee Account.
YOUR CHOICE OF RETIREMENT PLANS
As an employer, you can use the Program to adopt our profit-sharing
(including a 401(k) feature) or defined contribution pension master plan or
our self-directed prototype plan. You can also have your own
individually-designed plan and use our Pooled Trust as a funding vehicle. See
The Program for additional information on your choices.
3
<PAGE>
SUMMARY OF FUND EXPENSES
TRANSACTION EXPENSES
Transaction expenses are charges you pay when you buy or sell units of the
Funds.
<TABLE>
<CAPTION>
<S> <C>
Sales Load None
Deferred Sales Charge None
Surrender Fees None
Transfer or Exchange Fee None
</TABLE>
If you annuitize your account, premium taxes and other fees may apply.
ANNUAL FUND OPERATING EXPENSES
Operating expenses for the Funds are paid out of each Fund's assets. The
Growth Equity and Real Estate Funds each pay a management fee to us that
varies based on their respective assets. No management fees are paid to us by
the Aggressive Equity Fund, the ADA Foreign Fund, the Equity Index Fund, or
the Lifecycle Funds. The Program expense charge is based on all assets under
the Program; the Administration Fee is based on Fund assets. Each Fund also
incurs other expenses for services such as printing, mailing, legal, and
similar items. All of these annual fund operating expenses are reflected in
each Fund's unit value. See How We Determine the Unit Value.
These tables illustrate the effect of the charges which are generally
applicable to the Funds. They do not include other charges which are specific
to the various plans such as enrollment fees or record maintenance and report
fees. See Deductions and Charges. Premium taxes may also be applicable. The
expenses shown are based on average Program assets in each of the Funds
during the year ended December 31, 1995, restated to reflect current
applicable fees.
GROWTH EQUITY AND REAL ESTATE FUNDS
<TABLE>
<CAPTION>
INVESTMENT PROGRAM
MANAGEMENT EXPENSE ADMINISTRATION
FEE CHARGE FEE OTHER TOTAL
-------------- ------------ --------- -------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Growth Equity 0.19% 0.66% 0.15% 0.07% 1.07%
Real Estate 1.10 0.66 0.25 0.07 2.08
</TABLE>
AGGRESSIVE EQUITY, ADA FOREIGN AND EQUITY INDEX FUNDS
The Aggressive Equity Fund, the ADA Foreign Fund and the Equity Index Fund
each invest in shares of an underlying mutual fund. The following table
combines the charges and fees which are deducted from each Fund and the
underlying mutual fund. No transaction charges are incurred by the Funds when
shares of the underlying mutual fund are purchased or redeemed, but annual
mutual fund operating expenses are incurred. For a description of charges and
expenses incurred by the underlying mutual funds see their prospectuses.
4
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PROGRAM
MANAGEMENT EXPENSE ADMINISTRATION OTHER
FEE CHARGE FEE EXPENSES 12B-1 FEE TOTAL
<S> <C> <C> <C> <C> <C> <C>
Aggressive Equity
Fund None 0.66% 0.15%(2) 0.20%(7) None 1.01%(2)
MFS Emerging
Growth Fund(1) 0.75% None None 0.33% 0.25% 1.33%
TOTAL 0.75% 0.66% 0.15%(2) 0.53%(7) 0.25% 2.34%(2)
- ----------------- ------------ --------- -------------- ---------- ----------- ----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ADA Foreign Fund None 0.66% 0.15%(4) 0.12%(7) None 0.93%(4)
Templeton Foreign
Fund(3) 0.63% None None 0.27% 0.25% 1.15%
TOTAL 0.63% 0.66% 0.15%(4) 0.39%(7) 0.25% 2.08%(4)
- ----------------- ------- ------- ---------- ---------- ------- ----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Equity Index
Fund None 0.66% 0.15% 0.63%(7) None 1.44%
Seven Seas S&P 500
Fund(5) 0.00%(6) None None 0.13% 0.06% 0.19%(6)
TOTAL 0.00%(6) 0.66% 0.15% 0.76%(7) 0.06% 1.63%(6)
- ----------------- ------- ------- ---------- ---------- ------- ----------
</TABLE>
(1) Source: The MFS Emerging Growth Fund prospectus dated April 1, 1995.
(2) An annual amount of up to 0.25% will be paid to Equitable Life.
Equitable Life has waived the 0.15% Administration fee applicable to
the Aggressive Equity Fund and will use the payment from MFS Fund
Distributors, Inc. to defray administrative expenses associated with
the Program's operations and to fund Program enhancements. The
agreement and waiver are expected to be in effect for an indefinite
period, but these arrangements are subject to termination by either
party upon notice.
(3) Source: Templeton Foreign Fund prospectus dated January 1, 1996.
(4) An amount equal to the 12b-1 fee charged by Templeton will be paid by
Templeton to Equitable Life for services performed by Equitable Life
for Templeton. Equitable Life has waived the 0.15% Administration Fee
applicable to the ADA Foreign Fund and will use the payment from
Templeton to defray administrative expenses associated with the
Program's operations and to fund Program enhancements. The agreement
and waiver are expected to be in effect for an indefinite period, but
these arrangements are subject to termination by either party upon
notice.
(5) Source: Seven Seas Series Prospectus dated December 29, 1995.
(6) State Street has voluntarily agreed to waive up to the full amount of
its management fee of .10% to the extent that total expenses exceed
.15% on an annual basis. This agreement will remain in effect until
further notice. (See Note 5.) If the waiver agreement is terminated,
the full amount of State Street's management fee may be assessed and
the total Fund expenses may increase.
(7) Includes expenses incurred in connection with the organization of these
Funds. For the Aggressive Equity Fund, organizational expenses were
$110,846 and are being charged to the Fund in 1996. Organizational
expenses for the ADA Foreign Fund and the Equity Index Fund were
initially paid by us and we are being reimbursed from the Fund over a
five year period. For the ADA Foreign Fund, the organizational expenses
were $46,110 and were fully reimbursed as of April 1, 1996. For the
Equity Index Fund, organizational expenses were $33,917 and are being
amortized over the period which ends December 31, 1998.
5
<PAGE>
- -------------------------------------------------------------------------------
LIFECYCLE FUNDS
- -------------------------------------------------------------------------------
No transaction charges are incurred by the Lifecycle Funds when units of a
corresponding Lifecycle Fund Group Trust are purchased or redeemed, but
annual operating expenses are incurred by each Lifecycle Fund Group Trust. A
deduction is made from the assets of each Lifecycle Fund Group Trust to
compensate State Street for managing the assets of the Group Trust. State
Street does not receive a fee for managing the assets of the Underlying Funds
in which a Lifecycle Fund Group Trust invests. State Street may receive fees
for managing the assets of other collective investment funds in which the
Funds may be invested on a temporary basis, and for managing the mutual funds
in which assets of the Underlying Funds may be invested. State Street has
agreed to reduce its management fee charged each of the Lifecycle Fund Group
Trusts to offset any management fees State Street receives attributable to
the Group Trusts' investment in such other collective investment funds and
mutual funds.
Other expenses are deducted from the assets of each Lifecycle Fund Group
Trust and Underlying Fund to pay for costs related to services, such as legal
and auditing, provided directly to each Lifecycle Fund Group Trust. State
Street also receives an administration fee deducted from the assets of each
Lifecycle Fund Group Trust to compensate it for providing various
recordkeeping and accounting services to the Group Trust. In addition, other
expenses are deducted from the assets of the Underlying Funds for custodial
services provided to those Funds.
6
<PAGE>
The fees and charges which are deducted from the assets of the Lifecycle
Funds, the Lifecycle Fund Group Trusts and the Underlying Funds are
illustrated in the table below. This table does not reflect other charges
which are specific to the various plans participating in the Program, such as
enrollment, record maintenance and reporting fees. See Plan and Transaction
Expenses.
<TABLE>
<CAPTION>
INVESTMENT PROGRAM
MANAGEMENT EXPENSE ADMINISTRATION OTHER
FEE CHARGE FEE EXPENSES TOTAL
- -------------------------- ------------ --------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Lifecycle Fund -
Conservative None 0.66% 0.15% 0.80%(1) 1.61%
Lifecycle Fund
Group Trust -
Conservative 0.17% None 0.82%(2) 1.14%(1&3) 2.13%
Underlying Funds:
S&P 500 Flagship Fund None None None -- %(4&6) -- %(5&6)
Russell 2000 Fund None None None 0.10%(4) 0.10%(5)
Daily EAFE Fund None None None 0.20%(4) 0.20%(5)
Daily Government/Corporate
Bond Fund None None None 0.01%(4) 0.01%(5)
Short Term Investment Fund None None None -- %(4&6) -- %(5&6)
- -------------------------- ------------ --------- ------------ ------------ ----------
</TABLE>
<TABLE>
<CAPTION>
PROGRAM
INVESTMENT EXPENSE
MANAGEMENT FEE CHARGE ADMINISTRATION FEE OTHER EXPENSES TOTAL
- ------------------------------ -------------- ----------- ------------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
Lifecycle Fund -
Moderate None 0.66% 0.15% 0.22%(1) 1.03%
Lifecycle Fund
Group Trust -
Moderate 0.17% None 0.17%(2) 0.18%(1&3) 0.52%
Underlying Funds:
S&P 500 Flagship Fund None None None -- %(4&6) -- %(5&6)
Russell 2000 Fund None None None 0.10%(4) 0.10%(5)
Daily EAFE Fund None None None 0.20%(4) 0.20%(5)
Daily Government/Corporate
Bond Fund None None None 0.01%(4) 0.01%(5)
Short Term Investment Fund None None None -- %(4&6) -- %(5&6)
- ------------------------------ -------------- ----------- ---------------- -------------- --------------
</TABLE>
(1) These include a charge at the annual rate of .03% of the value of the
respective assets in the Lifecycle Funds--Conservative and Moderate to
compensate Equitable Life for additional legal, accounting and other
potential expenses resulting from the inclusion of the Lifecycle Fund
Group Trusts and Underlying Funds maintained by State Street among the
Investment Options described in this prospectus and the SAI. Other
expenses also include costs incurred by Equitable Life and State Street
in connection with the organization of the Lifecycle Funds.
Organizational expenses were initially paid by Equitable Life and State
Street and are being reimbursed from the Lifecycle Funds over a five
year period. Organizational expenses were $150,087 and will be
amortized, pro rata based on the assets of each Fund, over the period
ending June 30, 2000. On December 8, 1995, the Program's balance in the
Balanced Fund (approximately $70 million) was transferred to the
Lifecycle Fund--Moderate. The much larger balance in that Fund results
in a much lower ratio of other expenses to total assets compared to the
corresponding ratio for the Lifecycle Fund--Conservative.
(2) Based on the Lifecycle Fund's Group Trusts--Conservative and Moderate
current fixed fee of $11,100 per year, per fund, and average net assets
for 1995.
(3) Based on the Lifecycle Fund's Group Trusts--Conservative and Moderate
average net assets for 1995.
(4) Other expenses of the Underlying Funds are based on expenses incurred
by each Fund during 1995.
(5) The fees, charges and expenses columns of the Lifecycle Funds are not
totalled in the tables because the expense percentages reflected for
the Underlying Funds may change due to the annual review and revision
of the targeted percentage investments by each Group Trust in the
Underlying Funds.
(6) Less than 0.01%.
7
<PAGE>
- -------------------------------------------------------------------------------
EXAMPLES
- -------------------------------------------------------------------------------
You would pay the following expenses on a $1,000 investment over the time
period indicated for each Fund listed below, assuming a 5% annual rate of
return. The Examples include all annual fund operating expenses listed in the
tables above plus an estimate of average plan and transaction charges over
the time periods indicated for a $1,000 initial investment, assuming the
account is not annuitized. The estimate is computed by aggregating all record
maintenance and report fees and enrollment fees, divided by the average
assets for the same period. See ADA Members Retirement Plan, Prototype
Self-Directed Plan and Individually-designed Plan Fees of this prospectus.
Although the Program has no minimum contribution, the minimum amount that can
be converted to an annuity is $3,500. There are no surrender charges, so the
amounts would be the same, whether you withdraw all or a portion of your
Account Balance.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Growth Equity $11.22 $ 34.97 $ 60.59 $133.76
Aggressive Equity 24.05 74.01 126.52 269.92
Real Estate 21.44 66.14 113.37 243.55
ADA Foreign 21.44 66.14 113.37 243.55
Equity Index (1) 16.90(1) 52.37(1) 90.19(1) 196.11(1)
---------- -----------
Lifecycle--Conservative 38.03 115.36
Lifecycle--Moderate 16.09 49.91
- ---------------------- ---------- ----------
</TABLE>
(1) The returns shown reflect the waiver of a .10% investment management
fee by State Street.
The purpose of these tables and examples is to assist you in understanding
the various costs and expenses that will be incurred, either directly or
indirectly, when amounts are invested in the Funds. FUTURE EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN. IN ADDITION, THE 5% RATE OF RETURN IN THE
EXAMPLE IS NOT AN ESTIMATE OR GUARANTEE OF FUTURE PERFORMANCE.
8
<PAGE>
CONDENSED FINANCIAL INFORMATION
- -----------------------------------------------------------------------------
These 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 reports included in the SAI. For years prior
to 1993, such condensed financial information was audited by other
independent accountants. The Financial Statements of each of the Funds as
well as the Consolidated Financial Statements of Equitable Life are contained
in the SAI. The report for the Real Estate Fund (Separate Account No. 30
(Pooled)) includes an explanatory paragraph relating to the appraised
valuation of real estate investments. Information is provided for the period
that each Fund has been available under the Program, but not longer than 10
years.
- -------------------------------------------------------------------------------
GROWTH EQUITY FUND: SEPARATE ACCOUNT NO. 4 (POOLED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------------------------
INCOME AND EXPENSES
------------------------------
NET
YEAR ENDED EXPENSES INCOME
DEC. 31, INCOME (NOTE A) (LOSS)
- ------------ --------- -------- --------
<S> <C> <C> <C>
1995 $2.10 (2.28) (.18)
-------- ---------- --------
1994 $2.03 (2.03) .00
-------- ---------- --------
1993* $1.97 (1.92) .05
-------- ---------- --------
1992 $1.69 (1.75) (.06)
-------- ---------- --------
1991 $1.50 (1.52) (.02)
-------- ---------- --------
1990 $2.13 (1.16) .97
-------- ---------- --------
1989 $1.88 (1.09) .79
-------- ---------- --------
1988 $1.41 (.84) .57
-------- ---------- --------
1987 $1.35 (.89) .46
-------- ---------- --------
1986 $1.47 (.74) .73
-------- ---------- --------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CAPITAL CHANGES OPERATING STATISTICS
--------------------------------------------------- ---------------------------------------------------------
NET REALIZED
AND NUMBER OF
UNREALIZED NET NET ASSET NET ASSET RATIO OF UNITS
GAINS INCREASE VALUE AT VALUE AT OPERATING RATIO OF NET OUTSTANDING
(LOSSES) ON (DECREASE) BEGINNING END OF EXPENSES TO INCOME (LOSS) AT END OF PORTFOLIO
YEAR ENDED INVESTMENTS IN UNIT OF PERIOD PERIOD AVERAGE NET TO AVERAGE NET PERIOD (IN TURNOVER
DEC. 31, (NOTE B) VALUE (NOTE C) (NOTE F) ASSETS ASSETS 000'S) RATE
- ----------- ------------- ---------- ----------- ---------- ------------ -------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 57.14 56.96 183.07 $240.03 1.07% (.08)% 1,456 108%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1994 (4.23) (4.23) 187.30 $183.07 1.11% .00% 1,441 91%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1993* 29.46 29.51 157.79 $187.30 1.14% .03% 1,431 82%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1992 .92 .86 156.93 $157.79 1.17% (.04)% 1,418 68%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1991 53.07 53.05 103.88 $156.93 1.16% (.02)% 1,350 66%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1990 (14.99) (14.02) 117.90 $103.88 1.10% .92 % 1,295 93%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1989 35.17 35.96 81.94 $117.90 1.07% .78 % 1,399 113%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1988 10.89 11.46 70.48 $ 81.94 1.09% .75 % 1,587 101%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1987 2.92 3.38 67.10 $ 70.48 1.11% .58 % 1,742 121%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1986 7.07 7.80 59.30 $ 67.10 1.09% 1.09 % 1,838 102%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
</TABLE>
- -------------------------------------------------------------------------------
AGGRESSIVE EQUITY FUND: SEPARATE ACCOUNT NO. 3 (POOLED) (NOTE E)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------
INCOME AND EXPENSES
----------------------------------
NET
INVESTMENT
YEAR ENDED EXPENSES INCOME
DEC. 31, INCOME (NOTE A) (LOSS)
- ------------ -------- ---------- ------------
<S> <C> <C> <C>
Jan. 1-
Nov. 30,
1995 $.24 (.43) (.19)
-------- ---------- ------------
1994 $.19 (.43) (.24)
-------- ---------- ------------
1993* $.27 (.42) (.15)
-------- ---------- ------------
1992 $.32 (.40) (.08)
-------- ---------- ------------
1991 $.29 (.33) (.04)
-------- ---------- ------------
1990 $.28 (.21) .07
-------- ---------- ------------
1989 $.29 (.17) .12
-------- ---------- ------------
1988 $.17 (.14) .03
-------- ---------- ------------
1987 $.18 (.17) .01
-------- ---------- ------------
1986 $.15 (.15) .00
-------- ---------- ------------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CAPITAL CHANGES OPERATING STATISTICS
--------------------------------------------------- ---------------------------------------------------------
NET REALIZED
AND NUMBER OF
UNREALIZED NET NET ASSET NET ASSET RATIO OF RATIO OF NET UNITS
GAINS INCREASE VALUE AT VALUE AT OPERATING INVESTMENT OUTSTANDING
(LOSSES) ON (DECREASE) BEGINNING END OF EXPENSES TO INCOME (LOSS) AT END OF PORTFOLIO
YEAR ENDED INVESTMENTS IN UNIT OF PERIOD PERIOD AVERAGE NET TO AVERAGE NET PERIOD (IN TURNOVER
DEC. 31, (NOTE B) VALUE (NOTE C) (NOTE F) ASSETS ASSETS 000'S) RATE
- ------------ ------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jan. 1-
Nov. 30,
1995 9.28 9.09 33.69 $42.78 1.12% (.49)% 1,718 123%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1994 (1.37) (1.61) 35.30 $33.69 1.27% (.72)% 1,590 94%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1993* 4.42 4.27 31.03 $35.30 1.31% (.49)% 1,536 83%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1992 (1.15) (1.23) 32.26 $31.03 1.33% (.24)% 1,612 71%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1991 14.93 14.89 17.37 $32.26 1.28% (.17)% 1,309 63%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1990 1.22 1.29 16.08 $17.37 1.26% .46 % 644 48%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1989 4.94 5.06 11.02 $16.08 1.22% .86 % 578 92%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1988 .10 .13 10.89 $11.02 1.24% .23 % 626 103%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1987 (.36) (.35) 11.24 $10.89 1.26% .09 % 536 227%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1986 .08 .08 11.16 $11.24 1.23% .05% 398 162%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
</TABLE>
9
<PAGE>
CONDENSED FINANCIAL INFORMATION (CONT'D)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ADA FOREIGN FUND: SEPARATE ACCOUNT NO. 191
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------
INCOME AND EXPENSES
----------------------------------
NET
YEAR ENDED EXPENSES INVESTMENT
DEC. 31, INCOME (NOTE A) INCOME
- ------------ -------- ---------- ------------
<S> <C> <C> <C>
1995 $.48 (.12) .36
-------- ---------- ------------
1994 $.50 (.13) .37
-------- ---------- ------------
1993 $.27 (.09) .18
-------- ---------- ------------
Mar.2-
Dec. 31,
1992 $.39 (.08) .31
-------- ---------- ------------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CAPITAL CHANGES OPERATING STATISTICS
--------------------------------------------------- ---------------------------------------------------------
NET REALIZED
AND RATIO OF NUMBER OF
UNREALIZED NET NET ASSET NET ASSET INVESTMENT RATIO OF NET UNITS
GAINS INCREASE VALUE AT VALUE AT OPERATING INVESTMENT OUTSTANDING
(LOSSES) ON (DECREASE) BEGINNING END OF EXPENSES TO INCOME TO AT END OF PORTFOLIO
YEAR ENDED INVESTMENTS IN UNIT OF PERIOD PERIOD AVERAGE NET AVERAGE NET PERIOD (IN TURNOVER
DEC. 31, (NOTE B) VALUE (NOTE C) (NOTE F) ASSETS ASSETS 000'S) RATE
- ---------- ------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 .94 1.30 13.01 $14.31 .84% 2.65% 4,769 N/A
- ---------- ------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1994 (.44) (.07) 13.08 $13.01 0.98% 2.78% 5,537 N/A
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1993 3.09 3.27 9.81 $13.08 1.04% 2.02% 4,220 N/A
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
Mar.2-
Dec. 31,
1992 (.50) (.19) 10.00 $ 9.81 1.05% 4.10% 1,692 N/A
(Note D) (Note D)
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
</TABLE>
- ------------
NOTES:
* Prior to July 22, 1993, Equitable Capital Management Corporation
(Equitable Capital) served as the investment adviser to the Funds. On
July 22, 1993, Alliance Capital Management L.P. acquired the business
and substantially all of the assets of Equitable Capital and became the
investment adviser to the Funds.
A. Enrollment, annual administration and actuarial and quarterly record
maintenance and report fees are not included above and did not affect
any Unit Values. Defined benefit plan annual administration and
actuarial and quarterly record maintenance and report fees reduced the
number of Fund Units credited to participants; enrollment fees were
generally deducted from contributions to the Program.
B. See Note 2 to Financial Statements of Separate Account Nos. 3 (Pooled)
and 4 (Pooled) and Separate Account Nos. 191 and 200, which may be
found in the SAI.
C. The Program became available beginning on January 1, 1968. The value
for a Growth Equity Fund Unit was established at $10.00 on that date.
The values for Aggressive Equity, and ADA Foreign Fund Units were
established at $10.00 on May 1, 1985 and $10.00 on March 2, 1992,
respectively, the dates on which those Funds were first made available
under the Program.
D. Annualized basis.
E. As of the close of business on November 30, 1995, all amounts held in
Separate Account No. 3 (Pooled) for the Aggressive Equity Fund were
transferred to Separate Account No. 200 and were invested in Class A
shares of the MFS Emerging Growth Fund.
F. Income, expenses, gains and losses shown above pertain only to
participants' accumulations attributable to the Program. Other plans
also participate in the Growth Equity and Aggressive Equity Funds and
may have operating results and other supplementary data different from
those shown above.
FUND UNIT VALUES
Unit values for the Aggressive Equity Fund (reflecting only the value of
units of Separate Account No. 200), the Equity Index Fund and the Lifecycle
Funds are shown below.
<TABLE>
<CAPTION>
LIFECYCLE
AGGRESSIVE EQUITY INDEX FUND-- LIFECYCLE
UNIT VALUE AS OF: EQUITY FUND FUND CONSERVATIVE FUND-- MODERATE
- ----------------- ------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C>
December 31, 1994 -- $ 9.71 -- --
- ----------------- ------------- ------------ --------------- ---------------
December 31, 1995 $42.62 $13.12 $10.59 $11.01
- ----------------- ------------- ------------ --------------- ---------------
</TABLE>
10
<PAGE>
- -------------------------------------------------------------------------------
REAL ESTATE FUND: Separate Account No. 30 (Pooled)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------
INCOME AND EXPENSES
----------------------------------
NET
INVESTMENT
YEAR ENDED EXPENSES INCOME
DEC. 31, INCOME (NOTE A) (LOSS)
- ------------ -------- ---------- ------------
<S> <C> <C> <C>
1995 $0.06 (.25) (.19)
-------- ---------- ------------
1994 $0.04 (.24) (.20)
-------- ---------- ------------
1993 $0.01 (.24) (.23)
-------- ---------- ------------
1992 $0.01 (.25) (.24)
-------- ---------- ------------
1991 $0.01 (.26) (.25)
-------- ---------- ------------
1990 $0.02 (.27) (.25)
-------- ---------- ------------
1989 $0.02 (.25) (.23)
-------- ---------- ------------
1988 $0.02 (.24) (.22)
-------- ---------- ------------
1987 $0.04 (.22) (.18)
-------- ---------- ------------
Aug. 29-
Dec. 31,
1986 $0.01 (0.07) (0.06)
-------- ---------- ------------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CAPITAL CHANGES OPERATING STATISTICS
-------------------------------------------------- ---------------------------------------------------------
NET REALIZED
AND RATIO OF NET NUMBER OF
UNREALIZED NET UNIT VALUE RATIO OF INVESTMENT UNITS
GAINS INCREASE AT UNIT VALUE OPERATING INCOME OR OUTSTANDING PORTFOLIO
(LOSSES) ON (DECREASE) BEGINNING AT END OF EXPENSES TO (LOSS) TO AT END OF TURNOVER
YEAR ENDED INVESTMENTS IN UNIT OF PERIOD PERIOD AVERAGE NET AVERAGE NET PERIOD (IN RATE (NOTE
DEC. 31, (NOTE B) VALUE (NOTE C) (NOTE F) ASSETS ASSETS 000'S) E)
- ------------ ------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 (.02) (.21) $10.89 $10.68 2.26% (1.67%) 371 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1994 .65 .45 10.44 10.89 2.26% (1.87%) 311 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1993 .22 (.01) 10.45 10.44 2.26% (2.20%) 408 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1992 (.38) (.62) 11.07 10.45 2.30% (2.25%) 511 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1991 (.84) (1.09) 12.16 11.07 2.21% (2.10%) 515 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1990 .05 (0.20) 12.36 12.16 2.14% (1.96%) 530 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1989 1.08 0.85 11.51 12.36 2.11% (1.93%) 584 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1988 .89 0.67 10.84 11.51 2.12% (1.98%) 787 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1987 .85 0.67 10.17 10.84 2.13% (1.71%) 732 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
Aug. 29-
Dec. 31,
1986 0.23 0.17 10.00 $10.17 2.06% (1.71%) 438 N/A
(Note D) (Note D)
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
</TABLE>
- ------------
NOTES:
A. Enrollment and quarterly record maintenance and report fees are not
included above and did not affect Real Estate Fund Unit Values.
Quarterly record maintenance and report fees reduced the number of Real
Estate Fund Units credited to participants; enrollment fees were
generally deducted from contributions to the Program.
B. The change in the value of Separate Account No. 8 units owned by the
Account and any realized gains (losses) from the redemption of such
units are included in net realized and unrealized gain on
investments--see Note 2 to Financial Statements of Separate Account No.
30 (Pooled), which may be found in the SAI.
C. The value for a Real Estate Fund Unit was established at $10.00 on
August 29, 1986, the date on which the Fund commenced operations.
D. Annualized basis.
E. The Real Estate Fund invests solely in units of Equitable's Separate
Account Nos. 2A and 8 (Pooled); thus, there is no applicable portfolio
turnover rate for the Real Estate Fund.
F. The Real Estate Fund Unit Values shown above are based on the year-end
values for Separate Account Nos. 2A and 8. However, the Unit Values
used under the Program for determining Account Balances, processing
transactions and calculating performance (including Account Balances,
transactions and performance effected or reported on December 31) are
based on the last Real Estate Fund Unit Value determined in each
relevant period and, therefore, such Unit Values reflect the values of
Separate Account Nos. 2A and 8 as of dates prior to the last day of
such periods.
Income, expenses, gains and losses shown above pertain only to
participants' accumulations attributable to the Program. Other plans
also participate in Separate Account No. 30 (Pooled) and may have
operating results and other supplementary data different from those
shown above.
11
<PAGE>
INVESTMENT OPTIONS
- -------------------------------------------------------------------------------
Ten INVESTMENT OPTIONS are available under the Program. Seven of the
Investment Options are Funds, the Real Estate Fund and six which we call the
Equity Funds. The six Equity Funds are: the Growth Equity Fund, the
Aggressive Equity Fund, the ADA Foreign Fund, the Equity Index Fund, the
Lifecycle Fund--Conservative and the Lifecycle Fund--Moderate. The three
additional Investment Options are guaranteed options: three and five year
Guaranteed Rate Accounts and the Money Market Guarantee Account. See our
separate prospectus for a detailed description of the Equity Index Fund and
the Lifecycle Funds.
THE EQUITY FUNDS
- -------------------------------------------------------------------------------
Each of the Equity Funds has a different investment objective that it seeks
to achieve by following specific investment policies. We have the right to
change the investment objectives of the Growth Equity Fund, subject to the
approval of the New York State Insurance Department, although we do not
anticipate making such a change. The investment objectives of the Aggressive
Equity, ADA Foreign, Equity Index and the Lifecycle Funds, including the
choice of the corresponding underlying funds, can only be changed by the
Trustees. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVES OF ANY OF THE
FUNDS WILL BE MET. See Risks and Investment Techniques--Equity Funds.
- -------------------------------------------------------------------------------
THE GROWTH EQUITY FUND
- -------------------------------------------------------------------------------
OBJECTIVE. The Growth Equity Fund seeks to achieve long-term growth of
capital by investing in the securities of carefully selected companies we
believe will share in the growth of our nation's economy-- and those of other
leading industrialized countries--over a long period. The Growth Equity Fund
invests in securities of companies of any capitalization but is generally
invested primarily in securities of intermediate to large sized companies.
INVESTMENT POLICIES. The Growth Equity Fund invests primarily in common
stocks. Smaller amounts may be invested in other equity-type securities, such
as convertible preferred stocks or convertible debt instruments. The Growth
Equity Fund may use its assets to make non-equity investments. These could
include non-participating and non-convertible preferred stocks, bonds and
debentures. Some non-equity investments may carry certain equity features
such as conversion or exchange rights or warrants for the acquisition of
stocks of the same or different issuers or participation based on revenues,
sales or profits. If, in light of economic conditions and the general level
of stock prices, it appears that the Fund's investment objectives will not be
met by buying equities, non-equity investment may be substantial. The Fund
may invest up to 10% of its total assets in restricted securities.
The Growth Equity Fund may make temporary investments in government
obligations, short-term commercial paper and other money market instruments,
either directly or through our Separate Account No. 2A. While equity
investments will be made primarily in securities of United States companies
or foreign companies doing substantial business here, up to 15% of the value
of the Fund's assets may be invested in the securities of established foreign
companies without substantial business in the United States. See Risks and
Investment Techniques--Equity Funds for more information on restricted
securities, Separate Account No. 2A, securities of medium and smaller sized
companies, foreign securities, investment concentration, money market
investments and convertible securities.
12
<PAGE>
- -------------------------------------------------------------------------------
THE AGGRESSIVE EQUITY FUND
- -------------------------------------------------------------------------------
OBJECTIVE. The Aggressive Equity Fund seeks to achieve long-term growth of
capital by investing in a mutual fund designated by the Trustees, the MFS
Emerging Growth Fund, which will, in turn, invest primarily in companies,
that are early in their life cycle but which have the potential to become
major enterprises (emerging growth companies). There is no assurance that
this objective will be met.
INVESTMENT POLICIES. The Aggressive Equity Fund invests 100 percent of its
assets in Class A shares of the MFS Emerging Growth Fund. Prior to December
1, 1995, the Aggressive Equity Fund invested in our Separate Account No. 3
(Pooled).
THE MFS EMERGING GROWTH FUND. The MFS Emerging Growth Fund's investment
objective is to provide long-term growth of capital. Dividend and interest
income from portfolio securities, if any, is incidental to the Fund's
investment objective of long-term growth of capital.
The Fund's policy is to invest primarily (i.e., at least 80% of its assets
under normal circumstances) in common stocks of companies that are early in
their life cycle but which MFS believes have the potential to become major
enterprises (emerging growth companies). MFS believes that such companies
generally would be expected to show earnings growth over time that is well
above the growth rate of the overall economy and the rate of inflation, and
would have the products, technologies, management, market and other
opportunities which are usually necessary to become more widely recognized as
growth companies. Emerging growth companies can be of any size, and the Fund
may invest in larger or more established companies whose rates of earnings
growth are expected to accelerate because of special factors, such as
rejuvenated management, new products, changes in consumer demand, or basic
changes in the economic environment.
The nature of investing in emerging growth companies involves greater risk
than is customarily associated with investments in more established
companies. Emerging growth companies often have limited product lines,
markets or financial resources, and they may be dependent on one-person
management. In addition, there may be less research available on many
promising small and medium sized emerging growth companies, making it more
difficult to find and analyze these companies. The securities of emerging
growth companies may have limited marketability and may be subject to more
abrupt or erratic market movements than securities of larger, more
established growth companies or the market averages in general. Shares of the
Fund, therefore, are subject to greater fluctuation in value than shares of a
conservative equity fund or of a growth fund which invests entirely in proven
growth stocks.
For further information about the MFS Emerging Growth Fund, including risk
factors, see the MFS Emerging Growth Fund's prospectus and Statement of
Additional Information. Participants and employers should carefully read the
prospectus of the MFS Emerging Growth Fund before they allocate contributions
or transfer amounts to the Aggressive Equity Fund.
The MFS Series Trust II ("Trust") was organized as a Massachusetts business
trust and is registered under the 1940 Act as an open-end management
investment company. As a series mutual fund, the Trust issues shares in
different investment portfolios, one of which is the MFS Emerging Growth
Fund, a diversified series of the Trust. The investment adviser of the MFS
Emerging Growth Fund is MFS.
VOTING RIGHTS. The MFS Emerging Growth Fund does not hold annual meetings of
shareholders. If a meeting of shareholders is held, they may vote on such
matters as election of trustees and any other matters requiring a vote by
shareholders under the 1940 Act. Equitable Life will vote the shares of the
MFS Emerging Growth Fund allocated to the Aggressive Equity Fund in
accordance with instructions received from employers, participants or
trustees, as appropriate, in the Aggressive Equity Fund. Each
13
<PAGE>
employer, participant or trustee, as appropriate, will be allowed to instruct
Equitable Life on how to vote shares of the MFS Emerging Growth Fund in
proportion to their interest in the Aggressive Equity Fund as of the record
date for the shareholders meeting. Equitable Life will abstain from voting
shares as to which no instructions are received. Employers, participants or
trustees will receive periodic reports relating to the MFS Emerging Growth
Fund and proxy materials together with a voting instruction form, in
connection with shareholders meetings. The costs of soliciting voting
instructions from participants will be borne by the MFS Emerging Growth Fund.
- -------------------------------------------------------------------------------
THE ADA FOREIGN FUND
- -------------------------------------------------------------------------------
OBJECTIVE. The ADA Foreign Fund invests 100 percent of its assets in shares
of the Templeton Foreign Fund which, in turn, seeks long-term capital growth
through a flexible policy of investing primarily in common stocks of
companies outside the United States. There is no assurance that this
objective will be met.
INVESTMENT POLICIES. The ADA Foreign Fund invests 100 percent of its assets
in shares of the Templeton Foreign Fund. Prior to May 1, 1996, the ADA
Foreign Fund invested approximately 95% of its assets in shares of the
Templeton Foreign Fund and the balance in our Separate Account No. 2A.
TEMPLETON FOREIGN FUND. The Templeton Foreign Fund seeks long-term capital
growth through a flexible policy of investing in stocks and debt obligations
of companies and governments outside the United States. Although the
Templeton Foreign Fund generally invests in common stock, it may also invest
in preferred stock and certain debt securities, rated or unrated, such as
convertible bonds and bonds selling at a discount. The Templeton Foreign Fund
may for temporary defensive purposes invest without limit in U.S. Government
securities, bank time deposits in the currency of any major nation,
commercial paper and repurchase agreements with banks or broker-dealers.
The Templeton Foreign Fund is a portfolio of Templeton Funds, Inc., a series
fund which was incorporated under Maryland law in 1977 and is registered
under the 1940 Act as an open-end diversified management investment company.
As a series mutual fund, Templeton Funds, Inc. issues shares in two
investment portfolios, although the Templeton Foreign Fund is the only
Templeton fund available under the ADA program. The Templeton Foreign Fund
had total net assets of $7.5 billion as of December 31, 1995. The investment
manager of the Templeton Foreign Fund is Templeton Global Advisors Ltd.,
Nassau, Bahamas, an indirect wholly-owned subsidiary of Franklin Resources,
Inc.
For additional information about the Templeton Foreign Fund, including risk
factors, see the Templeton Foreign Fund's prospectus and Statement of
Additional Information. Free copies of those documents may be obtained by
calling an Equitable Life Account Executive. Participants and employers
should carefully read the prospectus of the Templeton Foreign Fund before
they allocate contributions or transfer amounts to the ADA Foreign Fund.
VOTING RIGHTS. Templeton Funds, Inc. is not required under state law to hold
annual meetings of shareholders and may elect not to do so. If a meeting of
shareholders is held, they may vote on such matters as election of directors
and any other matters requiring a vote by shareholders under the 1940 Act.
Equitable Life will vote the shares of the Templeton Foreign Fund allocated
to the ADA Foreign Fund in accordance with instructions received from
employers, participants or trustees, as the case may be, in the ADA Foreign
Fund. Each participant for whom we maintain records and, in other cases, the
employer or trustee, will be allowed to instruct Equitable Life on how to
vote shares of the Templeton Foreign Fund in proportion to his or her
interest in the ADA Foreign Fund as of the record date for the shareholder
meeting. Equitable Life will abstain from voting shares as to which no
instructions are
14
<PAGE>
received. Participants, employers or trustees, as the case may be, in the ADA
Foreign Fund will receive periodic reports relating to the Templeton Foreign
Fund and proxy material, together with a voting instruction form, in
connection with shareholder meetings. By agreement, the responsibility for
soliciting such voting instructions and the costs of solicitation will be
borne by Templeton Funds, Inc.
- -------------------------------------------------------------------------------
THE EQUITY INDEX FUND
- -------------------------------------------------------------------------------
OBJECTIVE. The Equity Index Fund seeks to achieve a total return which
parallels that of the Standard & Poor's 500 Composite Stock Price Index (the
"S&P 500 Index") by investing in a mutual fund designated by the Trustees,
the Seven Seas Series S&P 500 Index Fund (a portfolio of The Seven Seas
Series S&P Index Fund -- "The Seven Seas Series Fund"). There is no assurance
that this objective will be met.
INVESTMENT POLICIES. The Equity Index Fund will invest 100 percent of its
assets in shares of the Seven Seas S&P 500 Index Fund.
THE SEVEN SEAS S&P 500 FUND. The Seven Seas S&P 500 Index Fund's investment
objective is to emulate the total return of the S&P 500 Index. The Seven Seas
S&P 500 Index Fund seeks to achieve its objective by investing in all 500
stocks in the S&P 500 Index in proportion to their weighting in the S&P 500
Index. To the extent that all 500 stocks cannot be purchased, the Seven Seas
S&P 500 Index Fund will purchase a representative sample of the stocks listed
in the S&P 500 Index in proportion to their weightings.
The Seven Seas Series Fund was organized as a Massachusetts business trust
and is registered under the 1940 Act as an open-end diversified management
investment company. As a series mutual fund, The Seven Seas Series Fund
issues shares in different investment portfolios, one of which is the Seven
Seas S&P 500 Index Fund. The investment adviser of the Seven Seas S&P 500
Index Fund is State Street.
"S&P 500" IS A TRADEMARK OF STANDARD & POOR'S CORPORATION THAT HAS BEEN
LICENSED FOR USE BY THE SEVEN SEAS SERIES FUND. THE SEVEN SEAS SERIES FUND IS
NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S CORPORATION,
AND STANDARD & POOR'S CORPORATION MAKES NO REPRESENTATION REGARDING THE
ADVISABILITY OF INVESTING IN THE SEVEN SEAS SERIES FUND.
The S&P 500 Index is composed of 500 common stocks which are chosen by
Standard & Poor's Corporation to best capture the price performance of a
large cross-section of the United States publicly traded stock market. The
S&P 500 Index is structured to approximate the general distribution of
industries in the United States economy. The inclusion of a stock in the S&P
500 Index in no way implies that Standard & Poor's Corporation believes the
stock to be an attractive investment, nor is Standard & Poor's a sponsor or
in any way affiliated with the Seven Seas S&P 500 Index Fund or the Equity
Index Fund. The 500 securities, most of which trade on the New York Stock
Exchange, represent approximately 75 percent of the market value of all
common stocks. Each stock in the S&P 500 Index is weighted by its market
capitalization. That is, each security is weighted by its total market value
relative to the total market values of all the securities in the S&P 500
Index. Component stocks included in the S&P 500 Index are chosen with the aim
of achieving a distribution at the index level representative of the various
components of the United States gross national product and therefore do not
represent the 500 largest companies. Aggregate market value and trading
activity are also considered in the selection process. A limited percentage
of the S&P 500 Index may include Canadian securities. No other foreign
securities are eligible for inclusion.
For further information about the Seven Seas S&P 500 Index Fund, including
risk factors, see The Seven Seas Series Fund's prospectus and the related
statement of additional information. Free additional copies
15
<PAGE>
of The Seven Seas Series Fund prospectus and copies of the related statement
of additional information may be obtained by calling an Equitable Life
Account Executive. Participants and Employers should carefully read the
prospectus of The Seven Seas Series Fund before they allocate contributions
or transfer amounts to the Equity Index Fund.
VOTING RIGHTS: The Seven Seas Series Fund does not hold annual meetings of
shareholders. If a meeting of shareholders is held, they may vote on such
matters as election of trustees and any other matters requiring a vote by
shareholders under the 1940 Act. Equitable Life will vote the shares of the
Seven Seas S&P 500 Index Fund allocated to the Equity Index Fund in
accordance with instructions received from employers, participants or
trustees, as appropriate, in the Equity Index Fund. Each employer,
participant or trustee, as appropriate, will be allowed to instruct Equitable
Life on how to vote shares of the Seven Seas S&P 500 Index Fund in proportion
to their interest in the Equity Index Fund as of the record date for the
shareholder meeting. Equitable Life will abstain from voting shares for which
no instructions are received. Employers, participants or trustees will
receive periodic reports about the Seven Seas S&P 500 Index Fund and proxy
materials together with a voting instruction form, in connection with
shareholder meetings. The costs of soliciting voting instructions from
participants will be borne by the Seven Seas Series Fund.
- -------------------------------------------------------------------------------
LIFECYCLE FUNDS--CONSERVATIVE AND MODERATE
- -------------------------------------------------------------------------------
Each Lifecycle Fund is a separate account of Equitable Life. Contributions
may be made to the Lifecycle Fund--Conservative and/or the Lifecycle
Fund--Moderate. Each of the Lifecycle Funds invests in a Lifecycle Fund Group
Trust. Each such Group Trust has identical investment objectives and policies
to the Lifecycle Fund to which it relates. In turn each of the Lifecycle Fund
Group Trusts invests in a mix of Underlying Funds.
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THE LIFECYCLE FUND GROUP TRUSTS
- -------------------------------------------------------------------------------
The Lifecycle Funds Group Trusts are collective investment funds maintained
by State Street. Each Lifecycle Fund Group Trust is organized as a common law
trust under Massachusetts law, and, because of exclusionary provisions, is
not subject to regulation under the 1940 Act.
There are two Lifecycle Fund Group Trusts: the Lifecycle Fund Group
Trust-Conservative and the Lifecycle Fund Group Trust-Moderate. State Street
serves as the trustee and investment manager to each of these Group Trusts.
Each of the Lifecycle Fund Group Trusts attempts to achieve its investment
objective by investing in a mix of underlying collective investment funds
(the Underlying Funds) maintained by State Street and offered exclusively to
tax exempt retirement plans.
- -------------------------------------------------------------------------------
LIFECYCLE FUND GROUP TRUST--CONSERVATIVE
- -------------------------------------------------------------------------------
OBJECTIVE. The Lifecycle Fund Group Trust--Conservative seeks to provide
current income and a low to moderate growth of capital. There is no assurance
that this objective will be met.
INVESTMENT POLICIES. The Lifecycle Group Trust--Conservative seeks to achieve
its objective by investing 100% of its assets in units of a mix of Underlying
Funds in accordance with certain target percentage weightings. The table
below shows the mix of Underlying Funds targeted by the Lifecycle Fund Group
Trust--Conservative.
16
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
S&P 500 Flagship Fund ...................15%
Russell 2000 Fund ....................... 5%
Daily EAFE Fund ......................... 10%
Daily Government/Corporate Bond Fund ... 50%
Short Term Investment Fund .............. 20%
</TABLE>
The target percentages shown above are reviewed annually by the ADA Trustees
and may be revised as recommended, subject to State Street's approval. State
Street, as investment manager of the Lifecycle Fund Group
Trust--Conservative, from time to time makes adjustments in the mix of
Underlying Funds, as needed to maintain, to the extent practicable, the
target percentages in each of the Underlying Funds.
- -------------------------------------------------------------------------------
LIFECYCLE FUND GROUP TRUST--MODERATE
- -------------------------------------------------------------------------------
OBJECTIVE. The Lifecycle Fund Group Trust--Moderate seeks to provide growth
of capital and a reasonable level of current income. There is no assurance
that this objective will be met.
INVESTMENT POLICIES. The Lifecycle Fund Group Trust--Moderate seeks to
achieve its investment objective by investing 100% of its assets in units of
a mix of Underlying Funds in accordance with certain target percentage
weightings. The table below shows the mix of Underlying Funds targeted by the
Lifecycle Fund Group Trust--Moderate.
