Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM N-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. __ |_|
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 Insurance Company)
1290 Avenue of the Americas, New York, New York 10104
(Address of Insurance Company's Principal Executive Offices)
Insurance Company's Telephone Number, including Area Code: (212) 554-1234
---------------------------------------
HOPE E. ROSENBAUM-WERNER
Vice President
and Counsel
The Equitable Life Assurance Society of the United States
1290 Avenue of the Americas, New York, New York 10104
(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
---------------------------------------
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus and
Statement of Additional Information contained herein also relates to
Registration Statement No. 33-76028.
<PAGE>
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the Registration Statement.
CALCULATION OF REGISTRATION FEE UNDER
THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
Title of securities Amount being Proposed maximum Proposed maximum Amount of
being registered registered offering price per aggregate offering registration fee(2)
unit* price*
<S> <C> <C> <C> <C>
Units of Interest $20,000,000 (1) $20,000,000 6,060.61
under Group Annuity
Contract
<FN>
*Estimated solely for purpose of determining the registration fee.
</FN>
</TABLE>
(1) The Contracts do not provide for a predetermined amount or number of units.
(2) Of the $14,000,000 of units of interest under group annuity contracts
registered under Registration Statement No. 33-76028, $2,710,347, for which a
filing fee of $4,827.59 was previously paid, are being carried forward.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
<PAGE>
FORM N-3 ITEM PROSPECTUS CAPTION
------------- ------------------
CROSS REFERENCE SHEET
SHOWING LOCATION OF INFORMATION IN PROSPECTUS
---------------------------------------------
FORM N-3 ITEM PROSPECTUS CAPTION
------------- ------------------
1. Cover Page Cover Page
2. Definitions Part I - RIA Summary
3. Synopsis Part I - RIA Summary
4. Condensed Financial Part I - RIA Summary;
Information Condensed Financial Information
5. General Description Part I - RIA Summary;
of Registrant and Part III - Equitable Life and
Insurance Company Its Funds
6. Management Part II - Charges and Fees - Investment
Management and Financial Accounting Fee
Applicable to the Funds; Part III -
Equitable Life and Its Funds -
Investment Management
7. Deductions and Expenses Part II - Charges and Fees
8. General Description of Part V - Provisions of RIA and
Variable Annuity Contracts Retirement Benefits; Part VIII -
Participant Recordkeeping Services
(Optional)
9. Annuity Period Part V - Provisions of RIA and
Retirement Benefits - Annuity Benefits
10. Death Benefit Not Applicable
11. Purchases and Part III - Equitable Life
Contract Value and Its Funds - Investment Objectives
and Policies; Purchase and Redemption of
Units; How We Determine the Unit Value
12. Redemption Part II - Charges and Fees - Contingent
Withdrawal Charge; Part III - Equitable
Life and Its Funds - Purchase and
Redemption of Units; How We Determine
the Unit Value
13. Taxes Part VII - Tax and ERISA Considerations
14. Legal Proceedings Part VI - Miscellaneous Matters - Legal
Proceedings
15. Table of Contents of SAI Table of Contents
the Statement of
Additional Information
- i -
<PAGE>
CROSS REFERENCE SHEET SHOWING
LOCATION OF INFORMATION IN
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
STATEMENT OF ADDITIONAL
FORM N-3 ITEM INFORMATION CAPTION
------------- -------------------
16. Cover Page Cover Page
17. Table of Contents Table of Contents
18. General Information Part I - Fund Information
and History
19. Investment Objectives Part I - Fund
and Policies Information - Restrictions and
Requirements of the Bond, Balanced,
Common Stock and Aggressive Stock Funds;
Certain Investments of the Bond Fund
20. Management Part II - Management for The Bond,
Balanced, Common Stock and Aggressive
Stock Funds and Equitable Life
21. Investment Advisory Part I - Fund Information -
and Other Services Brokerage Fees and Charges for
Securities Transactions; Part II -
Management for The Bond, Balanced,
Common Stock and Aggressive Stock Fund
and Equitable Life
22. Brokerage Allocation Part I - Fund Information - Brokerage
Fees and Charges for Securities
Transactions
23. Purchase and Pricing Part I - Fund Information -
of Securities Being Offered Summary of Unit Values; How We
Determine the Unit Value
24. Underwriters Part II - Management for The Bond,
Balanced, Common Stock and Aggressive
Stock Funds and Equitable Life
25. Calculation of Yield Not Applicable
Quotations of Money
Market Sub-Accounts
26. Annuity Payments Not Applicable
27. Financial Statements Part III - Financial Statements
- ii -
<PAGE>
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PROSPECTUS
[RIA LOGO]
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MARCH 10, 1997
[EQUITABLE - MEMBER OF THE GLOBAL AXA GROUP LOGO]
<PAGE>
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SEPARATE ACCOUNT UNITS OF INTEREST UNDER
GROUP ANNUITY CONTRACTS
<TABLE>
<S> <C> <C>
O MONEY MARKET FUND O GROWTH & INCOME FUND BLENDED FUNDS:
O INTERMEDIATE GOVERNMENT O EQUITY INDEX FUND O CONSERVATIVE INVESTORS FUND
SECURITIES FUND O COMMON STOCK FUND O BALANCED FUND
O BOND FUND O GLOBAL FUND O GROWTH INVESTORS FUND
O QUALITY BOND FUND O INTERNATIONAL FUND
O HIGH YIELD FUND O AGGRESSIVE STOCK FUND
</TABLE>
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
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[RIA LOGO]
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Retirement Investment Account (RIA) is an investment vehicle for the assets of
employee retirement plans (EMPLOYER PLANS) that meet the requirements of Section
401(a) of the Internal Revenue Code of 1986, as amended (CODE), and whose funds
are maintained by trusts described in Section 501(a) of the Code. In addition,
some of these employer plans meet the requirements of the Employee Retirement
Income Security Act of 1974, as amended (ERISA). RIA is offered under a group
annuity contract issued by THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED
STATES.
Under RIA, employers may choose from fifteen investment options (INVESTMENT
OPTIONS) available under the Contracts. These Investment Options include (i) the
GUARANTEED INTEREST ACCOUNT, which is part of Equitable Life's general account
and pays interest at a periodically redetermined guaranteed fixed rate; (ii) the
investment funds of our Separate Account No. 51 -- Money Market Fund,
Intermediate Government Securities Fund, Quality Bond Fund, High Yield Fund,
Growth & Income Fund, Equity Index Fund, Global Fund, International Fund,
Conservative Investors Fund and Growth Investors Fund (THE INVESTMENT FUNDS OF
SEPARATE ACCOUNT NO. 51), and (iii) the Bond Fund (our Separate Account No. 13
- -- Pooled), the Balanced Fund (our Separate Account No. 10 -- Pooled), the
Common Stock Fund (our Separate Account No. 4 -- Pooled), the Aggressive Stock
Fund (our Separate Account No. 3 -- Pooled) (collectively with the investment
funds of Separate Account No. 51, the FUNDS.)