<TABLE>
<CAPTION>
<S> <C>
S&P 500 Flagship Fund ...................35%
Russell 2000 Fund ....................... 10%
Daily EAFE Fund ......................... 15%
Daily Government/Corporate Bond Fund ... 30%
Short Term Investment Fund .............. 10%
</TABLE>
The target percentages shown above are reviewed annually by the ADA Trustees
and may be revised as recommended, subject to State Street's approval. State
Street, as investment manager of the Lifecycle Fund Group Trust--Moderate,
from time to time makes adjustments in the mix of Underlying Funds as needed
to maintain, to the extent practicable, the target percentages in each of the
Underlying Funds.
- -------------------------------------------------------------------------------
THE UNDERLYING FUNDS
- -------------------------------------------------------------------------------
Like the Lifecycle Fund Group Trusts, the Underlying Funds are collective
investment funds maintained by State Street and offered exclusively to tax
exempt retirement plans. Unlike the Lifecycle Fund Group Trusts, however,
which are available only under the ADA Program, the Underlying Funds may
receive contributions from other tax exempt retirement plans.
For a description of the Underlying Funds in which the Lifecycle Fund Group
Trusts invest, see our separate prospectus for the Lifecycle Funds --
Conservative and Moderate.
- -------------------------------------------------------------------------------
RISKS AND INVESTMENT TECHNIQUES--EQUITY FUNDS
- -------------------------------------------------------------------------------
You should be aware that any investment in securities carries with it a risk
of loss. The investment objective and policies of the Growth Equity Fund may
affect the return of the Fund. Additionally, there are market and financial
risks inherent in any securities investment. By market risks, we mean factors
which do not necessarily relate to a particular issuer but which affect the
way markets, and securities within those markets, perform. We sometimes
describe market risk in terms of volatility, that is, the range and frequency
of market value changes. Market risks include such things as changes in
interest rates, general economic conditions and investor perceptions
regarding the value of debt and equity securities.
17
<PAGE>
By financial risks we mean factors associated with a particular issuer which
may affect the price of its securities, such as its competitive posture, its
earnings and its ability to meet its debt obligations. The risk factors and
investment techniques associated with the Growth Equity Fund are stated
below.
See the prospectuses and Statements of Additional Information for the MFS
Emerging Growth Fund, Templeton Foreign Fund and the Seven Seas S&P 500 Fund
for additional information on the special risks of investment in these funds
through the Aggressive Equity Fund, the ADA Foreign Fund and the Equity Index
Fund, respectively, and see our separate prospectus for information on the
special risks of investing in the Equity Index and Lifecycle Funds.
FOREIGN SECURITIES. The Growth Equity Fund may make a limited portion of its
investments in the securities of established foreign companies which do not
do substantial business in the United States. For many foreign securities,
there are dollar-denominated American Depository Receipts (ADRs), which are
traded in the United States on exchanges or over-the-counter, and are issued
by domestic banks. The Fund may invest in foreign securities directly and
through ADRs and may hold some foreign securities outside of the US. ADRs do
not lessen the foreign exchange risk inherent in investing in the securities
of foreign issuers. However, by investing in ADRs rather than directly in
foreign issuers' stock, the Fund will avoid currency risks during the
settlement period for either purchases or sales. Foreign investments may
involve risks not present in domestic investments, such as changes in the
political or economic climate of countries in which companies do business.
Foreign securities may be less liquid or subject to greater price volatility
than securities of domestic issuers, and foreign accounting, auditing and
disclosure standards may differ from domestic standards. There may be less
regulation in foreign countries of stock exchanges, brokers, banks, and
listed companies than in the United States. The value of foreign investments
may rise or fall because of changes in currency exchange rates or exchange
controls.
RESTRICTED SECURITIES. The Growth Equity Fund may make investments in
restricted securities. Restricted securities are generally less liquid than
registered securities and market quotations for such securities may not be
readily available. The Fund may not be able to sell restricted securities
except pursuant to registration under applicable Federal and State securities
laws or pursuant to Securities and Exchange Commission rules which limit
their sale to certain purchasers and may require that they be held by the
Funds for a specified period of time prior to resale. Because of these
restrictions, at times the Fund may not be readily able to sell them at fair
market value.
SECURITIES OF MEDIUM AND SMALLER SIZED COMPANIES. In addition to large sized
companies, the Growth Equity Fund may invest in securities of medium and
smaller sized companies. For this purpose the term medium and smaller sized
companies means companies with $500 million to $1.5 billion in
capitalization. Medium and smaller sized companies may be dependent on the
performance of only one or two products. Such companies may be vulnerable to
competition from larger companies with greater resources and to economic
conditions affecting their market sector. Therefore, consistent earnings may
not be as likely in small companies as in large companies. Such companies may
also be more dependent on access to equity markets to raise capital than
larger companies with greater ability to support debt. Small and medium sized
companies may be new, without long business or management histories, and
perceived by the market as unproven. Their securities may be held primarily
by insiders or institutional investors, which may have an impact on
marketability. The price of these stocks may rise and fall more frequently
and to a greater extent than the overall market.
INVESTMENT CONCENTRATION. From time to time, the equity holdings in the
Growth Equity Fund may be concentrated in the securities of a relatively
small number of issuers. In no event will an investment be made for the Fund
in the securities of one issuer if such investment would cause more than 10%
of the
18
<PAGE>
book value of the Growth Equity Fund to be invested in the securities of that
issuer, and no investment will be made for the Fund if such investment would
cause more than 40% of the book value of the Fund to be invested in the
securities of four or fewer issuers. This strategy of investment
concentration may increase an investor's risk of loss in the event of a
decline in the value of one of these securities. As of December 31, 1995,
28.5% (of market value) of the Growth Equity Fund was held in the stocks of
four issuers. See Separate Account No. 4 (Pooled) Statement of Investments
and Net Assets in the SAI.
MONEY MARKET INVESTMENTS. The Growth Equity Fund may make temporary
investments in government obligations, short-term commercial paper and other
money market instruments. They may buy these directly or acquire units in our
Separate Account No. 2A. We maintain Separate Account No. 2A to provide a
more efficient means for certain of our separate accounts to invest cash
positions on a pooled basis at no additional cost. Separate Account No. 2A
seeks to obtain a high level of current income, preserve its assets and
maintain liquidity. It invests only in short-term securities which mature in
60 days or less from the date of purchase or which are subject to repurchase
agreements requiring repurchase in 60 days or less. In repurchase agreements,
Separate Account No. 2A 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. Such transactions afford an
opportunity for Separate Account No. 2A to earn a fixed rate of return on
available cash at minimal market risk, although the account may be subject to
various delays and risks of loss if the seller is unable to meet its
obligation to repurchase. Units in Separate Account No. 2A are not registered
under the Securities Act of 1933.
The kinds of direct investments the 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 Service
("Moodys") or A-1 or A-1 Plus by Standard & Poor's Corporation ("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, and any
debt securities issued or guaranteed by an issuer, which 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 Eurodollars, certificates of deposit
and commercial paper issued by Schedule B Banks.
CONVERTIBLE SECURITIES. The Growth Equity Fund may invest in convertible
preferred stocks or convertible debt instruments. Convertible securities
contain both debt and equity features. Because of their debt element, they
may provide some protection when stock prices decline. Nevertheless,
convertible securities may lose significant value in periods of extreme
market volatility.
- -------------------------------------------------------------------------------
HOW WE CALCULATE THE VALUE OF AMOUNTS ALLOCATED TO THE EQUITY FUNDS
- -------------------------------------------------------------------------------
CONTRIBUTIONS AND TRANSFERS: PURCHASE OF FUND UNITS. The portion of each
contribution or transfer allocated to an Equity Fund will be used to purchase
Units. Your interest in each Fund is represented by the value of the Units
credited to your Account for that Fund. The number of Units purchased by a
contribution or transfer to a Fund is calculated by dividing the amount
allocated by the Unit Value calculated as of the close of business on the day
we receive your contribution or transfer instruction. The number of Units
credited to your Account will not vary because of any subsequent fluctuation
in the Unit Value, but the value of a Unit fluctuates with the investment
experience of the Fund. In other words, the Unit Value will reflect the
investment income and realized and unrealized capital gains and losses of
that Fund as well as the deductions and charges we make to the Fund.
19
<PAGE>
HOW WE DETERMINE THE UNIT VALUE. We determine the Unit Value for each Equity
Fund at the end of each business day. The Unit Value for each Fund is
calculated by first determining a gross unit value, which reflects only
investment performance, and then adjusting it for Fund expenses to obtain the
Fund Unit Value. We determine the gross unit value by multiplying the gross
unit value for the preceding business day by the net investment factor for
that subsequent business day (for the Growth Equity Fund we also subtract any
audit and custodial fees). We calculate 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 we are calculating the net investment factor.
o Then we subtract the capital losses, realized and unrealized, charged to
the Fund during that business day.
o Finally, we divide this amount by the value of the Fund's assets at the
close of the preceding business day.
The Fund Unit Value is calculated on every business day by multiplying the
Fund Unit Value for the last business day of the previous month by the net
change factor for that business day. The net change factor for each business
day is equal to (a) minus (b) where:
(a) is the gross unit value for that business day divided by the gross unit
value for the last business day of the previous month; and
(b) is the charge to the Fund for that month for the daily accrual of fees
and other expenses times the number of days since the end of the preceding
month.
For information on how we value the assets of the Equity Funds, see the SAI.
The Aggressive Equity Fund's investments in the MFS Emerging Growth Fund, the
ADA Foreign Fund's investment in the Templeton Foreign Fund and the Equity
Index Fund's investment in the Seven Seas S&P 500 Index Fund will be valued
at the underlying mutual fund's net asset value per share.
The investments made by each of the Lifecycle Funds in units of the
corresponding Lifecycle Fund Group Trust will be valued at the net asset
value of the units of such Lifecycle Fund Group Trust. Investments made by
each Lifecycle Fund Group Trust in the Underlying Funds will be valued at the
Underlying Fund's net asset value per unit. The units of each Underlying Fund
are valued daily. For a more detailed description of how the Underlying Funds
are valued, see our separate prospectus for the Lifecycle Funds --
Conservative and Moderate.
20
<PAGE>
THE REAL ESTATE FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
REAL ESTATE FUND OBJECTIVES AND INVESTMENT POLICIES
- -------------------------------------------------------------------------------
OBJECTIVE. The Real Estate Fund, Separate Account No. 30, invests primarily,
though not exclusively, in units of our Separate Account No. 8 (the "Prime
Property Fund"), which in turn invests primarily in real property. The Prime
Property Fund seeks to achieve a stable rate of return over an extended
period of time through rental income and appreciation of real property
values. In addition, the Real Estate Fund seeks to maintain a level of
liquidity consistent with anticipated distributions and transfers. The Real
Estate Fund's liquid assets typically range from 0 to 10% of its total
assets, although the actual level of liquidity will depend on contributions,
distributions and transfers. See Special Risks Related to the Real Estate
Fund. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVES OF THE REAL ESTATE
FUND OR OF PRIME PROPERTY FUND WILL BE MET.
INVESTMENT POLICIES OF PRIME PROPERTY FUND. Prime Property Fund seeks the
acquisition and long-term ownership of high-grade, income-producing real
property. Prime Property Fund seeks to invest in properties that are located
in strong rental markets and have continuous potential for resale. Properties
are located throughout the United States. The distribution of investments by
property type and by location of properties is expected to change from time
to time. For additional information about the distribution of investments,
see Prime Property Fund Investments in the SAI.
In selecting a property for Prime Property Fund, we consider its location,
potential income stream, cost, potential for increasing rental income and
capital appreciation, resale marketability and architectural and other
physical attributes. We also evaluate the risks, including environmental
risks, involved with the property, as well as the probability and potential
impact of changes in the local economy. There are no limits as to how much
Prime Property Fund can invest in any one property. Currently, however, we do
not intend to invest more than 10% of Prime Property Fund's assets in any one
property. Prime Property Fund may invest in construction and mortgage loans
receivable and notes receivable. Mortgages may be accepted as partial
consideration for properties sold.
Prime Property Fund acquires both existing and developmental properties.
Prime Property Fund will also enter into forward commitments, under which it
agrees to purchase a property upon completion of construction or leasing.
Prime Property Fund does not currently expect to invest more than 10% of its
assets in developmental properties.
Prime Property Fund participates in joint ventures, particularly with regard
to large properties. In general, co-venturers will be real estate developers,
and joint ventures with them may involve property development projects. We
seek to form joint ventures with persons and companies who, because of our
experience with them or investigation into their financial condition and
business history, we regard as experienced and financially responsible. Prime
Property Fund may issue construction and mortgage loans on a fixed or
variable rate basis in connection with joint ventures in which it
participates. If Prime Property Fund issues fixed rate loans, it may seek to
stabilize the market value of such loans by engaging in interest rate hedging
transactions, to the extent permitted under applicable regulatory
requirements.
Prime Property Fund may use mortgage financing to acquire properties, may
mortgage properties after acquisition, may acquire properties subject to
mortgages and may enter into joint ventures or other arrangements that
require mortgage financing. There is no limit on mortgage indebtedness with
respect to any one property. Prime Property Fund may also borrow money in
order to acquire new properties or improve existing investments. These
borrowings may have recourse to wholly-owned properties or may be secured by
the general credit of the Fund and thus have recourse to the entire Fund.
During the period
21
<PAGE>
from 1986 through 1995 Prime Property Fund's total borrowings secured by
wholly-owned properties ranged from 6.2% to 17.9% of the total portfolio
value. Properties held by joint ventures may also be mortgaged. For more
information regarding borrowings secured by wholly-owned properties see Prime
Property Fund Investments in the SAI. Prime Property Fund may borrow in order
to provide working capital for repairs and improvements and to meet other
cash flow requirements. Prime Property Fund does not borrow in order to meet
investors' withdrawal requests.
Consistent with Prime Property Fund's investment objectives, it may engage in
transactions and invest in properties other than or in addition to those
described above.
Prime Property Fund does not seek a specified holding period for the
properties it acquires. Prime Property Fund will buy and sell properties at
any time; in general, however, it seeks to hold properties for long-term
investment.
Most properties are managed by us or our affiliates. At December 31, 1995
independent managing and leasing agents managed properties representing
approximately 33.8% of aggregate appraised values.
INVESTMENT RISKS RELATED TO PRIME PROPERTY FUND. Prime Property Fund is
subject to the risks generally incident to the ownership of real property.
These include the uncertainty of cash flow, the need to meet fixed and other
obligations, shifts in real estate markets in general and in local markets in
particular, adverse changes in economic and social conditions, including
demographic trends, changes in operating expenses, including real estate
taxes, changes in tax, zoning, building, environmental and other laws, losses
due to nonpayment of rent, other uninsured losses and other risks beyond our
control. However, we believe that the large number of properties held in
Prime Property Fund and their geographic and use diversification provide a
measure of protection against these risks.
Investments in developmental properties are subject to additional risks,
which include cost overruns, construction delays, difficulties in finding
suitable tenants and delays in fully renting the property. Joint ventures may
be vulnerable to losses as a result of a joint venturer's financial
difficulties. In addition, the joint venturer may at times have objectives
that are contrary to those of Prime Property Fund. Construction loans may be
vulnerable to losses due to a developer's financial difficulties. In general,
construction loans will not be personal obligations of the borrower, and
Prime Property Fund will look solely to the underlying property in case of
default. Other liens such as mechanics' liens may have priority over Prime
Property Fund's security interest in the property.
INVESTMENT POLICIES RELATED TO LIQUID ASSETS. A portion of the Real Estate
Fund assets may be held in liquid assets. The portion of the Fund for which
liquidity is the investment objective may be invested in units of our
Separate Account No. 2A. See Money Market Investments under Risks and
Investment Techniques--Equity Funds. In addition, the Real Estate Fund may
invest directly in government obligations, short-term commercial paper and
other money market instruments of the types described above. Prime Property
Fund may also invest in these short-term securities directly or through
investment in units of Separate Account No. 2A. The Real Estate Fund seeks to
hold enough liquid assets to provide for expected withdrawals. These holdings
could, however, tend to reduce the investment performance of the Fund as
compared to that of Prime Property Fund or a fund fully invested in real
estate.
22
<PAGE>
- -------------------------------------------------------------------------------
SPECIAL RISKS RELATED TO THE REAL ESTATE FUND
- -------------------------------------------------------------------------------
LIQUIDITY. There is no assurance that the Real Estate Fund will have
sufficient liquidity to make distributions and transfers when requested under
the Program or when required by law. From 1991 to June 1994 the Real Estate
Fund was using substantially all of its available cash flow and liquid assets
to pay participant withdrawal requests, and withdrawals were being delayed in
accordance with the procedures described below. As of the date of this
prospectus, the Real Estate Fund has sufficient liquidity and is paying
participant withdrawals on a current basis.
IN LIGHT OF THE RISKS AND POSSIBLE ILLIQUIDITY OF AN INVESTMENT IN THE REAL
ESTATE FUND, YOU AS AN INDIVIDUAL PARTICIPANT SHOULD CONSIDER LIMITING THE
AMOUNT YOU ALLOCATE TO IT, PARTICULARLY AS YOU NEAR RETIREMENT. In
considering this matter, you should take into account the other assets in
your investment portfolio, both in your plan and elsewhere, and the
distributions you anticipate taking from your plan in the foreseeable future.
If the Real Estate Fund does not have enough liquid assets to pay all
requested withdrawals, it will withdraw some or all of its interest from
Prime Property Fund. We may postpone withdrawals from Prime Property Fund,
however, for such time as we reasonably consider necessary to obtain the
amount to be withdrawn or to protect the interests of other participants in
Prime Property Fund. Withdrawals from Prime Property Fund have been
restricted from time to time. See Procedures for Withdrawals, Distributions
and Transfers--Special Rules for Distributions and Transfers from the Real
Estate Fund in the SAI.
INSURANCE RISKS. We believe that our casualty insurance would provide
adequate compensation for accidental loss of property value. A possible
exception would be loss in California resulting from earthquake; our
insurance against such loss is limited to $80 million per occurrence and $80
million aggregate annually for all our California properties, including Prime
Property Fund properties. We believe that the amount of earthquake insurance
we carry is reasonable in light of the types of coverage available at
acceptable prices. Prime Property Fund's properties are also covered under an
umbrella liability policy that we believe is adequate for the portfolio in
view of the types of coverage currently available at acceptable prices.
- -------------------------------------------------------------------------------
CONFLICTS OF INTEREST RELATED TO PRIME PROPERTY FUND
- -------------------------------------------------------------------------------
ACQUISITION OF PROPERTIES. Our wholly-owned subsidiary, Equitable Real Estate
Investment Management, Inc. (Equitable Real Estate) is responsible for
advising us as to all our real property acquisitions, management and sales.
See Investment Management of the Real Estate Fund. We and Equitable Real
Estate make acquisitions for ourselves and for our clients, including Prime
Property Fund. Before acquisition, properties are allocated among Prime
Property Fund, our other separate accounts (both pooled and single-client
accounts), our general account, Equitable Real Estate's own account, our
investment advisory account and Equitable Real Estate's advisory accounts.
We seek to allocate properties among the accounts based on the accounts'
investment policies, size, liquidity and diversification requirements,
current availability of funds, current portfolio holdings and annually
established investment goals. Equitable Real Estate's recommendations as to
the allocation of properties are reviewed and approved by the Investment
Committee of our Board of Directors. With limited exceptions, the Investment
Committee has final authority over the acquisition and allocation of
investment properties for all of our accounts.
Two or more of those accounts may share some of those properties. Prime
Property Fund does not now share any properties with any of our other
accounts. It may do so in the future, however. Sharing real estate could give
rise to situations in which our accounts have conflicting interests.
23
<PAGE>
MANAGEMENT OF PROPERTIES. In certain cases, we or our affiliates may manage
some of the properties held in Prime Property Fund. Pursuant to an exemption
issued by the United States Department of Labor, we are permitted to charge
market level fees, including a profit, for on-site management and leasing
services we provide to properties in Prime Property Fund. During 1995,
Equitable Real Estate received payments of $9.4 million for these types of
services.
We may have interests in properties held in our general account or in other
accounts we manage that may be affected by the acquisition, operations or
sale of Prime Property Fund properties.
APPRAISAL OF PROPERTIES. The portfolio value for the Real Estate Fund depends
heavily on the estimated market values of properties held by Prime Property
Fund. Those estimates are based on our periodic reappraisals of the
properties. Our fees will tend to increase as those appraised values
increase. There is no assurance that any of the properties will ultimately be
sold for their appraised values. See How We Calculate the Value of Amounts
Allocated to the Real Estate Fund.
SALE OF PROPERTIES. We may postpone withdrawals from Prime Property Fund
under certain circumstances within our discretion (see Special Risks related
to the Real Estate Fund), which may include a reasonable determination not to
sell properties. Our fees depend on the aggregate value of net assets held in
Prime Property Fund.
- -------------------------------------------------------------------------------
HOW WE CALCULATE THE VALUE OF AMOUNTS ALLOCATED TO THE REAL ESTATE FUND
- -------------------------------------------------------------------------------
CONTRIBUTIONS AND TRANSFERS: PURCHASE OF REAL ESTATE FUND UNITS. The Real
Estate Fund accepts contributions and transfers only one day each month. All
amounts transferred from other Investment Options or contributed directly to
the Real Estate Fund will first be placed in the Money Market Guarantee
Account and designated for investment in the Real Estate Fund. On the next
day on which the Real Estate Fund accepts contributions, the amount
designated for the Real Estate Fund, plus accrued interest, will be used to
purchase Units in the Real Estate Fund. The Real Estate Fund accepts
contributions as of the day its Unit Value is determined. If you wish to
change your mind about contributing to the Real Estate Fund, you may do so
before your contribution is transferred to the Real Estate Fund by sending us
written instructions that the money being held in the Money Market Guarantee
Account is no longer designated for investment in the Real Estate Fund. You
should enclose a transfer form telling us where that money is to be
allocated. We must receive your instructions by the close of business on the
day the transfer is to occur in order for them to be effective. The transfer
date will vary from month to month; therefore, we cannot ensure that your
instructions will be effective unless we receive them by the first day of the
month.
The day on which the Real Estate Fund's Unit Value is determined depends each
month on the day on which the value of Prime Property Fund is known. Prime
Property Fund is valued only once each month, as of the last business day of
the month. However, that value is normally not known until several days later
because financial data must be calculated and reported from properties
located throughout the country. When this process is completed, Units of the
Real Estate Fund are valued. During the period between the end of the month
and the day on which the Real Estate Fund Units are valued, which normally
ranges from five to ten days, the value of Prime Property Fund real estate
assets from the end of the preceding month may change, income will accrue and
expenses will be incurred. As a result, the procedure described above will
tend to favor Real Estate Fund Units being purchased to the extent that there
have been net increases in the value of the underlying net assets between the
end of the month and the date of the valuation. It will have the opposite
effect to the extent of any decreases in the net assets during this period.
LIQUIDATION OF REAL ESTATE FUND UNITS. UNITS IN THE REAL ESTATE FUND MAY BE
LIQUIDATED ONLY AFTER THE END OF EACH CALENDAR QUARTER. The liquidation will
occur after we know the value of Prime Property Fund
24
<PAGE>
for the last day of that quarter and have determined the value of Real Estate
Fund Units, which normally occurs five to ten days into the succeeding month.
If you are taking a distribution or transfer from the Real Estate Fund, the
amount distributed will not reflect any change in the value of Prime Property
Fund assets attributable to the period between the last day of the quarter
and the day your redemption occurs. To the extent that the value increases
during that period, this will tend to disadvantage the person liquidating
Units and to favor the holders of the remaining Units.
HOW WE DETERMINE THE UNIT VALUE. We determine the Unit Value for the Real
Estate Fund once each month, generally as of the close of business on the
first business day after the day the unit value for Prime Property Fund is
known. We first determine the gross unit value, which is equal to (a) plus
(b) plus (c) divided by (d), where
(a) is the aggregate value of all units of Prime Property Fund held by the
Real Estate Fund determined as of the last business day of the preceding
month;
(b) is the aggregate value of all units of Separate Account No. 2A and cash
or cash equivalents held by the Real Estate Fund, determined as of the close
of business on the day the Real Estate Fund Unit Value is known;
(c) is the net value of all other assets and liabilities of the Real Estate
Fund, determined as of the close of business on the day the Real Estate Fund
Unit Value is known; and
(d) is the total number of Real Estate Fund Units outstanding.
To obtain the Real Estate Fund Unit Value, we then adjust this gross unit
value for Fund fees and other expenses at rates equal to 1/12 of the annual
rates. See Deductions and Charges.
Once we determine the Unit Value, it remains constant until set again the
following month. Thus, any transactions that occur between determination
dates (such as the withdrawal of fees) are processed using the Unit Value
determined earlier that month.
25
<PAGE>
THE GUARANTEED OPTIONS
- -------------------------------------------------------------------------------
Contributions allocated to the Guaranteed Rate Accounts are invested through
and guaranteed by major insurance companies. Contributions allocated to the
Money Market Guarantee Account are backed by amounts held in Separate Account
No. 43 (described below) and are guaranteed by Equitable Life's general
account. The general accounts of Equitable Life and other major insurance
companies support each company's respective insurance and annuity guarantees
as well as their general obligations. The companies' general accounts, as
part of their insurance and annuity operations, are subject to insurance laws
and regulations of all jurisdictions in which they are authorized to do
business. Because of applicable exemptive and exclusionary provisions,
interests in or guaranteed by the general accounts have not been registered
under the Securities Act of 1933 (the "1933 Act") nor are the general
accounts investment companies under the the 1940 Act. Accordingly, neither
the general accounts of Equitable Life or of any other major insurance
company nor any interests therein, are subject to regulation under the 1933
Act or the 1940 Act, and we have been advised that the staff of the
Securities and Exchange Commission has not made a review of the disclosures
which are included in this prospectus for your information and which relate
to the general accounts of Equitable Life and other major insurance companies
and the Guaranteed Options. These disclosures, however, may be subject to
certain generally applicable provisions of the federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
- -------------------------------------------------------------------------------
GUARANTEED RATE ACCOUNTS
- -------------------------------------------------------------------------------
NEW YORK LIFE GUARANTEES--NEW GUARANTEED RATE ACCOUNTS. For approximately a
one-year period beginning August 2, 1995, all monies allocated to the
Guaranteed Rate Accounts (GRAs) have been and will be invested through two
group annuity contracts issued to the Trustees by New York Life Insurance
Company ("New York Life"). These GRAs will remain invested with New York Life
through maturity. At the end of the one-year period the Trustees may renew
the arrangement with New York Life to provide the Program GRAs or they may
arrange for other carriers to provide them. Call your Account Executive at
that time for further information. All GRAs opened prior to August 2, 1995
will remain invested through maturity with the carrier that provided that
GRA. Withdrawals, transfers, reallocations on maturity and benefit
distributions from GRAs provided by other carriers are subject to Equitable
Life's receipt of the proceeds of such GRA from such other carriers.
All references in this prospectus and in the SAI to "The Guaranteed Rate
Accounts" or to a "GRA" or "GRAs" shall be deemed to refer to the GRAs
provided by New York Life or any other carrier which previously provided or
may in the future provide Program GRAs, as appropriate.
New York Life is a New York mutual life insurance company with its Home
Office located at 51 Madison Ave, New York, New York 10010. Founded in 1845,
New York Life is a Fortune 100 company with assets of approximately $59
billion held in its general account as of December 31, 1995. New York Life
and its subsidiaries had assets under management as of December 31, 1995 of
approximately $74 billion.
THE GUARANTEES. Contributions to the GRAs are credited until maturity with
the interest rate in effect on the date of receipt. The rate is expressed as
an effective annual rate, reflecting daily compounding and the deduction of
applicable asset-based fees. See Deductions and Charges. GRAs with maturities
of approximately three and approximately five years are available under the
Program. AMOUNTS ALLOCATED TO A GRA MAY GENERALLY NOT BE REMOVED PRIOR TO
MATURITY. New guaranteed rates are offered each Wednesday and are available
for a seven-day period. Interest accrues from the day after your contribution
26
<PAGE>
or transfer is credited through the maturity date of the GRA, which is either
approximately three or approximately five years from the end of the seven-day
offering period. The amount of your contributions and the interest credited
is guaranteed subject, however, to any penalties applicable upon premature
withdrawal. See Premature Withdrawals and Transfers from a GRA in the SAI for
a description of these penalties and when they apply. You may call us to
obtain the current GRA rates. For a discussion of maturing GRAs, see Maturing
GRAs in the SAI.
PREMATURE WITHDRAWALS AND TRANSFERS. You may transfer amounts from other
Investment Options to a GRA at the current guaranteed rate at any time. You
may not make transfers from one GRA to another or from a GRA to one of the
other Investment Options except at maturity. Likewise, you may not remove
amounts from a GRA prior to maturity in order to obtain a plan loan, to make
a hardship or in-service withdrawal, to receive benefits from a terminated
plan or to transfer amounts to a new plan. Withdrawals from GRAs may be made
before maturity if you are disabled, you attain age 70 1/2 , or you die.
Certain other withdrawals from a GRA prior to maturity are permitted, but may
be subject to a penalty. See Procedures for Withdrawals, Distributions and
Transfers--Premature Withdrawals and Transfers from a GRA in the SAI.
- -------------------------------------------------------------------------------
MONEY MARKET GUARANTEE ACCOUNT
- -------------------------------------------------------------------------------
WE GUARANTEE THE MONEY MARKET GUARANTEE ACCOUNT. We guarantee the amount of
your contributions and the interest credited to the Money Market Guarantee
Account. We maintain Separate Account No. 43 (described below) in connection
with these guarantees. All amounts held in the Money Market Guarantee Account
are credited with the same rate of interest. The rate changes monthly and is
expressed as an effective annual rate, reflecting daily compounding and the
deduction of applicable asset-based fees. The rate will approximate the
average over each calendar year of money market funds considered "domestic
prime," that is, funds with the highest quality investments offered to
investors, plus an amount which approximates the average expenses deducted
from such funds, less .15% and the applicable Program Expense Charge. See
Deductions and Charges. Call us to obtain the current monthly rate. On
January 1 each year we set an annual minimum interest rate for this Account.
The minimum guaranteed interest rate for 1996 is 2.5% (before applicable
asset-based fees).
SEPARATE ACCOUNT NO. 43. We will hold assets in Separate Account No. 43
sufficient to pay all principal and accrued interest under the Money Market
Guarantee Account option, less applicable fees, in accordance with provisions
of the New York Insurance Law which govern the operation of Separate Account
No. 43. These provisions generally require that assets held in Separate
Account No. 43 be valued at cost and not at market value. In accordance with
the New York Insurance Law, the assets which we are required to hold in
Separate Account No. 43 attributable to ADA participants will only be
available to Program participants who have allocated amounts to the Money
Market Guarantee Account and may not be used to satisfy obligations that may
arise out of any other business we conduct. We have the right to remove
assets from Separate Account No. 43 that are in excess of those attributable
to the combined account values of all ADA participants.
Your principal and accrued interest under the Money Market Guarantee Account
will not fluctuate with the value of the assets we hold in Separate Account
No. 43 and are guaranteed by us and backed by our general account assets. If
the assets in Separate Account No. 43 prove insufficient to provide for
payment of all principal and accrued interest under the Money Market
Guarantee Account, we will transfer additional assets into Separate Account
No. 43 to make up for any shortfall. Conversely, we may withdraw from
Separate Account No. 43 any excess over the amount needed to provide for
payment of all such principal and accrued interest.
27
<PAGE>
CONTRIBUTIONS. Contributions may be made at any time and will earn the
current rate from the day after the contribution is credited through the end
of the month or, if earlier, the day of transfer or withdrawal. Balances in
the Account at the end of the month automatically begin receiving interest at
the new rate until transferred or withdrawn. We guarantee the amount of your
contributions and the interest credited.
DISTRIBUTIONS, WITHDRAWALS, AND TRANSFERS. Distributions, withdrawals and
transfers may be made at any time permitted under your plan. We do not charge
penalties.
28
<PAGE>
EQUITABLE LIFE AND THE INVESTMENT MANAGERS
===============================================================================
EQUITABLE LIFE
- -------------------------------------------------------------------------------
Equitable Life is a diversified financial services organization serving a
broad spectrum of insurance, investment management and investment banking
customers. We are a New York stock life insurance company and our Home Office
is located at 787 Seventh Avenue, New York, New York 10019. Founded in 1859,
we are one of the largest life insurance companies in the United States. We
are authorized to sell life insurance and annuities in all fifty states, the
District of Columbia, Puerto Rico and the Virgin Islands. We maintain local
offices throughout the United States.
Equitable Life is a wholly-owned subsidiary of The Equitable Companies
Incorporated (the "Holding Company"). The largest stockholder of the Holding
Company is AXA S.A. AXA beneficially owns 60.6% of the outstanding shares of
common stock of the Holding Company plus 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, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed assets of
approximately $195.3 billion as of December 31, 1995.
- -------------------------------------------------------------------------------
THE SEPARATE ACCOUNTS
- -------------------------------------------------------------------------------
Each of the seven Funds is a separate account of Equitable Life; we own all
the assets of the separate accounts. A separate account is a separate
investment account which we use to support our group annuity contracts, and
for other purposes permitted by applicable law. We keep the assets of each
separate account segregated from our general account and from any other
separate accounts we may have. Although the assets of the Funds are our
property, our obligation to you under the group annuity contract equals the
value of your accumulation in each Fund.
Income, gains and losses, whether or not realized, from assets invested in
the Funds are credited to or charged against the Fund without regard to our
other income, gains or losses. The portion of each Fund's assets we hold on
your behalf may not be used to satisfy obligations that may arise out of any
other business we conduct. We may, however, transfer amounts owed to us, such
as fees and expenses, to our general account at any time. We may make these
transfers even if the Fund in question does not have sufficient liquidity to
make all withdrawals requested by participants.
The separate accounts which we call the Growth Equity, Aggressive Equity, ADA
Foreign, Equity Index, Lifecycle--Moderate and Lifecycle--Conservative and
Real Estate Funds commenced operations on 1968, 1969, 1992, 1994, 1995, and
1986 respectively. The Aggressive Equity Fund, which was part of Equitable's
Separate Account No. 3, was transferred on December 1, 1995 to Separate
Account No. 200. The Funds are governed by the laws and regulations of the
state of New York, where we are domiciled, and may also be governed by laws
of other states in which we do business. The Aggressive Equity, ADA Foreign,
Equity Index and Lifecycle Funds are used exclusively for the ADA Members
Retirement Program. The Growth Equity and Real Estate Funds are "pooled"
funds that are used to fund benefits under the ADA Program and other group
annuity contracts, agreements, and tax-deferred retirement programs we
administer. Because of exclusionary provisions, the separate accounts are not
subject to regulation under the 1940 Act.
29
<PAGE>
- -------------------------------------------------------------------------------
INVESTMENT MANAGEMENT OF THE EQUITY FUNDS
- -------------------------------------------------------------------------------
We act as investment manager to the Growth Equity Fund. As such, we invest
and reinvest its assets in accordance with the investment policies for the
Fund. We have no investment management responsibility for the Aggressive
Equity, ADA Foreign, Equity Index or Lifecycle Funds. In providing investment
management to the Growth Equity Fund, we have complete discretion over Fund
assets, within the investment policies of the Fund, and currently use the
personnel and facilities of Alliance Capital Management L.P. ("Alliance") for
portfolio management, securities selection and transaction services.
Alliance is a publicly-traded limited partnership which is indirectly
majority-owned by Equitable Life. Equitable Life and Alliance are registered
investment advisers under the Investment Advisers Act of 1940. As of December
31, 1995, Alliance had total assets under management of over $146.5 billion.
Alliance acts as an investment adviser to various separate accounts and
general accounts of Equitable Life and other affiliated insurance companies.
Alliance also provides management and consulting services to mutual funds,
endowment funds, insurance companies, foreign entities, qualified and non-tax
qualified corporate funds, public and private pension and profit-sharing
plans, foundations and tax-exempt organizations. Alliance's main office is
located at 1345 Avenue of the Americas, New York, New York 10105.
The securities held in the Fund must be authorized or approved by the
Investment Committee of our Board of Directors. Subject to the Investment
Committee's broad supervisory authority, our investment officers and managers
have been given discretion as to sales and, within specified limits,
purchases of stocks, other equity securities and certain debt securities.
When an investment opportunity arises that is consistent with the objectives
of more than one account, investment opportunities are allocated among
accounts in an impartial manner based on certain factors such as the
accounts' investment objectives and their then-current investment and cash
positions.
For the Aggressive Equity Fund, we act in accordance with the investment
policies established by the Trustees. The Aggressive Equity Fund is invested
solely in the MFS Emerging Growth Fund, which is managed by Massachusetts
Financial Services Company. See The Aggressive Equity Fund.
For the Equity Index Fund, we act in accordance with the investment policies
established by the Trustees. The Equity Index Fund is invested solely in the
Seven Seas Series S&P 500 Index Fund. State Street is the investment advisor
of that Fund. See The Equity Index Fund.
For the ADA Foreign Fund, we act in accordance with the investment policies
established by the Trustees. The ADA Foreign Fund is invested solely in the
Templeton Foreign Fund, which is managed by Templeton Global Advisors Ltd.
See The ADA Foreign Fund.
For the Lifecycle Funds, we act in accordance with the investment policies
established by the Trustees. The Lifecycle Funds--Conservative and Moderate
are invested solely in units of the Lifecycle Fund Group Trusts--Conservative
and Moderate, respectively. State Street is the investment adviser and
Trustee of these Group Trusts and the Underlying Funds. See Lifecycle Funds.
We, together with the Holding Company, own 80.2% of the outstanding common
stock of Donaldson, Lufkin & Jenrette, Inc. (DLJ). A DLJ subsidiary,
Donaldson, Lufkin & Jenrette Securities Corporation, 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 Donaldson, Lufkin
& Jenrette Securities Corporation, DLJ supplies correspondent services,
including order execution, securities clearance and other centralized
financial services, to numerous independent regional securities firms and
banks.
30
<PAGE>
To the extent permitted by law and consistent with the Fund transaction
practices discussed in this prospectus, and subject to the consent of Fund
contractholders, the Growth Equity Fund 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. In 1995,
there were no such transactions through DLJ subsidiaries.
- -------------------------------------------------------------------------------
INVESTMENT MANAGEMENT OF THE REAL ESTATE FUND
- -------------------------------------------------------------------------------
We act as investment manager to the Real Estate Fund and to Prime Property
Fund. In managing the Real Estate Fund and Prime Property Fund, we use the
services of Equitable Real Estate, a wholly-owned subsidiary. Equitable Real
Estate originates, analyzes, evaluates and recommends commercial real estate
investments for its clients, then manages and services those investments on
an ongoing basis. Equitable Real Estate provides property management services
in connection with some of the properties held in Prime Property Fund and
supervises the performance of other property managers which it retains.
Equitable Real Estate coordinates related accounting and bookkeeping
functions with us.
Equitable Real Estate advises us as to the commercial real estate assets of
all our accounts, which at December 31, 1995, represented approximately $25.7
billion in equity real estate and mortgage loan holdings.
31
<PAGE>
INVESTMENT PERFORMANCE
===============================================================================
MEASURING THE INVESTMENT PERFORMANCE OF THE FUNDS
- -------------------------------------------------------------------------------
We recognize that the performance of the Funds that you invest your
retirement savings in is important to you. The purpose of this discussion is
to give you an overview of how our Funds have performed in the past. OF
COURSE, PAST PERFORMANCE CANNOT BE USED TO PREDICT FUTURE PERFORMANCE.
Fund performance is most often measured by the change in the value of fund
units over time. Unlike typical mutual funds, which usually distribute
earnings annually, separate account funds reinvest all earnings. As described
previously, the unit value calculations for the funds include all earnings,
including dividends and realized and unrealized capital gains. Changes in the
unit values can be expressed in terms of the Fund's annual percentage change,
its average annual change, or its cumulative change over a period of years.
Each of these measurements is valuable on its own. In addition, it is often
helpful to compare the Funds' performance with the results of unmanaged
market indices.
The following tables and graphs provide a historical view of the Funds'
investment performance. The information presented includes performance
results for each Fund, along with data representing unmanaged market indices.
- -------------------------------------------------------------------------------
UNMANAGED MARKET INDICES
- -------------------------------------------------------------------------------
Unmanaged market indices, or "benchmarks," while providing a broader
perspective on relative performance, are only a tool for comparison.
Performance data for the unmanaged market indices do not reflect any
deductions for investment advisory, brokerage or other expenses of the type
typically associated with an actively managed fund. This effectively
overstates the rate of return of the market indices relative to that which
would be available to a typical investor, and limits the usefulness of these
indices in assessing the performance of the Funds. Since the Funds do not
distribute dividends or interest, the market indices have been adjusted to
reflect reinvestment of dividends and interest to provide greater
comparability.
We have presented data for the following unmanaged indices. One or more of
these indices may be appropriate comparative measures of performance for the
Funds.
o CONSUMER PRICE INDEX (URBAN CONSUMERS--NOT SEASONALLY ADJUSTED)
("CPI")--an index of inflation.
o STANDARD AND POOR'S 500 INDEX ("S&P 500")--an unmanaged weighted index
of the securities of 500 industrial, transportation, utility and
financial companies widely regarded by investors as representative of
the stock market. This index should not be confused with the performance
of our Equity Index Fund nor that of the Seven Seas Series S&P 500 Fund,
which seek to emulate the results of the S&P 500 Index. See The Equity
Funds--The Equity Index Fund for more information.
o RUSSELL 2000 INDEX ("RUSSELL 2000")--an unmanaged broadly diversified
index maintained by Frank Russell Company consisting of the
approximately 2,000 smallest stocks within the Russell 3000 Index. The
Russell 3000 Index consists of the largest 3,000 publicly traded stocks
of U.S. domiciled corporations and includes large, medium and small
capitalization stocks. As such, the Russell 3000 Index represents
approximately 98 percent of the total market capitalization of all U.S.
stocks that trade on the New York and American Stock Exchanges and in
the NASDAQ over-the-counter market.
o MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX ("EAFE")--an unmanaged
index of the securities of over 1,000 companies traded on the markets of
Europe, Australia, New Zealand and the Far East.
32
<PAGE>
- -------------------------------------------------------------------------------
HOW PERFORMANCE DATA ARE PRESENTED
- -------------------------------------------------------------------------------
We have shown Fund performance on several different bases:
o The annual percentage change in Fund Unit Values,
o The average annual percentage change in Fund Unit Values, and
o The total value as of December 31, 1995 of a $10,000 investment made
on January 1, 1986.
THE FUND PERFORMANCE SHOWN MAY NOT REPRESENT YOUR ACTUAL EXPERIENCE AND IT
DOES NOT REPRESENT THE EFFECT OF THE RECORD MAINTENANCE AND REPORT OR
ENROLLMENT FEES. The annual percentage change in Fund unit values represents
the percentage increase or decrease in unit values from the beginning of one
year to the end of that year. During any year unit values will, of course,
increase or decrease reflecting fluctuations in the securities markets. The
average annual rates of return are time-weighted, assume an investment at the
beginning of each period, and include the reinvestment of investment income.
Historical results are presented for the Funds for the periods during which
the funds were available under the Program. Hypothetical results were
calculated for prior periods. In the case of the Aggressive Equity Fund,
hypothetical performance is shown, because the ADA Program did not begin to
invest in the MFS Emerging Growth Fund until December 1, 1995. The table and
charts below are based on investment returns earned by the MFS Emerging
Growth Fund for other investors. For the Equity Index Fund, no results are
presented for periods prior to 1993, as the Seven Seas S&P 500 Index Fund
began operations during 1992. Performance data for the Lifecycle Funds are
shown for the period when the Funds commenced operations on May 1, 1995
through December 31, 1995. See How We Calculate Performance Data. The
foregoing applies with respect to the calculation of performance data given
in the "Annual Percentage Change in Unit Values" chart, "Average Annual
Percentage Change in Unit Values" chart, and "Cumulative Value Examples"
given below.
- -------------------------------------------------------------------------------
ANNUAL PERCENTAGE CHANGE IN FUND UNIT VALUES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH AGGRESSIVE ADA
EQUITY EQUITY FOREIGN
- ------ -------- ------------ ---------
<S> <C> <C> <C>
1995 31.1% 17.8% 10.0%
- ------ -------- ------------ ---------
1994 -2.3 4.1 -0.5
- ------ -------- ------------ ---------
1993 18.7 23.5 33.4
- ------ -------- ------------ ---------
1992 0.6 10.9 0.8
- ------ -------- ------------ ---------
1991 51.1 86.8 16.9
- ------ -------- ------------ ---------
1990 -11.9 -3.3 -3.3
- ------ -------- ------------ ---------
1989 43.9 26.1 28.6
- ------ -------- ------------ ---------
1988 16.3 7.2 20.5
- ------ -------- ------------ ---------
1987 5.0 3.8 23.0
- ------ -------- ------------ ---------
1986 13.2 -- 26.9
- ------ -------- ------------ ---------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
LIFECYCLE LIFECYCLE
EQUITY FUND-- FUND-- REAL RUSSELL
INDEX CONSERVATIVE MODERATE ESTATE CPI S&P 500 2000 EAFE
- ------ -------- -------------- -------------- -------- ------ --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 35.1% 5.9% 10.1% 4.4% 2.9% 37.5% 28.4% 11.2%
- ------ -------- -------------- -------------- -------- ------ --------- --------- -------
1994 0.7 -- -- 3.6 2.7 1.3 -1.8 7.8
- ------ -------- -------------- -------------- -------- ------ --------- --------- -------
1993 6.4 -- -- -3.2 2.7 10.0 18.9 32.6
- ------ -------- -------------- -------------- -------- ------ --------- --------- -------
1992 -- -- -- -5.2 2.9 7.6 18.4 -12.2
- ------ -------- -------------- -------------- -------- ------ --------- --------- -------
1991 -- -- -- -8.7 3.0 30.5 46.1 12.5
- ------ -------- -------------- -------------- -------- ------ --------- --------- -------
1990 -- -- -- 2.0 6.2 -3.1 -19.5 -23.2
- ------ -------- -------------- -------------- -------- ------ --------- --------- -------
1989 -- -- -- 8.1 4.6 31.7 16.3 10.8
- ------ -------- -------------- -------------- -------- ------ --------- --------- -------
1988 -- -- -- 4.9 4.4 16.6 24.9 28.6
- ------ -------- -------------- -------------- -------- ------ --------- --------- -------
1987 -- -- -- 7.6 4.4 5.3 -8.8 24.9
- ------ -------- -------------- -------------- -------- ------ --------- --------- -------
1986 -- -- -- 5.1 1.1 18.7 5.7 69.9
- ------ -------- -------------- -------------- -------- ------ --------- --------- -------
</TABLE>
PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE PERFORMANCE. NO PROVISIONS
HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS OR UPON
DISTRIBUTION.
33
<PAGE>
- -------------------------------------------------------------------------------
AVERAGE ANNUAL PERCENTAGE CHANGE IN FUND UNIT VALUES--
YEARS ENDING DECEMBER 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH AGGRESSIVE ADA
EQUITY EQUITY FOREIGN
- ---------- -------- ------------ ---------
<S> <C> <C> <C>
1 Year 31.1% 17.8% 10.0%
- ---------- -------- ------------ ---------
2 Years 13.2 10.7 4.6
- ---------- -------- ------------ ---------
3 Years 15.0 14.8 13.4
- ---------- -------- ------------ ---------
5 Years 18.2 25.7 11.4
- ---------- -------- ------------ ---------
10 Years 15.0 -- 14.9
- ---------- -------- ------------ ---------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
LIFECYCLE
EQUITY FUND-- LIFECYCLE REAL RUSSELL
INDEX CONSERVATIVE FUND-- MODERATE ESTATE CPI S&P 500 2000 EAFE
- ---------- -------- --------------- --------------- -------- ------ --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year 35.1% 5.9% 10.1% 4.4% 2.9% 37.5% 28.4 11.2%
- ---------- -------- --------------- --------------- -------- ------ --------- --------- -------
2 Years 16.7 -- -- 4.0 2.8 18.1 12.3 9.5
- ---------- -------- --------------- --------------- -------- ------ --------- --------- -------
3 Years 13.1 -- -- 1.6 2.8 15.3 14.5 16.7
- ---------- -------- --------------- --------------- -------- ------ --------- --------- -------
5 Years -- -- -- -1.9 2.9 16.6 21.0 9.4
- ---------- -------- --------------- --------------- -------- ------ --------- --------- -------
10 Years -- -- -- 1.7 3.5 14.9 11.3 13.6
- ---------- -------- --------------- --------------- -------- ------ --------- --------- -------
</TABLE>
- -------------------------------------------------------------------------------
CUMULATIVE VALUE EXAMPLES
- -------------------------------------------------------------------------------
Although historical percentage change data is valuable in evaluating fund
performance, it is often easier to understand the information in more graphic
examples. One approach to this is the use of "mountain charts." Mountain
charts, such as the ones below, illustrate the growth of a hypothetical
investment over time for each of the Funds. Each chart (except the Aggressive
Equity and the Equity Index) illustrates the growth through December 31, 1995
of an investment of $10,000 made on December 31, 1985. MOUNTAIN CHARTS ARE
NOT SHOWN FOR THE LIFECYCLE FUNDS--CONSERVATIVE AND MODERATE BECAUSE THESE
FUNDS HAVE BEEN IN OPERATION FOR LESS THAN ONE YEAR.
GROWTH OF $10,000 INITIAL INVESTMENT
GROWTH EQUITY FUND
#############################################################################
GRAPHIC OMITTED
PICKUP: "P1"
=============================================================================
IMAGE: "CHA"
=============================================================================
#############################################################################
AGGRESSIVE EQUITY FUND
#############################################################################
GRAPHIC OMITTED
IGT: "CHB"
#############################################################################
PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE PERFORMANCE. NO PROVISIONS
HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS OR UPON
DISTRIBUTION.
34
<PAGE>
ADA FOREIGN FUND
#############################################################################
GRAPHIC OMITTED
IGT: "CHC"
#############################################################################
EQUITY INDEX FUND
#############################################################################
GRAPHIC OMITTED
IGT: "CHD"
#############################################################################
REAL ESTATE FUND
#############################################################################
GRAPHIC OMITTED
IGT: "CHE"
#############################################################################
PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE PERFORMANCE. NO PROVISIONS
HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS OR UPON
DISTRIBUTION.
35
<PAGE>
- -------------------------------------------------------------------------------
HOW WE CALCULATE PERFORMANCE DATA
- -------------------------------------------------------------------------------
Growth Equity Fund performance reflects actual historical investment
experience and the deduction of asset-based charges actually incurred by
Separate Account No. 4 (Pooled) under the Program during the periods
indicated.
The Class A shares of the MFS Emerging Growth Fund in which the Aggressive
Equity Fund invests have been offered for sale since 1993, whereas the Class
B shares of the MFS Emerging Growth Fund have been offered since 1986. The
only difference between the two classes of shares is in their respective fee
and expense structures. The Class B shares have generally higher
class-related expenses than the Class A shares. The investments of the two
classes of shares are identical. The Aggressive Equity Fund performance shown
reflects the net performance of the Class A shares since September 13, 1993,
when those shares were first offered for sale. From December 29, 1986, when
Class B shares were first offered, to September 13, 1993, the performance of
those shares is reflected. Because the expenses applicable to the Class B
shares are higher than the expenses applicable to the Class A shares, the
hypothetical performance shown would have been somewhat higher for periods
prior to September 13, 1993 if Class A shares had been available.
In order to create the hypothetical performance, we have applied the Program
expense charge and other expenses actually incurred by the Aggressive Equity
Fund when it participated in Separate Account No. 3 (Pooled) to the
historical investment performance of the MFS Emerging Growth Fund Class A and
Class B shares described above.
The ADA Foreign Fund performance shown reflects the performance of Separate
Account No. 191 for the period beginning March 2, 1992. For periods prior to
March 2, 1992, hypothetical performance is shown, which reflects 95%
performance of the Templeton Foreign Fund and 5% performance of Separate
Account No. 2A. For these hypothetical calculations we have applied the
Program expense charge during those periods plus .15% in estimated other
expenses to the historical investment experience of the Templeton Foreign
Fund and Separate Account No. 2A or No. 2. Effective May 1, 1996, the ADA
Foreign Fund no longer invests in Separate Account No. 2A or 2.
The Equity Index Fund performance shown reflects the performance of Separate
Account No. 195 for the period beginning February 1, 1994. For periods prior
to February 1, 1994, hypothetical performance is shown, which reflects
performance of the Seven Seas S&P 500 Index Fund beginning 1992, the first
full year after that Fund began operations. For these hypothetical
calculations we have applied the Program expense charge during those periods
plus .15% in estimated other expenses to the historical investment experience
of the Seven Seas Series S&P 500 Index Fund.
The Lifecycle Fund--Conservative and the Lifecycle Fund--Moderate
performances shown reflect the performance of these Funds on an annualized
basis from May 1, 1995 (the date the Funds commenced operations).
The Real Estate Fund performance shown reflects the performance of Separate
Account No. 30 (Pooled) for the period beginning August 29, 1986. For periods
prior to August 29, 1986, hypothetical performance is shown, which reflects
90% performance of the Prime Property Fund and 10% performance of Separate
Account No. 2A. For these hypothetical calculations we have applied an
estimate of the expenses which would have been chargeable to the Fund. These
charges include an amount equal to the average Program expense charge for
each year, plus a 1.10% investment management fee, plus the .25%
administration fee applicable to the Fund. Real Estate Fund performance
includes both current income and the effect of changes in the appraised value
of Prime Property Fund investments.
See Summary of Unit Values for the Equity Funds, and Summary of Unit Values
for the Real Estate Fund in the SAI for a more detailed description of how
the hypothetical Unit Values were calculated.
36
<PAGE>
THE PROGRAM
- -------------------------------------------------------------------------------
The purpose of this section is to explain the ADA Members Retirement Program
in more detail. Although we have described important aspects of the Program,
you should understand that the provisions of your plan and the Participation
Agreement will define the scope of the Program and its specific terms and
conditions. This section is for employers, and for the purposes of this
section, "you" and "your" refer to you in that role although you may also be
a participant in the plan.
EMPLOYERS WHO MAY PARTICIPATE IN THE PROGRAM
If you are a sole proprietor, a partner or a shareholder in a professional
corporation, your practice, as an employer, can adopt the Program if you or
at least one of your fellow partners or shareholders is a member of:
o the ADA,
o one of its constituent or component societies, or
o an ADA-affiliated organization whose participation in the Program has
been approved by the Council on Insurance of the ADA.
ADA constituent or component societies may also adopt the Program for their
own employees within certain limitations imposed by the Internal Revenue
Code.
CHOICES FOR THE EMPLOYER
The ADA Members Retirement Program gives you a variety of approaches to
choose from. You can:
o Adopt our Master Plan, which gives you options as to types of plans and
plan provisions. The Master Plan uses the Program Investment Options as the
exclusive investment choices.
o Adopt the Self-Directed Prototype plan, which gives additional
flexibility to choose investments, or
o Maintain your own individually-designed plan, but use the Investment
Options as an investment for your plan.
SUMMARY OF THE PLANS AND TRUSTS
THE MASTER PLAN--Under the Master Plan, you will automatically receive a full
range of services from Equitable Life, including your choice of the
Investment Options, plan-level and participant-level record- keeping, benefit
payments and tax withholding and reporting.
o The Master Plan is a defined contribution master plan which can be
adopted as a profit sharing plan (including an optional 401(k) feature), a
defined contribution pension plan, or both.
THE SELF-DIRECTED PROTOTYPE PLAN--is a defined contribution prototype plan
which can be used to combine the Program Investment Options with individual
investments such as stocks and bonds. Employers must also adopt the Pooled
Trust and maintain a minimum of $25,000 in the Trust at all times. We provide
recordkeeping services only for plan assets held in the Pooled Trust.
THE ADA MEMBERS POOLED TRUST FOR RETIREMENT PLANS--is an investment vehicle
to be used by those who have an individually designed qualified retirement
plan. The Pooled Trust is for investment only and can be used for both
defined benefit and defined contribution plans. We provide participant-level
or plan-level recordkeeping services for plan assets held in the Pooled
Trust.
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<PAGE>
INFORMATION ON JOINING THE PROGRAM
Our Retirement Program Specialists are available to answer your questions
about joining the Program. To reach one of our Retirement Program
Specialists, call or write to us at:
<TABLE>
<CAPTION>
<S> <C>
By Phone 1-800-523-1125, ext. 2608 From Alaska, 0-201-392-5331,
collect Specialists are available from 9 a.m. to 5 p.m.
Eastern Time, Monday through Friday.
By Regular Mail The ADA Members Retirement Program c/o Equitable Life Box
2011 Secaucus, New Jersey 07096
By Registered, Certified or The ADA Members Retirement Program c/o Equitable Life 200
Overnight Mail Plaza Drive, Second Floor Secaucus, New Jersey 07094
</TABLE>
CHOOSING THE RIGHT PLAN
Choosing the right plan depends on your own unique set of circumstances.
Although our Retirement Program Specialists can help explain the Program, you
and your tax advisors must decide which plan is best for you.
GETTING STARTED IN THE PROGRAM AFTER CHOOSING A PLAN
To adopt the Master Plan, you must complete a Participation Agreement. If you
have your own plan and wish to use the Pooled Trust as an investment option,
the trustee of your plan must complete the appropriate Participation
Agreement. Our Retirement Program Specialists can help you complete the
Participation Agreement for review by your tax advisor.
To adopt our prototype self-directed plan, you must complete the prototype
plan adoption agreement and a Participation Agreement for the Pooled Trust.
In addition, you must also arrange separately for plan level accounting and
brokerage services. We provide recordkeeping services only for plan assets
held in the Pooled Trust. You can use any plan recordkeeper of your choice or
you can arrange through us to hire Trust Consultants, Inc. at a special rate.
You can also arrange through us brokerage services from our affiliate,
Pershing Discount Brokerage Services, at special rates or use the services of
any other broker.
38
<PAGE>
COMMUNICATING WITH US AFTER YOU ENROLL
<TABLE>
<CAPTION>
<S> <C>
By Phone
To Reach an Account 1-800-223-5790
Executive: (9 am to 5 pm Eastern Time, Monday through
Friday)
To Reach the Account 1-800-223-5790 (24 Hours)
Investment Management
("AIM") System:
- ------------------------------- ----------------------------------------------
By Regular Mail (Other than The ADA Members Retirement Program
contribution checks) Box 2486 G.P.O. New York, New York 10116
- ------------------------------- ----------------------------------------------
By Registered, Certified or The ADA Members Retirement Program c/o
Overnight Mail Equitable Life
200 Plaza Drive, Second Floor
Secaucus, New Jersey 07094
----------------------------- ------------------------------------------
For Contribution Checks Only The Association Members Retirement Program
P.O. Box 1599 Newark, New Jersey
07101-9764
----------------------------- ------------------------------------------
</TABLE>
YOUR RESPONSIBILITIES AS THE EMPLOYER
Employers adopting the Master Plan are responsible for the plan and its
administration. This includes certain responsibilities relating to the
administration and continued qualification of your plan. See Your
Responsibilities As Employer in the SAI for a list of responsibilities which
you will have if you adopt the Master Plan.
If you have an individually designed plan, you already have these
responsibilities; they are not increased in any way by your adoption of the
Pooled Trust for investment purposes only. It is your responsibility to
determine that the terms of your plan are consistent with the provisions of
the Pooled Trust and our practices described in this prospectus and the SAI.
If you utilize our prototype self-directed plan, you will have
responsibilities as the plan administrator and will also have to appoint a
plan trustee; these responsibilities will be greater than those required by
the adoption of the Master Plan. Again it is also your responsibility to
determine that the terms of your plan are consistent with the provisions of
the Pooled Trust and our practices described in this prospectus and the SAI.
You should consult your legal advisor for an understanding of your legal
responsibilities under the self-directed plan.
We will give you guidance and assistance in the performance of your
responsibilities. The ultimate responsibility, however, rests with you.
39
<PAGE>
WHEN TRANSACTIONS ARE EFFECTIVE
A business day is any day both we and the New York Stock Exchange are open.
Contributions, transfers, and allocation changes are effective on the
business day they are received. Distribution requests are also effective on
the business day they are received unless, as in the Master Plan, there are
plan provisions to the contrary. However, we may have to delay the processing
of any transaction which is not accompanied by a properly completed form or
which is not mailed to the correct address. An Account Executive will
generally be available to speak with you each business day from 9 a.m. to 5
p.m. Eastern Time. We may, however, close due to emergency conditions.
MINIMUM INVESTMENTS
There is no minimum amount which must be invested if you adopt the Master
Plan, or if you have your own individually-designed plan and use the Pooled
Trust as an investment.
If you adopt our self-directed prototype plan, you must keep at least $25,000
in the Pooled Trust at all times.
MAKING CONTRIBUTIONS TO THE PROGRAM
You should send contribution checks or money orders payable to The ADA
Retirement Trust to the address shown under Communicating With Us After You
Enroll. All contributions must be accompanied by a properly completed
Contribution Remittance form which designates the amount to be allocated to
each participant. Contributions are normally credited on the business day
that we receive them, provided the remittance form is properly completed.
Contributions are only accepted from the employer. Employees may not send
contributions directly to the Program.
The Real Estate Fund will accept contributions only one day a month. Any
amount allocated for investment in the Real Estate Fund will first be placed
in the Money Market Guarantee Account. On the next day on which the Real
Estate Fund accepts contributions, the amount designated for the Fund, plus
any accrued interest, will automatically be transferred to the Real Estate
Fund. For more information see The Real Estate Fund.
OUR ACCOUNT INVESTMENT MANAGEMENT (AIM) SYSTEM
We offer an automated telephone system for participants to transfer between
investment options, obtain account information and change the allocation of
future contributions and maturing GRAs. To use the AIM System, participants
must have a Personal Security Code (PSC) number.
If you have a touch-tone telephone you may make transfers on the AIM System.
Procedures have been established by Equitable Life for its AIM System that
are considered to be reasonable and are designed to confirm that instructions
communicated by telephone are genuine. Such procedures include requiring
certain personal identification information prior to acting on telephone
instructions and providing written confirmation of instructions communicated
by telephone. If Equitable Life does not employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, we may be
liable for any losses arising out of any action on our part or any failure or
omission to act as a result of our own negligence, lack of good faith or
willful misconduct. In light of the procedures established, Equitable Life
will not be liable for following telephone instructions that we reasonably
believe to be genuine. We may discontinue the telephone transfer service at
any time without notice.
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<PAGE>
ALLOCATING CONTRIBUTIONS AMONG THE INVESTMENT OPTIONS
Under the Master Plan, participants make all investment decisions. Under an
individually-designed plan or our self-directed prototype plan, either the
participants or the plan trustees make the investment allocation decisions,
depending on the terms of the plan.
Contributions may be allocated among any number of the Investment Options.
Allocation instructions may be changed at any time, and as often as needed,
by calling the AIM System. New instructions become effective on the business
day we receive them. You may allocate employer contributions in different
percentages than employee contributions. IF WE HAVE NOT RECEIVED VALID
INSTRUCTIONS, WE WILL ALLOCATE YOUR CONTRIBUTIONS TO THE MONEY MARKET
GUARANTEE ACCOUNT.
TRANSFERS AMONG THE INVESTMENT OPTIONS
Participants in the Master Plan may make transfers on a daily basis without
charge. Participants in other plans may make transfers whenever the plan
allows them to do so. We do not charge a fee for transfers. (If an
individually designed plan does not allow transfers by individual
participants, only you as employer or trustee may make a transfer.)
Participants may use the AIM System to transfer amounts among the investment
options. All transfers are made as of the close of business on the day we
receive the authorized instructions, provided we receive the request by 4:00
p.m. Eastern time. Transfer requests received after that time will be
processed as of the close of business on the following business day.
No transfers from the Guaranteed Rate Accounts to other Investment Options
are permitted prior to maturity. Transfers to the Guaranteed Rate Accounts,
and to or from the Money Market Guarantee Account and the Growth Equity Fund,
are permitted at any time. Transfers from the Aggressive Equity Fund, ADA
Foreign Fund, Equity Index Fund and Lifecycle Funds are permitted at any time
except if there is any delay in redemptions from the underlying mutual fund
or, with respect to the Lifecycle Funds, the Lifecycle Fund Group Trusts in
which they invest. See The Equity Funds--The Aggressive Equity Fund, The ADA
Foreign Fund, The Equity Index Fund and The Lifecycle Funds. Transfers to and
from the Real Estate Fund are subject to special rules, which are described
in Special Rules for Distributions and Transfers from the Real Estate Fund
below, and in The Real Estate Fund.
DISTRIBUTIONS FROM THE INVESTMENT OPTIONS
There are two sets of rules that must be kept in mind when considering
distributions or withdrawals from the Program. The first are the rules and
procedures which apply to the Investment Options, exclusive of the provisions
of your plan. These are discussed in this section. The second are the rules
specific to your plan; these are discussed under When Distributions are
Available to Participants.
Amounts in the Equity Funds and the Money Market Guarantee Account are
generally available for distribution at any time, subject to the provisions
of your plan. However, there may be a delay for withdrawals from the
Aggressive Equity Fund, ADA Foreign Fund, Equity Index Fund, and the
Lifecycle Funds if there is any delay in the redemptions from the underlying
mutual fund or, with respect to the Lifecycle Funds, from the Lifecycle Fund
Group Trusts in which they invest. Special rules, which are described below,
apply to distributions from the Real Estate Fund. In addition, withdrawals
generally may not be taken from the Guaranteed Rate Accounts prior to
maturity. See Guaranteed Rate Accounts. Please note that certain plan
distributions may be subject to penalty or excise taxes. See The Program and
Federal Income Tax Considerations for more details.
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<PAGE>
Payments or withdrawals out of the Funds and application of proceeds to an
annuity ordinarily will be made promptly upon request in accordance with Plan
provisions. However, we can defer payments, applications and withdrawals from
the Funds for any period during which the New York Stock Exchange is closed
for trading, sales of securities are restricted or determination of the fair
market value of assets of the Funds is not reasonably practicable because of
an emergency. See The Real Estate Fund and The Equity Funds.
SPECIAL RULES FOR DISTRIBUTIONS AND TRANSFERS FROM THE REAL ESTATE FUND
Under the Master Plan, a distribution can be obtained from the Real Estate
Fund only after the amount to be withdrawn has been transferred to another
Investment Option. A distribution of benefits may be made only after you
receive confirmation of the transfer. Participants in an
individually-designed plan or the prototype self-directed plan may receive a
distribution directly from the Real Estate Fund without first having it
transferred to another Investment Option. Distributions of all or a portion
of the balance in the Real Estate Fund directly from the Fund are payable
only in a single sum payment. See Federal Income Tax Considerations and
Procedures for Withdrawals, Distributions and Transfers--Special Rules for
Distributions and Transfers From the Real Estate Fund in the SAI.
All distributions and transfers from the Real Estate Fund are subject to a
minimum wait of one calendar quarter: they are scheduled to be made shortly
after the end of the calendar quarter following the quarter in which we
receive properly completed forms requesting the distribution or transfer. The
amount distributed will be based on the Real Estate Fund's Unit Value as of
the close of business on the date the distribution or transfer is made. See
The Real Estate Fund for more information on how we value and liquidate Real
Estate Fund Units. Withdrawals from the Real Estate Fund must be made in
amounts of at least $1,000 or, if less, your balance in the Real Estate Fund.
The Real Estate Fund may not have enough liquid assets to pay all withdrawals
when requested. If liquid assets are insufficient to pay all requested
withdrawals, withdrawal requests are prioritized according to the nature of
the distribution. Priority 1 consists of all amounts requested because of
death or disability or after age 70 1/2. Priority 2 consists of all other
requests. The Real Estate Fund will pay all Priority 1 distributions to the
extent cash is available or can be obtained through liquidation of the Real
Estate Fund's interest in Prime Property Fund. The Real Estate Fund may also
pay some or all of the scheduled Priority 2 distributions and transfers, but
only if it can liquidate its interest in Prime Property Fund or if we believe
it has enough liquid assets to meet anticipated Priority 1 distributions. In
making this determination, we will consider anticipated future contributions
as well as the amount of cash required for anticipated Priority 1
distributions, expenses and payment of our fees. The Real Estate Fund will
satisfy all scheduled Priority 1 distribution requests before it satisfies
any Priority 2 request, even if the Priority 1 requests were received after
the Priority 2 requests.
See Special Risks Related to the Real Estate Fund in the prospectus and
Procedures for Withdrawals, Distributions and Transfers--Special Rules for
Distributions and Transfers From the Real Estate Fund in the SAI.
IN LIGHT OF THE RISKS AND POSSIBLE ILLIQUIDITY OF AN INVESTMENT IN THE REAL
ESTATE FUND, INDIVIDUAL PARTICIPANTS SHOULD CONSIDER LIMITING THE AMOUNT
ALLOCATED TO IT, PARTICULARLY AS THEY NEAR RETIREMENT. IF YOUR PLAN IS AN
EMPLOYER OR TRUSTEE-DIRECTED PLAN, YOU AS THE EMPLOYER ARE RESPONSIBLE FOR
ENSURING THAT THERE IS SUFFICIENT CASH AVAILABLE TO PAY BENEFITS.
42
<PAGE>
WHEN DISTRIBUTIONS ARE AVAILABLE TO PARTICIPANTS
In addition to the rules and procedures generally applicable to investments
in the Investment Options under the Program, there are other important rules
regarding the distribution and benefit payment options for each type of plan.
Distributions and benefit payment options under a qualified retirement plan
are subject to extremely complicated legal requirements. Certain plan
distributions may be subject to penalty or excise taxes. A general
explanation of the federal income tax treatment of distributions and benefit
payment options is provided in Federal Income Tax Considerations in both this
prospectus and the SAI. If a participant retires, becomes disabled or
terminates employment, the benefit payment options available should be
discussed with a qualified financial advisor. Our Account Executives can also
be of assistance.
In general, under the Master Plan or our self-directed prototype plan,
participants are eligible for benefits upon retirement, death or disability,
or upon termination of employment with a vested benefit. ("Vested" refers to
the nonforfeitable portion of your benefits under the plan.) Participants in
an individually designed plan are eligible for retirement benefits depending
on the terms of that plan. See Benefit Payment Options and Federal Income Tax
Considerations for more details. In most cases, benefits must begin no later
than April 1 of the year after the participant reaches age 70 1/2. A
participant (other than a more-than-10% owner in an unincorporated practice)
may be exempt from this requirement only if a special election was filed with
the employer before January 1, 1984.
Under the Master Plan, self-employed persons may generally not receive a
distribution prior to age 59 1/2, and employees generally may not receive a
distribution prior to a separation from service.
PARTICIPANT LOANS
The Master Plan permits participants to borrow a portion (not to exceed
$50,000) of their vested Account Balance (all plans combined), if the
employer has elected this feature. If the participant is a sole proprietor,
partner who owns more than 10% of the business, or a shareholder-employee of
an S Corporation who owns more than 5% of the business (or a family member as
defined by the IRS), he or she presently may not borrow from his or her
vested Account Balance without first obtaining a prohibited transaction
exemption from the Department of Labor. Participants should consult with
their attorneys or tax advisors regarding the advisability and procedures for
obtaining such an exemption. Loans are also available under our self-directed
prototype plan and under an individually designed plan if the terms of the
plan allow them.
Generally speaking, when a loan is taken, an amount equal to the loan is
transferred out of the Investment Options and is set up as a loan account.
While the loan is outstanding, the participant must pay interest on the loan.
Any principal and interest paid will be added to the participant's loan
account balance and will be taxable on distribution. If you fail to repay the
loan when due, the amount of the unpaid balance may be taxable and subject to
additional penalty taxes. The interest paid on a retirement plan loan may not
be deductible.
Loans from the plan should be applied for through the employer. Loans are
subject to restrictions under federal tax laws and all plans of the employer
are aggregated for purposes of these restrictions. Loan kits containing all
necessary forms, along with an explanation of how interest rates are set, are
available from our Account Executives. PLEASE NOTE THAT PARTICIPANTS MAY NOT
TAKE A LOAN FROM THE REAL ESTATE FUND OR FROM THE GUARANTEED RATE ACCOUNTS
PRIOR TO MATURITY. If a participant is married, written spousal consent will
be required for a loan.
43
<PAGE>
BENEFIT PAYMENT OPTIONS
We offer a variety of benefit payment options to participants who are
eligible to receive benefits from a plan. However, many self-directed and
individually-designed plans do not allow all of these options, so you should
ask your employer for details on which of these options may be available.
Your plan may allow for one or more of the following forms of distribution to
be selected:
o Qualified Joint and Survivor Annuity
o Lump Sum Payment
o Installment Payments
o Life Annuity
o Life Annuity--Period Certain
o Joint and Survivor Annuity
o Joint and Survivor Annuity--Period Certain
o Cash Refund Annuity
See Types of Benefits in the SAI for detailed information regarding each of
these options, and Procedures for Withdrawals, Distributions and Transfers in
the SAI.
The annuity options may be either fixed or variable except for the Cash
Refund Annuity and the Qualified Joint and Survivor Annuity. Fixed annuities
are available from insurance companies selected by the Trustees, which meet
criteria established by the Trustees from time to time. Upon request, we will
provide fixed annuity rate quotes available from one or more such companies.
Participants may instruct us to withdraw all or part of their account balance
and forward it to the annuity provider selected. Once we have distributed
that amount to the company selected, we will have no further responsibility
to the extent of the distribution. We provide the variable annuity options.
Payments under variable annuity options reflect investment performance of the
Growth Equity Fund. The minimum amount that can be used to purchase any type
of annuity is $3,500. In most cases an annuity administrative charge of $350
will be deducted from the amount used to purchase an annuity from Equitable
Life. Annuities purchased from other providers may also be subject to fees
and charges.
SPOUSAL CONSENT RULES
If a participant is married and has an Account Balance greater than $3,500,
federal law generally requires payment of a Qualified Joint and Survivor
Annuity payable to the participant for life and then to the surviving spouse
for life, unless the participant and spouse have properly waived that form of
payment in advance. If a participant is married, the spouse must consent in
writing before any type of withdrawal can be made.
SPOUSAL CONSENT REQUIREMENTS
Under the Master Plan and the self-directed prototype plan, you may designate
a non-spouse beneficiary any time after the earlier of the first day of the
plan year in which you attain age 35 or the date on which you separate from
service with your employer. If you designate a beneficiary other than your
spouse prior to your reaching age 35, your spouse must consent to the
designation and, upon your reaching age 35, must again give his or her
consent or the designation will lapse. In order for you to make a withdrawal,
44
<PAGE>
elect a form of benefit other than a Qualified Joint and Survivor Annuity or
designate a non-spouse beneficiary, your spouse must consent to your election
in writing within the 90 day period before your annuity starting date. To
consent, your spouse must sign on the appropriate line on your election of
benefits or beneficiary designation form. Your spouse's signature must be
witnessed by a notary public or plan representative.
If you change your mind, you may revoke your election and elect a qualified
Joint and Survivor Annuity or designate your spouse as beneficiary, simply by
filing the appropriate form. Your spouse's consent is not required for this
revocation.
It is also possible for your spouse to sign a blanket consent form. By
signing this form, your spouse consents not just to a specific beneficiary
or, with respect to the waiver of the Qualified Joint and Survivor Annuity,
the form of distribution, but gives you the right to name any beneficiary, or
if applicable, form of distribution you want. Once you file such a form, you
may change your election whenever you want, even without spousal consent. No
spousal consent to a withdrawal or benefit in a form other than a Qualified
Joint and Survivor Annuity is required under certain self-directed prototype
profit sharing plans that do not offer life annuity benefits.
BENEFITS PAYABLE AFTER THE DEATH OF A PARTICIPANT
If a participant dies before the entire benefit has been paid, the remaining
benefits will be paid to the beneficiary. The law generally requires the
entire benefit to be distributed no more than five years after death. There
are two exceptions--(1) if the benefit is payable to the spouse, the spouse
may elect to receive benefits over his or her life or a fixed period measured
by life expectancy beginning any time up to the date the participant would
have attained age 70 1/2 or, if later, one year after the participant's
death, and (2) a beneficiary who is not the participant's spouse may elect
payments over his or her life or a fixed period measured by life expectancy,
provided payments begin within one year of death. If, at death, a participant
was already receiving benefits, the beneficiary can continue to receive
benefits based on the payment option selected by the participant. To
designate a beneficiary or to change an earlier designation, a participant
must have the employer send us a beneficiary designation form. The spouse
must consent in writing to a designation of any non-spouse beneficiary, as
explained in Procedures for Withdrawals, Distributions and Transfers--Spousal
Consent Requirements in the SAI.
If a participant in the Master Plan dies without designating a beneficiary,
the vested benefit will automatically be paid to the spouse or, if the
participant is not married, to the first surviving class of his or her (a)
children, (b) parents and (c) brothers and sisters. If none of them survive,
the participant's vested benefit will be paid to the participant's estate. If
a participant in our prototype self-directed plan dies without designating a
beneficiary, the vested benefit will automatically be paid to the spouse or,
if the participant is not married, to the first surviving class of his or her
(a) children, (b) grandchildren, (c) parents, (d) brothers and sisters and
(e) nephews and nieces. If none of them survive, the participant's vested
benefit will be paid to the participant's estate.
Under the Master Plan, on the day we receive proof of death, we automatically
transfer the participant's Account Balance in the Equity Funds to the Money
Market Guarantee Account unless the beneficiary gives us other written
instructions. The balance in the Real Estate Fund will be treated as a
Priority 1 distribution and will be scheduled for transfer to the Money
Market Guarantee Account following the last day of the next quarter. See
Special Risks Related to the Real Estate Fund.
45
<PAGE>
DEDUCTIONS AND CHARGES
- -------------------------------------------------------------------------------
There are two general types of expenses you may incur under the Program. The
first is expenses which are applicable to all amounts invested in the
Program. These include the Program expense charge, investment management,
administration fees, and certain other expenses borne directly by the Funds.
These charges are deducted from the amount invested in the Program regardless
of the type of plan you may have. Generally speaking, these charges are
reflected as reductions in the Unit Values of the Funds or as reductions from
the rates credited to the Guaranteed Options. These charges apply to all
amounts invested in the Program, including amounts being distributed under
installment payout options.
The second type of charge is expenses which vary by the type of plan you have
or which are charged for specific transactions. These are typically stated in
terms of a defined dollar amount. Unless otherwise noted, fees which are set
in fixed dollar amounts are deducted by reducing the number of Units in the
appropriate Funds and the number of dollars in the Guaranteed Option. The
number of Units to be deducted from the Real Estate Fund is based on the last
Unit Value determined prior to the date of deduction. See Condensed Financial
Information and How We Calculate the Value of Amounts Allocated to The Real
Estate Funds. The amount allocable to the three-year or five-year Guaranteed
Rate Account will be taken from your most recent GRA in that Account.
No deductions are made from contributions or withdrawals for sales expenses.
CHARGES BASED ON AMOUNTS INVESTED IN THE PROGRAM
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PROGRAM EXPENSE CHARGE
- -------------------------------------------------------------------------------
We assess the Program expense charge against the combined value of Program
assets in all the Investment Options. The purpose of this charge is to cover
the expenses incurred by Equitable Life and the ADA in connection with the
Program. The Unit Values of the Funds and the interest rates credited to the
Guaranteed Options reflect the deduction of this charge.
The amount payable to us and the ADA is calculated as follows:
<TABLE>
<CAPTION>
ANNUAL PROGRAM EXPENSE
CHARGE
- ------------------------
VALUE OF PROGRAM ASSETS EQUITABLE LIFE ADA* TOTAL
- ------------------------ ---------------------------- ------- -------
<S> <C> <C> <C>
First $400 million .650% .025% .675%
Next $350 million .650 .020 .670
Over $750 million .650 .020 .670
</TABLE>
* Currently, this charge has been reduced to 0.01% for all asset value
levels, but the charge could in the future be increased to the levels shown
in the table.
For all Investment Options other than GRAs, the Program expense charge is
calculated based on Program assets at the end of the second previous month,
and is charged at a monthly rate of 1/12 of the relevant annual charge. For
GRAs, the program expense charge is calculated based on Program assets at the
end of the second month prior to the day on which the GRA is opened, and is
charged at a constant daily rate of 1/365 of the relevant annual charge until
maturity. Subsequent changes in the Program Expense Charge will not be
reflected in the charge against closed GRAs. In addition to the Program
expense charge, an annual investment accounting fee of 0.02% is charged on
all amounts of Program assets invested in GRAs issued after February 1992.
This fee is reflected in the interest rates credited to the GRAs and is
calculated and charged in the same manner as the Program expense charge.
46
<PAGE>
Our portion of the Program expense charge is applied toward the cost of
maintenance of the Investment Options, promotion of the Program, commissions,
administrative costs, such as enrollment and answering participant inquiries,
and overhead expenses such as salaries, rent, postage, telephone, travel,
legal, actuarial and accounting costs, office equipment and stationery. The
ADA's part of this fee covers developmental and administrative expenses
incurred in connection with the Program. The Trustees can direct us to raise
or lower the ADA's part of this fee to reflect their expenses in connection
with the Program. Currently, this fee has been reduced to 0.01% for all asset
value levels. During 1995 we received $6,487,705 and the ADA received
$104,687 under the Program expense charge then in effect.
- -------------------------------------------------------------------------------
ADMINISTRATION AND INVESTMENT MANAGEMENT FEES
- -------------------------------------------------------------------------------
The computation of the Unit Values applicable for each Fund also reflects the
deduction of charges for administration and investment management.
EQUITY FUNDS. We receive fees for investment management services we provide
for the Growth Equity Fund. We also receive an administration fee from all
the Equity Funds which covers the administrative functions related to the
offering of those Funds. We maintain records for all portfolio transactions
and cash flow control, calculate Unit Values, monitor compliance with the New
York Insurance Law and supervise custody matters for all the Funds.
REAL ESTATE FUND. The investment management fee compensates us for managing
the Real Estate Fund as well as the underlying Prime Property Fund. The Real
Estate Fund is not charged an additional fee for our management of Prime
Property Fund. The services we provide with respect to the Real Estate Fund
include monitoring the Real Estate Fund's holdings and liquidity. The
services we provide with respect to Prime Property Fund include selecting
real properties for purchase and sale, selecting managers for those
properties and, in some cases, managing the properties ourselves, appraising
the properties, accounting for their receipts and disbursements and servicing
any loans issued by Prime Property Fund. The administration fee is to
reimburse us for the additional expenses involved in administering the Fund.
47
<PAGE>
FEES. The investment management and administration fees are also based on the
Program assets in the Fund at the end of the second month prior to the day on
which the calculation is being made. The fees charged monthly are 1/12 of the
following amounts:
<TABLE>
<CAPTION>
TYPE OF FEE
VALUE OF PROGRAM INVESTMENT
FUND FUND ASSETS MANAGEMENT ADMINISTRATION TOTAL
- --------------------------- ----------------- ------------ -------------- --------
<S> <C> <C> <C> <C>
FIRST $100
Growth Equity Fund million .29% .15% .44%
Over $100 million .20 .15 .35
-------------------------- ----------------- ------------ -------------- --------
Aggressive Equity Fund All amounts -- .15(1) .15(1)
----------------- ------------ -------------- --------
ADA Foreign Fund All amounts -- .15(2) .15(2)
----------------- ------------ -------------- --------
Equity Index Fund All amounts -- .15 .15
----------------- ------------ -------------- --------
Lifecycle
Fund--Conservative All amounts -- .15 .15
----------------- ------------ -------------- --------
Lifecycle Fund--Moderate All amounts -- .15 .15
----------------- ------------ -------------- --------
Real Estate Fund First $50 million 1.10 .25 1.35
Next $25 million 1.00 .25 1.25
Over $75 million .95 .25 1.20
-------------------------- ----------------- ------------ -------------- --------
</TABLE>
(1) An annual amount of up to 0.25% of the average daily net assets of the
ADA Program invested in the MFS Emerging Growth Fund is paid to
Equitable Life. Equitable Life has waived the 0.15% Administration fee
applicable to the Aggressive Equity Fund and will use the payment from
MFS Funds Distributors, Inc. to defray administrative expenses
associated with the Program's operations and to fund Program
enhancements. The agreement and waiver are expected to be in effect for
an indefinite period, but these arrangements are subject to termination
by either party upon notice.
(2) Equitable Life has waived the administrative fee for the ADA Foreign
Fund in view of the payment for services rendered to Templeton it will
receive from Templeton in an amount equal to the 12b-1 fees charged by
Templeton to the Templeton Foreign Fund. The 12b-1 fee charged by
Templeton is at the annual rate not to exceed 0.25% of the Templeton
Foreign Fund's assets. Amounts received by us will be used for
administrative expenses associated with the Program's operations and to
fund Program enhancements.
- -------------------------------------------------------------------------------
OTHER EXPENSES BORNE DIRECTLY BY THE FUNDS
- -------------------------------------------------------------------------------
Certain costs and expenses are charged directly to the Funds. These may
include Securities and Exchange Commission filing fees and certain related
expenses including printing of SEC filings, prospectuses and reports, mailing
costs, custodians' fees, financial accounting costs, outside auditing and
legal expenses, and other costs related to the Program. These are included as
"Other Expenses" in the tables of Annual Fund Operating Expenses and Summary
of Fund Expenses.
The Aggressive Equity, ADA Foreign and Equity Index Funds purchase and sell
shares in the MFS Emerging Growth Fund, Templeton Foreign Fund and Seven Seas
S&P 500 Index Fund, respectively, at net asset value. The net asset value
reflects charges for management, audit, legal, shareholder services, transfer
agent and custodian fees. For a description of charges and expenses assessed
by the MFS Emerging Growth Fund, Templeton Foreign Fund and the Seven Seas
S&P 500 Index Fund, which are indirectly borne by the Funds, please refer to
the prospectuses for each of these funds.
The Lifecycle Funds--Conservative and Moderate purchase and sell units in the
Lifecycle Fund Group Trusts--Conservative and Moderate, respectively, at net
asset value. The net asset value reflects charges for management, audit,
legal, custodian and other fees. By agreement with the ADA Trustees,
Equitable Life imposes a charge at the annual rate of .03% of the value of
the respective assets of the Lifecycle Funds--Conservative and Moderate to
compensate it for additional legal, accounting and other potential expenses
resulting from the inclusion of the Lifecycle Fund Group Trusts and
Underlying Funds maintained by State Street among the Investment Options
described in this prospectus. For a description
48
<PAGE>
of charges and expenses assessed by the Lifecycle Fund Group Trusts, which
are indirectly borne by the Lifecycle Funds, please refer to our separate
prospectus for those Funds.
PLAN AND TRANSACTION EXPENSES
===============================================================================
ADA RETIREMENT PLAN, PROTOTYPE SELF-DIRECTED PLAN AND
INDIVIDUALLY-DESIGNED PLAN FEES
- -------------------------------------------------------------------------------
RECORD MAINTENANCE AND REPORT FEE. At the end of each calendar quarter, we
deduct a record maintenance and report fee from each participant's Account
Balance. This fee is:
<TABLE>
<CAPTION>
<S> <C>
ADA Members Retirement Plan participants ....$3 per quarter
Self-Directed Prototype Plan participants ... $3 per quarter
Participants in Pooled-Trust Arrangement .... $1 per quarter
</TABLE>
ENROLLMENT FEE. The employer must pay us a non-refundable enrollment fee of
$25 for each participant enrolling under its plan. If we do not maintain
individual participant records under an individually- designed plan, the
employer is instead charged $25 for each plan or trust. If these charges are
not paid by the employer, the amount may be deducted from subsequent
contributions or from participants' Account Balances.
PROTOTYPE SELF-DIRECTED PLAN FEES. Employers who participate in our prototype
self-directed plan will incur additional fees not payable to us, such as
brokerage and administration fees.
- -------------------------------------------------------------------------------
INDIVIDUAL ANNUITY CHARGES
- -------------------------------------------------------------------------------
ANNUITY ADMINISTRATIVE CHARGE. If a participant elects a variable annuity
payment option, a $350 charge will usually be deducted from the amount used
to purchase the annuity to reimburse us for administrative expenses
associated with processing the application for the annuity and with issuing
each month's annuity payment. Annuities purchased from other providers may
also be subject to fees and charges. See Distributions From the Investment
Options and Benefit Payment Options for details.
PREMIUM TAXES. In certain jurisdictions, amounts used to purchase an annuity
are subject to charges for premium and other applicable taxes (rates
currently range up to 5%). Taxes depend, among other things, on your place of
residence, applicable laws and the form or annuity benefit you select. We
will deduct such charges we pay based on your place of residence at the time
the annuity payments begin.
- -------------------------------------------------------------------------------
GENERAL INFORMATION ON FEES AND CHARGES
- -------------------------------------------------------------------------------
We may change our investment management fees if we give the Trustees 90 days
notice and comply with certain conditions of our group annuity contract with
them. The other fees and charges described above may be changed at any time
by the mutual consent of Equitable Life and the ADA. During 1995 we received
total fees and charges under the Program of $9,232,986.
49
<PAGE>
FEDERAL INCOME TAX CONSIDERATIONS
- -------------------------------------------------------------------------------
Current federal income tax rules relating to adoption of the Program and
generally to distributions to participants under qualified retirement plans
are outlined briefly below. These rules relating to contributions are
outlined briefly in the SAI under Provisions of the ADA Plans. For purposes
of this outline we have assumed that you are not a participant in any other
qualified retirement plan. We have not attempted to discuss other current
federal income tax rules that govern participation, vesting, funding or
prohibited transactions, although some information on these subjects appears
here and in the SAI; nor do we discuss the reporting and disclosure or
fiduciary requirements of the Employee Retirement Income Security Act. In
addition, we do not discuss the effect, if any, of state tax laws that may
apply. FOR INFORMATION ON THESE MATTERS, WE SUGGEST THAT YOU CONSULT YOUR TAX
ADVISOR.
- -------------------------------------------------------------------------------
ADOPTING THE PROGRAM
- -------------------------------------------------------------------------------
If you adopt an ADA Plan, you will not need IRS approval unless you adopt
certain provisions. We will tell you whether it is desirable for you to
submit your plan to the Internal Revenue Service for approval. If you make
such a submission, you will have to pay an IRS user's fee. The Internal
Revenue Service does not have to approve your adoption of the Pooled Trust.
- -------------------------------------------------------------------------------
INCOME TAXATION OF DISTRIBUTIONS TO QUALIFIED PLAN PARTICIPANTS
- -------------------------------------------------------------------------------
In this section, the word "you" refers to the plan participant.
Amounts distributed to a participant from a qualified plan are generally
subject to federal income tax as ordinary income when benefits are
distributed to you or your beneficiary. Generally speaking, only your
post-tax contributions, if any, are not taxed when distributed.
LUMP SUM DISTRIBUTIONS. If your benefits are distributed to you in a lump sum
after you have participated in the plan for at least five taxable years, you
may be able to use five-year averaging. Under this method, the tax on the
lump sum distribution is calculated separately from taxes on any other income
you may have during the year. The tax is calculated at ordinary income tax
rates in the year of the distribution, but as if it were your only income in
each of five years. The tax payable is the sum of the five years'
calculations. To qualify for five-year averaging, the distribution must
consist of your entire balance in the plan and must be made in one taxable
year of the recipient after you have attained age 59 1/2. Five-year
averaging is available only for one lump sum distribution.
If you were born before 1936, you may elect to have special rules apply to
one lump sum distribution. You may elect either ten-year averaging using 1986
rates or five-year averaging using then current rates. In addition, you may
elect separately to have the portion of your distribution attributable to
pre-1974 contributions taxed at a flat 20% rate.
ELIGIBLE ROLLOVER DISTRIBUTIONS. Many types of distributions from qualified
plans are "eligible rollover distributions" that can be transferred directly
to another qualified plan or individual retirement arrangement ("IRA"), or
rolled over to another plan or IRA within 60 days of the receipt of the
distribution. If a distribution is an "eligible rollover distribution," 20%
mandatory federal income tax withholding will apply unless the distribution
is directly transferred to a qualified plan or IRA. See Eligible Rollover
Distributions and Federal Income Tax Withholding in the SAI for a more
detailed discussion.
ANNUITY OR INSTALLMENT PAYMENTS. Each payment you receive is treated as
ordinary income except where you have a "cost basis" in the benefit. Your
cost basis is equal to the amount of your post-tax employee contributions,
plus any employer contributions you were required to include in gross income
in prior years. A portion of each annuity or installment payment you receive
will be excluded from gross income. If you (and your survivor) continue to
receive payments after your cost basis in the contract has been paid out, all
amounts will be taxable.
50
<PAGE>
IN SERVICE WITHDRAWALS; HARDSHIP WITHDRAWALS. Some plans allow in-service
withdrawals of after-tax contributions. The portion of each in-service
withdrawal attributable to cost basis is received income tax-free. The
portion that is attributable to earnings will be included in your gross
income. Amounts contributed before January 1, 1987 to employer plans which on
May 5, 1986 permitted such withdrawals, are taxable withdrawals only to the
extent that they exceed the amount of your cost basis. Other amounts are
treated as partly a return of cost basis with the remaining portion treated
as earnings. Amounts included in gross income under this rule may also be
subject to the additional 10% penalty tax on premature distributions
described below. In addition, 20% mandatory federal income tax withholding
may also apply.
PREMATURE DISTRIBUTIONS. You may be liable for an additional 10% penalty tax
on all taxable amounts distributed before age 59 1/2 unless the distribution
falls within a specified exception or is rolled over into an IRA or other
qualified plan.
The exceptions to the penalty tax include (a) distributions made on account
of your death or disability, (b) distributions in the form of a life annuity
or installments over your life expectancy (or the joint lives or life
expectancies of you and your beneficiary), (c) distributions due to
separation from active service after age 55 and (d) distributions used to pay
deductible medical expenses.
EXCESS DISTRIBUTIONS. You may be liable for a 15% excise tax on all
distributions in excess of a threshold amount. All distributions you receive
from qualified plans, IRAs and Section 403(b) tax deferred annuities are
aggregated for this purpose, even if those plans were maintained by unrelated
employers.
For installment and annuity payments, the threshold amount is $155,000 in
1996. If you elect special averaging for a lump sum distribution received in
1996, you will owe the excise tax only to the extent your distribution
exceeds five times the threshold for excess distributions (i.e., $775,000 in
1996).
WITHHOLDING. In almost all cases, 20% mandatory income tax withholding will
apply to all "eligible rollover distributions" that are not directly
transferred to a qualified plan or IRA. If a distribution is not an eligible
rollover distribution, the recipient may elect out of withholding. The rate
of withholding depends on the type of distribution. See Eligible Rollover
Distributions and Federal Income Tax Withholding in the SAI. Under the ADA
Master Retirement Plan, we will withhold the tax and send you the remaining
amount. Under an individually designed plan or our prototype self-directed
plan that uses the Pooled Trust for investment only, we will pay the full
amount of the distribution to the plan's trustee. The trustee is then
responsible for withholding federal income tax upon distributions to you or
your beneficiary.
- -------------------------------------------------------------------------------
OTHER TAX CONSEQUENCES
- -------------------------------------------------------------------------------
Federal estate and gift and state and local estate, inheritance, and other
tax consequences of participation in the Program depend on the residence and
the circumstances of each participant or beneficiary. For complete
information on federal, state, local and other tax considerations, you should
consult a qualified tax advisor.
MISCELLANEOUS
- -------------------------------------------------------------------------------
CHANGE OR DISCONTINUANCE OF THE PROGRAM. The group annuity contract has been
amended from time to time, and may be amended in the future. No future change
can affect annuity benefits in the course of payment. Provided certain
conditions are met, we may terminate the offer of any of the Investment
Options and offer new ones with different terms.
51
<PAGE>
Our contract with the Trustees may be terminated by us or the ADA. If our
contract with the Trustees is terminated, we will not accept any further
contributions or perform recordkeeping functions after the date of
termination. At that time we would make arrangements with the Trustees as to
the disposition of assets in the Investment Options we provide, subject to
the following restrictions (i) transfers and withdrawals of assets allocated
to the Real Estate Fund would continue to be subject to the restrictions
described in this prospectus and in the SAI; (ii) assets allocated to the
Money Market Guarantee Account would be transferred at the direction of the
Trustees in installments over a period of time not to exceed two years;
however, during that time participants would be permitted to transfer amounts
out of the Money Market Guarantee Account to a funding vehicle provided by
another financial institution (other than a money market fund or similar
investment); and (iii) amounts allocated to the Guaranteed Rate Accounts will
be held until maturity. You may be able to continue to invest amounts in the
Investment Options we provide and elect payment of benefits through us if the
Trustees make arrangements with us.
DISQUALIFICATION OF PLAN. If your plan is found not to qualify under the
Internal Revenue Code, we may return the plan's assets to the employer, as
the plan administrator or we may prevent plan participants from investing in
the separate accounts.
REPORTS. We send reports annually to employers showing the aggregate Account
Balances of all participants and information necessary to complete annual IRS
filings.
REGULATION. We are subject to regulation and supervision by the Insurance
Department of the State of New York, which periodically examines our affairs.
We are also subject to the insurance laws and regulations of all
jurisdictions in which we are authorized to do business. This regulation does
not, however, involve any supervision of the investment policies of the Funds
or of the selection of any investments except to determine compliance with
the law of New York. We are required to submit annual statements of our
operations, including financial statements, to the insurance departments of
the various jurisdictions in which we do business for purposes of determining
solvency and compliance with local insurance laws and regulations.
LEGAL PROCEEDINGS. We are engaged in litigation of various kinds which in our
judgment is not of material importance in relation to our total assets. None
of the litigation now in progress is expected to affect any assets of the
Funds.
ADDITIONAL INFORMATION. A registration statement relating to the offering
described in this prospectus has been filed with the Securities and Exchange
Commission under the Securities Act of 1933. Certain portions of the
Registration Statement have been omitted from this prospectus and the SAI
pursuant to the rules and regulations of the Commission. The omitted
information may be obtained by requesting a copy of the registration
statement from the Commission's principal office in Washington, D.C., and
paying the Commission's prescribed fees or by accessing the Securities and
Exchange Commission's Electronic Data Gathering, Analysis, and Retrieval
(EDGAR) System.
EXPERTS. The financial statements as of December 31, 1995 and for each of the
two years in the period then ended for Separate Account Nos. 3, 4, 191, 30
and 8 and for the period December 1, 1995 through December 31, 1995 for
Separate Account No. 200 included in the SAI and the condensed financial
information for Separate Account Nos. 3, 4, 191 and 30 for each of the two
years in the period ended December 31, 1995 included in this prospectus and
the financial statements as of December 31, 1995 and 1994 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 upon the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
ACCEPTANCE. The employer or plan sponsor, as the case may be, is solely
responsible for determining whether the Program is a suitable funding vehicle
and should, therefore, carefully read the prospectus and other materials
before entering into a Participation Agreement.
52
<PAGE>
TABLE OF CONTENTS
OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
The Contracts ................................ SAI-2
Your Responsibilities as Employer ............ SAI-2
Procedures for Withdrawals, Distributions and
Transfers ................................... SAI-3
Types of Benefits ............................ SAI-8
Provisions of the Master Plan ................ SAI-10
Prime Property Fund Investments .............. SAI-13
Investment Restrictions Applicable to
the Funds ................................... SAI-17
How We Value the Assets of the Funds ........ SAI-18
Summary of Unit Values for the Funds ........ SAI-20
Growth Equity and Aggressive Equity Fund
Transactions ................................ SAI-22
Investment Management Fee .................... SAI-23
Underwriter .................................. SAI-24
Our Management ............................... SAI-24
Financial Statements ......................... SAI-26
</TABLE>
CLIP AND MAIL TO US TO RECEIVE A
STATEMENT OF ADDITIONAL INFORMATION
----------------------------------------------------
To:The Equitable Life Assurance Society
of the United States
Box 2486 G.P.O.
New York, NY 10116
Please send me a copy of the Statement of Additional Information for the
American Dental Association Members Retirement Program Prospectus dated May
1, 1996.
Name
-----------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
----------------------------------------------------
Copyright 1995 by The Equitable Life Assurance Society of the United States.
All rights reserved.
53
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT OPTION CHARACTERISTICS
AGGRESSIVE EQUITY LIFECYCLE FUND--
GROWTH EQUITY FUND FUND ADA FOREIGN FUND EQUITY INDEX FUND CONSERVATIVE
- ------------------ ------------------ ------------------ ----------------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
Designed for Long term growth Long term growth Long term growth Parallel the total Current income
(Objective) of capital of capital of capital return of the S&P and low to
500 Index moderate growth
of capital
- ------------------ ------------------ ------------------ ----------------- ------------------ ----------------
Invests Primarily Common stocks and Invests 100% of Invests 100% of Invests 100% of Invests 100% of
In other equity-type its assets in the its assets in the its assets in the its assets in a
securities MFS Emerging Templeton Foreign Seven Seas Series mix of
generally issued Growth Fund which Fund which S&P 500 Index Fund underlying
by large and invests in common invests primarily which invests in collective
intermediate-sized stocks of small in common stocks all 500 stocks in investment funds
companies and medium-sized of companies the S&P 500 Index maintained by
companies that are outside the U.S. in proportion to State Street
early in their their weighting in
life cycle. the Index
- ------------------ ------------------ ------------------ ----------------- ------------------ ----------------
Risk to Principal Average for a Somewhat higher Somewhat higher Somewhat lower Somewhat lower
growth fund than a growth fund than a growth than the Growth than the
fund Equity Fund Lifecycle
Fund--Moderate
- ------------------ ------------------ ------------------ ----------------- ------------------ ----------------
Primary Growth Capital Capital Capital Capital Capital
Potential Through appreciation and appreciation and appreciation and appreciation and appreciation and
reinvested reinvested reinvested reinvested reinvested
dividends dividends dividends dividends dividends and
interest
- ------------------ ------------------ ------------------ ----------------- ------------------ ----------------
Income Guarantee No No No No No
- ------------------ ------------------ ------------------ ----------------- ------------------ ----------------
Volatility of Somewhat more Highly volatile Generally depends Generally equal to Generally lower
Return volatile than the on stock, country the S&P 500 Index than pure equity
S&P 500 and currency funds, but
selections, as degree may vary
well as market depending on
factors market
conditions
- ------------------ ------------------ ------------------ ----------------- ------------------ ----------------
Transfers to other Permitted daily Permitted daily Permitted daily Permitted daily Permitted daily
Options except under
extreme
circumstances
- ------------------ ------------------ ------------------ ----------------- ------------------ ----------------
Withdrawal No No No No No
Penalties
- ------------------ ------------------ ------------------ ----------------- ------------------ ----------------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
INVESTMENT OPTION CHARACTERISTICS
LIFECYCLE FUND-- GUARANTEED RATE MONEY MARKET
MODERATE REAL ESTATE FUND ACCOUNTS GUARANTEE ACCOUNT
- ------------------ ---------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Designed for Growth of Stable rate of Principal and Principal and
(Objective) capital and return through interest interest
reasonable level rental income and guaranteed-- guaranteed--short
of current appreciation interest rates term rates
income reflect maturities
- ------------------ ---------------- ----------------- ------------------- -----------------
Invests Primarily Invests 100% of High-grade, Contributions Contributions
In its assets in a income-producing credited with fixed credited with
mix of real property rate of interest current
underlying until the maturity guaranteed rate
collective date of interest
investment funds
maintained by
State Street
- ------------------ ---------------- ----------------- ------------------- -----------------
Risk to Principal Somewhat lower Lower than the Carrier providing Equitable Life
than a growth Equity Funds GRAs guarantees guarantees
fund principal and principal and
interest interest; also
backed by assets
in insulated
separate account
- ------------------ ---------------- ----------------- ------------------- -----------------
Primary Growth Capital Rental income, Interest income Interest income
Potential Through appreciation, capital
reinvested appreciation and
dividends interest
- ------------------ ---------------- ----------------- ------------------- -----------------
Income Guarantee No No Yes--subject to Yes
withdrawal
penalties
- ------------------ ---------------- ----------------- ------------------- -----------------
Volatility of Generally lower Stable and less Carrier providing Equitable Life
Return than pure equity volatile than the GRAs guarantees guarantees
funds, but Equity Funds interest rate until monthly interest
degree may vary the maturity date rate; also backed
depending on by assets in
market insulated
conditions separate account
- ------------------ ---------------- ----------------- ------------------- -----------------
Transfers to other Permitted daily Permitted Permitted only at Permitted daily
Options quarterly if cash maturity
available
- ------------------ ---------------- ----------------- ------------------- -----------------
Withdrawal No No Prior to maturity, No
Penalties withdrawals may not
be permitted or may
be subject to a
penalty
- ------------------ ---------------- ----------------- ------------------- -----------------
</TABLE>
The Funds each have different investment objectives and policies that can
affect the returns of each Fund and the market and financial risks to which
each is subject. While we do not intend to change the investment objectives
of the pooled funds, we nevertheless have the right to do so, subject to the
approval of the New York State Insurance Department. The Funds involve a
greater potential for growth but involve risks that are not present with the
Guaranteed Options. There is no assurance that any of the investment
objectives of the Funds will be achieved or that the risk to principal or
volatility of return will be as indicated.
<PAGE>
- -----------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
- -----------------------------------------------------------------------------
MAY 1, 1996
AMERICAN DENTAL ASSOCIATION
MEMBERS RETIREMENT PROGRAM
Separate Account Units of interest under a group annuity contract with THE
EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, 787 Seventh Avenue,
New York, New York 10019, which funds the American Dental Association Members
Retirement Program. Toll-free telephone number 1-800-223-5790.
- -----------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the prospectus dated May 1, 1996 for the American
Dental Association Members Retirement Program. THIS SAI RELATES TO ALL
INVESTMENT OPTIONS EXCEPT THE EQUITY INDEX FUND AND LIFECYCLE FUNDS, WHICH
ARE DISCUSSED IN OUR SEPARATE SAI FOR THOSE FUNDS.
A copy of the prospectus to which this Statement of Additional Information
relates is available at no charge by writing to Equitable Life at Box 2486
G.P.O., New York, New York 10116 or by calling our toll-free telephone
number.
The following information is contained primarily in the prospectus:
Investment Objectives and Policies
Investment Advisory Services
Certain of the cross references in this Statement of Additional Information
are contained in the prospectus dated May 1, 1996 to which this Statement of
Additional Information relates.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
The Contracts ...................................... SAI-2
Your Responsibilities as Employer .................. SAI-2
Procedures for Withdrawals, Distributions and
Transfers ........................................ SAI-3
Pre-Retirement Withdrawals ........................ SAI-3
Benefit Distributions ............................. SAI-4
Spousal Consent Requirements ...................... SAI-4
Eligible Rollover Distributions and
Federal Income Tax Withholding ................... SAI-5
Premature Withdrawals and Transfers from
a GRA ............................................ SAI-5
Maturing GRAs ..................................... SAI-6
Special Rules for Distributions and Transfers
from the Real Estate Fund ........................ SAI-7
Real Estate Fund Withdrawals from Prime Property
Fund .............................................. SAI-7
Types of Benefits .................................. SAI-8
Provisions of the Master Plan ...................... SAI-10
Plan Eligibility Requirements ..................... SAI-10
Contributions to Qualified Plans .................. SAI-10
Contributions to the Master Plan .................. SAI-10
Allocation of Contributions ....................... SAI-12
The Master Plan and Section 404(c) of ERISA ..... SAI-12
Vesting ........................................... SAI-12
Prime Property Fund Investments .................... SAI-13
Holdings of Prime Property Fund .................... SAI-15
Investment Restrictions Applicable to the Funds ... SAI-17
The Growth Equity Fund ............................ SAI-17
The Aggressive Equity Fund ........................ SAI-17
The ADA Foreign Fund .............................. SAI-17
The Equity Index Fund ............................. SAI-17
Lifecycle Funds ................................... SAI-18
The Real Estate Fund .............................. SAI-18
How We Value the Assets of the Funds ............... SAI-18
Assets Held in Prime Property Fund ................ SAI-19
Summary of Unit Values for the Funds ............... SAI-20
The Equity Funds ................................ SAI-20
The Real Estate Fund ............................ SAI-21
Prime Property Fund ............................. SAI-22
Growth Equity and Aggressive Equity Fund
Transactions .................................... SAI-22
Prime Property Fund Transactions ................... SAI-23
Investment Management Fee .......................... SAI-23
Underwriter ........................................ SAI-24
Our Management ..................................... SAI-24
Financial Statements ............................... SAI-26
</TABLE>
[FN]
- ------------
Copyright 1996 by The Equitable Life Assurance Society of The United States.
All rights reserved.
<PAGE>
ADDITIONAL INFORMATION ABOUT THE PROGRAM
THE CONTRACTS
The Program is primarily funded through a group annuity contract issued to
the Trustees by The Equitable Life Assurance Society of the United States
(Equitable Life). The contract governs the Investment Options that are
provided by Equitable Life under the Program. The Trustees have also entered
into two group annuity contracts with New York Life Insurance Company (New
York Life) which govern Guaranteed Rate Accounts opened during the one year
period beginning August 2, 1995. The Trustees hold all contracts for the
benefit of employers and participants in the Program.
In addition, the Trustees and Equitable Life have entered into an
administrative services agreement that governs Equitable Life's duties
relating to administrative support, recordkeeping and marketing for the
Program. This agreement would under most circumstances terminate at the same
time as the group annuity contract.
YOUR RESPONSIBILITIES AS EMPLOYER
If you adopt the Master Plan, you as the employer and plan administrator will
have certain responsibilities, including:
o sending us your contributions at the proper time and in the proper
format;
o maintaining all personnel records necessary for administering your
plan;
o determining who is eligible to receive benefits;
o forwarding to us all the forms your employees are required to submit;
o distributing summary plan descriptions and participant annual reports
to your employees and former employees;
o distributing our prospectuses and confirmation notices to your
employees and, in some cases, former employees;
o filing an annual information return for your plan with the Internal
Revenue Service, if required;
o providing us the information with which to run special
non-discrimination tests, if you have a 401(k) plan or your plan accepts
post-tax employee or employer matching contributions;
o determining the amount of all contributions for each participant in the
plan;
o forwarding salary deferral and post-tax employee contributions to us;
and
o selecting interest rates and monitoring default procedures if you elect
the loan provision in your plan.
SAI-2
<PAGE>
If you, as an employer, have an individually designed plan, your
responsibilities will not be increased in any way by your adoption of the
Pooled Trust for investment only. If you adopt our self-directed prototype
plan, you will be completely responsible for administering the plan and
complying with all of the reporting and disclosure requirements applicable to
qualified plans, with the assistance of the recordkeeper of your choice.
We will give you guidance and assistance in the performance of your
responsibilities. The ultimate responsibility, however, rests with you. If
you have questions about any of your obligations, you can contact our Account
Executives at 1-800-223-5790 or write to us at Box 2486 G.P.O., New York, New
York 10116.
PROCEDURES FOR WITHDRAWALS, DISTRIBUTIONS AND TRANSFERS
PRE-RETIREMENT WITHDRAWALS. Under the Master Plan, self-employed persons may
generally not receive a distribution prior to age 59 1/2, and employees may
generally not receive a distribution prior to separation from service.
However, if your employer maintains the Master Plan as a profit sharing plan,
you may request distribution of benefits after you reach age 59 1/2 even if
you are still working. If your employer maintains the Master Plan as a 401(k)
plan and you are under age 59 1/2, you may withdraw your own 401(k)
contributions only if you can demonstrate financial hardship within the
meaning of applicable Income Tax Regulations. Each withdrawal must be at
least $1,000 (or, if less, your entire Account Balance or the amount of your
hardship withdrawal under a 401(k) plan). If your employer terminates the
plan, all amounts (subject to GRA restrictions) may be distributed to
participants at that time.
You may withdraw all or part of your Account Balance under the Master Plan
attributable to post-tax employee contributions at any time, subject to any
withdrawal restrictions applicable to the Investment Options, provided that
you withdraw at least $300 at a time (or, if less, your Account Balance
attributable to post-tax employee contributions). See Federal Income Tax
Considerations in the prospectus.
All benefit payments (including withdrawals due to plan terminations) will be
paid in accordance with the rules described below under Benefit
Distributions. All other withdrawals will be effected as of the close of
business on the day we receive the properly completed form.
If you are married, your spouse must consent in writing before you can make
any type of withdrawal. See Spousal Consent Requirements below.
Under the self-directed prototype plan you may receive a distribution upon
attaining normal retirement age as specified in the plan, or upon separation
from service. If your employer maintains the self-directed prototype plan as
a profit sharing plan, an earlier distribution of funds that have accumulated
after two years is available if you incur a financial hardship, as defined in
the plan. In addition, if you are married, your spouse may have to consent in
writing before you can make any type of withdrawal, except for the purchase
of a Qualified Joint and Survivor Annuity. See Spousal Consent Requirements
below.
Under an individually designed plan, the availability of pre-retirement
withdrawals depends on the terms of the plan. We suggest that you ask your
employer what types of withdrawals are available under your plan.
PLEASE NOTE THAT GENERALLY YOU MAY NOT MAKE WITHDRAWALS FROM THE GUARANTEED
RATE ACCOUNTS PRIOR TO MATURITY EVEN IF THE EMPLOYER PLAN PERMITS WITHDRAWALS
PRIOR TO THAT TIME. (SEE PREMATURE WITHDRAWALS AND TRANSFERS FROM A GRA).
TRANSFERS FROM THE ADA FOREIGN FUND, THE EQUITY INDEX FUND, THE AGGRESSIVE
EQUITY FUND AND THE LIFECYCLE FUNDS--CONSERVATIVE AND MODERATE ARE PERMITTED
DAILY EXCEPT UNDER
SAI-3
<PAGE>
INFREQUENT CIRCUMSTANCES WHEN THEY MAY BE SUBJECT TO A DELAY. SEE BENEFIT
DISTRIBUTIONS BELOW. IN ADDITION, THE REAL ESTATE FUND IS SUBJECT TO SPECIAL
WITHDRAWAL RULES WHICH ARE DESCRIBED UNDER SPECIAL RULES FOR DISTRIBUTIONS
AND TRANSFERS FROM THE REAL ESTATE FUND.
BENEFIT DISTRIBUTIONS. In order for you to begin receiving benefits under the
Master Plan, your employer must send us your properly completed Election of
Benefits form and, if applicable, Beneficiary Designation form. If we receive
your properly completed forms on or before the 15th of the month, your
benefits will commence as of the close of business on the first business day
of the next month; if your forms arrive after the 15th, your benefits will
commence as of the close of business on the first business day of the second
following month.
Under an individually designed plan and our self-directed prototype plan,
your employer must send us a request for disbursement form. We will send
single sum payments to your plan's trustee as of the close of business on the
day we receive a properly completed form. If you wish to receive annuity
payments, your plan's trustee may purchase a variable annuity contract from
us. Fixed annuities are available from insurance companies selected by the
Trustees. See Types of Benefits. Annuity payments will be paid directly to
you and will commence as of the close of business on the first business day
of the next month if we receive your properly completed forms on or before
the 15th of the month. If we receive your properly completed forms after the
15th, annuity payments will commence as of the close of business on the first
business day of the second following month.
Transfers and withdrawals from the Aggresive Equity Fund, the ADA Foreign
Fund and the Equity Index Fund may be deferred if there is any delay in
redemption of shares of the respective mutual funds in which the Funds
invest. We generally do not expect any delays.
Transfers and withdrawals from the Lifecycle Funds--Conservative and Moderate
may be deferred if there is any delay in redemption of units of the Lifecycle
Fund Group Trusts. We generally do not expect any such delays.
Special rules apply to withdrawals from the Real Estate Fund. See Special
Rules for Distributions and Transfers from the Real Estate Fund.
Please note that we use the value of your vested benefits at the close of
business on the day payment is due to determine the amount of benefits you
receive. We will not, therefore, begin processing your check until the
following business day. You should expect your check to be mailed within five
days after processing begins. Annuity checks can take longer. If you buy a
fixed annuity, your check will come from the company you selected. If you are
withdrawing more than $50,000 and you would like expedited delivery at your
expense, you may request it on your election of benefits form.
Distributions under a qualified retirement plan such as yours are subject to
extremely complicated legal requirements. When you are ready to retire, we
suggest that you discuss the available payment options with your employer.
Our Account Executives can provide you or your employer with information.
SPOUSAL CONSENT REQUIREMENTS. Under the Master Plan and the self-directed
prototype plan, you may designate a non-spouse beneficiary any time after the
earlier of the first day of the plan year in which you attain age 35 or the
date on which you separate from service with your employer. If you designate
a beneficiary other than your spouse prior to your reaching age 35, your
spouse must consent to the designation and, upon your reaching age 35, must
again give his or her consent or the designation will lapse. In order for you
to make a withdrawal, elect a form of benefit other than a Qualified Joint
and Survivor Annuity or designate a non-spouse beneficiary, your spouse must
consent to your election in writing within the 90 day period before your
annuity starting date. To consent, your spouse must sign the appropriate line
on your election of benefits or beneficiary designation form. Your spouse's
signature must be witnessed by a notary public or plan representative.
SAI-4
<PAGE>
If you change your mind, you may revoke your election and elect a Qualified
Joint and Survivor Annuity or designate your spouse as beneficiary, simply by
filing the appropriate form. Your spouse's consent is not required for this
revocation.
It is also possible for your spouse to sign a blanket consent form. By
signing this form, your spouse consents not just to a specific beneficiary or
form of distribution, but gives you the right to name any beneficiary or form
of distribution you want. Once you file such a form, you may change your
election whenever you want, even without spousal consent. No spousal consent
to a withdrawal or benefit in a form other than a Qualified Joint and
Survivor Annuity is required under certain self-directed and individually
designed profit sharing plans that do not offer life annuity benefits.
ELIGIBLE ROLLOVER DISTRIBUTIONS AND FEDERAL INCOME TAX WITHHOLDING. All
"eligible rollover distributions" are subject to mandatory federal income tax
withholding of 20% unless the participant elects to have the distribution
directly rolled over to a qualified plan or individual retirement arrangement
(IRA). An "eligible rollover distribution" is generally any distribution that
is not one of a series of substantially equal periodic payments made (not
less frequently than annually) (1) for the life (or life expectancy) of the
plan participant or the joint lives (or joint life expectancies) of the plan
participant and his or her designated beneficiary, or (2) for a specified
period of 10 years or more. In addition, the following are not subject to
mandatory 20% withholding:
o certain corrective distributions under Internal Revenue Code (Code)
Section 401(k) plans;
o loans that are treated as distributions; and
o a distribution to a beneficiary other than to a surviving spouse or a
current or former spouse under a qualified domestic relations order.
If a distribution is made to a participant's surviving spouse, or to a
current or former spouse under a qualified domestic relations order, the
distribution may be an eligible rollover distribution, subject to mandatory
20% withholding, unless one of the exceptions described above applies.
If a distribution is not an "eligible rollover distribution" income tax will
be withheld from all taxable payments unless the recipient elects not to have
income tax withheld.
PREMATURE WITHDRAWALS AND TRANSFERS FROM A GRA. You may transfer amounts from
other Investment Options to a GRA at any time. Transfers may not be made from
one GRA to another or from a GRA to one of the other Investment Options until
the maturity date of the GRA. Likewise, you may not remove amounts from a GRA
prior to maturity in order to obtain a plan loan or make a hardship or
in-service withdrawal. If your plan's assets are transferred to another
funding vehicle from the Program or if your plan is terminated, we will
continue to hold your money in GRAs until maturity. All such GRAs will be
held in the Pooled Trust under the investment-only arrangement. See The
Program--Summary of the Plans and Trusts in the prospectus.
Withdrawals are not permitted prior to maturity unless they are permitted
under your plan and are Exempt or Qualified, as explained below. Exempt
Withdrawals may be made without penalty at any time. Qualified Withdrawals
are subject to a penalty. No Qualified Withdrawals are permitted from a
five-year GRA during the first two years after the end of its offering
period; this rule does not apply if the amount of the applicable penalty is
less than the interest you have accrued. If you have more than one GRA and
you are taking a partial withdrawal or installments, amounts held in your
most recently purchased three-year or five-year GRA that is available under
the withdrawal rules for Exempt and Qualified Withdrawals will first be used
to make withdrawal or installment payments. Please note that withdrawals,
transfers, reallocations on maturity and benefit distributions from GRAs
provided by a carrier other than Equitable Life are subject to Equitable
Life's receipt of the proceeds of such GRA from such carrier.
SAI-5
<PAGE>
Exempt Withdrawal. You may withdraw amounts without penalty from a GRA prior
to its maturity if:
o you are a dentist age 59 1/2 or older and you elect an installment
payout of at least three years or an annuity benefit;
o you are not a dentist and you attain age 59 1/2 or terminate employment
(including retirement);
o you are disabled;
o you attain age 70 1/2; or
o you die.
Qualified Withdrawal. You may withdraw amounts with a penalty from a GRA
prior to its maturity if you are a dentist and are taking payment upon
retirement after age 59 1/2 under a distribution option of less than three
years duration. The interest paid to you upon withdrawal will be reduced by
an amount calculated as follows:
(i) the amount by which the three-year GRA rate being offered on the
date of withdrawal exceeds the GRA rate from which the withdrawal is made,
times
(ii) the years and/or fraction of a year until maturity, times
(iii) the amount withdrawn from the GRA.
We will make this calculation based on GRA rates without regard to deductions
for the applicable Program expense charge. If the three-year GRA is not being
offered at the time of withdrawal, the adjustment will be based on then
current rates on U.S. Treasury notes or for a comparable option under the
Program.
Your original contributions will never be reduced by this adjustment. No
adjustment is made if the current three-year GRA rate is equal to or less
than the rate for the GRA from which the Qualified Withdrawal is being made.
A separate adjustment is calculated for each GRA. If the interest accumulated
in one GRA is insufficient to recover the amount calculated under the
formula, the excess may be deducted as necessary from interest accumulated in
other GRAs of the same duration.
EXAMPLE: You contribute $1,000 to a three-year GRA on January 1 with a rate
of 4%. Two years later you make a Qualified Withdrawal. Your GRA balance is
$1,082. The current GRA rate is 6%; (i) 6%-4%=2%, (ii) 2% X 1 year=2%, (iii)
2% X $1,082=$21.64. The withdrawal proceeds would be $1,082-$21.64=$1,060.36.
MATURING GRAS
o Your confirmation notice lists the maturity date for each GRA you hold.
o You may arrange in advance for the reinvestment of your maturing GRAs
by filing a GRA maturity form or by using the Account Investment Management
("AIM") system. (Instructions must be received at least four days before the
GRA matures.)
o The instructions you give us remain in effect until you change them
(again, at least four days before you want the change to go into effect).
o You may have different instructions for your GRAs attributable to
employer contributions than for your GRAs attributable to employee
contributions.
o If you have never provided GRA maturity instructions, your maturing
GRAs will be allocated to the Money Market Guarantee Account.
SAI-6
<PAGE>
SPECIAL RULES FOR DISTRIBUTIONS AND TRANSFERS FROM THE REAL ESTATE
FUND. PLEASE NOTE THAT AT TIMES OF INSUFFICIENT LIQUIDITY WITHDRAWALS FROM
THE REAL ESTATE FUND AND PRIME PROPERTY FUND COULD BE DELAYED IN ACCORDANCE
WITH THE PROCEDURES DESCRIBED BELOW. AT THIS TIME THE REAL ESTATE FUND IS
FULFILLING WITHDRAWAL REQUESTS ON A CURRENT BASIS. YOU MAY CALL US TO RECEIVE
CURRENT INFORMATION REGARDING THE STATUS OF REAL ESTATE FUND WITHDRAWALS. SEE
SPECIAL RISKS RELATED TO THE REAL ESTATE FUND IN THE PROSPECTUS FOR MORE
INFORMATION.
THERE IS A MINIMUM WAIT OF ONE CALENDAR QUARTER FOR WITHDRAWALS FROM THE REAL
ESTATE FUND. All distributions and transfers from the Real Estate Fund will
be scheduled to be made shortly after the end of the calendar quarter
following the quarter in which we receive properly completed forms. (See The
Real Estate Fund in the prospectus for more information on how we value and
liquidate Real Estate Fund Units.) The amount distributed will be based on
the Real Estate Fund's Unit Value on the date distribution is made.
Withdrawals from the Real Estate Fund must be made in amounts of at least
$1,000 or, if less, your balance in the Real Estate Fund.
IN ADDITION TO THE WAIT OF AT LEAST ONE CALENDAR QUARTER WHICH IS REQUIRED BY
OUR PROCEDURES, IT IS ALSO POSSIBLE THAT THE REAL ESTATE FUND WILL NOT HAVE
ENOUGH CASH TO MAKE ALL WITHDRAWALS AND TRANSFERS WHEN REQUESTED. If at the
end of a calendar quarter the Real Estate Fund does not have enough cash to
pay all scheduled withdrawals, they will be divided into two priority
categories. Priority 1 consists of all amounts requested because of death or
disability or after age 70 1/2. Priority 2 consists of all other requests.
THE REAL ESTATE FUND WILL SATISFY ALL SCHEDULED PRIORITY 1 DISTRIBUTION
REQUESTS BEFORE IT SATISFIES ANY PRIORITY 2 REQUEST, EVEN IF THE PRIORITY 1
REQUESTS WERE RECEIVED AFTER THE PRIORITY 2 REQUESTS. If the Real Estate Fund
does not have enough cash to make all Priority 1 distributions, they will be
paid in the order the requests were received. After the Real Estate Fund has
made all Priority 1 distributions, it will make Priority 2 distributions and
transfers. If the Real Estate Fund does not satisfy all scheduled Priority 2
distributions and transfer requests, they will be paid in the order the
requests were received.
To make Priority 1 distributions, the Real Estate Fund will use substantially
all its liquid assets, keeping only a reserve that we believe is adequate for
anticipated expenses. If possible, the Real Estate Fund will also liquidate
as much of its interest in Prime Property Fund as required. With regard to
Priority 2, we will make distributions and transfers to the extent that funds
are available from cash flow and from liquidation of Prime Property Fund
units. However, we will not make Priority 2 distributions and transfers if
the Real Estate Fund cannot liquidate enough of its interest in Prime
Property Fund and we believe that it would be desirable to maintain liquidity
to meet anticipated Priority 1 distributions.
Requests that remain unpaid will be scheduled for the next quarterly
distribution date. At that time they will be satisfied to the extent
possible, in accordance with their respective priorities and order of
receipt. Please note that if you make a Priority 2 request that is not paid
when scheduled, Priority 1 distributions requested in later quarters may be
paid before your Priority 2 request.
REAL ESTATE FUND WITHDRAWALS FROM PRIME PROPERTY FUND. If the Real Estate
Fund does not have enough liquid assets to pay all requested withdrawals, it
will seek to withdraw some or all of its interest from Prime Property Fund.
We may postpone withdrawals from Prime Property Fund, however, for such time
as we reasonably consider necessary to obtain the amount to be withdrawn or
to protect the interests of other participants in Prime Property Fund. In
making this determination, we consider primarily (i) the availability of cash
to manage Prime Property Fund's property holdings, to meet emergencies and to
meet commitments for property acquisitions and loans, (ii) the time necessary
to dispose of properties and (iii) any adverse impact of proposed property
sales on other participants in Prime Property Fund. Except as described
below, Prime Property Fund has been able to pay withdrawals when requested
since its inception in 1973.
SAI-7
<PAGE>
If withdrawal from Prime Property Fund is restricted, any payment from Prime
Property Fund is applied pro rata to the withdrawal requests of all
participants in Prime Property Fund that are eligible for payment on the
withdrawal date, regardless of when those requests were made. Prime Property
Fund withdrawal requests not satisfied by a pro rata distribution are
deferred until the next withdrawal date (generally the last business day of
the following quarter), at which time the amount available for distribution
will again be applied pro rata to all pending requests. For purposes of this
policy, the Real Estate Fund is considered a single participant in Prime
Property Fund, on par with each other participant in Prime Property Fund.
From the first quarter of 1995 through the third quarter of 1995, Prime
Property Fund satisfied all participant withdrawal requests. As of the fourth
quarter of 1995, the Prime Property Fund was unable to satisfy all
participant withdrawal requests. Consequently, withdrawals from Prime
Property Fund are being delayed in accordance with the procedures discussed
above. However, since June 1994 the Real Estate Fund has had sufficient
liquidity; and withdrawals have not been restricted. If the Real Estate Fund
experiences periods of insufficient liquidity withdrawals may be delayed in
accordance with the procedures described above. See Special Rules for
Distributions and Transfers from the Real Estate Fund. There have been other
periods when there was insufficent available cash in Prime Property Fund to
meet all withdrawal requests and the above withdrawal procedures were put
into place for all pending Prime Property Fund withdrawal requests. During
these other periods Real Estate Fund withdrawals were not delayed or
restricted in any manner because there was sufficient liquidity in the Real
Estate Fund.
In general, a withdrawal from Prime Property Fund by one or more of its
larger investors could significantly reduce its cash position and increase
the likelihood that the Real Estate Fund would not have cash sufficient to
meet all withdrawal requests. At December 31, 1995 there were 206
participants in Prime Property Fund, none of which held more than 3.6% of
Prime Property Fund.
TYPES OF BENEFITS
Under the Master Plan, and under most self-directed prototype plans, except
as provided below, you may select one or more of the following forms of
distribution once you are eligible to receive benefits. Please see Benefit
Distributions under Procedures for Withdrawals, Distributions and Transfers.
Not all of these distribution forms may be available to you, if your employer
has adopted an individually designed plan or a self-directed prototype profit
sharing plan that does not offer annuity benefits. We suggest you ask your
employer what types of benefits are available under your plan.
Fixed annuities are available from insurance companies selected by the
Trustees, which meet criteria established by the Trustees from time to time.
Fixed annuities are currently not available from Equitable Life. The types of
fixed annuity benefits described below will be available through one or more
of such companies. Upon your request, the companies will provide annuity
benefit information. We will have no further responsibility for the amount
used to purchase the annuity once it has been sent to the insurance company
you select. The cost of a fixed annuity is determined by each insurance
company based on its current annuity purchase rates. The amount of your
monthly annuity benefit will depend on the type of annuity selected, your age
and the age of your beneficiary if you select a joint and survivor annuity.
Your Account Executive has more details regarding the insurance companies
currently providing annuity benefits under the Program.
QUALIFIED JOINT AND SURVIVOR ANNUITY. An annuity providing equal monthly
payments for your life and, after your death, for your surviving spouse's
life. No payments will be made after you and your spouse die, even if you
have received only one payment. THE LAW REQUIRES THAT IF THE VALUE OF YOUR
VESTED BENEFITS EXCEEDS $3,500, YOU MUST RECEIVE A QUALIFIED JOINT AND
SURVIVOR ANNUITY UNLESS YOUR SPOUSE CONSENTS IN
SAI-8
<PAGE>
WRITING TO A CONTRARY ELECTION. Please see Spousal Consent Requirements under
Procedures for Withdrawals, Distributions and Transfers for an explanation of
the procedures for electing not to receive a Qualified Joint and Survivor
Annuity.
LUMP SUM PAYMENT. A single payment of all or part of your vested benefits. If
you take a lump sum payment of only part of your balance, it must be at least
$1,000. If you have more than one GRA, amounts held in your most recent GRA
will first be used to make payment. IF YOUR VESTED BENEFIT IS $3,500 OR LESS,
YOU WILL RECEIVE A LUMP SUM PAYMENT OF THE ENTIRE AMOUNT.
PERIODIC INSTALLMENTS. Monthly, quarterly, semi-annual or annual payments
over a period of at least three years, where the initial payment on a monthly
basis is at least $300. You can choose either a time-certain payout, which
provides variable payments over a specified period of time, or a
dollar-certain payout, which provides level payments over a variable period
of time. During the installment period, your remaining Account Balance will
be invested in whatever Options you designate, other than the Real Estate
Fund; each payment will be drawn pro rata from all the Options you have
selected. If you elect installment payments, you may not leave or place any
assets in the Real Estate Fund. If you have more than one GRA, amounts held
in your most recently purchased three-year or five-year GRA will first be
used to make installment payments. If you die before receiving all the
installments, we will make the remaining payments to your beneficiary.
LIFE ANNUITY. An annuity providing monthly payments for your life. No
payments will be made after your death, even if you have received only one
payment.
LIFE ANNUITY--PERIOD CERTAIN. An annuity providing monthly payments for your
life or, if longer, a specified period of time. If you die before the end of
that specified period, payments will continue to your beneficiary until the
end of the period. Subject to legal limitations, you may specify a minimum
payment period of 5, 10, 15 or 20 years; the longer the specified period, the
smaller the monthly payments will be.
JOINT AND SURVIVOR ANNUITY. An annuity providing monthly payments for your
life and that of your beneficiary. You may specify the percentage of the
annuity payment to be made to your beneficiary. Subject to legal limitations,
that percentage may be 100%, 75%, 50%, or any other percentage you specify.
JOINT AND SURVIVOR ANNUITY--PERIOD CERTAIN. An annuity providing monthly
payments for your life and that of your beneficiary or, if longer, a
specified period of time. If you and your beneficiary both die before the end
of the specified period, payments will continue to your contingent
beneficiary until the end of the period. Subject to legal limitations, you
may specify a minimum payment period of 5, 10, 15 or 20 years and the
percentage of the annuity payment to be made to your beneficiary (as noted
above under Joint and Survivor Annuity); the longer the specified period, the
smaller the monthly payments will be.
CASH REFUND ANNUITY. An annuity providing equal monthly payments for your
life with a guarantee that the sum of those payments will be at least equal
to the portion of your vested benefits used to purchase the annuity. If upon
your death the sum of the monthly payments to you is less than that amount,
your beneficiary will receive a lump sum payment of the remaining guaranteed
amount.
Under a Qualified Joint and Survivor Annuity or a Cash Refund Annuity, the
amount of the monthly payments is fixed at retirement and remains level
throughout the distribution period. Under the Life Annuity, Life
Annuity--Period Certain, Joint and Survivor Annuity and Joint and Survivor
Annuity--Period Certain, you may select either fixed or variable payments.
All forms of variable annuity benefits under the Program will be provided by
us. The payments under variable annuity options reflect the investment
performance of the Growth Equity Fund. If you are interested in a variable
annuity, when you are ready to select your benefit please ask our Account
Executives for our variable annuity prospectus supplement.
SAI-9
<PAGE>
PROVISIONS OF THE MASTER PLAN
PLAN ELIGIBILITY REQUIREMENTS. Under the Master Plan, the employer specifies
the eligibility requirements for its plan in the Participation Agreement. The
employer may exclude any employee who has not attained a specified age (not
to exceed 21) and completed a specified number of years (not to exceed two)
in each of which he completed 1,000 hours of service. No more than one year
of eligibility service may be required for a 401(k) arrangement.
The employer may also exclude salaried dentists (those with no ownership
interest in the practice), employees of related employers, leased employees
and certain other types of employees at the employer's election, provided
such exclusion does not cause the Plan to discriminate in favor of "highly
compensated" employees (defined below). The Master Plan provides that a
partner or shareholder may, upon commencement of employment or upon first
becoming eligible to participate in any qualified plan of the employer, make
a one-time irrevocable election not to participate in the plan or to make a
reduced contribution. This election applies to all plans of the employer, now
and in the future, and should be discussed with your tax advisor.
CONTRIBUTIONS TO QUALIFIED PLANS. Current federal income tax rules relating
to contributions under qualified retirement plans are outlined briefly below.
For purposes of this outline we have assumed that you are not a participant
in any other qualified retirement plan.
The employer's contributions to the plan are deductible in the year for which
they are made. As a general rule, employer contributions must be made for any
year by the due date (including extensions) for filing the employer's federal
income tax return for that year. However, participants' salary deferrals
under a 401(k) plan must be contributed by the employer as soon as
practicable after the payroll period for which the deferral is made and
regulations have been proposed for shortening the maximum time period for
remitting contributions to the plan.
If the employer contributes more to the plan than is deductible under the
rules described below, the employer may be liable for a 10% penalty tax on
that nondeductible amount and may risk disqualifying the plan.
CONTRIBUTIONS TO THE MASTER PLAN. The employer makes annual contributions to
its plan based on the plan's provisions.
An employer that adopts the Master Plan as a profit sharing plan makes
contributions in discretionary amounts to be determined annually. The
aggregate employer contribution to the plan, including participants' salary
deferrals under a 401(k) arrangement, is limited to 15% of all participants'
compensation for the plan year. For plan purposes, compensation for
self-employed persons does not include deductible plan contributions made on
behalf of the self-employed person.
A 401(k) arrangement is available as part of the profit sharing plan. Under a
401(k) arrangement, employees are permitted to make contributions to the plan
on a pre-tax basis. The maximum amount that may be contributed by highly
compensated employees is limited depending upon the amount that is
contributed by non-highly compensated employees and the amount the employer
designates as a nonforfeitable 401(k) contribution. In 1996, "highly
compensated" employee for this purpose is (a) an owner of more than 5% of the
practice, or (b) anyone with earnings of more than $100,000 from the
practice, or (c) anyone with earnings of more than $66,000 from the practice
who is among the highest-paid 20% of employees, or (d) an officer of the
practice with earnings of more than $60,000. In any event, the
SAI-10
<PAGE>
maximum amount each employee may defer is limited to $9,500 for 1996 reduced
by that employee's salary reduction contributions to simplified employee
pensions (SEPs), employee contributions to tax deferred (Section 403(b))
annuities, and contributions deductible by the employee under a trust
described under Section 501(c)(18) of the Code.
If the employer adopts the Master Plan as a defined contribution pension
plan, its contribution is equal to the percentage of each participant's
compensation that is specified in the Participation Agreement.
Under either type of plan, compensation in excess of $150,000 must be
disregarded in making contributions. Contributions may be integrated with
Social Security which means that contributions with respect to each
participant's compensation in excess of the integration level may exceed
contributions made with respect to compensation below the integration level,
within limits imposed by the Code. Your Account Executive can help you
determine the legally permissible contribution.
Contributions on behalf of non-key employees must be at least 3% of
compensation (or, under the profit sharing plan, the percentage contributed
on behalf of key employees, if less than 3%). In 1996, "key employee" means
(a) an owner of one of the ten largest (but more than 1/2%) interests in the
practice with earnings of more than $30,000, or (b) an officer of the
practice with earnings of more than $60,000 or (c) an owner of more than 5%
of the practice, or (d) an owner of more than 1% of the practice with
earnings of more than $150,000. For purposes of (b), no more than 50
employees (or, if less, the greater of three or 10% of the employees) shall
be treated as officers.
Certain plans may also permit participants to make post-tax contributions. We
will maintain a separate account to reflect each participant's post-tax
contributions and the earnings (or losses) thereon. Post-tax contributions
are now subject to complex rules under which the maximum amount that may be
contributed by highly compensated employees is limited, depending on the
amount contributed by non-highly compensated employees. BEFORE PERMITTING ANY
HIGHLY-COMPENSATED EMPLOYEE TO MAKE POST-TAX CONTRIBUTIONS, THE EMPLOYER
SHOULD MAKE SURE THAT ALL NON-DISCRIMINATION TESTS HAVE BEEN PASSED. If an
employer employs only "highly compensated" employees (as defined above),
post-tax contributions may not be made to the plan. In addition, the employer
may make matching contributions to certain plans, i.e., contributions which
are based upon the amount of post-tax or pre-tax 401(k) contributions made by
plan participants. Special non-discrimination rules apply to matching
contributions and may limit the amount of matching contributions that may be
made on behalf of highly compensated employees.
Contributions on behalf of each participant are limited to the lesser of
$30,000 and 25% of his earnings (excluding, in the case of self-employed
persons, all deductible plan contributions). The participant's post-tax
contributions are taken into account for purposes of applying this
limitation.
Each participant's Account Balance equals the sum of the amounts accumulated
in each Investment Option. We will maintain separate records of each
participant's interest in each of the Investment Options attributable to
employer contributions, 401(k) non-elective contributions, 401(k) elective
contributions, post-tax employee contributions and employer matching
contributions. Any amounts rolled over from the plan of a previous employer
will also be accounted for separately. Our records will also reflect each
participant's percentage of vesting (see below) in his Account Balance
attributable to employer contributions and employer matching contributions.
The participant will receive an individual confirmation of each transaction
(including the deduction of record maintenance and report fees). The
participant will also receive an annual statement showing his Account Balance
in each Investment Option attributable to each type of contribution. Based on
information supplied by you, we will run the required special
non-discrimination tests (Actual Deferral Percentage and Actual Contribution
Percentage) applicable to 401(k) plans and plans that accept post-tax
employee contributions or employer matching contributions.
SAI-11
<PAGE>
Elective deferrals to a 401(k) plan are subject to applicable FICA (social
security) and FUTA (unemployment) taxes.
ALLOCATION OF CONTRIBUTIONS. Contributions may be allocated among any number
of the Investment Options. Allocation instructions may be changed at any
time, and as often as needed, by calling the AIM System. New instructions
become effective on the business day we receive them. Employer contributions
may be allocated in different percentages than employee contributions. The
allocation percentages elected for employer contributions will automatically
apply to any 401(k) qualified non-elective contributions, qualified matching
contributions and matching contributions. The allocation percentages for
employee contributions will automatically apply to any post-tax employee
contributions and 401(k) salary deferral contributions. IF WE HAVE NOT
RECEIVED VALID INSTRUCTIONS, WE WILL ALLOCATE CONTRIBUTIONS TO THE MONEY
MARKET GUARANTEE ACCOUNT.
THE MASTER PLAN AND SECTION 404(C) OF ERISA. The Master Plan is a participant
directed individual account plan designed to comply with the requirements of
Section 404(c) of ERISA. Section 404(c) of ERISA, and the related Department
of Labor (DOL) regulation, provide that if a participant or beneficiary
exercises control over the assets in his or her plan account, plan
fiduciaries will not be liable for any loss that is the direct and necessary
result of the participant's or beneficiary's exercise of control. This means
that if the employer plan complies with Section 404(c), participants can make
and are responsible for the results of their own investment decisions.
Section 404(c) plans must, among other things, make a broad range of
investment choices available to participants and beneficiaries and must
provide them with enough information to make informed investment decisions.
The ADA Program provides the broad range of investment choices and
information that are needed in order to meet the requirements of Section
404(c). Our suggested summary plan descriptions, annual reports,
prospectuses, and confirmation notices provide the required investment
information; it is the employer's responsibility, however, to see that this
information is distributed in a timely manner to participants and
beneficiaries. You should read this information carefully before making your
investment decisions.
VESTING. Vesting refers to the nonforfeitable portion of a participant's
Account Balance attributable to employer contributions under the Master Plan.
The participant's Account Balance attributable to 401(k) contributions
(including salary deferral, qualified non-elective and qualified matching
contributions), post-tax employee contributions and to rollover contributions
is nonforfeitable at all times.
A participant will become fully vested in all benefits if still employed at
death, disability, attainment of normal retirement age or upon termination of
the plan. If the participant terminates employment before that time, any
benefits that have not yet become vested under the plan's vesting schedule
will be forfeitable. The normal retirement age is 65 under the Master Plan.
SAI-12
<PAGE>
Benefits must vest in accordance with any of the schedules below or one at
least as favorable to participants:
<TABLE>
<CAPTION>
SCHEDULE A SCHEDULE B SCHEDULE C
YEARS OF VESTED VESTED VESTED
SERVICE PERCENTAGE PERCENTAGE PERCENTAGE
- ---------- ------------ ------------ ------------
<S> <C> <C> <C>
1 0% 0% 0%
2 100 20 0
3 100 40 100
4 100 60 100
5 100 80 100
6 100 100 100
</TABLE>
If the plan requires more than one year of service for participation, it must
use Schedule A or one at least as favorable to participants.
PRIME PROPERTY FUND INVESTMENTS
Since typically 90% to 100% of the Real Estate Fund's assets are invested in
Prime Property Fund, we have provided the following information about the
investments of Prime Property Fund.
Prime Property Fund seeks the acquisition and long-term ownership of
high-grade, income-producing real property. Prime Property Fund seeks to
invest in properties that are located in strong rental markets and have
continuous potential for resale. At December 31, 1995, Prime Property Fund
held 171 investments in wholly-owned properties and equities in partnerships
with an aggregate appraised value of $3.1 billion.
Prime Property Fund seeks to diversify its property portfolio by usage and
location. Prime Property Fund's major holdings (in wholly-owned properties
and equities in partnerships) as of December 31, 1995 included:
o 32 retail properties, primarily super-regional shopping centers, with
an aggregate market value of $1,665.3 million.
o 43 office properties, with an aggregate market value of $896.3 million.
o 84 industrial properties (primarily warehouses) and research and
development facilities, with an aggregate market value of $373.9 million.
o 5 hotels, with an aggregate market value of $117.4 million.
o 7 other properties, which include any other income-producing properties
not specifically mentioned above, with an aggregate market value of $34.1
million.
In addition to wholly-owned properties and equities in partnerships, Prime
Property Fund has eight investments in mortgage loans receivable with an
aggregate market value of $311 million, or 9.2% of Prime Property Fund's
investments. Mortgages may be accepted as partial consideration for
properties sold.
SAI-13
<PAGE>
BORROWINGS. There is no limit on mortgage indebtedness with respect to any
one property. During the period from 1986 through 1995 Prime Property Fund's
total borrowings secured by wholly-owned properties ranged from 6.2% to 17.9%
of the total portfolio value. Properties held by joint ventures may also be
mortgaged. The borrowings on wholly-owned properties held in Prime Property
Fund as of December 31, 1995 are summarized below.
- -----------------------------------------------------------------------------
Summary of Borrowings on Wholly-Owned Properties*--December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Number of mortgages payable ........... 7
Number of encumbered properties ...... 13
Outstanding borrowings (millions) .... 528.8
Borrowings as a percent of total value 17.9%
</TABLE>
*Prime Property Fund also held interests in real estate partnerships
having total assets of $1,284 million and total liabilities of $915 million.
- -----------------------------------------------------------------------------
SAI-14
<PAGE>
HOLDINGS OF PRIME PROPERTY FUND
The charts below describe the investments in wholly-owned properties,
partnership equities and mortgage and construction loans receivable of Prime
Property Fund as of December 31, 1995 and for the other periods indicated.
<TABLE>
<CAPTION>
DISTRIBUTION OF INVESTMENT VALUE BY TYPE AND LOCATION* (BY
PERCENTAGE) -- DECEMBER 31, 1995
- --------------------------------------------------------------
SOUTH EAST MID-WEST WEST TOTAL
- -------------- ------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C>
Industrial/R&D 2.9% 2.4% 1.3% 4.4% 11.0%
Office 1.2 16.1 1.1 11.7 30.1
Retail 13.4 14.1 21.6 5.3 54.4
Hotel 0.9 1.5 -- 1.1 3.5
Other 0.1 0.9 -- -- 1.0
- -------------- ------- ------- ---------- ------- -------
Total 18.5% 35.0% 24.0% 22.5% 100.0%
- -------------- ------- ------- ---------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF INVESTMENTS BY TYPE AND LOCATION* (BY NUMBER
OF INVESTMENTS) -- DECEMBER 31, 1995
- ------------------------------------------------------------
SOUTH EAST MID-WEST WEST TOTAL
- -------------- ------- ------ ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Industrial/R&D 29 21 13 21 84
Office 3 26 7 11 47
Retail 10 12 10 3 35
Hotel 1 3 -- 1 5
Other 1 6 1 -- 8
- -------------- ------- ------ ---------- ------ -------
Total 44 68 31 36 179
- -------------- ------- ------ ---------- ------ -------
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF INVESTMENT VALUE BY LOCATION* (BY
PERCENTAGE)
- ------------------------------------------------------
1995 1994 1993 1992 1991
- ---------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
South 18.5 19.7% 20.0% 20.8% 24.9%
East 35.0 31.0 30.9 29.9 29.3
Mid-West 24.0 27.3 27.6 26.6 23.8
West 22.5 22.0 21.5 22.7 22.0
- ---------- ------ ------- ------- ------- -------
</TABLE>
*Each region comprises the states indicated:
South: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi,
Oklahoma, Tennessee, Texas
East: Connecticut, Delaware, District of Columbia, Kentucky, Maine,
Maryland, Massachusetts, New Hampshire, New Jersey, New York, North
Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia,
West Virginia
Mid-West: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri,
Nebraska, North Dakota, Ohio, South Dakota, Wisconsin
West: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada,
New Mexico, Oregon, Utah, Washington, Wyoming
SAI-15
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF INVESTMENT VALUE BY PROPERTY TYPE (BY
PERCENTAGE)
- -----------------------------------------------------------
1995 1994 1993 1992 1991
- -------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Industrial/R&D 11.0% 10.6% 10.8% 11.4% 10.9%
Office 30.1 24.9 25.2 26.8 33.2
Retail 54.4 60.8 60.0 57.6 51.6
Hotel 3.5 3.2 2.9 3.3 3.8
Other 1.0 0.5 1.1 0.9 0.5
- -------------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF INVESTMENT VALUE BY TYPE OF OWNERSHIP (BY PERCENTAGE) --
DECEMBER 31, 1995
- -------------------------------------------------------------------------
WHOLLY-OWNED EQUITY IN MORTGAGE LOANS
REAL ESTATE* PARTNERSHIPS RECEIVABLE TOTAL
- -------------- -------------- -------------- ---------------- -------
<S> <C> <C> <C> <C>
Industrial/R&D 10.6% 0.4% -- 11.0%
Office 23.2 3.1 3.8% 30.1
Retail 48.3 0.7 5.4 54.4
Hotel 2.3 1.2 -- 3.5
Other 0.1 0.9 -- 1.0
- -------------- -------------- -------------- ---------------- -------
Total 84.5% 6.3% 9.2% 100.0%
- -------------- -------------- -------------- ---------------- -------
</TABLE>
* Title to wholly-owned properties allocated to Prime Property Fund is
generally held in Equitable Life's name.
<TABLE>
<CAPTION>
DISTRIBUTION OF INVESTMENTS BY VALUE RANGE* -- DECEMBER 31,
1995
- -------------------------------------------------------------
INVESTMENT PERCENTAGE OF
VALUE PERCENTAGE OF NUMBER OF TOTAL NUMBER
(MILLIONS) INVESTMENT VALUE INVESTMENTS OF INVESTMENTS
- ------------ ---------------- ------------- --------------
<S> <C> <C> <C>
Under $2.5 2.0% 48 26.8%
$2.5-$5 3.9 36 20.1
$5-$10 6.9 33 18.4
$10-$20 7.2 17 9.5
$20-$50 27.3 28 15.7
$50-$100 20.7 10 5.6
Over $100 32.0 7 3.9
- ------------ ---------------- ------------- --------------
Total 100.0% 179 100.0%
- ------------ ---------------- ------------- --------------
</TABLE>
* Includes all investments stated at the Fund's ownership share.
SAI-16
<PAGE>
INVESTMENT RESTRICTIONS APPLICABLE TO THE FUNDS
THE GROWTH EQUITY FUND. The Growth Equity Fund will not:
o trade in foreign exchange (except transactions incidental to the
settlement of purchases or sales of securities);
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; purchase or write puts and
calls (options);
o purchase real estate or mortgages, except as stated below. The Fund may
buy shares of real estate investment trusts listed on stock exchanges or
reported on the National Association of Securities Dealers, Inc. automated
quotation system ("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 an
investment company's outstanding voting securities. Finally, total holdings
of 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.
o make an investment in an industry if that investment would make the
Fund's holding in that industry exceed 25% of its assets. The United States
government, and its agencies and instrumentalities, are not considered
members of any industry.
THE AGGRESSIVE EQUITY FUND. The Aggressive Equity Fund will operate as
discussed in The Equity Funds--The Aggressive Equity Fund in the prospectus,
and will be subject to the investment policies and limitations described
there. The prospectus for the MFS Emerging Growth Fund describes the
investment objective, policies and limitations applicable to the Fund. A free
copy of the MFS Emerging Growth Fund prospectus may be obtained by calling an
Equitable Life Account Executive.
THE ADA FOREIGN FUND. The ADA Foreign Fund will operate as discussed in The
Equity Funds--The ADA Foreign Fund in the prospectus, and will be subject to
the investment policies and limitations described there. The prospectus for
the Templeton Foreign Fund describes the investment objective, policies and
limitations applicable to that Fund. A free copy of the Templeton Foreign
Fund prospectus may be obtained by calling an Equitable Life Account
Executive.
THE EQUITY INDEX FUND. The Equity Index Fund will operate as discussed in The
Equity Funds--The Equity Index Fund in the prospectus, and will be subject to
the investment policies and limitations
SAI-17
<PAGE>
described there. The prospectus for the Seven Seas Series Fund describes the
investment objective, policies and limitations applicable to the Seven Seas
S&P 500 Index Fund. A free copy of the Seven Seas Series Fund prospectus may
be obtained by calling an Equitable Life Account Executive.
LIFECYCLE FUNDS. The Lifecycle Funds will operate as discussed in The Equity
Funds--The Lifecycle Funds in the prospectus, and will be subject to the
investment policies and limitations described there. Our separate prospectus
for the Lifecycle Funds describes the investment objectives, policies and
limitations applicable to the Lifecycle Fund Group Trusts. A free copy of
that prospectus may be obtained by calling an Equitable Life Account
Executive.
THE REAL ESTATE FUND. The Real Estate Fund will operate as discussed in The
Real Estate Fund in the prospectus, and will be subject to the investment
policies and limitations described there.
HOW WE VALUE THE ASSETS OF THE FUNDS
THE GROWTH EQUITY FUND. The assets of the Growth Equity Fund are valued as
follows:
o STOCKS listed on national securities exchanges or traded on the NASDAQ
national market system are valued at the last sale price. If on a particular
day there is no sale, they are valued at the latest available bid price
reported on a composite tape. 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 PUBLICLY TRADED CORPORATE BONDS (i.e., maturing in more than
one year) 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 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.
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 SHORT-TERM DEBT SECURITIES that mature in more than 60 days are valued
at representative quoted prices. Short-term debt securities that mature in 60
days or less are valued at amortized cost, which approximates market value.
The Growth Equity Fund, as well as the Real Estate Fund, may also acquire
short-term debt securities through units in our Separate Account No. 2A.
These unit values are calculated in the same way as Fund Units. The assets of
Separate Account No. 2A are valued as described above.
Our investment officers 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.
SAI-18
<PAGE>
THE AGGRESSIVE EQUITY FUND. The Fund will invest all of its assets in the MFS
Emerging Growth Fund. The asset value of the MFS Emerging Growth Fund is
computed on a daily basis by the MFS Emerging Growth Fund. See the prospectus
of the MFS Emerging Growth Fund for information on valuation methodology.
THE ADA FOREIGN FUND. The Fund will invest all of its assets in shares of the
Templeton Foreign Fund. The asset value of the Templeton Foreign Fund is
computed on a daily basis by the Templeton Foreign Fund. See the prospectus
of the Templeton Foreign Fund for information on valuation methodology.
THE EQUITY INDEX FUND. The Fund will invest all of its assets in the Seven
Seas S&P 500 Index Fund. The asset value of the Seven Seas S&P 500 Index Fund
is computed on a daily basis by the Seven Seas S&P 500 Index Fund. See the
prospectus of the Seven Seas Series Fund for information on valuation
methodology.
THE LIFECYCLE FUNDS. The Lifecycle Funds--Conservative and Moderate will
invest all of their assets in the Lifecycle Fund Group Trusts--Conservative
and Moderate, respectively. The Group Trusts, in turn, will invest all of
their assets in the Underlying Funds. See our separate prospectus for the
Lifecycle Funds for information on valuation methodology.
ASSETS HELD IN PRIME PROPERTY FUND. Real properties held by Prime Property
Fund (Equitable's Separate Account No. 8) are valued by staff appraisers in
our field offices or third-party appraisers. Appraised values do not
necessarily represent the prices at which the real estate investments would
sell since sales prices are determined by negotiation between a willing buyer
and seller.
Our appraisers value each Prime Property Fund property prior to acquisition
and at the end of each calendar quarter thereafter. The initial appraisal is
a fully documented appraisal. This appraisal takes into account all relevant
information, including the property's physical attributes, location,
marketability, zoning, expandability, and adaptability to use. The initial
appraisal also involves consideration of values based on the three major
methods of estimating property value:
o the income method, based on the value of the property's projected
income stream;
o the cost method, based on the replacement cost of improvements, less
depreciation, plus land value; and
o the market method, based on the sales prices of similar properties.
Subsequent quarterly appraisals include less documentation but take into
account all relevant information and consist of a physical inspection, a
valuation based on the most relevant of the three above methods, usually the
income method, performance record and an assessment of any relevant market
changes. Interim monthly valuations also take into account physical or
economic changes respecting a property which we believe would have a material
effect on its market value. Quarterly appraisals are prepared primarily by
staff appraisers. Staff appraisals are submitted to one of three designated
third-party appraisal firms which also physically inspect those properties
periodically. These appraisal firms provide Equitable Real Estate with a
written statement of concurrence annually.
Partnership equities are valued at Prime Property Fund's equity in the net
assets of the partnerships in accordance with the valuation procedures
described above.
During the past five years, on average, net proceeds (equal to sales price
minus sales expenses) from sales of properties in which Equitable Life
retains no equity interest were equal to approximately 95.8% of their most
recent quarterly valuation. In some cases, Prime Property Fund has received
purchase money mortgages for a portion of the sales price.
SAI-19
<PAGE>
Mortgage and construction loans receivable are valued by comparing the loan
rate of interest to market rates for loans of comparable quality and
duration, giving consideration to the value of the underlying security.
See Note B2 to the Financial Statements of Separate Account No. 8 (Prime
Property Fund) in this SAI for more information about the valuation of
investments in Prime Property Fund.
SUMMARY OF UNIT VALUES FOR THE FUNDS
THE EQUITY FUNDS. Set forth below are Unit Values for the Growth Equity,
Aggressive Equity, ADA Foreign and Equity Index Funds, computed to the
nearest cent on the last business day of the periods specified. The value of
a Growth Equity Fund Unit was established at $10.00 on January 1, 1968, the
date the Program first became available. The Aggressive Equity Fund Unit
Value under the Program was established at $10.00 on May 1, 1985, the date on
which Separate Account No. 3 (Pooled) was first made available under the
Program. The Program's interest in Separate Account No. 3 (Pooled) was
transferred to Separate Account No. 200 at the close of business on November
30, 1995. The ADA Foreign Fund Unit Value was established at $10.00 on March
2, 1992, the date the ADA Foreign Fund began operations. The Equity Index
Fund Unit Value was established at $10.00 on February 1, 1994, the date the
Equity Index Fund began operations. The Lifecycle Funds' Unit Values were
established at $10.00 on May 1, 1995, the date these Funds began operation.
Since the Lifecycle Funds and the Lifecycle Fund Group Trusts have had no
prior operations, Unit Values for the Lifecycle Funds prior to May 1, 1995
are not provided.
Hypothetical Unit Values for the ADA Foreign Fund for periods prior to March
2, 1992 assume that the Fund's assets are invested 95% in the Templeton
Foreign Fund and 5% in Separate Account No. 2A. Hypothetical Unit Values for
periods prior to the availability of the Aggressive Equity Fund, ADA Foreign
Fund and the Equity Index Fund under the Program were calculated by applying
the Program expense charge during those periods plus .15% in estimated other
expenses to the historical investment experience of the MFS Emerging Growth
Fund for the Aggressive Equity Fund, to the historical investment experience
of the Templeton Foreign Fund and Separate Account No. 2A for the ADA Foreign
Fund, and to the historical investment experience of the Seven Seas S&P 500
Index Fund (from its first full year of operations) for the Equity Index
Fund.
<TABLE>
<CAPTION>
UNIT VALUES OF THE EQUITY FUNDS
LIFECYCLE LIFECYCLE
LAST BUSINESS GROWTH EQUITY AGGRESSIVE ADA FOREIGN EQUITY INDEX FUND- FUND-
DAY OF FUND EQUITY FUND (A) FUND (B) FUND (C) CONSERVATIVE MODERATE
- --------------- ------------- --------------- ------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
1986 $ 67.10 $10.00 $ 4.52 -- -- --
1987 70.48 10.38 5.56 -- -- --
1988 81.94 11.13 6.70 -- -- --
1989 117.90 14.04 8.62 -- -- --
1990 103.88 13.58 8.33 -- -- --
1991 156.93 25.37 9.74 -- -- --
1992 157.79 28.13 9.81 $9.06 -- --
1993 187.30 34.75 13.08 9.64 -- --
1994 183.07 36.16 13.01 9.71 -- --
1995 240.03 42.62 14.31 13.12 $10.59 $11.01
March 1996 254.93 45.49 14.93 13.78 10.56 11.22
</TABLE>
- ---------------
(a) For periods after December 1, 1995, Unit Values reflect the actual
performance of Separate Account No. 200, for periods prior to such date
unit values reflect the share values of the MFS Emerging Growth
SAI-20
<PAGE>
Fund Class A shares since September 13, 1993, when those shares were
first offered for sale. From December 31, 1986 to September 13, 1993,
the performance of Class B shares is reflected. The hypothetical
performance shown would have been somewhat higher for the period if
Class A shares had been available.
(b) For periods prior to March 2, 1992, Unit Values reflect hypothetical
performance.
(c) For periods prior to February 1, 1994, Unit Values reflect hypothetical
performance.
THE REAL ESTATE FUND. The Real Estate Fund Unit Value was established at
$10.00 on August 29, 1986, the date the Real Estate Fund began operations.
Set forth below are Unit Values for the Real Estate Fund, computed to the
nearest cent on the last business day of the periods specified.
First, we have assumed that, for periods prior to August 29, 1986, 90% of the
Real Estate Fund's assets were invested in Prime Property Fund and that 10%
were invested in our Separate Account No. 2A, described in the prospectus.
We have also approximated the asset-based fees which would have applied under
the Program for the periods shown and applied them to the hypothetical
investment experience of the Real Estate Fund. For January 1, 1986 through
August 28, 1986, we have assumed those charges were equal to the average
Program Expense Charge for that year, plus a 1.10% investment management fee
for the Real Estate Fund, plus the .25% administration fee applicable to the
Real Estate Fund. See Deductions and Charges in the prospectus for more
information about the charges that apply to the Real Estate Fund.
UNIT VALUES OF THE REAL ESTATE FUND
<TABLE>
<CAPTION>
LAST BUSINESS
DAY OF UNIT VALUE*
- --------------- ------------
<S> <C>
1986 $10.07
1987 10.84
1988 11.37
1989 12.29
1990 12.53
1991 11.44
1992 10.85
1993 10.50
1994 10.88
1995 11.36
March 1996 10.79
</TABLE>
- ---------------
(*) Unit Values are the actual Unit Values last determined before the date
shown, which determination normally will have been from five to ten
days after the end of the preceding month. Consequently, the Unit
Values may differ from the Unit Values presented in Condensed Financial
Information in the prospectus.
SAI-21
<PAGE>
PRIME PROPERTY FUND. Set forth below are the unit values of Prime Property
Fund, computed to the nearest cent on the last business day of the periods
specified. The value of a Prime Property Fund unit was established at
$1,000.00 on August 20, 1973, the date on which it commenced operations. Unit
values are shown without deduction for investment management fees.
UNIT VALUES OF PRIME PROPERTY FUND
<TABLE>
<CAPTION>
LAST BUSINESS
DAY OF UNIT VALUE
- --------------- ------------
<S> <C>
1986 $4,431.87
1987 4,848.46
1988 5,260.89
1989 5,765.73
1990 5,786.40
1991 5,367.19
1992 5,177.99
1993 5,287.69
1994 5,643.72
1995 5,622.21
</TABLE>
GROWTH EQUITY AND AGGRESSIVE EQUITY FUND TRANSACTIONS
The Growth Equity and, prior to December 1, 1995, the Aggressive Equity Funds
are charged for securities brokers' commissions, transfer taxes and other
fees relating to securities transactions. Transactions in equity securities
for a Fund are executed primarily through brokers that receive a commission
paid by the Fund. The brokers are selected by Alliance Capital Management
L.P. ("Alliance") and Equitable Life. For 1995, 1994 and 1993, the Growth
Equity Fund paid $6,044,623, $4,738,796 and $3,407,006, respectively, in
brokerage commissions. For January 1 through November 30, 1995, and for 1994
and 1993, the Aggressive Equity Fund paid $1,453,659, $908,990 and $616,015,
respectively, in brokerage commissions.
Alliance and Equitable Life seek to obtain the best price and execution of
all orders placed for the portfolios of the funds, considering all the
circumstances. If transactions are executed in the over-the- counter market,
they 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 and Equitable Life. These concurrent
authorizations potentially can be either advantageous or disadvantageous to
the Funds. When the concurrent authorizations occur, the objective is to
allocate the executions among the Funds and the other accounts in a fair
manner.
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
Funds. This is taken into account when setting the expense charges.
Brokers who provide research services may charge somewhat higher commissions
than those who do not. However, we will select only brokers whose commissions
we believe are reasonable in all the circumstances. Of the brokerage
commissions paid by the Growth Equity Fund during 1995 and Aggressive Equity
Fund for January 1 through November 30, 1995, $5,731,568 and $1,407,868,
respectively, were paid to brokers providing research services on
transactions of $3,120,414,654 and $562,849,447, respectively.
SAI-22
<PAGE>
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. We
have no binding agreements with any firm as to the amount of brokerage
business which the firm may expect to receive for research services or
otherwise. There may, however, be understandings with certain firms that we
will continue to receive services from such firms only if such firms are
allocated a certain amount of brokerage business. We may try to allocate such
amounts of business to such firms to the extent possible in accordance with
the policies described above.
Research information obtained by us may be used in servicing all 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.
When making securities transactions for 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 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.
PRIME PROPERTY FUND TRANSACTIONS
Prime Property Fund is charged separately for fees paid to independent
property managers, outside legal expenses, operating expenses, real estate
taxes and insurance premiums. In addition, Prime Property Fund reimburses
Equitable Life for certain direct expenses and pays property management and
leasing fees associated with Equitable Life's management of some properties
held in Prime Property Fund.
INVESTMENT MANAGEMENT FEE
The table below shows the amount we received under the investment management
fee under the Program during each of the last three years. These figures
include charges for financial accounting. See Deductions and Charges in the
prospectus. We no longer receive management fees for the Aggressive Equity,
ADA Foreign and Equity Index Funds.
<TABLE>
<CAPTION>
FUND 1995 1994 1993
- ------------------ ---------- ---------- ----------
<S> <C> <C> <C>
Growth Equity ..... $585,663 $632,720 $819,035
Aggressive Equity 193,600 209,181 256,490
ADA Foreign ....... -- 40,815 54,409
Equity Index Fund* -- 788 --
Real Estate ....... 41,887 39,344 54,761
</TABLE>
- ------------
* The Equity Index Fund became available on February 1, 1994.
SAI-23
<PAGE>
UNDERWRITER
Equico Securities, Inc. (Equico), a wholly-owned subsidiary of Equitable
Life, may be deemed to be the principal underwriter of separate account units
under the group annuity contract. On or about May 1, 1996, Equico Securities
will change its name to EQ Financial Consultants, Inc. Equico is registered
with the SEC as a broker-dealer under the Securities Exchange Act of 1934 and
is a member of the National Association of Securities Dealers, Inc. Equico's
principal business address is 1755 Broadway, New York, NY 10019. The offering
of the units under the contract is continuous. No underwriting commissions
have been paid during any of the last three fiscal years with respect to
units of interest under the contract. See Deductions and Charges in the
prospectus.
OUR MANAGEMENT
Equitable Life is managed by a Board of Directors which is elected by its
shareholders. Its directors and certain of its executive officers and their
principal occupations are as follows:
<TABLE>
<CAPTION>
DIRECTORS
NAME PRINCIPAL OCCUPATION
- ----------------------------- ----------------------------------------------------------------------
<S> <C>
Claude Bebear Chairman and Chief Executive Officer, AXA, Chairman, The Equitable
Companies Incorporated
Christopher Brocksom Chief Executive Officer, AXA Equity & Law Life Assurance Society
Francoise Colloc'h Executive Vice President--Culture--Management--Communications, AXA
*Henri de Castries Executive Vice President--Finance, AXA, Vice Chairman, The Equitable
Companies Incorporated
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, Le Boeuf, Lamb, Greene & MacRae
Anthony J. Hamilton Chairman and Chief Executive Officer, Fox-Pitt, Kelton Limited.
John T. Hartley Director, 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.
G. Donald Johnston, Jr. 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
Corporation, L.P.
</TABLE>
- ------------
*Member of Equitable's Investment Committee.
SAI-24
<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>
Joseph J. Melone Director, President and Chief Executive Officer, The Equitable Companies
Incorporated; prior thereto, President and Chief Operating Officer; Chairman
of the Board, Equitable Life; prior thereto, Chairman and Chief Executive
Officer
James M. Benson Director, Senior Executive Vice President and Chief Operating Officer, The
Equitable Companies Incorporated; prior thereto, Senior Executive Vice
President; Director, President and Chief Executive Officer, Equitable Life;
prior thereto, President and Chief Operating Officer; prior thereto,
President, Management Compensation Group
Jerry M. de St. Paer Senior Executive Vice President and Chief Financial Officer; prior thereto,
Executive Vice President and Chief Financial Officer
Robert E. Garber Executive Vice President and General Counsel
William T. McCaffrey Director, Senior Executive Vice President and Chief Operating Officer; prior
thereto, Executive Vice President and Chief Administrative Officer
Peter D. Noris Executive Vice President and Chief Investment Officer
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
</TABLE>
- ------------
* Member of Equitable Life's Investment Committee.
SAI-25
<PAGE>
FINANCIAL STATEMENTS
The financial statements of Equitable Life included in this Statement of
Additional Information should be considered only as bearing upon the ability
of Equitable Life to meet its obligations under the group annuity contract.
They should not be considered as bearing upon the investment experience of
the Funds. The financial statements of Separate Account Nos. 3 (Pooled), 4
(Pooled), 30 (Pooled), 191 and 200 reflect applicable fees, charges and other
expenses under the Program as in effect during the periods covered and they
also reflect the charges against the accounts made in accordance with the
terms of all other contracts participating in the respective separate
accounts. The financial statements of Separate Account No. 8 (Prime Property
Fund) reflect charges against the account made in accordance with the terms
of all other contracts participating in the account; there are no Program
fees charged against Separate Account No. 8.
SEPARATE ACCOUNT NOS. 3 (POOLED) AND 4 (POOLED):
<TABLE>
<CAPTION>
<S> <C>
Reports of Independent Accountants ............................................................... SAI-28
Separate Account No. 3 (Pooled) (The Aggressive Equity Fund):
Statement of Assets and Liabilities, December 31, 1995 ........................................... SAI-29
Statements of Operations and Changes in Net Assets for the Years Ended December 31, 1995 and 1994 SAI-30
Portfolio of Investments, December 31, 1995 ...................................................... SAI-31
Separate Account No. 4 (Pooled) (The Growth Equity Fund):
Statement of Assets and Liabilities, December 31, 1995 ........................................... SAI-35
Statements of Operations and Changes in Net Assets for the Years Ended December 31, 1995 and 1994 SAI-36
Portfolio of Investments, December 31, 1995 ...................................................... SAI-37
Separate Account Nos. 3 (Pooled) and 4 (Pooled)
Notes to Financial Statements .................................................................... SAI-41
SEPARATE ACCOUNT NOS. 191 AND 200:
Report of Independent Accountants ................................................................ SAI-44
Separate Account No. 191 (The ADA Foreign Fund):
Statement of Assets and Liabilities, December 31, 1995 ........................................... SAI-45
Statements of Operations and Changes in Net Assets for the Years Ended December 31, 1995 and 1994 SAI-46
Separate Account No. 200 (The Aggressive Equity Fund):
Statement of Assets and Liabilities, December 31, 1995 ........................................... SAI-47
Statement of Operations and Changes in Net Assets, for the Period December 1, 1995 to
December 31, 1995 .............................................................................. SAI-48
Separate Account Nos. 191 and 200
Notes to Financial Statements .................................................................... SAI-49
SEPARATE ACCOUNT NO. 30 (POOLED) (THE REAL ESTATE FUND):
Report of Independent Accountants ................................................................ SAI-51
Statements of Assets and Liabilities, December 31, 1995 and 1994 ................................. SAI-52
Statements of Operations and Changes in Net Assets for the Years Ended December 31, 1995 and 1994 SAI-53
Statements of Cash Flows for the Years Ended December 31, 1995 and 1994 .......................... SAI-54
Statement of Investments and Net Assets, December 31, 1995 ....................................... SAI-55
Notes to Financial Statements .................................................................... SAI-56
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND):
Report of Independent Accountants ................................................................ SAI-58
Statement of Independent Appraisers .............................................................. SAI-59
Statements of Assets and Liabilities, December 31, 1995 and 1994 ................................. SAI-60
Statements of Operations and Changes in Net Assets for the Years Ended December 31, 1995 and 1994 SAI-61
Statements of Cash Flows for the Years Ended December 31, 1995 and 1994 .......................... SAI-62
Notes to Financial Statements .................................................................... SAI-63
Schedule X: Supplementary Income Statement Information, December 31, 1995 and 1994 .............. SAI-72
Schedule XII: Mortgage Loans Receivable on Real Estate, December 31, 1995 and 1994 .............. SAI-73
SAI-26
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES:
Report of Independent Accountants ................................................................ SAI-75
Consolidated Balance Sheets, December 31, 1995 and 1994 .......................................... SAI-76
Consolidated Statements of Earnings for the Years Ended December 31, 1995, 1994 and 1993 ........ SAI-77
Consolidated Statements of Shareholder's Equity for the Years Ended December 31, 1995, 1994 and
1993 ........................................................................................... SAI-78
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993 ...... SAI-79
Notes to Consolidated Financial Statements ....................................................... SAI-80
</TABLE>
SAI-27
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of The Equitable Life Assurance Society
of the United States and the Participants in the American Dental
Association Members Retirement Program
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. 3 and 4 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, 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 and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable
basis for the opinion expressed above.
Our audits were 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) 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, New York
February 7, 1996
SAI-28
<PAGE>
SEPARATE ACCOUNT NO. 3 (POOLED) (THE AGGRESSIVE EQUITY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<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.
SAI-29
<PAGE>
SEPARATE ACCOUNT NO. 3 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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.
SAI-30
<PAGE>
SEPARATE ACCOUNT NO. 3 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments
December 31, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
NUMBER OF VALUE (NOTE
SHARES 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
-------------
SAI-31
<PAGE>
SEPARATE ACCOUNT NO. 3 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments (Continued)
December 31, 1995
- -------------------------------------------------------------------------------
NUMBER OF VALUE (NOTE
SHARES 3)
- --------------------------------------------------- ----------- -------------
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
-------------
SAI-32
<PAGE>
SEPARATE ACCOUNT NO. 3 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments (Continued)
December 31, 1995
- -------------------------------------------------------------------------------
NUMBER OF VALUE (NOTE
SHARES 3)
- --------------------------------------------------- ----------- -------------
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
-------------
SAI-33
<PAGE>
SEPARATE ACCOUNT NO. 3 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments (Concluded)
December 31, 1995
- -------------------------------------------------------------------------------
NUMBER OF VALUE (NOTE
SHARES 3)
- --------------------------------------------------- ----------- -------------
DIVERSIFIED (1.2%)
MISCELLANEOUS
Pittston Services Group ............................ 118,800 $ 3,727,350
-------------
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.
SAI-34
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED) (THE GROWTH EQUITY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <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.
SAI-35
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
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.
SAI-36
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments
December 31, 1995
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
NUMBER OF VALUE (NOTE
SHARES 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
-------------
SAI-37
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments (Continued)
December 31, 1995
- ---------------------------------------------------------------------------------------
NUMBER OF VALUE (NOTE
SHARES 3)
- ---------------------------------------------------------- ------------ -------------
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
-------------
SAI-38
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments (Continued)
December 31, 1995
- ---------------------------------------------------------------------------------------
NUMBER OF VALUE (NOTE
SHARES 3)
- ---------------------------------------------------------- ------------ -------------
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>
SAI-39
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments (Concluded)
December 31, 1995
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE (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 (100.0%) ........................................................ $2,125,124,541
==============
* Non-income producing.
</TABLE>
See Notes to Financial Statements.
SAI-40
<PAGE>
SEPARATE ACCOUNT NOS. 3 (POOLED) AND 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
1. Separate Account Nos. 3 (Pooled) (the Aggressive Equity Fund) and 4
(Pooled) (the Growth Equity Fund) (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 Statements of Assets and Liabilities in Separate
Account No. 4 may be transferred to Equitable Life's General Account.
Interests of retirement and investment plans for Equitable Life employees,
managers, and agents in Separate Account Nos. 3 and 4 aggregated $68,328,503
(20.0%) and $246,531,777 (11.6%), respectively, at December 31, 1995 and
$48,123,292 (15.6%) and $184,086,304 (11.1%), 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 the Funds. Alliance is a publicly-traded
limited partnership which is indirectly majority-owned by Equitable Life.
As of the close of business on November 30, 1995, the American Dental
Association transferred all amounts held in Separate Account No. 3 (Pooled)
to a newly established Separate Account No. 200 which invests in Class A
shares of the MFS Emerging Growth Fund.
Equitable Life and Alliance seek to obtain the best price and execution of
all orders placed for the 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 Funds' portfolio
transactions.
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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.
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.
SAI-41
<PAGE>
SEPARATE ACCOUNT NOS. 3 (POOLED) AND 4 (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
acquisition. At December 31, 1995, the amortized cost of investments held in
Separate Account No. 2A consists of the following:
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
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 1/12/96 through
2/23/96 ................................................ 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. Separate Account No. 2A is valued daily at amortized cost, which
approximates market value.
For 1995 and 1994, investment security transactions, excluding short-term
debt securities, were as follows:
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPARATE ACCOUNT NO. 3 SEPARATE ACCOUNT NO. 4
------------------------------ ------------------------------
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 ....................................... $460,486,634 $525,937,180 $2,037,876,834 $2,082,648,235
1994 ....................................... 314,667,935 272,832,266 1,556,068,225 1,644,508,525
U.S. Government obligations:
1995 ....................................... -- -- -- --
1994 ....................................... -- -- -- --
</TABLE>
----------------------------------------------------------------------------
3. Investment securities 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 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.
SAI-42
<PAGE>
SEPARATE ACCOUNT NOS. 3 (POOLED) AND 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Concluded)
Long-term 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.
Separate Account No. 2A is valued daily at amortized cost, which
approximates market value. Short-term debt securities purchased directly by
the 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 are deducted in accordance with the terms of the
various contracts which participate in the Funds. With respect to the
American Dental Association Members Retirement Program, these expenses
consist of investment management and accounting fees, program expense charge,
direct expenses and record maintenance and report fee. These charges and fees
are paid to Equitable Life by the Funds and are recorded as expenses in the
accompanying Statements of Operations and Changes in Net Assets.
5. No Federal income tax based on net income or realized and unrealized
capital gains was applicable to contracts participating in the Funds for the
two years ended December 31, 1995, by reason of applicable provisions of the
Internal Revenue Code and no Federal income tax payable by Equitable Life for
such years will affect such contracts. Accordingly, no Federal income tax
provision is required.
SAI-43
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of The Equitable Life Assurance Society
of the United States and the Participants in the American Dental
Association Members Retirement Program
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. 191 and 200 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 the periods indicated, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
Equitable Life's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of shares owned in the underlying
mutual funds with the transfer agent at December 31, 1995, provide a
reasonable basis for the opinion expressed above.
Our audits were 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) 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, New York
February 7, 1996
SAI-44
<PAGE>
SEPARATE ACCOUNT NO. 191 (THE ADA FOREIGN FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in shares of The Templeton Foreign
Fund--at value (cost: $66,914,606)
(Notes 2 and 5) .................................... $65,524,431
Participation in Separate Account No. 2A--at
amortized cost, which approximates market value,
equivalent to 11,254 units at $241.89 .............. 2,722,162
- ----------------------------------------------------- -------------
Total assets ..................................... 68,246,593
- ----------------------------------------------------- -------------
LIABILITIES:
Due to Equitable Life's General Account ............. 4,087
Accrued expenses .................................... 13,622
- ----------------------------------------------------- -------------
Total liabilities ................................ 17,709
- ----------------------------------------------------- -------------
NET ASSETS .......................................... $68,228,884
===================================================== =============
</TABLE>
See Notes to Financial Statements.
SAI-45
<PAGE>
SEPARATE ACCOUNT NO. 191
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994
- ------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends from The Templeton Foreign Fund .......................... $ 2,301,415 $ 2,444,487
Interest ........................................................... 174,395 125,681
- ------------------------------------------------------------------- -------------- --------------
Total .............................................................. 2,475,810 2,570,168
EXPENSES--(NOTE 3) ................................................. (598,289) (673,967)
- ------------------------------------------------------------------- -------------- --------------
NET INVESTMENT INCOME .............................................. 1,877,521 1,896,201
-------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from share transactions .............................. 2,088,140 3,165,838
Realized gain distribution from The Templeton Foreign Fund ........ 2,017,814 2,513,801
- ------------------------------------------------------------------- -------------- --------------
Net realized gain .................................................. 4,105,954 5,679,639
- ------------------------------------------------------------------- -------------- --------------
Unrealized appreciation (depreciation) of investments:
Beginning of period ............................................... (2,127,462) 6,344,998
End of period ..................................................... (1,390,175) (2,127,462)
- ------------------------------------------------------------------- -------------- --------------
Change in unrealized appreciation/depreciation ..................... 737,287 (8,472,460)
- ------------------------------------------------------------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ............ 4,843,241 (2,792,821)
- ------------------------------------------------------------------- -------------- --------------
Increase (decrease) in net assets attributable to operations ...... 6,720,762 (896,620)
- ------------------------------------------------------------------- -------------- --------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions ...................................................... 22,185,319 52,322,250
Withdrawals ........................................................ (32,718,398) (34,585,740)
- ------------------------------------------------------------------- -------------- --------------
Increase in net assets attributable to contributions and
withdrawals ....................................................... 10,533,079 17,736,510
- ------------------------------------------------------------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS .................................. (3,812,317) 16,839,890
NET ASSETS--BEGINNING OF YEAR ...................................... 72,041,201 55,201,311
- ------------------------------------------------------------------- -------------- --------------
NET ASSETS--END OF YEAR ............................................ $ 68,228,884 $ 72,041,201
=================================================================== ============== ==============
</TABLE>
See Notes to Financial Statements.
SAI-46
<PAGE>
SEPARATE ACCOUNT NO. 200 (THE AGGRESSIVE EQUITY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities (Concluded)
December 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in shares of the MFS Emerging Growth
Fund--at value (cost: $76,985,878)
(Notes 2 and 5) ................................ $76,787,976
Receivable from Equitable Life's General Account 61,803
- ------------------------------------------------ -------------
Total assets ................................. 76,849,779
LIABILITIES--Accrued expenses ................... 56,341
- ------------------------------------------------ -------------
NET ASSETS ...................................... $76,793,438
================================================ =============
</TABLE>
See Notes to Financial Statements.
SAI-47
<PAGE>
SEPARATE ACCOUNT NO. 200
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Operations and Changes in Net Assets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 1, 1995*
TO
DECEMBER 31, 1995
- ------------------------------------------------------------------- -----------------
FROM OPERATIONS:
<S> <C>
EXPENSES--(NOTE 3) ................................................. $ (56,341)
- ------------------------------------------------------------------- -----------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS (NOTE 2):
Realized loss from share transactions .............................. (18,654)
Unrealized depreciation of investments ............................. (197,902)
- ------------------------------------------------------------------- -----------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS .................... (216,556)
- ------------------------------------------------------------------- -----------------
Decrease in net assets attributable to operations .................. (272,897)
- ------------------------------------------------------------------- -----------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions ...................................................... 79,148,659
Withdrawals ........................................................ (2,082,324)
- ------------------------------------------------------------------- -----------------
Increase in net assets attributable to contributions and
withdrawals ....................................................... 77,066,335
- ------------------------------------------------------------------- -----------------
INCREASE IN NET ASSETS ............................................. 76,793,438
NET ASSETS--BEGINNING OF PERIOD .................................... --
- ------------------------------------------------------------------- -----------------
NET ASSETS--END OF PERIOD .......................................... $76,793,438
=================================================================== =================
</TABLE>
* Commencement of operations.
See Notes to Financial Statements.
SAI-48
<PAGE>
SEPARATE ACCOUNT NOS. 191 AND 200
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
1. Separate Account Nos. 191 (the ADA Foreign Fund) and 200 (the
Aggressive Equity Fund) (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.
Separate Account No. 200 was established as of the opening of business on
December 1, 1995 and is available only to the American Dental Association
Members Retirement Trust and the American Dental Association Members Pooled
Trust for Retirement Plans (Trusts) sponsored by the American Dental
Association (ADA).
Equitable Life is the investment manager for the Funds.
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Separate Account No. 191 normally invests at least 95% of its assets in
shares of the Templeton Foreign Fund, a series of Templeton Funds, Inc.,
which is registered under the Investment Company Act of 1940 as an open-end
management investment company. The investment manager of the Templeton
Foreign Fund is Templeton Global Advisors Ltd., an indirect wholly-owned
subsidiary of Franklin Resources, Inc. The balance of the ADA Foreign Fund's
assets (up to 5%) are invested in units of Equitable's Internal short-term
investment account, Separate Account No. 2A. Effective May 1, 1996, Separate
Account No. 191 will invest 100 percent of its assets in shares of the
Templeton Foreign Fund.
The Aggressive Equity Fund invests 100% of its assets in Class A shares of
the MFS Emerging Growth Fund, a series of MFS Series Trust II, which was
organized as a Massachusetts business trust and is registered under the 1940
Act as an open-end management investment company. The investment adviser of
the MFS Emerging Growth Fund is Massachusetts Financial Services. Prior to
December 1, 1995, the Aggressive Equity Fund invested in Equitable Life's
Separate Account No. 3 (Pooled).
2. Realized gains and losses on investments include gains and losses on
redemptions of the underlying fund's shares (determined on the identified
cost basis) and capital gain distributions from the underlying funds.
Dividends and realized gain distributions from underlying funds are recorded
on ex-date.
Investments in the Templeton Foreign and MFS Emerging Growth Funds are
valued at the underlying mutual fund's net asset value per share.
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
SAI-49
<PAGE>
SEPARATE ACCOUNT NOS. 191 AND 200
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Concluded)
in sixty days or less from the date of acquisition. At December 31, 1995, the
amortized cost of investments held in Separate Account No. 2A consists of the
following:
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
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 1/12/96 through
2/23/96 ................................................ 262,329,329 88.0
Time Deposits, 5.875% due 01/02/96 ...................... 800,000 0.3
Variable Rate LIBOR, 5.968% due 01/08/95 ................ 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. Separate Account No. 2A is valued daily at amortized cost, which
approximates market value.
3. Charges and fees relating to the Funds are deducted in accordance with
the terms of the contracts issued by Equitable Life to the Trusts. With
respect to the American Dental Association Members Retirement Program, these
expenses consist of program expense charge, direct expenses and record
maintenance and report fee. These charges and fees are paid to Equitable Life
by the Funds and are recorded as expenses in the accompanying Statements of
Operations and Changes in Net Assets.
4. 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.
5. The Templeton Foreign Fund and MFS Emerging Growth Fund have provided
Equitable Life with the following unaudited information as of December 31,
1995.
The Templeton Foreign Fund had total assets of $7.5 billion and a net
asset value per share of $9.18. Its asset allocation consisted of 71.3% in
common and preferred shares and convertible issues, 19.2% in liquid
investments and 9.5% in fixed income issues. Its five major industry group
concentrations were as follows: Banking (11.2%), Telecommunications (5.9%),
Energy Sources (5.7%), Transportation (4.6%) and Metals and Mining (4.5%).
Geographically, the five major country concentrations were as follows: Hong
Kong (8.2%), Spain (7.0%), France (6.3%), Australia (5.8%) and United Kingdom
(5.0).
The MFS Emerging Growth Fund had net assets of $3.5 billion and a net
asset value per share of $26.71. Its asset allocation consisted of 98.1% in
common and preferred shares and convertible issues and 1.9% in liquid
investments. Its five major industry group concentrations were as follows:
Computer Software (27.0%), Gaming and Lodging (14.1%), Health Maintenance
Organization (12.8%), Specialty Stores (8.7%) and Medical Services (7.2%).
SAI-50
<PAGE>
SEPARATE ACCOUNT NO. 30 (THE REAL ESTATE FUND) (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:
We have audited the accompanying statements of assets and liabilities of
The Real Estate Fund (Separate Account No. 30) of The Equitable Life
Assurance Society of the United States (the Account) as of December 31, 1995
and 1994, the statement of investments and net assets as of December 31,
1995, the related statements of operations and changes in net assets and of
cash flows for the years then ended. These financial statements are the
responsibility of the Account's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements audited by us present fairly, in
all material respects, the financial position of the Account at December 31,
1995 and 1994, and the results of its operations and the changes in its net
assets and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
As explained in Note 2, the financial statements at December 31, 1995
include an investment in Prime Property Fund (PPF), valued at $7.3 million
(84% of total assets). PPF holds real estate related investments whose values
have been estimated by management in accordance with the procedures described
in Note B2 of the PPF financial statements. We have tested the procedures
used by PPF's management in arriving at its estimate of market value and have
tested the underlying documentation. In the circumstances, we believe the
procedures are reasonable and the documentation appropriate. Because the real
estate related assets underlying PPF's investments are generally held for
long-term operation and appreciation, amounts ultimately realized from the
sale of real estate related investments may vary from the market values
presented.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The condensed financial information of
the Account for the years ended December 31, 1995 and 1994 included in the
accompanying Prospectus, is presented for purposes of additional analysis and
is not a required part of the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audits 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
Atlanta, Georgia
April 8, 1996
SAI-51
<PAGE>
SEPARATE ACCOUNT NO. 30 (THE REAL ESTATE FUND) (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1995 1994
- ------------------------------------------------------------------------------ ------------ ------------
<S> <C> <C>
ASSETS:
Investments (Notes 2 and 3):
Participation in Prime Property Fund, at value, equivalent to 1,304 units at
$5,622.21 for 1995 (cost: $6,427,542) and 1,418 units at $5,643.72 for 1994
(cost: $6,966,153) .......................................................... $7,333,914 $8,002,106
Participation in Separate Account No. 2A, at amortized cost which
approximates market value,equivalent to 5,659 units at $241.89 for 1995 and
3,922 units at $227.94 for 1994 ............................................. 1,368,746 893,924
Cash .......................................................................... 167 4,426
- ------------------------------------------------------------------------------ ------------ ------------
Total assets ............................................................... 8,702,827 8,900,456
- ------------------------------------------------------------------------------ ------------ ------------
LIABILITIES:
Accrued expenses .............................................................. 19,240 12,712
- ------------------------------------------------------------------------------ ------------ ------------
Total liabilities .......................................................... 19,240 12,712
- ------------------------------------------------------------------------------ ------------ ------------
Net Assets .................................................................... $8,683,587 $8,887,744
============================================================================== ============ ============
</TABLE>
See Notes to Financial Statements.
SAI-52
<PAGE>
SEPARATE ACCOUNT NO. 30 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994
- ----------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Interest Income .............................................................. $ 52,821 $ 36,884
EXPENSES (NOTE 4) ............................................................ (180,455) (185,127)
- ----------------------------------------------------------------------------- ------------- -------------
NET INVESTMENT LOSS .......................................................... (127,634) (148,243)
- ----------------------------------------------------------------------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from redemption of Prime Property Fund units ................... 111,388 342,395
- ----------------------------------------------------------------------------- ------------- -------------
Unrealized appreciation (depreciation) of Prime Property Fund units:
January 1 ................................................................... 1,035,953 813,978
December 31 ................................................................. 906,373 1,035,953
- ----------------------------------------------------------------------------- ------------- -------------
Unrealized appreciation (depreciation) ....................................... (129,580) 221,975
- ----------------------------------------------------------------------------- ------------- -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ....................... (18,192) 564,370
- ----------------------------------------------------------------------------- ------------- -------------
Increase (decrease) in net assets attributable to operations ................. (145,826) 416,127
- ----------------------------------------------------------------------------- ------------- -------------
FROM ALLOCATIONS AND WITHDRAWALS:
Allocations .................................................................. 874,036 914,352
Withdrawals .................................................................. (932,367) (4,331,414)
- ----------------------------------------------------------------------------- ------------- -------------
Increase (decrease) in net assets attributable to allocations and withdrawals (58,331) (3,417,062)
- ----------------------------------------------------------------------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS ............................................ (204,157) (3,000,935)
NET ASSETS -- JANUARY 1 ...................................................... 8,887,744 11,888,679
- ----------------------------------------------------------------------------- ------------- -------------
NET ASSETS -- DECEMBER 31 .................................................... $ 8,683,587 $ 8,887,744
============================================================================= ============= =============
</TABLE>
See Notes to Financial Statements.
SAI-53
<PAGE>
SEPARATE ACCOUNT NO. 30 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Cash Flows
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994
- ---------------------------------------------------------- ------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net investment loss ....................................... $ (127,634) $ (148,243)
- ---------------------------------------------------------- ------------- -------------
Adjustments to reconcile net investment loss to net cash flow used in
operating activities:
Increase (decrease) in accrued expenses .................. 6,528 (4,855)
------------- -------------
Total adjustments ........................................ 6,528 (4,855)
- ---------------------------------------------------------- ------------- -------------
Net cash flow used in operating activities ............... (121,106) (153,098)
- ---------------------------------------------------------- ------------- -------------
INVESTING ACTIVITIES:
Net proceeds from redemption of Prime Property Fund units 650,000 2,331,728
- ---------------------------------------------------------- ------------- -------------
Net cash flow provided by investing activities .......... 650,000 2,331,728
- ---------------------------------------------------------- ------------- -------------
FINANCING ACTIVITIES:
Allocations .............................................. 874,036 914,352
Withdrawals .............................................. (932,367) (4,331,414)
- ---------------------------------------------------------- ------------- -------------
Net cash flow used in financing activities ............... (58,331) (3,417,062)
- ---------------------------------------------------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS 470,563 (1,238,432)
CASH AND SHORT-TERM INVESTMENTS -- JANUARY 1 .............. 898,350 2,136,782
- ---------------------------------------------------------- ------------- -------------
CASH AND SHORT-TERM INVESTMENTS -- DECEMBER 31 ........... $1,368,913 $ 898,350
========================================================== ============= =============
</TABLE>
See Notes to Financial Statements.
SAI-54
<PAGE>
SEPARATE ACCOUNT NO. 30 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Investments and Net Assets
December 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INVESTMENTS (NOTES 2 AND 3):
- ------------------------------------------------------------------------------------------------------- ------------
REAL ESTATE INVESTMENTS:
Participation in Prime Property Fund at value, equivalent to 1,304 units at $5,622.21
(cost: $6,427,542) ................................................................................... $7,333,914
SHORT-TERM INVESTMENTS:
Participation in Separate Account No. 2A, at amortized cost which approximates market value,
equivalent to 5,659 units at $241.89 ................................................................. 1,368,746
- ------------------------------------------------------------------------------------------------------- ------------
Total Investments ...................................................................................... 8,702,660
- ------------------------------------------------------------------------------------------------------- ------------
Cash Less Liabilities .................................................................................. (19,073)
- ------------------------------------------------------------------------------------------------------- ------------
NET ASSETS ............................................................................................. $8,683,587
======================================================================================================= ============
</TABLE>
See Notes to Financial Statements.
SAI-55
<PAGE>
SEPARATE ACCOUNT NO. 30 (POOLED) (THE REAL ESTATE FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
1. Separate Account No. 30 (the Account) was established as a separate
account of The Equitable Life Assurance Society of the United States
(Equitable), in conformity with the New York State Insurance Law. Pursuant to
such law, the net assets of the Account are not chargeable with liabilities
arising out of any other business of Equitable. Equitable is the investment
manager for the Account. In managing the Account, Equitable uses the services
of its wholly-owned subsidiary, Equitable Real Estate Investment Management,
Inc. (Management).
2. The Account participates primarily in Equitable's Prime Property Fund
by purchasing or redeeming units on the date Prime Property Fund units are
valued. Prime Property Fund invests in real estate as discussed in the
accompanying financial statements of Prime Property Fund.
The change in value of Prime Property Fund units owned by the Account is
recorded as unrealized appreciation (depreciation). Prime Property Fund's
unit value changes as a result of both investment income and increases and
decreases in investment appreciation. In determining realized gains or losses
from the redemption of Prime Property Fund units, the cost of units sold is
recorded on a first-in, first-out basis.
The Account participates in Equitable's Separate Account No. 2A by
purchasing or redeeming units, depending on the Account's excess cash
availability or need for cash to meet Account liabilities or withdrawals. The
investments of Separate Account No. 2A consist of debt securities which
mature or can be liquidated in sixty days or less from the date of
acquisition. Short-term debt securities may also be purchased directly by the
Account. Interest income is recorded when earned and expenses are recognized
when incurred.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilites at the
date of the financial statements and the reported amounts of income,
expenses, and unrealized gains (losses) during the reporting period. Actual
results could differ from those estimates.
3. Investments are valued as follows:
The Account's participation in Prime Property Fund is valued as of the
last business day of the month based upon the number of units held and the
unit value of Prime Property Fund. Investments held by Prime Property Fund
are valued as disclosed in Note B2 of the financial statements of Prime
Property Fund which are included in this Statement of Additional Information.
Separate Account No. 2A is primarily valued at amortized cost which
approximates market value.
4. Expense charges are made in accordance with the terms of the contracts
participating in the Account.
5. In the Statements of Cash Flows, the Account considers short-term
investments to be cash equivalents.
6. No federal income tax based on net investment income or realized and
unrealized gains was applicable to contracts participating in the Account by
reason of applicable sections of the Internal Revenue Code, and no federal
income tax payable by Equitable will affect the contracts.
SAI-56
<PAGE>
SEPARATE ACCOUNT NO. 30 (POOLED) (THE REAL ESTATE FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Concluded)
7. The ability of a client to withdraw funds from the Account is subject
to the availability of cash arising from net investment income, allocations
and the redemption of units in Prime Property Fund. To the extent that
withdrawal requests exceed such available cash, Management has uniform
procedures to provide for cash payments. As of December 31, 1995, the Real
Estate Fund is fulfilling withdrawal requests on a current basis.
8. These financial statements should be read in conjunction with the
financial statements of Prime Property Fund, which are included in this
Statement of Additional Information.
SAI-57
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Equitable Life Assurance Society of the United States:
We have audited the accompanying statements of assets and liabilities of
Prime Property Fund of The Equitable Life Assurance Society of the United
States (the Account) as of December 31, 1995 and 1994, and the related
statements of operations and changes in net assets and of cash flows for the
years then ended. These financial statements are the responsibility of the
Account's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of the Account at December 31, 1995
and 1994, and the results of its operations and the changes in its net assets
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
As explained in Note B2, the financial statements at December 31, 1995
include real estate related investments, valued at $3.4 billion (95% of total
assets), whose values have been estimated by management in accordance with
the procedures described in the Note. We have tested the procedures used by
the Account's management in arriving at its estimate of market value and have
tested the underlying documentation. In the circumstances, we believe the
procedures are reasonable and the documentation appropriate. Because the real
estate related assets underlying the Account's investments are generally held
for long-term operation and appreciation, amounts ultimately realized from
the sale of real estate related investments may vary from the market values
presented.
PRICE WATERHOUSE LLP
Atlanta, Georgia
February 2,1996
SAI-58
<PAGE>
STATEMENT OF INDEPENDENT APPRAISERS
Equitable Real Estate staff appraisers and independent fee appraisers make
quarterly market value estimates of all properties in Prime Property Fund.
During 1995, those appraisals completed by Equitable Real Estate staff were
independently reviewed by L. W. Ellwood Company, Arthur Andersen & Co. and
Landauer Real Estate Counselors. Each company independently reviewed separate
portions of the Equitable valuations so that by year end all properties were
analyzed once by non-Equitable appraisers. Based on our review and analysis,
we concur with the value estimates on properties prepared by Equitable Real
Estate staff as of the calendar quarter during which we conducted our review.
Our appraisal review is part of a comprehensive three-year program which
analyzes Equitable Real Estate staff appraisals including our thorough market
value comparisons and physical inspections of one-third of the properties
during the year. At the end of the three-year cycle, we have subjected all
properties to on-site review.
We have had the full cooperation of Equitable Real Estate with complete and
unrestricted access to all underlying documents including leases, operation
agreements, budgets, and partnership joint venture agreements. We have, where
in our opinion deemed appropriate, independently researched the market for
additional data and performed supplemental analysis to complete our review.
Our review has been made in conformity with and subject to the Code of
Professional Ethics and Standards of Practice of the Appraisal Institute.
L.W. Ellwood Company
Arthur Andersen & Co.
Landauer Real Estate Counselors
December 31, 1995
SAI-59
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1995 1994
- ----------------------------------------------------------- -------------- --------------
<S> <C> <C>
ASSETS:
Real estate investments at value (Notes B and C):
Properties ................................................ $2,872,220,000 $3,015,415,000
Partnership equities and related mortgage loans receivable 321,425,207 212,322,573
Mortgage loans receivable ................................. 204,700,000 172,300,000
- ----------------------------------------------------------- -------------- --------------
Total real estate investments at value ..................... 3,398,345,207 3,400,037,573
- ----------------------------------------------------------- -------------- --------------
Cash and short-term investments (Notes B and C) ........... 78,409,583 65,252,499
Accrued investment income .................................. 78,412,412 74,877,495
Prepaid real estate expenses and taxes ..................... 6,559,659 6,638,877
Other assets ............................................... 12,431,297 15,629,624
- ----------------------------------------------------------- -------------- --------------
Total assets .............................................. 3,574,158,158 3,562,436,068
- ----------------------------------------------------------- -------------- --------------
LIABILITIES:
Mortgage loans payable (Note E) ............................ 528,809,699 422,207,905
Accrued real estate expenses and taxes ..................... 55,529,792 53,168,032
Accrued asset management fees and other liabilities (Note
I) ......................................................... 21,494,899 19,062,551
Accrued capital expenditures ............................... 20,388,611 12,422,321
- ----------------------------------------------------------- -------------- --------------
Total liabilities ......................................... 626,223,001 506,860,809
- ----------------------------------------------------------- -------------- --------------
NET ASSETS ................................................. $2,947,935,157 $3,055,575,259
=========================================================== ============== ==============
</TABLE>
SAI-60
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994
- -------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
INVESTMENT INCOME (NOTES B, C AND D):
Rental income from real estate properties ................................. $ 443,539,829 $ 410,179,367
Income from partnership operations and interest from related mortgage
loans receivable ......................................................... 24,671,070 21,690,976
Interest from mortgage loans receivable ................................... 15,941,696 13,534,675
Interest from short-term investments ...................................... 11,147,574 5,419,060
Other ..................................................................... 1,517,993 49,609
- -------------------------------------------------------------------------- -------------- --------------
Total ..................................................................... 496,818,162 450,873,687
- -------------------------------------------------------------------------- -------------- --------------
EXPENSES (NOTES B AND D):
Real estate operating expenses ............................................ 139,640,785 132,262,835
Real estate taxes ......................................................... 55,808,774 59,635,936
Asset management fees (Note I) ............................................ 31,427,742 29,785,130
Interest on mortgage loans payable (Note E) ............................... 35,593,854 25,931,441
- -------------------------------------------------------------------------- -------------- --------------
Total ..................................................................... 262,471,155 247,615,342
- -------------------------------------------------------------------------- -------------- --------------
NET INVESTMENT INCOME ..................................................... 234,347,007 203,258,345
- -------------------------------------------------------------------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE B):
Realized gain (loss) from sale of investments:
Net proceeds from sales .................................................. 15,730,241 24,326,114
Cost of investments sold ................................................. (18,860,705) (51,428,164)
- -------------------------------------------------------------------------- -------------- --------------
Net Realized Gain (Loss) from Sale of Investments ........................ (3,130,464) (27,102,050)
- -------------------------------------------------------------------------- -------------- --------------
Unrealized appreciation (depreciation) on investments:
January 1 ................................................................ (370,439,139) (359,530,346)
December 31 .............................................................. (644,450,055) (370,439,139)
- -------------------------------------------------------------------------- -------------- --------------
Unrealized appreciation (depreciation) on investments .................... (274,010,916) (10,908,793)
- -------------------------------------------------------------------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS .................... (277,141,380) (38,010,843)
- -------------------------------------------------------------------------- -------------- --------------
Increase (decrease) in net assets attributable to investment activities .. (42,794,373) 165,247,502
- -------------------------------------------------------------------------- -------------- --------------
FROM CLIENT TRANSACTIONS:
Allocations ............................................................... 281,104,520 185,252,463
Withdrawals (Note G) ...................................................... (345,950,249) (206,898,433)
- -------------------------------------------------------------------------- -------------- --------------
Increase (decrease) in net assets attributable to client transactions .... (64,845,729) (21,645,970)
- -------------------------------------------------------------------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS ......................................... (107,640,102) 143,601,532
NET ASSETS -- JANUARY 1 ................................................... 3,055,575,259 2,911,973,727
- -------------------------------------------------------------------------- -------------- --------------
NET ASSETS -- DECEMBER 31 ................................................. $2,947,935,157 $3,055,575,259
========================================================================== ============== ==============
Unit Value ................................................................ $5,622.21 $5,643.72
Units Outstanding ......................................................... 524,336 541,410
- -------------------------------------------------------------------------- -------------- --------------
</TABLE>
SAI-61
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Cash Flows
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994
- ----------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net investment income .............................................................. $ 234,347,007 $ 203,258,345
- ----------------------------------------------------------------------------------- --------------- ---------------
Adjustments to reconcile net investment income to net cash flow provided by
operating activities:
Changes in assets -- (increase) decrease:
Accrued investment income ........................................................ (2,748,532) (13,730,542)
Prepaid real estate expenses and taxes ........................................... 79,218 (869,986)
Other assets ..................................................................... 3,250,279 (126,116)
Changes in liabilities -- increase (decrease):
Accrued real estate expenses and taxes ........................................... 2,361,760 9,911,961
Accrued asset management fees and other liabilities .............................. 2,591,007 1,783,913
- ----------------------------------------------------------------------------------- --------------- ---------------
Total adjustments ................................................................. 5,533,732 (3,030,770)
- ----------------------------------------------------------------------------------- --------------- ---------------
Net Cash Flow Provided by Operating Activities .................................... 239,880,739 200,227,575
- ----------------------------------------------------------------------------------- --------------- ---------------
INVESTING ACTIVITIES:
Acquisitions of real estate properties ............................................. (69,581,894) (79,391,114)
Additions to real estate properties ................................................ (77,829,327) (69,096,671)
Proceeds from real estate properties sold .......................................... 15,571,583 17,140,410
Acquisitions of mortgage loans receivable .......................................... (28,250,000) --
Repayments of mortgage loans receivable ............................................ 4,653,293 14,425,000
Proceeds from partnership equities sold and repayments of loans receivable related
to partnership equities ........................................................... 8,041,534 2,940,517
Contributions to partnership equities and advances on related loans receivable .... (112,323,092) (2,930,726)
Distributions from partnerships less than net cash provided by partnership
operating activities .............................................................. (8,709,865) (9,200,042)
- ----------------------------------------------------------------------------------- --------------- ---------------
Net Cash Flow Used in Investing Activities ........................................ (268,427,768) (126,112,626)
- ----------------------------------------------------------------------------------- --------------- ---------------
FINANCING ACTIVITIES:
Increase in mortgage loans payable ................................................. 110,000,000 --
Principal payments on mortgage loans payable ....................................... (3,398,206) (63,675,602)
Allocations ........................................................................ 281,052,568 185,208,817
Withdrawals ........................................................................ (345,950,249) (206,898,433)
- ----------------------------------------------------------------------------------- --------------- ---------------
Net Cash Flow Provided by (Used in) Financing Activities .......................... 41,704,113 (85,365,218)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS ......................... 13,157,084 (11,250,269)
CASH AND SHORT-TERM INVESTMENTS AT JANUARY 1 ....................................... 65,252,499 76,502,768
- ----------------------------------------------------------------------------------- --------------- ---------------
CASH AND SHORT-TERM INVESTMENTS AT DECEMBER 31 ..................................... $ 78,409,583 $ 65,252,499
=================================================================================== =============== ===============
</TABLE>
SAI-62
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
A: GENERAL
Prime Property Fund (the Account) was established as a separate account of
The Equitable Life Assurance Society of the United States (Equitable) in
conformity with the New York State Insurance Law for the purpose of
acquiring real estate and real estate related investments. Pursuant to
such law, the net assets in the Account are not chargeable with
liabilities arising out of any other business of Equitable. Equitable acts
as investment manager for the Account. In managing the Account, Equitable
uses the services of its wholly-owned subsidiary, Equitable Real Estate
Investment Management, Inc. (Management).
B: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Investment Transactions
Real estate property acquisitions are recorded as of the date of
closing. Mortgage and construction loans receivable and capital
contributions to partnership equities are recorded as of the date funds
are advanced. Purchase money mortgages, acquired as consideration
received for real estate sold, are recorded as of the closing date of
the sales transaction.
Expenditures which extend economic life or represent additional capital
investments benefiting future periods (including tenant improvements and
leasing commissions) are capitalized. For properties under development
or major expansion, carrying costs related to the development or
expansion, principally real estate taxes, interest, and utility costs,
are capitalized prior to substantial completion of tenant improvements
for a maximum period of one year from cessation of major construction
activity. Historical cost depreciation is not recognized on real estate
properties.
Rental income is recognized when due in accordance with the terms of the
respective leases rather than being averaged over the lives of the
leases. Expenses are recognized when incurred. Income from partnership
operations represents the Account's share of partnership income
excluding historical cost depreciation.
The Account determines realized gain (loss) by comparing net proceeds
from the sale of properties to the cost of the properties sold. The
unrealized gain (loss) previously recorded for these properties is then
eliminated.
Mortgage loans payable are stated at the principal amount of obligations
outstanding. Benefits or detriments resulting from a differential in
current mortgage interest rates and contractual mortgage interest rates
are taken into consideration in the appraisal of the related property.
Certain real estate and partnership equity properties may have a market
value that is lower than the outstanding principal amount of the
obligation. If the Account's obligation is limited to the value of the
individual property and if Management intends to limit the Account's
exposure in the property to its existing investment, then the value of
the property is adjusted to equal the outstanding principal amount of
the obligation plus incidental liabilities. Upon transfer of properties
in satisfaction of debt, the Account reclassifies previously recognized
unrealized losses to realized gains and losses.
SAI-63
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
The preparation of financial statements in conformity with generally
accepted accounting principles requires Management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amount of
income, expenses, and unrealized gains (losses) during the reporting
period. Actual results could differ from those estimates.
2. Valuation of Investments
The values of real estate investments are estimated in accordance with
the policies and procedures of the Appraisal Institute. Ultimate
realization of the market values is dependent to a great extent on
economic and other conditions that are beyond Management's control (such
as general economic conditions, conditions affecting tenants and other
events occurring in the markets in which individual properties are
located). Further, values may or may not represent the prices at which
the real estate investments would sell since market prices of real
estate investments can only be determined by negotiation between a
willing buyer and seller. Market value considers the financial aspects
of a property, market transactions and the relative yield for an asset
as measured against alternative investments. Although the market values
represent subjective estimates, Management believes that these market
values are reasonable approximations of market prices.
Real Estate Properties and Partnership Equities
The values of real estate properties and partnership equities have been
prepared giving consideration to Income, Cost, and Market Data
Approaches of estimating property value. The Income Approach projects an
income stream for a property (typically 10 years) and discounts this
income plus a reversion (presumed sale) into a present value. Yield
rates and growth assumptions utilized in this approach are derived from
market transactions as well as other financial and demographic data. The
Cost Approach estimates the replacement cost of the building less
depreciation plus the land value. Generally, this approach provides a
check on the Income Approach. The Market Data Approach compares recent
transactions to the appraised property. Adjustments are made for
dissimilarities which typically provide a range of value. Generally, the
Income Approach carries the most weight in the value reconciliation.
The initial valuation of properties allocated to the Account is based on
a fully documented appraisal report. Subsequent values are determined
quarterly from certificates of value which include less documentation
but nevertheless meet all of the requirements of the Appraisal Institute
and are considered appraisals. In these appraisals, a full discounted
cash flow analysis, which is the basis of an Income Approach, is the
primary focus. Interim monthly valuations are determined giving
consideration to material investment transactions. Full appraisal
reports on selected properties are prepared as deemed necessary by
Management.
Appraisals are prepared by Management's valuation staff or third-party
appraisers. Staff appraisals are concurred with and reviewed by one of
three designated third-party appraisal firms which also physically
inspect one-third of the properties every year on a rotating basis.
Since appraisals take into consideration the estimated effect of
physical depreciation, a more meaningful
SAI-64
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
financial statement presentation is achieved by excluding historical
cost depreciation from net investment income. This presentation does not
affect the net assets or unit value of the Account.
Partnership equities are stated at the Account's equity in the value of
the net assets of the partnerships.
Mortgage Loans Receivable
The fair value of mortgage loans receivable held in the Account has been
determined by one or more of the following criteria as appropriate: (i)
on the basis of estimated market interest rates for loans of comparable
quality and maturity, (ii) by recognizing the value of equity
participations and options to enter into equity participations contained
in certain loan instruments and (iii) giving consideration to the value
of the underlying security.
Short-Term Investments
The short-term investments are primarily valued at amortized cost, which
approximates market value.
SAI-65
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
C: INVESTMENTS
1. Real Estate Investments
The Account's real estate investments are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
(MILLIONS) (MILLIONS)
- --------------- ---------------------- ---------------------
COST VALUE COST VALUE
- --------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Properties:
Industrial/R&D $ 380.0 $ 360.9 $ 371.5 $ 348.7
Office ..... 1,279.3 788.7 1,194.7 710.2
Retail ..... 1,731.9 1,642.6 1,693.8 1,880.0
Hotel ...... 103.0 76.1 97.7 72.6
Other ...... 4.1 3.9 4.1 3.9
------------ ---------- ---------- ---------- ---------
Subtotal ... 3,498.3 2,872.2 3,361.8 3,015.4
------------ ---------- ---------- ---------- ---------
Partnership equities and
related mortgage loans
receivable:
Industrial/R&D 18.6 13.0 18.7 13.0
Office ..... 221.3 214.2 130.1 107.9
Retail ..... 56.5 22.7 54.8 41.3
Hotel ...... 50.7 41.3 43.0 36.3
Other ...... 27.0 30.2 13.3 13.8
------------ ---------- ---------- ---------- ---------
Subtotal ... 374.1 321.4 259.9 212.3
------------ ---------- ---------- ---------- ---------
Mortgage loans receivable:
Office ..... 17.2 21.0 23.6 27.3
Retail ..... 153.2 183.7 125.2 145.0
Other ...... -- -- -- --
------------ ---------- ---------- ---------- ---------
Subtotal ... 170.4 204.7 148.8 172.3
------------ ---------- ---------- ---------- ---------
Total ...... $4,042.8 $3,398.3 $3,770.5 $3,400.0
------------ ---------- ---------- ---------- ---------
</TABLE>
SAI-66
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
2. Real Estate Partnership Equities
The Account's equity interests in real estate partnerships and their
respective financial positions at December 31, 1995 and 1994 (based on
market valuations determined for the Account) and results from
operations for the years then ended are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------- ------------ ------------
<S> <C> <C>
Number of interests ....................................... 18 17
Ownership positions ....................................... 33.3-91.2% 33.3-91.2%
Account's equity value (millions) ......................... $197 $150
Notes receivable related to partnership equities
(millions) ............................................... $18 $43
Partnership assets (millions) ............................. $1,284 $1,280
Partnership liabilities (millions) ........................ $915 $982
Partnership income before depreciation (millions) ........ $30 $29
========================================================== ============ ============
</TABLE>
3. Mortgage Loans Receivable
At December 31, 1995, mortgage loans receivable at a fair value of
$311.3 million of which $106.6 million related to partnership equities,
$175 million of other mortgage loans receivable and $29.7 million of
rated commercial mortgage backed securities, had interest rates ranging
from 8.2% to 13.1%. Aggregate annual receipts of mortgage principal due
during the five years following December 31, 1995 and thereafter are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, (MILLIONS)
- ------------------------ ----------
<S> <C>
1996 .................... $ 1
1997 .................... 1
1998 .................... 1
1999 .................... 45
2000 .................... 1
Thereafter .............. 194
- ------------------------ ----------
Total ................... $243
======================== ==========
</TABLE>
4. Short-Term Investments
The Account's short-term investments are comprised principally of
participation in Equitable's Separate Account No. 2A. The assets of
Separate Account No. 2A consist of debt securities maturing in sixty
days or less from the date of acquisition. Such debt securities may
include bankers acceptances, certificates of deposit, commercial paper,
and repurchase agreements. Short-term debt securities may also be
purchased directly by the Account.
SAI-67
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
D: INVESTMENT RESTRUCTURINGS
During 1994, five partnership equities and certain related loans
receivable with a market value of $222.1 million were transferred to real
estate properties. The Account acquired its partners' interests in four of
the partnerships in exchange for loans owed by the partners to the
Account. Additionally, the Account acquired its partner's interest in a
partnership in which the Account had been recording all of the
partnership's operating results. In accordance with the terms of the
partnership agreement, no consideration was given to the partner in
exchange for its interest. These transactions were recorded at the
investments' existing cost and market values and had no effect on the net
assets or unit value of the Account.
In November 1994, the Account acquired the 50% interest of its partner in
a partnership in which the Account previously had held the other 50%
interest. Upon acquisition, this investment was transferred to real estate
properties.
E: MORTGAGE LOANS PAYABLE
Mortgage loans payable consist of the following at December 31, 1995:(1)
<TABLE>
<CAPTION>
(MILLIONS)
- ------------------------------------------------------------------------------------------- ----------
<S> <C>
6.633% loan of $209.5 million and a LIBOR plus 0.5% loan of $70.5 million collateralized by
four real estate properties with a market value of $596.6 million. Includes an interest
rate cap agreement which limits the interest rate for the floating rate loan to a maximum
of 11.5%. Maturing July 2003. .............................................................. $280.0
LIBOR plus 1.1% loan collateralized by four real estate properties with a market value of
$374.7 million. Includes an interest rate cap agreement which limits the interest rate to a
maximum of 9.5%. Maturing June 1998. ....................................................... 172.0
LIBOR plus 1.4% loan collateralized by a real estate property with a market value of $64.3
million. Maturing July 1996. ............................................................... 35.0
9.0% loan collateralized by a real estate property with a market value of $34.7 million.
Maturing June 2011. ........................................................................ 14.3
9.0% loan collateralized by a real estate property with a market value of $18.5 million.
Maturing March 2000. ....................................................................... 13.7
9.375% loan collateralized by a real estate property with a market value of $18.5 million.
Maturing December 1999.(2) ................................................................. 10.2
9.375% loan collateralized by a real estate property with a market value of $3.9 million.
Maturing February 2000. .................................................................... 3.6
- ------------------------------------------------------------------------------------------- ----------
Total ...................................................................................... $528.8
=========================================================================================== ==========
</TABLE>
(1) Market values shown are as of 12/31/95.
(2) This represents the Account's 50% interest in a tenancy-in-common
property with a total market value of $37 million and total outstanding debt of
$20.4 million.
SAI-68
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
Aggregate annual payments of principal on mortgage loans are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, (MILLIONS)
- ------------------------ ----------
<S> <C>
1996 .................... $ 36
1997 .................... 1
1998 .................... 173
1999 .................... 11
2000 .................... 16
2001-2005 ............... 284
Thereafter .............. 8
- ------------------------ ----------
Total ................... $529
======================== ==========
</TABLE>
F: LEASES
Minimum future rentals to be received on real estate properties, excluding
partnership equities, under noncancelable operating leases in effect as of
December 31, 1995 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, (MILLIONS)
- ------------------------ ----------
<S> <C>
1996 .................... $ 275.7
1997 .................... 248.1
1998 .................... 218.6
1999 .................... 195.2
2000 .................... 154.0
Thereafter .............. 452.8
- ------------------------ ----------
Total ................... $1,544.4
======================== ==========
</TABLE>
Contingent rentals included in investment income were approximately $8.6
million and $8.3 million in 1995 and 1994, respectively.
G: WITHDRAWALS
The ability of a client to withdraw funds from the Account is subject to
the availability of cash arising from net investment income,
contributions, and the sale of investments in the normal course of
business. To the extent that withdrawal requests exceed such available
cash, Management has uniform procedures to provide for cash payments,
which may be deferred for such period as Management considers necessary to
protect the interests of other clients in the Account or to obtain the
funds to be withdrawn. At December 31, 1995 and 1994, withdrawal requests
exceeded available cash.
SAI-69
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
H: RELATED PARTY TRANSACTIONS
At December 31, 1995 and 1994, interests of retirement plans for
employees, managers, and agents of Equitable in the Account aggregated
$64.6 million (2.2%) and $65.5 million (2.1%), respectively, of the net
assets of the Account.
Management has an exemption from the Department of Labor which allows it
to charge market rate property management and leasing fees for properties
it manages for the Account. All such fees must be approved by an
independent fiduciary. During 1995 and 1994, Management earned $9.4
million and $6.1 million, respectively, in property management and leasing
fees from the Account, and in addition was reimbursed$16.0 million and
$13.6 million, respectively, for payroll expenses for on-site personnel.
I: FEES
Management charges clients in the Account a monthly asset management fee
based on the client's prior month-end net asset value at the annual rates
shown below:
<TABLE>
<CAPTION>
AMOUNT OF FUNDS ANNUAL RATE
- ------------------------ -------------
<S> <C>
First $10 million ....... 1.15%
Net $15 million ......... 1.00%
Excess over $25 million 0.80%
- ------------------------ -------------
</TABLE>
Additional fees may also be charged to clients for certain optional
services provided by Management.
At December 3l, 1995 and 1994, the clients' liability to Management for
asset management fees totaled $4.6 million and $4.5 million, respectively.
Account investments in Separate Account No. 2A are not subject to an
additional asset management fee.
SAI-70
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
J: SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
In the Statements of Cash Flows, the Account considers short-term
investments to be cash equivalents. Cash payments of interest were $35.8
million and $25.6 million during 1995 and 1994, respectively.Non-cash
investing and financing activities are summarized as follows:
<TABLE>
<CAPTION>
19954 1994
(MILLIONS) (MILLIONS)
- ---------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
Conversion of partnership equities and related loans receivable to
real estate properties, at cost ...................................... $327
- ---------------------------------------------------------------------- ---------- ----------
Assumption of mortgage loans payable upon conversion of partnership
equities to real estate properties ................................... $ 29
- ---------------------------------------------------------------------- ---------- ----------
Refinancing of mortgage loan payable .................................. $205 $205
- ---------------------------------------------------------------------- ---------- ----------
Conversion of notes receivable related to partnership equity to
contribution of partnership equity ................................... $ 16
====================================================================== ==========
</TABLE>
K: FEDERAL INCOME TAX
No federal income tax based on net investment income or realized and
unrealized gains was applicable to contracts participating in the Account
by reason of applicable sections of the Internal Revenue Code, and no
federal income tax payable by Equitable will affect the contracts.
L: INVESTMENT COMMITMENTS
As of December 31, 1995, the Account proposes to invest an additional $126
million in existing real estate investments and $39 million in new
properties.
SAI-71
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Supplementary Financial Information
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
(IN THOUSANDS)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN B
YEAR ENDED DECEMBER
COLUMN A 31,
ITEM 1995 1994
- --------------------------- --------- ---------
<S> <C> <C>
1.Maintenance and repairs . $17,498 $11,465
2.Real estate taxes ........ $55,809 $57,663
- --------------------------- --------- ---------
</TABLE>
Maintenance and Repairs is included in Real Estate Operating Expenses.
Other captions not included since such costs and expenses are not applicable
or did not exceed 1% of total revenues.
SAI-72
<PAGE>
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Supplementary Financial Information
SCHEDULE XII -- MORTGAGE LOANS RECEIVABLE ON REAL ESTATE
AS OF DECEMBER 31, 1995
(IN THOUSANDS)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
CARRYING
AMOUNT OF
CURRENT FINAL MORTGAGE AT
EFFECTIVE MATURITY FACE AMOUNT MARKET
DESCRIPTION INTEREST RATE DATE PERIODIC PAYMENT TERMS OF MORTGAGE VALUE
- --------------------------------- -------------- ----------- -------------------------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Mortgage Loans Receivable:
Participating mortgage secured by 8.2% 07/01/03 Monthly payment of interest plus $125,474 $154,000
a shopping center in New Castle participation in property cash flow.
County, DE Loan due at maturity date.
Secured by office, hotel, retail, 8.71% 03/31/99 Quarterly interest only. Loan due at 43,505 43,505
garage and marina facility in maturity date.
Boston, MA
Secured by office building in Prime + 3% 08/31/95 Loan in default. 64,376 38,677
Irvine, CA
Secured by office, hotel, retail, 12% 03/31/02 Monthly interest only to the extent of 24,451 24,451
garage and marina facility in available cash flow. Principal and
Boston, MA all accrued unpaid interest due at
maturity date.
Secured by shopping center in 13.12% 10/22/01 Monthly payment of interest and 22,700 24,400
Danbury, CN $50,000 of principal. Remaining
principal due at maturity date.
Secured by 19 office, industrial 9.5% 05/01/01 Monthly interest only payable at 6%. 22,410 21,000
and retail properties in Principal and all accrued unpaid
Rockville, MD interest due at maturity date.
Other:
$5,000,000-$7,500,000 (two loans) 10.0%-12.36% 1/95-5/07 12,500 5,300
- --------------------------------- -------------- ----------- -------------------------------------- ----------- -----------
Total $315,416 $311,333
================================= ============== =========== ====================================== =========== ===========
</TABLE>
SAI-73
<PAGE>
- -----------------------------------------------------------------------------
The following is a reconciliation of the carrying amounts of the above loans
at market value for the years ended December 31, 1995 and 1994:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994
- ---------------------------------------------------------------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Balance -- January 1 ............................................ $191,981 $207,100
Additions during the year:
Advances/New Loans .............................................. 104,800 1,320
Deductions during the year:
Collection of principal and transfers to real estate properties (8,353) (20,198)
Increase/(decrease) in unrealized gain/(loss) during the year .. 22,905 3,759
Increase/(decrease in realized gain/(loss) during the year ..... -- --
- ---------------------------------------------------------------- ---------- ----------
Balance -- December 31 ......................................... $311,333 $191,981
================================================================ ========== ==========
</TABLE>
SAI-74
<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
SAI-75
<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.
SAI-76
<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.
SAI-77
<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.
SAI-78
<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.
SAI-79
<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.
SAI-80
<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.
SAI-81
<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".
SAI-82
<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.
SAI-83
<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.
SAI-84
<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.
SAI-85
<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.
SAI-86
<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>
SAI-87
<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.
SAI-88
<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>
SAI-89
<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.
SAI-90
<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>
SAI-91
<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.
SAI-92
<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>
SAI-93
<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>
SAI-94
<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.
SAI-95
<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.
SAI-96
<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.
SAI-97
<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>
SAI-98
<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>
SAI-99
<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>
SAI-100
<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.
SAI-101
<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
SAI-102
<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.
SAI-103
<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.
SAI-104
<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
SAI-105
<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 Funds' 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
SAI-106
<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
SAI-107
<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.
SAI-108
<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.
SAI-109
<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>
SAI-110
<PAGE>
18) BUSINESS SEGMENT INFORMATION
The Company has three major business segments: Individual Insurance
and Annuities; Investment Services and Group Pension.
Consolidation/elimination 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>
SAI-111
<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
SAI-112
<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>
SAI-113
<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.
SAI-114
<PAGE>
Supplement dated May 1, 1996 to Prospectus dated May 1, 1996
MEMBERS RETIREMENT PROGRAMS
funded under contracts with
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
787 Seventh Avenue, New York, New York 10019
Toll-Free Telephone 800-223-5790
-------------------------------
VARIABLE ANNUITY BENEFITS
-------------------------------
This Prospectus Supplement should be read and retained for
future reference by Participants in the Members Retirement
Programs who are considering variable
annuity payment benefits after retirement.
This Prospectus Supplement is not authorized for
distribution unless accompanied or preceded by
the Prospectus dated May 1, 1996 for the
appropriate Members Retirement Program.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS: ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- ------------------------------------------------------------------------------
<PAGE>
RETIREMENT BENEFITS
When you become eligible to receive benefits under a Members Retirement
Program, you may select one or more of the following forms of distribution,
which are available in variable or fixed form. The law requires that if the
value of your Account Balance is more than $3,500, you must receive a
Qualified Joint and Survivor Annuity unless your Spouse consents to a
different election.
Life Annuity - an annuity providing monthly payments for your life. No
payments will be made after your death, even if you have received only one
payment.
Life Annuity - Period Certain - an annuity providing monthly payments
for your life or, if longer, a specified period of time. If you die before the
end of that specified period, payments will continue to your beneficiary until
the end of the period. Subject to legal limitations, you may specify a minimum
payment period of 5, 10, 15 or 20 years; the longer the specified period, the
smaller the monthly payments will be.
Joint and Survivor Annuity - Period Certain - an annuity providing
monthly payments for your life and that of your beneficiary or, if longer, a
specified period of time. If you and your beneficiary both die before the end
of the specified period, payments will continue to your contingent beneficiary
until the end of the period. Subject to legal limitations, you may specify a
minimum payment period of 5, 10, 15 or 20 years; the longer the specified
period, the smaller the monthly payments will be.
How Annuity Payments are Made
When your distribution of benefits under an annuity begins, your Units
in the Funds are redeemed. Part or all of the proceeds, plus part or all of
your Account Balance in the General Account Options, may be used to purchase
an annuity. The minimum amount that can be used to purchase any type of
annuity is $3,500. Usually, a $350 charge will be deducted from the amount
used to purchase the annuity to reimburse us for administrative expenses
associated with processing the application and with issuing each month's
annuity payment. Applicable premium taxes will also be deducted.
Annuity payments may be fixed or variable.
FIXED ANNUITY PAYMENTS. Fixed annuity payments are determined from our
annuity rate tables in effect at the time the first annuity payment is
made. The minimum amount of the fixed payments is determined from tables
in our contract with the Trustees, which show the amount of proceeds
necessary to purchase each $1 of monthly annuity payments (after
deduction of any applicable taxes and the annuity administrative
charge). These tables are
-2-
<PAGE>
designed to determine the amounts required to pay for the annuity
selected, taking into account our administrative and investment expenses
and mortality and expense risks. The size of your payment will depend
upon the form of annuity chosen, your age and the age of your
beneficiary if you select a joint and survivor annuity. If our current
group annuity rates for payment of proceeds would produce a larger
payment, those rates will apply instead of the minimums in the contract
tables. If we give any group pension client with a qualified plan a
better annuity rate than those currently available for the Program, we
will also make those rates available to Program participants. The
annuity administrative charge may be greater than $350 in that case.
Under our contract with the Trustees, we may change the tables but not
more frequently than once every five years. Fixed annuity payments will
not fluctuate during the payment period.
VARIABLE ANNUITY PAYMENTS. Variable annuity payments are funded through
our Separate Account No. 4 (Pooled) (the "Fund"), through the purchase
of Annuity Units. The number of Annuity Units purchased is equal to the
amount of the first annuity payment divided by the Annuity Unit Value
for the due date of the first annuity payment. The amount of the first
annuity payment is determined in the same manner for a variable annuity
as it is for a fixed annuity. The number of Annuity Units stays the same
throughout the payment period for the variable annuity but the Annuity
Unit Value changes to reflect the investment income and the realized and
unrealized capital gains and losses of the Fund, after adjustment for an
assumed base rate of return of 5-3/4%, described below.
The amounts of variable annuity payments are determined as follows:
Payments normally start as of the first day of the second calendar month
following our receipt of the proper forms. The first two monthly payments are
the same.
Payments after the first two will vary according to the investment
performance of the Fund. Each monthly payment will be calculated by
multiplying the number of Annuity Units credited to you by the Annuity Unit
Value for the first business day of the calendar month before the due date of
the payment.
The Annuity Unit Value was set at $1.1553 as of July 1, 1969, the first
day that Separate Account No. 4 (Pooled) was operational. For any month after
that date, it is the Annuity Unit Value for the preceding month multiplied by
the change factor for the current month. The change factor gives effect to the
assumed annual base rate of return of 5-3/4% and to the actual investment
experience of the Fund.
-3-
<PAGE>
Because of the adjustment for the assumed base rate of return, the
Annuity Unit Value rises and falls depending on whether the actual rate of
investment return is higher or lower than 5-3/4%.
Illustration of Changes in Annuity Payments. To show how we determine
variable annuity payments from month to month, assume that the amount you
applied to purchase an annuity is enough to fund an annuity with a monthly
payment of $363 and that the Annuity Unit Value for the due date of the first
annuity payment is $1.05. The number of annuity units credited under your
certificate would be 345.71 (363 / 1.05 = 345.71). If the third monthly
payment is due on March 1, and the Annuity Unit Value for February was $1.10,
the annuity payment for March would be the number of units (345.71) times the
Annuity Unit Value ($1.10), or $380.28. If the Annuity Unit Value was $1.00 on
March 1, the annuity payment for April would be 345.71 times $1.00 or $345.71.
Summary of Annuity Unit Values for the Fund
This table shows the Annuity Unit Values with an assumed based rate of
return of 5-3/4%.
<TABLE>
<CAPTION>
First Business Day of Annuity Unit Value
--------------------- ------------------
<S> <C>
October 1986 $3.4330
October 1987 $4.3934
October 1988 $3.5444
October 1989 $4.8357
October 1990 $3.8569
October 1991 $5.4677
October 1992 $5.1818
October 1993 $6.3886
October 1994 $6.1563
October 1995 $7.4970
</TABLE>
THE FUND
The Fund (Separate Account No. 4 (Pooled)) was established pursuant to
the Insurance Law of the State of New York in 1969. It is an investment
account used to fund benefits under group annuity contracts and other
agreements for tax-deferred retirement programs administered by us.
-4-
<PAGE>
For a full description of the Fund, its investment policies, the risks
of an investment in the Fund and information relating to the valuation of Fund
assets, see the description of the Fund in our May 1, 1996 prospectus and the
Statement of Additional Information.
INVESTMENT MANAGER
The Manager
We, Equitable Life, act as Investment Manager to the Fund. As such, we
have complete discretion over Fund assets and we invest and reinvest these
assets in accordance with the investment policies described in our May 1, 1996
prospectus and Statement of Additional Information.
We are a New York stock life insurance company with our Home Office at
787 Seventh Avenue, New York, New York 10019. Founded in 1859, we are one of
the largest insurance companies in the United States. Equitable Life, the
Holding Co. and their subsidiaries managed assets of approximately $195.3
billion as of December 31, 1995.
Investment Management
In providing investment management to the Funds, we currently use the
personnel and facilities of Alliance Capital Management L.P. ("Alliance"), for
portfolio selection and transaction services. For a description of Alliance,
see our May 1, 1996 prospectus.
Fund Transactions
The Fund is charged for securities brokers commissions, transfer taxes
and other fees relating to securities transactions. Transactions in equity
securities for the Fund are executed primarily through brokers which are
selected by Alliance/Equitable Life and receive commissions paid by the Fund.
For 1995 and 1994, the Fund paid $6,044,623 and $4,738,796, respectively, in
brokerage commissions. For a full description of our policies relating to the
selection of brokers, see the description of the Fund in our May 1, 1996
Statement of Additional Information.
-5-
<PAGE>
FINANCIAL STATEMENTS
The financial statements of the Fund reflect applicable fees, charges
and other expenses under the Members Programs as in effect during the periods
covered, as well as the charges against the account made in accordance with
the terms of all other contracts participating in the account.
Separate Account No. 4 (Pooled): Page
Report of Independent Accountants - Price Waterhouse LLP 7
Statement of Assets and Liabilities,
December 31, 1995 8
Statement of Operations and Changes in Net Assets
for the Years Ended December 31, 1995 and 1994 9
Portfolio of Investments
December 31, 1995 10
Notes to Financial Statements 14
-6-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and the Participants in the
Association Members Retirement Program
In our opinion, the accompanying statement 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 No. 4 of The Equitable Life Assurance Society of
the United States ("Equitable Life") at December 31, 1995, and its results of
operations and changes in net assets for each of the two years in the period
then ended, 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, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, NY
February 7, 1996
-7-
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED) (THE GROWTH EQUITY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<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.
-8-
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
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.
-9-
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments
December 31, 1995
<TABLE>
<CAPTION>
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
-------------
-10-
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments (Continued)
December 31, 1995
NUMBER OF VALUE
SHARES (NOTE 3)
- ---------------------------------------------------------- ------------ -------------
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
-------------
-11-
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments (Continued)
December 31, 1995
NUMBER OF VALUE
SHARES (NOTE 3)
- ---------------------------------------------------------- ------------ -------------
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>
-12-
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments (Concluded)
December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE (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 (100.0%) ........................................................ $2,125,124,541
==============
* Non-income producing.
</TABLE>
See Notes to Financial Statements.
-13-
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
1. Separate Account No. 4 (Pooled) (the Growth Equity Fund) (the Fund) of
The Equitable Life Assurance Society of the United States (Equitable Life), a
wholly-owned subsidiary of The Equitable Companies Incorporated, was
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 Fund is 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 Statements of
Assets and Liabilities in Separate Account No. 4 may be transferred to
Equitable Life's General Account.
At December 31, 1995 and 1994, interests of retirement and investment
plans for Equitable Life employees, managers, and agents in Separate Account
No. 4 aggregated $246,531,777 (11.6%) and $184,086,304 (11.1%), respectively,
of the net assets in the Fund.
Equitable Life is the investment manager for the Fund. Alliance Capital
Management L.P. (Alliance) serves as the investment adviser to Equitable Life
with respect to the management of the Fund. Alliance is a publicly-traded
limited partnership which is indirectly majority-owned by Equitable Life.
Equitable Life and Alliance seek to obtain the best price and execution of
all orders placed for the Fund 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 Funds' portfolio
transactions.
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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.
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.
-14-
<PAGE>
SEPARATE ACCOUNT NO. 4 (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
acquisition. At December 31, 1995, the amortized cost of investments held in
Separate Account No. 2A consists of the following:
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
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 1/12/96 through
2/23/96 ................................................ 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. Separate Account No. 2A is valued daily at amortized cost, which
approximates market value.
For 1995 and 1994, investment security transactions, excluding short-term
debt securities, were as follows:
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPARATE ACCOUNT NO. 4
COST OF NET PROCEEDS
PURCHASES OF SALES
- ----------------------------------------------- -------------- --------------
<S> <C> <C>
Stocks and long-term corporate debt securities:
1995 ......................................... $2,037,876,834 $2,082,648,235
1994 ......................................... 1,556,068,225 1,644,508,525
U.S. Government obligations:
1995 ......................................... -- --
1994 ......................................... -- --
</TABLE>
----------------------------------------------------------------------------
3. Investment securities 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 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.
-15-
<PAGE>
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Concluded)
Long-term 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.
Separate Account No. 2A is valued daily at amortized cost, which
approximates market value. Short-term debt securities purchased directly by
the Fund 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 are deducted in accordance with the terms of the
various contracts which participate in the Fund. With respect to the Members
Retirement Plan and Trust, these expenses consist of investment management
and accounting fees, program expense charge, direct expenses and record
maintenance and report fee. These charges and fees are paid to Equitable Life
by the Fund and are recorded as expenses in the accompanying Statements of
Operations and Changes in Net Assets.
5. No Federal income tax based on net income or realized and unrealized
capital gains was applicable to contracts participating in the Fund for the
two years ended December 31, 1995, by reason of applicable provisions of the
Internal Revenue Code and no Federal income tax payable by Equitable Life for
such years will affect such contracts. Accordingly, no Federal income tax
provision is required.
-16-
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part B.
The following are included in the Statement of Additional
Information relating to the American Dental Association Program:
1. Separate Account Nos. 3 (Pooled) 4 (Pooled) 191 and 200:
--------------------------------------------------------
- Report of Independent Accountants
2. Separate Account No. 3 (Pooled) (The Aggressive Equity Fund):
- Statement of Assets and Liabilities, December 31, 1995
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1995 and 1994
- Portfolio of Investments, December 31, 1995
3. Separate Account No. 4 (Pooled) (The Growth Equity Fund):
- Statement of Assets and Liabilities, December 31, 1995
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1995 and 1994
- Portfolio of Investments, December 31, 1995
4. Separate Account No. 191 (The ADA Foreign Fund):
- Statement of Assets and Liabilities, December 31, 1995
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1995 and 1994
5. Separate Account No. 200 (The Aggressive Equity Fund):
- Statement of Assets and Liabilities, December 31, 1995
- Statements of Operations and Changes in Net Assets for the
Year Ended December 31, 1995
6. Separate Account Nos. 3 (Pooled), 4 (Pooled), 191 and 200
- Notes to Financial Statements
7. Separate Account No. 30 (Pooled (The Real Estate Fund):
- Report of Independent Accountants
- Statements of Assets and Liabilities, December 31, 1995 and 1994
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1995 and 1994
- Statements of Cash Flows for the Years Ended December 31, 1995
and 1994
- Statement of Investments and Net Assets, December 31, 1995
- Notes to Financial Statements
C-1
<PAGE>
8. Separate Account No. 8 (Prime Property Fund):
- Report of Independent Accountants
- Statement of Independent Appraisers
- Statements of Assets and Liabilities, December 31, 1995 and
1994
- Statements of Operations and Changes in Net Assets for
the Years Ended December 31, 1995 and 1994
- Statements of Cash Flows for the Years Ended December 31, 1995
and 1994
- Notes to Financial Statements
- Schedule X: Supplementary Income Statement Information,
December 31, 1995 and 1994
- Schedule XII: Mortgage Loans Receivable on Real Estate,
December 31, 1995 and 1994
9. The Equitable Life Assurance Society of the United States:
- Report of Independent Accountants
- Consolidated Balance Sheets, December 31, 1995 and 1994
- Consolidated Statements of Earnings for the Years Ended
December 31, 1995, 1994 and 1993
- Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993
- Notes to Consolidated Financial Statements
(b) The following Exhibits are filed herewith:
1. Action by Peter D. Noris, Executive Vice President and Chief
Investment Officer of Equitable, dated September 5, 1995
establishing Separate Account No. 200 and copies of resolutions
of the Board of Directors of Equitable referenced in said action,
incorporated by reference to Registration Statement No. 33-63113
on Form N-4 of Registrant, filed on September 29, 1995.
2. Not applicable.
3. (a) Service Agreement, effective as of December 1, 1995,
between MFS Distributors, Inc. and The Equitable Life
Assurance Society of the United States, incorporated by
reference to Pre-Effective Amendment No. 1 to Registration
Statement No. 33-63113 on Form N-4 of Registrant, filed on
November 21, 1995.
(i) Buy-Sell Agreement effective May 1, 1996 between
The Equitable Life Assurance Society of the United
States and Franklin Templeton Distributors, Inc.
(b) Form of Letter Agreement between The Equitable Life
Assurance Society of the United States and the Trustees of
the American Dental Association Members Retirement Trust
and the Trustees of the American Dental Association Members
Pooled Trust for Retirement, incorporated by reference to
Pre-Effective Amendment No. 1 to Registration Statement No.
33-63113 on Form N-4 of Registrant, filed on November 21,
1995.
(c) Amended and Restated Buy-Sell Agreement effective
April 17, 1995 between The Equitable Life Assurance
Society of the United States and Franklin Templeton
Distributors, Inc., incorporated by reference to
Registration Statement No. 33- 91588 on Form N-3 of
Registrant, filed on April 28, 1995.
C-2
<PAGE>
(d) Investment Management Agreement by and among (i) the
Trustees of the American Dental Association Members
Retirement Trust and the American Dental
Association Members Pooled Trust for Retirement
Plans, (ii) the Committee of Separate Account No.
191 of The Equitable Life Assurance Society of the
United States, and (iii) The Equitable Life
Assurance Society of the United States in its
capacity as insurer and owner of the assets of
Separate Account No. 191 and as an Investment
Manager of Separate Account No. 191 to the extent
described therein, incorporated by reference to
Registration Statement No. 33- 46995 on Form N-3 of
Registrant, filed on April 8, 1992.
(e) Amended and Restated Investment Management Agreement dated
as of May 1, 1996, by and among (i) the Trustees of the
American Dental Association Members Retirement Trust for
Retirement Plans, (ii) the Committee of Separate Account
No. 191 of The Equitable Life Assurance Society of the
United States, and (iii) The Equitable Life Assurance
Society of the United States in its capacity as insurer and
owner of the assets of Separate Account No. 191.
4. (a) Exhibit 6(a)(2) (Group Annuity Contract AC 2100, as amended
and restated effective February 1, 1991 on contract Form
No. APC 1,000-91, among the Trustees of the American Dental
Association Members Retirement Trust, the American Dental
Association Members Pooled Trust for Retirement Plans and
The Equitable Life Assurance Society of the United States),
incorporated by reference to Post-Effective Amendment No. 1
on Form N-3 to Registration Statement 33-40162, filed
December 20, 1991.
(b) Rider No. 1 to Group Annuity Contract AC 2100 among
the Trustees of the American Dental Association
Members Retirement Trust, the American Dental
Association Members Pooled Trust for Retirement
Plans and The Equitable Life Assurance Society of
the United States, incorporated by reference to
Registration No. 33-46995 on Form N-3 of
Registrant, filed April 8, 1992.
(c) Form of Rider No. 2 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the American
Dental Association Members Pooled Trust for
Retirement Plans and The Equitable Life Assurance
Society of the United States, incorporated by
reference to Registration No. 33-46995 on Form N-3
of Registrant, filed April 8, 1992.
(d) Rider No. 3 to Group Annuity Contract AC 2100 among
the Trustees of the American Dental Association
Members Retirement Trust, the American Dental
Association Members Pooled Trust for Retirement
Plans and The Equitable Life Assurance Society of
the United States, incorporated by reference to
Registration No. 33-75616 on Form N-4 of
Registrant, filed April 29, 1994.
C-3
<PAGE>
(e) Form of Rider No. 4 to Group Annuity Contract AC 2100 among
the Trustees of the American Dental Association
Members Retirement Trust, the American Dental
Association Members Pooled Trust for Retirement
Plans and The Equitable Life Assurance Society of
the United States, incorporated by reference to
Registration No. 33-75616 on Form N-4 of
Registrant, filed April 29, 1994.
(f) Form of Rider No. 5 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the American
Dental Association Members Pooled Trust for
Retirement Plans and The Equitable Life Assurance
Society of the United States, incorporated by
reference to Registration No. 33-75616 on Form N-4
of Registrant, on February 27, 1995.
(g) Form of Rider No. 6 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the American
Dental Association Members Pooled Trust for
Retirement Plans and The Equitable Life Assurance
Society of the United States, previously filed with
this Registration Statement No. 33-63113 on
September 29, 1995.
(h) Form of Rider No. 7 to Group Annuity Contract AC 2100 among
the Trustees of the American Dental Association Members
Retirement Trust, the American Dental Association Members
Pooled Trust for Retirement Plans and The Equitable Life
Assurance Society of the United States, incorporated by
reference to Pre-Effective Amendment No. 1 to Registration
Statement No. 33-63113 on Form N-4 of Registrant, filed on
November 21, 1995.
(i) Form of Rider No. 8 to Group Annuity Contract AC 2100 among
the Trustees of the American Dental Association Members
Retirement Trust, the American Dental Association Members
Pooled Trust for Retirement Plans and The Equitable Life
Assurance Society of the United States.
5. (a) Exhibit 7(a) (Form of Participation Agreement for the
standardized Profit-Sharing Plan under the ADA Program),
incorporated by reference to Post-Effective Amendment No. 1
on Form N-3 to Registration Statement on Form S-1 of
Registrant, filed April l6, 1986.
(b) Exhibit 7(b) (Form of Participation Agreement for
the nonstandardized Profit-Sharing Plan under the
ADA Program), incorporated by reference to
Post-Effective Amendment No. 1 on Form N-3 to
Registration Statement on Form S-1 of Registrant,
filed April l6, 1986.
(c) Exhibit 7(e) (Copy of Attachment to Profit Sharing
Participation Agreement under the American Dental
Association Members Retirement Plan), incorporated
by reference to Registration No. 33-21417 on Form
N-3 of Registrant, filed April 26, 1988.
C-4
<PAGE>
(d) Exhibit 7(e)(2) (Form of Participant Enrollment
Form under the ADA Program), incorporated by
reference to Post- Effective Amendment No. 2 on
Form N-3 to Registration Statement on Form S-1 of
Registrant, filed April 2l, l987.
(e) Exhibit 7(v) (Form of Simplified Participation
Agreement for the Profit-Sharing Plan under the ADA
Program, as filed with the Internal Revenue
Service), incorporated by reference to
Post-Effective Amendment No. 2 to Registration No.
33-21417 on Form N-3 of Registrant, filed April 26,
1989.
(f) Exhibit 7(w) (Form of Non-Standardized
Participation Agreement for the Profit-Sharing Plan
under the ADA Program, as filed with the Internal
Revenue Service), incorporated by reference to
Post-Effective Amendment No. 2 to Registration No.
33-21417 on Form N-3 of Registrant, filed April 26,
1989.
(g) Exhibit 7(x) (Form of Standardized Participation
Agreement for the Profit-Sharing Plan under the ADA
Program, as filed with the Internal Revenue
Service), incorporated by reference to
Post-Effective Amendment No. 2 to Registration No.
33-21417 on Form N-3 of Registrant, filed April 26,
1989.
6. (a) Copy of the Restated Charter of The Equitable Life
Assurance Society of the United States, adopted August 6,
1992, incorporated by reference to Post-Effective Amendment
No. 2 to Registrant No. 33-46995 on Form N-3 of Registrant,
filed March 2, 1993.
(b) By-Laws of The Equitable Life Assurance Society of the
United States, as amended through July 22, 1992,
incorporated by reference to Post-Effective Amendment No. 2
to Registration No. 33-46995 on Form N-3 of Registrant,
filed March 2, 1993.
(c) Certificate of Amendment of the Restated Charter of
The Equitable Life Assurance Society of the United
States, adopted November 18, 1993, previously filed
with this Registration No. 333-01301 on February
29, 1996.
7. Not applicable
8. (a) Exhibit 11(a)(2) (Form of American Dental Association
Members Retirement Plan, as filed with the Internal Revenue
Service), incorporated by reference to Post-Effective
Amendment No. 2 to Registration No. 33-21417 on Form N-3 of
Registrant, filed April 26, 1989.
(b) Exhibit 11(g)(2) (Form of American Dental Association
Members Retirement Trust, as filed with the Internal
Revenue Service), incorporated by reference to Post-
C-5
<PAGE>
Effective Amendment No. 2 to Registration No. 33-21417 on
Form N-3 of Registrant, filed April 26, 1989.
(c) Exhibit 11(i) (Form of First Amendment to the American
Dental Association Members Retirement Trust), incorporated
by reference to Post-Effective Amendment No. 1 to
Registration No. 33-40162 on Form N-3 of Registrant, filed
December 20, 1991.
(d) Exhibit 11(o) (Copy of Administration Services Agreement,
dated May 1, 1994, among The Equitable Life Assurance
Society of the United States, the Trustees of the American
Dental Association Members Retirement Trust, and of the
American Dental Association Members Pooled Trust for
Retirement Plans and the Council of Insurance of the
American Dental Association), incorporated by reference to
Registration Statement No. 33-75614 on Form N-3 of
Registrant, filed February 23, 1994.
(e) Exhibit 11(j) (Copy of American Dental Association Members
Pooled Trust for Retirement Plans, dated as of January 1,
1984), incorporated by reference to Post-Effective
Amendment No. 1 to Registration No. 33-40162 on Form N-3 of
Registrant on Form N-3 of Registrant, filed December 20,
1991.
(f) Exhibit 11(k) (Form of First Amendment to the American
Dental Association Members Pooled Trust for Retirement
Plans, dated as of January 1, 1984), incorporated by
reference to Post-Effective Amendment No. 1 to Registration
No. 33-40162 on Form N-3 of Registrant, filed December 20,
1991.
9. Opinion and Consent of Anthony A. Dreyspool, Vice President
and Senior Counsel of The Equitable Life Assurance Society
of the United States, previously filed with this
Registration Statement No. 333-01301 on February 29, 1996.
10 (a) Consent of Anthony A. Dreyspool (included
within Exhibit 9(a) above), previously filed with
this Registration No.
333-01301 on February 29, 1996.
(b) Consent of Price Waterhouse LLP.
(b) Powers of Attorney, previously filed with this Registration
Statement No. 333-01301 on February 29, 1996.
11. Not applicable.
12. Not applicable.
13. Not applicable.
14. Not Applicable.
Item 27 - FINANCIAL DATA SCHEDULE
C-6
<PAGE>
Item 25. Directors and Officers of Equitable
Set forth below is information regarding the directors and
principal officers of Equitable. Equitable's address is 787 Seventh Avenue,
New York, New York 10019. The business address of the persons whose names are
preceded by an asterisk is that of Equitable.
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH EQUITABLE
- ----------------- ----------------------
DIRECTORS
Claude Bebear Director
AXA S.A.
23, Avenue Matignon
75008 Paris, France
Christopher J. Brocksom Director
AXA Equity & Law
Amersham Road
High Wycombe
Bucks HP 13 5 AL, England
Francoise Colloc'h Director
AXA S.A.
23, Avenue Matignon
75008 Paris, France
Henri de Castries Director
AXA S.A.
23, Avenue Matignon
75008 Paris, France
Joseph L. Dionne Director
The McGraw-Hill Companies
1221 Avenue of the Americas
New York, NY 10020
William T. Esrey Director
Sprint Corporation
P.O. Box 11315
Kansas City, MO 64112
C-7
<PAGE>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH EQUITABLE
Jean-Rene Fourtou Director
Rhone-Poulenc S.A.
25 Quai Paul Doumer
92408 Courbevoie Cedex
France
Norman C. Francis Director
Xavier University of Louisiana
7325 Palmetto Street
New Orleans, LA 70125
Donald J. Greene Director
LeBouef, Lamb, Greene & MacRae
125 West 55th Street
New York, NY 10019-4513
Anthony J. Hamilton Director
Fox-Pitt, Kelton Limited
35 Wilson Street
London EC2M 2SJ
England
John T. Hartley Director
Harris Corporation
1025 NASA Boulevard
Melbourne, FL 32919
John H.F. Haskell, Jr. Director
Dillon, Read & Co., Inc.
535 Madison Avenue
New York, NY 10022
W. Edwin Jarmain Director
Jarmain Group Inc.
95 Wellington Street West
Suite 805
Toronto, Ontario M5J 2N7,
Canada
G. Donald Johnston, Jr. Director
184-400 Ocean Road
John's Island
Vero Beach, FL 32963
Winthrop Knowlton Director
Knowlton Brothers, Inc.
530 Fifth Avenue
New York, NY 10036
C-8
<PAGE>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH EQUITABLE
Arthur L. Liman Director
Paul, Weiss, Rifkind, Wharton &
Garrison
1285 Avenue of the Americas
New York, NY 10019
George T. Lowy Director
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Didier Pineau-Valencienne Director
Schneider S. A.
64-70 Avenue Jean-Baptiste Clement
96646 Boulogne- Billancourt Cedex
France
George J. Sella, Jr. Director
P.O. Box 397
Newton, NJ 07860
Dave H. Williams Director
Alliance Capital Management
Corporation
1345 Avenue of the Americas
New York, NY 10105
OFFICER-DIRECTORS
*James M. Benson President, Chief Executive Officer
and Director
*William T. McCaffrey Senior Executive Vice President,
Chief Operating Officer and Director
*Joseph J. Melone Chairman of the Board and Director
OTHER OFFICERS
*Harvey Blitz Senior Vice President and Deputy
Chief Financial Officer
*Kevin R. Byrne Vice President and Treasurer
*Jerry M. de St. Paer Senior Executive Vice President and
Chief Financial Officer
*Gordon G. Dinsmore Senior Vice President
*Alvin H. Fenichel Senior Vice President and Controller
C-9
<PAGE>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH EQUITABLE
*Paul J. Flora Vice President and Auditor
*Robert E. Garber Executive Vice President and General
Counsel
*J. Thomas Liddle, Jr. Senior Vice President and Chief
Valuation Actuary
*Michael S. Martin Senior Vice President
*Peter D. Noris Executive Vice President and Chief
Investment Officer
*Anthony C. Pasquale Senior Vice President
*Pauline Sherman Vice President, Secretary and
Associate General Counsel
Richard V. Silver Senior Vice President and Chief
1755 Broadway, 3rd floor Compliance Officer
New York, New York 10019
*Jose Suquet Executive Vice President and Chief
Agency Officer
C-10
<PAGE>
Item 26. Persons Controlled by or Under Common Control with the Insurance
Company or Registrant
Separate Account Nos. 3, 4, 8, 30, 191 and 200 of The Equitable Life
Assurance Society of the United States (the "Separate Accounts") are separate
accounts of Equitable. Equitable, a New York stock life insurance company, is
a wholly owned subsidiary of The Equitable Companies Incorporated (the
"Holding Company"), a publicly traded company.
The largest stockholder of the Holding Company is AXA S.A. At
12/31/95 AXA S.A. beneficially owned approximately 60.6% of the Holding
Company's outstanding common stock plus convertible preferred stock. AXA S.A.
is able to exercise significant influence over the operations and capital
structure of the Holding Company and its subsidiaries, including Equitable.
AXA, a French company, is the holding company for an international group of
insurance and related financial services companies.
C-11
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
The Equitable Companies Incorporated (1991) (Delaware)
Donaldson, Lufkin & Jenrette, Inc. (1993) (Delaware) (44.1%) (See Addendum
for subsidiaries)
The Equitable Life Assurance Society of the United States (l859) (New York)
(a)(b)
The Equitable of Colorado, Inc. (l983) (Colorado)
Equitable Variable Life Insurance Company (l972) (New York) (a)
FHJV Holdings, Inc. (1990) (Delaware)
EVLICO, INC. (1995) (Delaware)
EVLICO East Ridge, Inc. (1995) (Delaware)
GP/EQ Southwest, Inc. (1995) (Texas) (5.86%)
Franconom, Inc. (1985) (Pennsylvania)
Frontier Trust Company (1987) (North Dakota)
Gateway Center Buildings, Garage and Apartment Hotel, Inc. (inactive)
(pre-l970) (Pennsylvania)
Equitable Deal Flow Fund, L.P.
Equitable Managed Assets (Delaware)
EREIM LP Associates (99%)
EML Associates, L.P. (19.8%)
ACMC, Inc. (1991) (Delaware)
Alliance Capital Management L.P. (1988) (Delaware)
(46.7% limited partnership interests)
EVCO, Inc. (1991) (New Jersey)
EVSA, Inc. (1992) (Pennsylvania)
Prime Property Funding, Inc. (1993) (Delaware)
Wil Gro, Inc. (1992) (Pennsylvania)
Equitable BJVS, Inc. (1992) (California)
- ------------
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-12
<PAGE>
The Equitable Companies Incorporated (1991) (Delaware) (cont.)
The Equitable Life Assurance Society of the United States (cont.)
Equitable Rowes Wharf, Inc. (1995) (Massachusetts)
GP/EQ Southwest, Inc. (1995) (Texas) (94.132%)
Fox Run, Inc. (1994) (Massachusetts)
Equitable Underwriting and Sales Agency (Bahamas) Limited (1993) (Bahamas)
CCMI Corporation (1994) (Maryland)
FTM Corporation (1994) (Maryland)
HVM Corporation (1994) (Maryland)
STCS, Inc. (1992) (Delaware)
Equitable Holding Corporation (1985) (Delaware)
Equico Securities, Inc. (l97l) (Delaware) (a) (b)
ELAS Securities Acquisition Corp. (l980) (Delaware)
Equitable Realty Assets Corporation (l983) (Delaware)
100 Federal Street Funding Corporation (Massachusetts)
100 Federal Street Realty Corporation (Massachusetts)
EquiSource of New York, Inc. (formerly Traditional Equinet Business
Corporation of New York) (1986) (New York) (See Addendum for
subsidiaries.)
Equitable Casualty Insurance Company (l986) (Vermont)
EREIM LP Corp. (1986) (Delaware)
EREIM LP Associates (1%)
EML Associates (.02%)
Six-Pac G.P., Inc. (1990) (Georgia)
Equitable Distributors,Inc. (1988) (Delaware) (a)
Equitable JVS, Inc. (1988) (Delaware)
- ------------
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-13
<PAGE>
The Equitable Life Assurance Society of the United States (cont.)
The Equitable Companies Incorporated (1991) (Delaware) (cont.)
quitable Holding Corporation (cont.)
Astor/Broadway Acquisition Corp. (1990) (New York)
Astor Times Square Corp. (1990) (New York)
PC Landmark, Inc. (1990) (Texas)
Equitable JVS II, Inc. (1994) (Maryland)
EJSVS, Inc. (1995) (New Jersey)
Donaldson, Lufkin & Jenrette, Inc. (1985 by EIC; 1993 by EHC)
(Delaware) (36.1%) (See Addendum for subsidiaries)
JMR Realty Services, Inc. (1994) (Delaware)
Equitable Investment Corporation (l97l) (New York)
Stelas North Carolina Limited Partnership (50% limited partnership
interest) (l984)
EQ Services, Inc. (1992) (Delaware)
Equitable Agri-Business, Inc. (1984) (Delaware)
Alliance Capital Management Corporation (l991) (Delaware) (b)
(See Addendum for subsidiaries)
Equitable Capital Management Corporation (l985) (Delaware) (b)
Alliance Capital Management L.P. (1988) (Delaware)
(16.6% limited partnership interests)
Equitable JV Holding Corporation (1989) (Delaware)
Equitable Real Estate Investment Management, Inc. (l984) (Delaware)
(b)
Equitable Realty Portfolio Management, Inc. (1984) (Delaware)
EQK Partners (100% general partnership interest)
Compass Management and Leasing Co. (formerly known as
EREIM, Inc.) (l984) (Colorado)
Equitable Real Estate Capital Markets, Inc. (1987) (Delaware)
(a)
- ------------
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-14
<PAGE>
The Equitable Companies Incorporated (1991) (Delaware) (cont.)
The Equitable Life Assurance Society of the United States (cont.)
Equitable Holding Corporation (cont.)
Equitable Investment Corporation (cont.)
Equitable Real Estate Investment Management, Inc. (cont.)
EQ Realty Associates-V, Inc. (1987) (Delaware)
EPPNLP Corp. (1987) (Delaware)
Equitable Pacific Partners Corp. (1987) (Delaware)
Equitable Pacific Partners Limited Partnership
EREIM Managers Corp. (1986) (Delaware)
ML/EQ Real Estate Portfolio, L.P.
EML Associates, L.P. (80%)
Compass Retail, Inc. (1990) (Delaware)
Compass Management and Leasing, Inc. (1991) (Delaware)
Compass Cayman (1996) (Delaware)
Column Financial, Inc. (1993) (Delaware) (50%)
Buckhead Strategic Corp. (1994) (Delaware)
Buckhead Strategic Fund L.P.
BH Strategic Co. I, L.P.
BH Strategic Co. II, L.P.
BH Strategic Co. III, L.P.
BH Strategic Co. IV, L.P.
CJVS, Inc. (1994) (California))
ERE European Corp. I, L.P. (1994) (Delaware)
A/E European Associates I Limited Partnership
Community Funding, Inc. (1994) (Delaware)
Community Mortgage Fund, L.P. (1994) (Delaware)
- ------------
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-15
<PAGE>
The Equitable Companies Incorporated (1991) (Delaware) (cont.)
The Equitable Life Assurance Society of the United States (cont.)
Equitable Holding Corporation (cont.)
Buckhead Strategic Corp. II (1995) (Delaware)
Buckhead Strategic Fund L.P. II
Buckhead Co. III, L.P.
HYDOC, L.L.C.
- -----------------
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-16
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
ADDENDUM - NON-REAL ESTATE SUBSIDIARY
OF EQUITABLE HOLDING CORPORATION
HAVING MORE THAN FIVE SUBSIDIARIES
EquiSource of New York, Inc.(formerly Traditional Equinet Business Corporation
of New York) has the following subsidiaries that are brokerage companies to
make available to Equitable Agents within each state traditional (non-equity)
products and services not produced by Equitable:
EquiSource of Delaware, Inc. (1986) (Delaware)
EquiSource of Alabama, Inc. (1986) (Alabama)
EquiSource of Arizona, Inc. (1986) (Arizona)
EquiSource of Arkansas, Inc. (1987) (Arkansas)
EquiSource Insurance Agency of California, Inc. (1987) (California)
EquiSource of Colorado, Inc. (1986) (Colorado)
EquiSource of Hawaii, Inc. (1987) (Hawaii)
EquiSource of Maine, Inc. (1987) (Maine)
EquiSource Insurance Agency of Massachusetts, Inc. (1988) (Massachusetts)
EquiSource of Montana, Inc. (1986) (Montana)
EquiSource of Nevada, Inc. (1986) (Nevada)
EquiSource of New Mexico, Inc. (1987) (New Mexico)
EquiSource of Pennsylvania, Inc. (1986) (Pennsylvania)
EquiSource Insurance Agency of Utah, Inc. (1986) (Utah)
EquiSource of Washington, Inc. (1987) (Washington)
EquiSource of Wyoming, Inc. (1986) (Wyoming)
C-17
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
ADDENDUM - OTHER NON-REAL ESTATE SUBSIDIARIES
HAVING MORE THAN FIVE SUBSIDIARIES
Donaldson, Lufkin & Jenrette, Inc. has the following subsidiaries, and
approximately 60 other subsidiaries, most of which are special purpose
subsidiaries (the number fluctuates according to business needs):
Donaldson, Lufkin & Jenrette, Inc. (1985) (Delaware)
Donaldson, Lufkin & Jenrette Securities Corporation (1985)
(Delaware) (a) (b)
Wood, Struthers & Winthrop Management Corporation (1985)
(Delaware) (b)
Autranet, Inc. (1985) (Delaware) (a)
DLJ Real Estate, Inc.
DLJ Capital Corporation (b)
DLJ Mortgage Capital, Inc. (1988) (Delaware)
Column Financial, Inc.(1993) (Delaware) (50%)
Alliance Capital Management Corporation has the following subsidiaries:
Alliance Capital Management Corporation (1991) (Delaware) (b)
Alliance Capital Management L.P. (1988) (Delaware) (b)
Alliance Capital Management Corporation of Delaware, Inc.
(Delaware)
Alliance Fund Services, Inc. (Delaware)
Alliance Capital Management (Japan), Inc. (formerly
Alliance Capital Mgmt. Intl.)
Alliance Fund Distributors, Inc. (Delaware) (a)
Alliance Oceanic Corp. (Delaware) (formerly Alliance
Capital, Ltd.)
Alliance Capital Management Australia Pty. Ltd.
(Australia)
Meiji - Alliance Capital Corp. (Delaware) (50%)
Alliance Capital (Luxembourg) S.A. (99.98%)
Alliance Southern Europe Corp. (Delaware) (inactive)
Alliance Barra Research Institute, Inc. (Delaware) (50%)
Alliance Capital Management Canada, Inc. (Canada) (99.99%)
Alliance Capital Management Limited (United Kingdom)
Pastor Alliance Gestora de Fondas de Pensiones, S.A.
(Spain) (50%)
Dementional Asset Management, Ltd. (U.K.)
Dementional Trust Management, Ltd. (U.K.)
Alliance Capital Global Derivatives Corp. (Delaware)
Alliance Corporate Finance Group, Inc. (Delaware)
- ------------
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-18
<PAGE>
AXA GROUP CHART
The information listed below is dated as of January 1, 1996; percentages shown
represent voting power. The name of the owner is noted when AXA indirectly
controls the company.
AXA INSURANCE AND REINSURANCE BUSINESS HOLDING
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ---------- ------------- -------------
<S> <C> <C>
Axa Assurances Iard France 96.9%
Axa Assurances Vie France 100% by Axa and Uni Europe
Vie
Uni Europe Assurance France 100% by Axa and Axa
Assurances Iard
Uni Europe Vie France 99.3% by Axa and Axa
Assurances Iard
Alpha Assurances Vie France 100%
Axa Direct France 100%
Direct Assurances Iard France 100% by Axa Direct
Direct Assurance Vie France 100% by Axa Direct
Axa Direkt Versicherung A.G. Germany 100% owned by Axa Direct
Axiva France 90.3%
Defense Civile France 95%
Societe Francaise d'Assistance France 51.2% by Axa Assurances Iard
Monvoisin Assurances France 99.92% by different companies
and Mutuals
Societe Beaujon France 100%
Lor Finance France 99.9%
Jour Finance France 100% by different companies
Compagnie Auxiliaire pour le France 100% by Societe Beaujon
Commerce et l'Industrie
C.F.G.A. France 99.96% owned by the mutuals
and Finaxa
Saint Bernard Diffusion France 89.9%
Sogarep France 95%, (100% with the mutuals)
Argovie France 100% by Axiva and SCA Argos
Finargos France 66.4% owned by Axiva
Astral France 100% by Uni Europe Assurance
Argos France N.S.
Finaxa Belgium Belgium 100%
C-19
<PAGE>
Axa Belgium Belgium 18.5% by Axa(SA) and 72.5% by
Finaxa Belgium
De Kortrijske Verzekering Belgium 99.8%
Juris Belgium 100%
Finaxa Luxembourg Luxembourg 100%
Axa Assurance IARD Luxembourg Luxembourg 99.4%
Axa Assurance Vie Luxembourg Luxembourg 99.4%
Axa Aurora Spain 50%
Aurora Polar SA de Seguros y Spain 99.8% owned by Axa Aurora
Reaseguros
Axa Vida SA de Seguros y Spain 99.8% owned by Axa Aurora
Reaseguros
Axa Gestion de Seguros y Spain 100% owned by Axa Aurora
Reaseguros
Axa Assicurazioni Italy 100%
Eurovita Italy 30% owned by Axa
Assicurazioni
Axa Equity & Law plc U.K. 99.9%
Axa Equity & Law Life U.K. 100% by Axa Equity & Law plc
Assurance Society
Axa Equity & Law International U.K. 100% owned by Axa Equity &
Law plc
Axa Equity & Law Netherlands 100% by Axa Equity & Law plc
Levensverzekeringen
Axa Insurance U.K 100%
Axa Global Risks U.K 100% by Axa and Uni Europe
Assurance
Axa U.K. U.K. 100%
Axa Canada Canada 100%
Boreal Insurance Canada 100% owned by AXA Canada
Axa Assurances Inc Canada 100% owned by Axa Canada
Axa Insurance Inc Canada 100% owned by Axa Canada
Anglo Canada General Insurance Canada 100% owned by Axa Canada
Cy
Axa Pacific Insurance Canada 100% by Boreal Insurance
Boreal Assurances Agricoles Canada 100% by Boreal Insurance
C-20
<PAGE>
Sime Axa Berhad Malaysia 30%
Axa Sime Investment Holdings Singapore 50%
Pte Ltd
Axa Sime Assurance Hong Kong 100% owned by Axa Sime Invt.
Holdings Pte Ltd
Axa Sime Assurance Singapore 100% owned by Axa Sime Invt
Holdings Pte Ltd
Axa Life Insurance Hong Kong 100%
PT Asuransi Axa Indonesia Indonesia 80%
Equitable Cies Incorp. U.S.A. 60.6% owned by Axa, 44.4%
Financiere 45, 3.8%,
Lorfinance 7.6% and Axa
Equity & Law Life Association
Society 4.8%
Equitable Life Assurance of U.S.A. 100% owned by Equitable Cies
the USA Inc
National Mutual Holdings Ltd Australia 51%
The National Mutual Life Australia 100% owned by National Mutual
Association of Australasia Ltd Holdings Ltd
National Mutual International 74% owned by National Mutual
Pty Ltd Holdings Ltd and 26% by The
National Mutual Life
Association of Australasia
National Mutual (Bermuda) Ltd Australia 100% owned by National Mutual
International Pty Ltd
National Mutual Asia Ltd Bermudas 54% owned by National Mutual
(Bermuda) Ltd and 20% by
Delta Ltd
National Mutual Funds Australia 100% owned by National Mutual
Management (Global) Ltd Holdings Ltd
National Mutual Funds USA 100% owned by National Mutual
Management North America Funds Management (Global) Ltd
Holdings Inc
Australian Casualty & Life Ltd Australia 100% owned by National Mutual
Holdings Ltd
National Mutual Health Australia 100% owned by National Mutual
Insurance Pty Ltd Holdings Ltd
Axa Reassurance France 100%
Axa Re Finance France 100% owned by Axa Reassurance
Axa Re Vie France 100% owned by Axa Reassurance
Axa Cessions France 100%
C-21
<PAGE>
Abeille Reassurances France 100% owned by Axa Reassurance
Axa Re Mexico Mexico 100% owned by Axa Reassurance
Axa Re Asia Singapore 100% owned by Axa Reassurance
Axa Re U.K. Plc U.K. 100% owned by Axa Re U.K.
Holding
Axa Re U.K. Holding U.K 100% owned by Axa Reassurance
Axa Re U.S.A. U.S.A 100% owned by Axa America
Axa America U.S.A. 100% owned by Axa Reassurance
International Technology U.S.A. 80% owned by Axa America
Underwriters Inc (INTEC)
Axa Re Life U.S.A. 100% owned by Axa Re Vie
C.G.R.M. Monaco 100% by Axa Reassurance
Axa Life Insurance Japan 100% owned by Axa
Dongbu Axa Life Insurance Co Korea 50%
Ltd
Axa Oyak Hayat Sigota Turkey 60%
Oyak Hayat Sigorta Turkey 11%
</TABLE>
C-22
<PAGE>
AXA FINANCIAL BUSINESS
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ---------- ---------- -------------
<S> <C> <C>
Compagnie Financiere de Paris France 96.9%, (100% with the
(C.F.P.) Mutuals)
Axa Banque France 98.7% owned by C.F.P.
Financiere 78 France 100% owned by C.F.P.
Axa Credit France 65% owned by C.F.P.
Axa Gestion Interessement France 100% owned by C.F.P.
Compagnie Europeenne de Credit France 100% owned by C.F.P.
(C.E.C.)
Fidei France 20.7% owned by C.F.P. and
10.8% by Axamur
Meeschaert Rousselle France 100% owned by Financiere 78
M R Futures SNC France 59% by Meeschaert Rousselle
Opale Derivee Bourse France 89.4% by M.R. Futures and
Meeschaert Rousselle
Anjou Courtage France 70% owned by Meeschaert
Rousselle
Axiva Gestion France 100% owned by Axiva
Juri Creances France 100% by different companies
Societe de Placements France 99.3% with the Mutuals
Selectionnes S.P.S.
Presence et Initiative France 73% with the Mutuals
Vamopar France 100% owned by Societe Beaujon
Financiere Mermoz France 100%
Axa Asset Management Europe France 100%
Axa Asset Management France 100% owned by Axa Asset
Partenaires Management Europe
Axa Asset Management Conseils France 100% owned by Axa Asset
Management Europe
Axa Asset Management France 100% owned by Axa Asset
Distribution Management Europe
Axa Equity & Law Home Loans U.K. 100% owned by Axa Equity &
Law
Axa Equity & Law Commercial U.K. 100% owned by Axa Equity &
Loans Law
C-23
<PAGE>
Alliance Capital Management U.S.A. 59% held by ELAS
Donaldson Lufkin & Jenrette U.S.A. 36.1% owned by ELAS and 44.1%
by Equitable Cies Inc
Cogefin Luxembourg 100% owned by Axa Belgium
Soflinter Beligium 100% owned by Axa Belgium
Financiere 45 France 99.6%
Mofipar France 99.76% owned by Societe
Beaujon
ORIA France 100% owned by Axa Millesimes
Axa Oeuvres d'Art France 100% by the Mutuals
Axa Cantenac Brown France 100%
Colisee Acti Finance 1 France 100% owned by Societe Beaujon
Colisee Acti Finance 2 France 100% owned by Axa Assurances
Iard Mutuelle
Participations 2001 France 100% owned by Societe Beaujon
Finalor France 100% owned by Societe Beaujon
</TABLE>
C-24
<PAGE>
AXA REAL ESTATE BUSINESS
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ---------- --------------
<S> <C> <C>
C.I.P.M. France 97.6% with the Mutuals
Fincosa France 100% owned by C.I.P.M.
Prebail France 100% owned by Societe Beaujon
and C.F.P.
Axamur France 100% by different companies
and mutuals
Parigest France 100% by the Mutuals, C.I.P.M.
and Fincosa
Parimmo France 100% by the insurance
companies and the mutuals
S.G.C.I. France 100% with the Mutuals
Transaxim France 99.4% owned by S.G.C.I.
Compagnie Parisienne de France 100% owned by S.G.C.I.
Participations
Monte Scopeto France 100% owned by C.P.P.
Matipierre France 100% by different companies
Securimmo France 87% by different companies
and mutuals
Paris Orleans France 99.9% by different companies
Colisee Bureaux France 99.4% by different companies
Colisee Premiere France 99.9% by different companies
Colisee Laffitte France 99.8% by Colisee Bureaux
Carnot Laforge France 100% by Colisee Premiere
Parc Camoin France 100% by Colisee Premiere
Delta Point du Jour France 100% owned by Matipierre
Paroi Nord de l'Arche France 100% owned by Matipierre
Falival France 100% owned by Axa Reassurance
Compagnie du Gaz d'Avignon France 99% owned by Axa Assurances
Iard
Ahorro Familiar France 40.1% owned by Axa Assurances
Iard
Fonciere du Val d'Oise France 100% owned by C.P.P.
Sodarec France 99.9% owned by C.P.P.
Centrexpo France 99.9% owned by C.P.P.
COMPANY COUNTRY VOTING POWER
Fonciere de la Vile du Bois France 99.6% owned by Centrexpo
Colisee Seine France 97.4% by different companies
Translot France 99.9% by SGCI
C-25
<PAGE>
S.N.C. Dumont d'Urville France 100% owned by Colisee
Premiere
Colisee Participations France 100% by SGCI
Colisee Federation France 100% by SGCI
Colisee Saint Georges France 100% by SGCI
Drouot Industrie France 50% by SGCI
Colisee Vauban France 99.7% by Matipierre
Fonciere Colisee France 98.9% by Matipierre
Axa Pierre S.C.I. France 97.6% owned by different
companies and Mutuals
Axa Millesimes France 77.8% owned by AXA and the
Mutuals
Chateau Suduirault France 100% owned by Axa Millesimes
Diznoko Hongrie 100% owned by Axa Millesimes
Compagnie Fonciere Matignon France 100% by different companies
and Mutuals
Equitable Real Estate U.S.A. 100% owned by ELAS
Investment
Quinta do Noval Vinhos S.A. Portugal 99.9% owned by Axa Millesimes
</TABLE>
C-26
<PAGE>
OTHER AXA BUSINESS
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ---------- ------------ ---------------
<S> <C> <C>
A.N.F. France 95.4% owned by Finaxa
SCOR France 10.1% owned by Axa
Reassurance
Campagnie du Cambodge France 23% owned by A.N.F.
Lucia France 20.6% owned by Axa Assurance
Iard and 8.6% by the mutuals
Rubis et Cie France 12.7% owned by Uni Europe
Assurance
Schneider S.A. France 10%
Eurofin France 31.6% owned by Compangie
Financiere de Paris
</TABLE>
c-27
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
NOTES
1. The year of formation or acquisition and state or country of
incorporation of each affiliate is shown.
2. The chart omits certain relatively inactive special purpose real
estate subsidiaries, partnerships, and joint ventures formed to
operate or develop a single real estate property or a group of
related properties, and certain inactive name-holding corporations.
3. All ownership interests on the chart are 100% common stock ownership
except for (a) as noted for certain partnership interests, (b) ACMC,
Inc.'s and Equitable Capital Management Corporation's limited
partnership interests in Alliance Capital Management L.P., (c) as
noted for certain subsidiaries of Alliance Capital Management Corp.
of Delaware, Inc., (d) Treasurer Robert L. Bennett's 20% interest in
Compass Management and Leasing Co. (formerly known as EREIM, Inc.),
(e) as noted for certain subsidiaries of AXA (f) The Equitable
Companies Incorporated's 44.1% interest in DLJ and Equitable Holding
Corp.'s 36.1% interest in same; and (g) DLJ Mortgage Capital, Inc.'s
and Equitable Real Estate Investment Management, Inc.'s ownership
(50% each) in Column Financial, Inc.
4. The operational status of the entities shown as having been formed or
authorized but "not yet fully operational" should be checked with the
appropriate operating areas, especially for those that are start-up
situations.
5. The following entities are not included in this chart because, while
they have an affiliation with The Equitable, their relationship is
not the ongoing equity-based form of control and ownership that is
characteristic of the affiliations on the chart, and, in the case of
the first two entities, they are under the direction of at least a
majority of "outside" trustees:
The Equitable Funds
The Hudson River Trust
Separate Accounts
6. This chart was last revised on March 25, 1996.
c-28
<PAGE>
Item 27. Number of Contractowners.
As of March 31, 1996 the number of participants in the American
Dental Association Members Program offered by the Registrant was 21,348.
Item 28. Indemnification
(a) Indemnification of Principal Underwriter: to the extent
permitted by law of the State of New York and subject to
all applicable requirements thereof, Equico Securities,
Inc. ("Equico") undertook to indemnify each of its
directors and officers who is made or threatened to be
made a party to any action or proceeding, whether civil or
criminal, by reason of the fact that he or she is or was a
director or officer of Equico.
(b) Undertaking: insofar as indemnification for liability
arising under the Securities Act of 1933 may be permitted
to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 29. Principal Underwriters
(a) Equico, a wholly-owned subsidiary of Equitable is the
principal underwriter for Equitable's Separate Account No.
301 and Separate Account A and for Separate Account I and
Separate Account FP of Equitable Variable Life Insurance
Company. On or about May 1, 1996, Equico will be changing
its name to EQ Financial Consultants, Inc. Equico's
principal business address is 1755 Broadway, NY, NY 10019.
(b) See Item 25.
(c) Not applicable.
c-29
<PAGE>
Item 30. Location of Accounts and Records
The records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 to 31a-3
promulgated thereunder, with respect to the separate accounts
named in Item 29(a),are maintained by The Equitable Life
Assurance Society of the United States at 135 West 50th Street
New York, New York 10020.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement
are never more than 16 months old for so long as payments
under the variable annuity contracts may be accepted;
(b) to include either (1) as part of any application to
purchase a contract offered by the prospectus, a space
that an applicant can check to request a Statement of
Additional Information, or (2) a postcard or similar
written communication affixed to or included in the
prospectus that the applicant can remove to send for a
Statement of Additional Information;
(c) to deliver any Statement of Additional Information and any
financial statements required to be made available under
this Form promptly upon written or oral request.
c-30
<PAGE>
I
SIGNATURES
As required by the Securities Act of 1933, the Registrant certifies
that it meets the requirements of Securities Act Rule 485(b) for effectiveness
of this amended Registration Statement and has caused this amended
Registration Statement to be signed on its behalf, in the City and State of
New York, on the 30th day of April, 1996.
THE EQUITABLE LIFE ASSURANCE SOCIETY OF
THE UNITED STATES
(Registrant)
By: The Equitable Life Assurance
Society of the United States
By: /s/Naomi J. Weinstein
----------------------
Naomi J. Weinstein
Vice President
c-31
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, the Depositor certifies
that it meets the requirements of Securities Act Rule 485(b) for effectiveness
of this amended Registration Statement and has caused this amended
Registration Statement to be signed on its behalf, in the City and State of
New York, on the 30th day of April, 1996.
THE EQUITABLE LIFE ASSURANCE SOCIETY OF
THE UNITED STATES
(Depositor)
By: /s/Naomi J. Weinstein
---------------------
Naomi J. Weinstein
Vice President
As required by the Securities Act of 1933 this amendment to the
registration statement has been signed by the following persons in the
capacities and on the date indicated:
PRINCIPAL EXECUTIVE OFFICERS:
Joseph J. Melone Chairman of the Board and Director
James M. Benson President, Chief Executive
Officer and Director
William T. McCaffrey Senior Executive Vice President,
Chief Operating Officer and Director
PRINCIPAL FINANCIAL OFFICER:
Jerry M. de St. Paer Senior Executive Vice President and
Chief Financial Officer
PRINCIPAL ACCOUNTING OFFICER:
/s/ Alvin H. Fenichel
- ---------------------
Alvin H. Fenichel Senior Vice President and
April 30, 1996 Controller
DIRECTORS:
Claude Bebear Jean-Rene Fourtou Winthrop Knowlton
James M. Benson Norman C. Francis Arthur L. Liman
Chrisopher Brocksom Donald J. Greene George T. Lowy
Francoise Colloc'h Anthony J. Hamilton William T. McCaffrey
Henri de Castries John T. Hartley Joseph J. Melone
Joseph L. Dionne John H.F. Haskell, Jr. Didier Pineau-Valencienne
William T. Esrey W. Edwin Jarmain George J. Sella, Jr.
G. Donald Johnston, Jr. Dave H. Williams
/s/Naomi J. Weinstein
- ----------------------
Naomi J. Weinstein
Attorney-in-Fact
April 30, 1996
c-32
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE NO.
- ---------- ---------
<S> <C> <C>
3(a)(i) Buy-Sell Agreement effective May 1, 1996 between The
Equitable Life Assurance Society of the United States
and Franklin Templeton Distributors, Inc.
3(e) Amended and Restated Investment Management Agreement
dated as of May 1, 1996.
4(i) Form of Rider No. 8 to Group Annuity Contract 2100.
10(a) Consent of Price Waterhouse LLP.
27 Financial Data Schedule.
- ---------------
</TABLE>
c-33
Buy - Sell Agreement
The following amends and restates the Buy-Sell Agreement by and among
the Trustees of the American Dental Association Members Retirement Trust and of
the American Dental Association Members Pooled Trust for Retirement Plans
("Trustees" and "Trusts"), The Equitable Life Assurance Society of the United
States ("Equitable"), Templeton Foreign Fund which is a series fund of Templeton
Funds, Inc. (the "Fund") and Templeton Funds Distributor, Inc. (collectively
known as the "Parties"), which was effective March 2, 1992. This amended and
restated Buy-Sell Agreement (the "Agreement") shall be effective May 1, 1996.
The compensation arrangements provided for in Section 20 hereof were effective
January 1, 1994. Franklin Templeton Distributors, Inc. ("Distributor"), now
acts as distributor for the Fund, and hereby and hereinafter replaces Templeton
Funds Distributor, Inc. as a party to the Buy-Sell Agreement. In addition, in
the following, representations of the Fund in the Buy-Sell Agreement are
replaced with similar representations of Distributor on behalf of the Fund. The
Fund and the Trustees are no longer parties to the Buy-Sell Agreement.
WHEREAS, the Trustees have requested Equitable to establish a separate
investment account ("Equitable Separate Account") available solely to the
Trusts, which Equitable Separate Account would invest net contributions from
participants in the Trusts solely in the shares of the Templeton Foreign Fund
(the "Fund") and short-term investments (either directly or through Equitable
Separate Account No. 2A) pursuant to investment objectives and policies provided
by the Trustees;
WHEREAS, Equitable is willing to establish and maintain the Equitable
Separate Account on the terms and conditions set forth below, subject to (a)
the approval of its Board of Directors and the New York Insurance Department,
(b) agreement with the Trustees on an amendment ("Amendment") to the group
annuity contract between the Trustees and Equitable dated March 2, 1992 ("Group
Annuity Contract") to add and maintain the Equitable Separate Account as an
investment option for Trust participants and (c) approval of the Illinois and
New York Insurance Departments of the Amendment;
WHEREAS, subject to the foregoing, Equitable has filed an amendment to its
registration statement under the Securities Act of 1933 ("'33 Act") which
registers units of separate account interests in the Group Annuity Contract
("Registration Statement"), and otherwise maintain the currency of the
Registration Statement;
WHEREAS, Equitable will make units of interest in the Equitable Separate
Account available to the Trusts following the effectiveness of such amendment to
the Registration Statement; and
WHEREAS, the Distributor is willing to sell shares of the Fund to the
Equitable Separate Account under the terms and conditions set forth below;
NOW THEREFORE, the Parties hereby agree as follows:
1. Distributor will make shares of the Fund available for purchase and
redemption by the Equitable Separate Account as follows:
a. Distributor agrees to furnish or cause to be furnished to Equitable in
the manner set forth in Appendix C hereto, for the Fund (1) confirmed
net asset value information as of the close of trading (currently 4:00
P.M. East Coast time, 1:00 P.M. Pacific Coast time) on the New York
Stock Exchange (the "Close of Trading") on each business day that the
New York Stock Exchange is open for business (each a "Business Day") or
at such other time as the net asset value of the Fund is calculated, as
disclosed in the then current prospectus, in a format which includes the
Fund's name and the change from the last calculated net asset value, and
(2) dividend and capital gains information as it arises. Distributor
shall use its best efforts to provide or cause to be provided to
Equitable such information by 6:30 p.m. East Coast time, 3:30 p.m.
Pacific Coast time.
b. Equitable, as agent for the Fund, limited to the duties provided herein,
shall: (1) receive from benefit plans investing through the Trusts in
the Equitable Separate Account for acceptance as of the Close of Trading
on each Business Day (based upon the benefit plans' or Equitable's
receipt of instructions from participants of the benefit plans prior to
the Close of Trading on such Business Days): (a) orders for the purchase
of shares of the Fund, (b) exchange orders, and (c) redemption requests
and redemption directions with respect to shares of the Fund held in
the Equitable Separate Account for benefit of the benefit plans
("Instructions"); (2) transmit to Distributor, as specified in
Appendix A hereto, such net purchase and/or net redemption Instructions
no later than 9:30 a.m. East Coast time, 6:30 a.m. Pacific Coast time on
the next following Business Day; and (3) upon acceptance of any such
Instructions, communicate such acceptance as appropriate within
Equitable's system (a "Confirmation"). The Business Day on which such
Instructions are received in proper form by Equitable and time stamped
by the Close of Trading will be the date as of which Fund shares shall
be deemed purchased, exchanged, or redeemed as a result of such
Instructions, and at the price of such shares as of the close of
trading on that Business Day. Instructions received in Proper Form by
Equitable and time stamped after the Close of Trading on any given
Business Day shall be treated as if received on the next following
Business Day. Equitable warrants that all orders, Instructions and
Confirmations received which will be transmitted to Distributor for
processing as of a particular Business Day will have been received
and time stamped prior to the Close of Trading on that Business Day.
Proper Form shall be interpreted to mean when amounts to be invested
or redeemed are identified on Equitable's system by participant,
benefit plan and Fund.
c. Equitable will wire payment, or arrange for payment to be wired by its
designated bank, for such purchase orders, in immediately available
funds, to a Fund custodial account or accounts designated by
Distributor. Such wires must be received no later than the close of
the Federal Reserve Bank, which is 6:00 p.m. East Coast time, on the
Business Day following the Business Day as of which such purchase
orders are made in conformance with Paragraph b.
d. Except as noted below, Distributor will wire payment, or
arrange for payment to be wired, for redemption orders, in
immediately available funds, to an account or accounts
designated by Equitable as specified in Appendix B hereto, as
soon as possible but in any event no later than the close of the
Federal Reserve on the Business Day following the Business
Day as of which such redemption orders are made in
conformance with Paragraph b. Distributor reserves the right to
delay settlement in accordance with standard securities
transactions settlement guidelines of the Securities and
Exchange Commission as then in effect to achieve the required
liquidity, unless Equitable provides 3 Business Days advance
notice of such intention to redeem, which advance notice shall
not be considered an order to redeem until the effective date for
such redemption.
e. In addition to the written confirmations containing information
and sent in a timely manner as reasonably agreed to by the
parties, the Distributor will (i) designate in writing a contact
person with adequate back up whom Equitable will be able to
contact by telephone during normal business hours to verify on
a same day basis receipt by the Distributor of FAX redemption
orders by the Equitable Separate Account and (ii) make
available an automated telephone confirmation system to permit
Equitable to confirm all transactions ("Templeton Star Service")
no later than 12:00 noon on the business day following receipt of
the transaction order, provided that, in the event that the
Templeton Star Service is not operational on business day, the
Distributor will designate in writing a contact person with
adequate back-up whom Equitable will be able to contact to
confirm all transactions within the same time frame.
f. All dividends with respect to Fund shares held by the Equitable
Separate Account will be automatically invested in additional
shares of Fund unless and until contrary written instructions
are provided by Equitable.
2. The Distributor agrees to provide to Equitable at the Distributor's or
the Fund's expense whatever quantities of Fund prospectuses, prospectus
supplements, Statements of Additional Information, annual and semi-annual
reports Equitable reasonably determines it requires in connection with meeting
its or the Trustees' Fund communication and disclosure statement delivery
requirements for Trust participants. The Distributor agrees on behalf of
Equitable to submit for reimbursement from the Fund reasonable out-of-pocket
postage expenses incurred by Equitable in mailing such materials to Trust
participants who beneficially own shares of the Fund.
With regard to Fund proxy statements for Fund shareholders, Equitable
agrees to furnish Distributor with a list of the names and addresses, in a
format reasonably acceptable to the Distributor and Equitable, of all Trust
participants investing in the Fund though the Equitable Separate Account, and
will update such list as of certain Fund shareholder record dates provided by
Distributor for such purposes. Distributor or its agents will use such
information to forward Fund proxy statements to such Trust participants, and
Distributor or its agents shall solicit the return of such proxies as
appropriate.
3. The Distributor agrees to assist Equitable in preparation of any sales
literature, articles or advertising for the Equitable Separate Account and Group
Annuity Contract describing investment in the Fund.
4. Any sales material, articles, advertising, registration statements,
annual and semi-annual reports and/or any other material prepared by Equitable
which refer to the Fund, the Distributor or the Fund's adviser will be subject
to review and written approval by the Distributor. The Distributor agrees to
review all such material promptly.
5. The Distributor will provide training as reasonably necessary for
Equitable's marketing and operations staffs at the regular place of business of
such staffs concerning the Fund, in connection with Equitable's offering the
Equitable Separate Account to Trust participants.
6. The Distributor agrees that during the term of this Agreement it will
not impose a sales load or any other charge on purchases or redemptions of
shares of the Fund for the Equitable Separate Account.
7. The Distributor will prepare such periodic written reports as requested
by the Trustees and will arrange to send a representative of the Fund or the
Fund's investment adviser to the meetings of the Trustees, as reasonably
requested.
8. Distributor agrees to treat as confidential the information provided by
Equitable and the Trustees concerning the American Dental Association Members
Retirement Program ("Program"), the Trusts and participants in the Trusts and
shall not use the information for any purposes except the purposes specified in
this Agreement.
9. The Distributor agrees to indemnify and hold harmless Equitable and any
employee or agent thereof, the American Dental Association and its employees and
the Trustees for any and all losses, claims, damages and liabilities, including
legal costs of defending such claims, to which any of them may become subject
under the '33 Act, the Securities Exchange Act of 1934, or other Federal or
state statutory law or regulation or at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based on any (a) failure by Distributor to supply Equitable with
copies in a timely manner of any Fund Prospectus, Prospectus supplement,
Statement of Additional Information, or report relating to the Fund, or (b)
untrue statement of a material fact, or alleged omission to state a material
fact required to be stated or necessary to make the statements not misleading
(x) in the registration statement for the Fund filed pursuant to the '33 Act, or
any Prospectus or Statement of Additional Information included as a part
thereof, as from time to time amended and supplemented, or in
any Fund report, proxy material, sales material, advertising or any other
material prepared by the Fund or the Distributor; and (y) in any description of
the Fund, including a description of its adviser and Distributor, included in
the Registration Statement, or in any Prospectus or Statement of Additional
Information included in such Registration Statement, or in any report, sales
literature, article, advertising or other material prepared by Equitable
describing the Equitable Separate Account, the Fund, provided such description
has been approved or provided by the Distributor or the Fund, as applicable.
10. The Distributor agrees to indemnify and hold harmless Equitable,
including any employee or agent thereof, and the American Dental Association and
its employees and the Trustees for any liability resulting from the Fund's or
the Distributor's misfeasance, bad faith or gross negligence or reckless
disregard of their duties.
11. Equitable agrees to hold harmless and indemnify Distributor, the Funds
and any other Franklin or Templeton entity, including any employees, officers,
directors or trustees, against any claims or actions resulting from any material
misstatements or omissions or alleged material misstatements or omissions to
state a material fact relating to the Fund or the Distributor in marketing or
sales literature created by Equitable, unless such literature has been reviewed
and approved by Distributor. Equitable also agrees to indemnify Distributor
for out-of-pocket losses it or the Fund may become subject to as a result of
their reasonable reliance on (i) redemption orders sent by Equitable by Fax as
provided in paragraph 1.b above or (ii) information contained in or omitted from
any list supplied by Equitable pursuant to Section 2 above.
12. Nothing in paragraphs 9, 10 and 11 shall be construed to require an
indemnitor to indemnify any indemnitee for consequential damages.
13. In the event that the Fund or Distributor report to Equitable a price
for shares of the Fund, which price is determined subsequent to 9:00 a.m. on the
following business day, to be incorrect, the price correction for the Equitable
Separate Account will be handled by the Fund and the Distributor on the same
basis as the price correction for any other shareholder of the Fund. However,
to the extent Trust participants had received Fund redemption proceeds from the
Equitable Separate Account in excess of the amounts which should have been paid
as a result of such an incorrect price, the Fund and Distributor will not reduce
or seek to reduce the number of Fund shares credited to the Equitable Separate
Account as of such overpayment, and the Fund and the Distributor agree not to
seek reimbursement from such Trust participants.
14. The Distributor agrees to make shares of the Fund available for purchase
by the Equitable Separate Account in accordance with the terms and conditions of
this Agreement so long as this Agreement is in effect, Distributor acts as
distributor for the Fund, and shares of the Fund are generally available for
sale.
15. Nothing in this Agreement shall be construed to create an obligation on
the part of the Trustees or Equitable to maintain the Equitable Separate Account
as an investment option for participants in the Trusts or to prevent Equitable
or the Trustees from terminating the Equitable Separate Account or changing its
investment objective or policies so as to no longer permit or require investment
in shares of the Fund.
16. It is understood that decisions to allocate Trust assets to the
Equitable Separate Account are made solely by participants and accordingly, no
representation is, or can be, made by Equitable or the Trustees concerning a
minimum investment in the Fund by the Equitable Separate Account.
17. Distributor represents that the Fund is a registered investment company
under the Investment Company Act of 1940 ("'40 Act") and that shares of the Fund
are registered under the '33 Act. Distributor also represents that the Fund
will maintain such registration statements on a current basis so long as it
makes its shares available for purchase by the Equitable Separate Account.
18. Equitable represents that the Equitable Separate Account is not required
to register under the 40 Act pursuant to Section 3(c) (11) thereof and that
Equitable Separate Account units of interests in the Group Annuity Contract will
be registered under the '33 Act prior to offering such units to Trust
participants and such registration will be maintained on a current basis so long
as units of the Equitable Separate Account are offered to Trust participants.
19. Equitable agrees that it will abide by the Rules of Fair Practice of the
National Association of Securities Dealers to the extent these Rules are
applicable to the marketing and sale of units of interest in the Equitable
Separate Account.
20. For services to the Trusts and Trust participants investing in the Fund
through the Equitable Separate Account, Distributor shall pay Equitable
compensation derived from the amount invested by the Equitable Separate Account
in the Fund. Presently, the rate of such compensation is .25% per annum of the
average daily net assets attributable to the Equitable Separate Account's
investment in the Fund, payable quarterly. Such compensation is derived from
compensation payable by the Fund to Distributor from a 12b-1 Plan adopted by the
Fund, and is contingent upon Distributor's receipt of related compensation from
the Fund. Due to regulatory requirements, Equitable hereby agrees to waive its
right to receive such compensation until such time as Distributor has received
the related 12b-1 Plan-derived compensation from the Fund. In addition, were
the related 12b-1 Plan of the Fund terminated by the Fund's Board of Directors
in accordance with Rule 12b-1 under the '40 Act, Distributor's obligation to pay
such compensation would also terminate effective upon termination of the 12b-1
Plan.
21. This Agreement will be interpreted in accordance with the law of New
York.
22. This Agreement shall be terminable by the Distributor at any time after
six months advance written notice to the other Parties. Equitable and the
Trustees may terminate this agreement at any time upon 60 days advance written
notice to the Distributor.
23. Except as otherwise specified herein, notices under this Agreement shall
be sent to the following:
a. Notices to Equitable should be sent to:
The Equitable Life Assurance Society of the United States
200 Plaza Drive
Secaucus, New Jersey 07096
Attention: Naomi J. Weinstein
b. Notices to The Trustees should be sent to
American Dental Association
211 East Chicago Avenue
Chicago, Illinois 60611
Attention: David R. Dwyer
c. Notices to The Distributor should be sent to:
Franklin Templeton Distributors, Inc.
777 Mariners Island Boulevard
San Mateo, CA 94404
Attention: Deborah R. Gatzek, Senior Vice President
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed:
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
By:______________________________ ___________
Name, Title Date
FRANKLIN TEMPLETON DISTRIBUTORS, INC.
By:______________________________ ___________
Deborah R. Gatzek, Senior Vice President Date
APPENDIX A
PURCHASE ORDERS
INSTRUCTIONS FOR WIRING PURCHASE ORDERS TO FRANKLIN TEMPLETON DISTRIBUTORS,
INC.:
Wire to: First Union Bank
ABA No.: 063 000 021
City, State Jacksonville, Florida
Credit Templeton Wire Holding Account
A/C No.: 2175009117348
Name of Fund Templeton Foreign Fund
Templeton A/C No.: 4920049053
Account Registration Equitable for ADA, TPA
APPENDIX B
REDEMPTION ORDERS
1. FED WIRE INSTRUCTIONS FOR SETTLEMENT OF REDEMPTION ORDERS:
CHASE NYC/CUST ABA #021-0000-21
A/C #037-2-417352
For the AJC of American Dental Association, Templeton Foreign
Fund
2. INSTRUCTIONS FOR FACSIMILE TRANSMISSION OF REDEMPTION
ORDERS TO FRANKLIN TEMPLETON DISTRIBUTORS, INC.:
To the attention of Franklin Templeton Institutional Services
(TPA):
(415) 312-4000 or
(415) 312-4153.
If neither fax number is available, then please call Theresa
Figone at (415) 312-5604 or (415) 312-6575.
APPENDIX C
DAILY PRICE INFORMATION
1. CONTACT PERSONS AND TELEPHONE NUMBERS FOR THE EQUITABLE TO
TRANSMIT PRICE INFORMATION TO FRANKLIN TEMPLETON DISTRIBUTORS BY
TELEPHONE:
NAME OF PERSON TELEPHONE NUMBER
Yeshod Naidu (primary) Phone: 800/632-2000 or 415/312-6574
Fax: 415/312-4000 or 415/312-4153
Gener Filoteo (back-up) Phone: 800/632-2000 or 415/312-6119
Fax: same as above
2. CONTACT PERSONS AND FACSIMILE TRANSMISSION NUMBERS FOR FRANKLIN
TEMPLETON DISTRIBUTORS TO TRANSMIT PRICE INFORMATION TO THE
EQUITABLE:
NAME OF PERSON TELEPHONE NUMBER
David Cohen (212) 382-8121
Robert -West (212) 307-0708
Lorraine Chevere (212) 307-0977
AMENDED AND RESTATED
INVESTMENT MANAGEMENT AGREEMENT
Amendment and Restatement dated as of May 1, 1996 to Agreement dated
as of March 2, 1992 ("Original Agreement") by and among (i) the Trustees of
the American Dental Association Members Retirement Trust and of the American
Dental Association Members Pooled Trust for Retirement Plans (hereinafter
called the "Trustees"), (ii) the Committee of Separate Account No. 191 of The
Equitable Life Assurance Society of the United States ("Committee"), and (iii)
The Equitable Life Assurance Society of the United States ("Equitable") in its
capacity as insurer and owner of the assets of Separate Account No. 191.
WHEREAS the American Dental Association Members Retirement Trust and
The American Dental Association Members Pooled Trust for Retirement Plans
(collectively referred to as the "Trusts"), for which the Trustees act, were
established to fund the American Dental Association Members Retirement Plan
and other employee benefit plans ("Plans") adopted by eligible individuals,
organizations, partnerships, corporations or associations, which Plans must
meet the requirements for qualification under Section 401 of the Internal
Revenue Code of 1954, as amended ("Code");
WHEREAS Equitable established effective as of March 2, 1992 a
separate account, designated Separate Account No. 191 ("Separate Account"),
which Separate Account is used solely as a funding medium for certain amounts
received or to be received under a group annuity contract between Equitable
and the Trustees which was most recently amended as of December 9, 1995
("Contract"), under which the Trustees are the holders of the Contract
("Contract Holders");
WHEREAS the assets of the Separate Account are the property of
Equitable;
WHEREAS the Committee was established as of March 2, 1992 to direct
the investment of the assets of the Separate Account with authority to
delegate such power in whole or in part to one or more Investment Managers;
WHEREAS the Committee is comprised of members designated by the
Contract Holders, and as of the date of this Agreement the Contract Holders
have designated the Trustees as the Committee;
WHEREAS the Committee delegated to Equitable certain responsibilities
for managing assets of the Separate Account so as to maintain an investment of
not less than 95% of the market value of said assets in shares of the
Templeton Foreign Fund, a series of a registered investment company under the
Investment Company Act of 1940
<PAGE>
- 2 -
("Templeton Foreign Fund"), and up to 5% of the market value of said assets in
units of Equitable's Separate Account No. 2A;
WHEREAS the Committee has determined that, effective May 1, 1996,
100% of the market value of the assets of the Separate Account will be
invested in shares of the Templeton Foreign Fund; and
WHEREAS, the parties hereto wish to amend and restate the Original
Agreement so as to appropriately reflect the new investment policy of the
Separate Account and the role of Equitable with respect thereto.
NOW THEREFORE, in consideration of the promises and mutual convenants
herein contained, it is hereby agreed as follows:
1. Investment Instructions. The Committee hereby instructs
Equitable to invest 100% of the assets of the Separate Account in
shares of the Templeton Foreign Fund.
The Committee may substitute one or more registered
investment companies for the Templeton Foreign Fund as an investment
for the Separate Account. Equitable will comply with the directions
of the Committee; provided, however, that such substitution, in
Equitable's reasonable discretion, must be in accordance with the
standard for investments of a separate account under the New York
Insurance Law and that the effective date of such substitution will
have to comply with all applicable laws, including the Securities Act
of 1933.
2. Committee as Fiduciary. The Committee acknowledges that Equitable
no longer has the fiduciary obligations of an investment manager, as
such terms are defined in the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), with respect to management of the
investments of the Separate Account.
3. Proxy Voting. As owner of the assets of the Separate Account,
Equitable will receive all communications sent to shareholders of the
Templeton Foreign Fund, including proxies for shares held in the
Separate Account. Equitable will vote such proxies only in accordance
with the instructions received from participants, or in the case of
the American Dental Association Members Defined Benefit Plan, from
participating employers, or in the case of the American Dental
Association Members Pooled Trust for Retirement Plans, from
participants or trustees, as the case may be. Equitable shall not
vote any shares with respect to which no instructions were received.
<PAGE>
- 3 -
The Trustees will require the Templeton Foreign Fund, or its
distributor, to arrange for and bear the cost of distributing proxy
statements to, and soliciting instructions from, such participants
and trustees, tabulating and retaining such instructions and advising
Equitable of such results.
4. Responsibilities of Equitable. Equitable shall not be responsible
for the operation or administration of the Trusts or Plans except as
otherwise provided herein or by other written agreement, including
the Administrative Services Agreement dated January 10, 1986 among
Equitable, the Trustees and the Council of Insurance of the American
Dental Association, as amended (the "Administrative Services
Agreement"). Equitable shall discharge its duties in accordance with
the requirements of ERISA, other applicable law and this Agreement.
5. Liability of Equitable. Equitable shall not be liable for any act
or omission of the Committee or any other person or entity exercising
a fiduciary responsibility with respect to the Separate Account, if
such fiduciary responsibility has been allocated to the Committee or
such other person or entity in accordance with this Agreement, the
Contract, the Plans or the Trusts, except to the extent that
Equitable has itself violated a fiduciary responsibility, if any,
with respect to the Separate Account and except to the extent that
applicable law (including ERISA) may expressly provide otherwise.
6. Indemnification. The Trustees will indemnify and hold harmless
Equitable and its directors, employees and agents, from any and all
expenses (including attorney's fees), losses, damages, liabilities,
demands, charges, and claims of any kind whatsoever, arising directly
from or directly attributable to (a) the designation of the Templeton
Foreign Fund or any successor or substitute fund as an investment for
the Separate Account and (b) all other actions taken or omitted to be
taken by the Committee or the Trustees under this Agreement.
If any claim shall be made or action or proceeding commenced
that might give rise to an obligation hereunder, the indemnified
party shall give prompt written notice thereof to the Trustees and,
if requested by the Trustees, shall permit them, at their sole cost
and expense, to assume the defense of such claim, action or
proceeding.
7. Reports. Equitable shall furnish to the Trustees and the
Committee such reports and information as may reasonably be requested
by the Trustees, including a monthly statement as of the end of such
month of the value of the Separate Account's investment in the shares
of the Templeton Foreign Fund.
<PAGE>
- 4 -
8. Accounting.
(a) Equitable shall keep accurate and detailed records
concerning its services under this Agreement, including
records of all transactions during its performance of this
Agreement, and all such records shall be open to inspection
at all reasonable times by the Trustees and the Committee,
or their designee, and by duly authorized representatives of
the Secretary of Labor and the Secretary of the Treasury
acting pursuant to their authority under ERISA and the Code,
respectively, and other appropriate regulatory authorities.
(b) Equitable shall provide the investment accounting
services for the Separate Account as required under the
Contract and the Administrative Services Agreement.
9. Fees and Expenses. The fees payable to Equitable for its services
hereunder are set forth in Appendix A to this Agreement. Expenses
incurred in connection with the organization of the Separate Account
were initially paid by Equitable and are being reimbursed from the
Separate Account over a five year period, consisting of the period
from March 2, 1992 through December 31, 1992 and the four consecutive
calendar years beginning January 1, 1993. During the first period
(March 2 - December 31, 1992), the charge to the Separate Account for
all expenses, including other direct expenses, did not exceed .10% of
the average daily net assets of the Separate Account during such
period. Thereafter, the reimbursement of four-fifths of the
organizational expenses is being amortized equally over the remaining
four year period, and all other direct expenses will be deducted from
the Separate Account as they are incurred.
10. Termination and Resignation. This Agreement and Equitable's
services hereunder will terminate on the effective date of the
termination of the Contract or the earlier termination of the
Separate Account pursuant to the Contract. Equitable will dispose of
the assets of the Separate Account in accordance with the
instructions of the Committee.
11. Evidence of Ownership of Assets. The parties understand and agree
that the shares of the Templeton Foreign Fund held in the Separate
Account will not be physically issued. The shares of the Templeton
Foreign Fund will be issued in book-entry form as uncertificated
shares and appropriate notice will be sent to Equitable by the
Templeton Foreign Fund. All income and proceeds of redemption of such
shares and units will be reinvested in additional shares in
accordance with Section 1 above.
<PAGE>
- 5 -
12. Miscellaneous. The provisions of this Agreement may not be
terminated, changed, modified, altered, or amended in any respect
except in writing signed by all of the parties hereto.
13. Governing Law. This Agreement shall be construed and enforced
according to the laws of the State of Illinois and, to the extent of
any federal preemption, the laws of the United States of America.
14. Binding Upon Successors. This Agreement shall be binding upon and
enforceable by the successors to Equitable, the Trustees and the
Committee members and any of them.
15. Notices. Notices shall be deemed effective if addressed and
mailed with postage prepaid, by first class mail as follows:
To the Trustees and Committee:
American Dental Association
211 East Chicago Avenue
Chicago, Illinois 60611
Attention: David R. Dwyer
To Equitable:
The Equitable Life Assurance Society
of the United States
200 Plaza Drive
Secaucus, New Jersey 07094
Attention: Naomi J. Weinstein
16. Authority. Each party to this Agreement represents that it has
duly authorized the execution, delivery and performance of this
Agreement and that neither such execution and delivery nor the
performance of its obligations hereunder conflict with or violate any
provision of law, rule or regulation, or any instrument to which it
either is a party or to which any of its properties are subject and
that this Agreement is a valid and binding obligation.
<PAGE>
- 6 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
Each in his capacity as (i) a Trustee of each of the American Dental
Association Members Retirement Trust and the American Dental Association
Members Pooled Trust for Retirement Plans and (ii) a Member of the Committee of
Separate Account No. 191 of The Equitable Life Assurance Society of the United
States:
By_______________________________ By_______________________________
By_______________________________ By_______________________________
By_______________________________ By_______________________________
By_______________________________ By_______________________________
By_______________________________ By_______________________________
By_______________________________ By_______________________________
By_______________________________ By_______________________________
By_______________________________ By_______________________________
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
By_________________________________
Its________________________________
<PAGE>
APPENDIX A
Fee Schedule for Separate Account No. 191
An administration fee shall be paid to Equitable with respect to the
Separate Account in an amount equal to 1/12th of .15% of the aggregate amount
held for the Trusts in the Separate Account, calculated as of the first day of
each month, based on the aggregate amount held for the Trusts in the Separate
Account as of the last day of the second previous month, and will be charged
against the Separate Account unit value on a daily basis during the month.
This fee will be waived to the extent that Equitable receives fees from
Templeton Funds Distributor, Inc. ("Distributor") for services rendered to
Distributor under an agreement dated as of April 17, 1995.
<PAGE>
Attached to and made part of GROUP ANNUITY CONTRACT NO. AC2100
between
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
and
TRUSTEES OF THE AMERICAN DENTAL ASSOCIATION MEMBERS RETIREMENT TRUST AND OF
THE AMERICAN DENTAL ASSOCIATION MEMBERS POOLED TRUST FOR RETIREMENT PLANS
RIDER NO. 8
IT IS HEREBY AGREED that, as of May 1, 1996, said Contract is amended as
described below:
Section 2.12 is amended to read as follows:
"2.12 Contributions and transfers to the ADA Foreign Fund, the
Equity Index Fund and the Aggressive Equity Fund shall be invested
in the shares of funds registered under the Investment Company Act
of 1940 ("1940 Act") as open-end diversified management investment
companies (the "Investment Company"). If net transfers and
withdrawals from the ADA Foreign Fund, Equity Index Fund or the
Aggressive Equity Fund exceed the cash available to pay such
transfers and/or withdrawals, transfers and/or withdrawals may be
deferred pending settlement of the redemption of shares from the
Investment Company."
New York, New York
FOR THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES:
Chairman and Chief President and Chief Vice President, Secretary
Executive Officer Operating Officer and Associate General Counsel
- ------------------------------------ --------------------------------------
Assistant Registrar Date of Issue
<PAGE>
FOR THE CONTRACTHOLDER: Trustees of the American Dental Association Members
Retirement Trust and of the American Dental Association Members Pooled Trust for
Retirement Plans
- ---------------------------, Trustee ---------------------------, Trustee
- ---------------------------, Trustee ---------------------------, Trustee
- ---------------------------, Trustee ---------------------------, Trustee
- ---------------------------, Trustee ---------------------------, Trustee
- ---------------------------, Trustee ---------------------------, Trustee
- ---------------------------, Trustee ---------------------------, Trustee
- ---------------------------, Trustee ---------------------------, Trustee
- ---------------------------, Trustee ---------------------------, Trustee
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 1 to the Registration
Statement No. 333-01301 on Form N-4 (the "Registration Statement") of our
report dated February 7, 1996, relating to the financial statements of Separate
Account Nos. 3, 4, 191 and 200 of The Equitable Life Assurance Society of the
United States, and our report dated February 7, 1996, relating to the
consolidated financial statements of The Equitable Life Assurance Society
of the United States, which reports appear in such Statement of Additional
Information, and to the incorporation by reference of our reports into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the use in the Prospectus Supplement constituting part of this
Registration Statement of our report dated February 7, 1996, relating to the
financial statements of Separate Account No. 4 of The Equitable Life Assurance
Society of the United States, which report appears in such Prospectus
Supplement.
We also consent to the references to us under the headings "Condensed Financial
Information" and "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
New York, New York
April 26, 1996
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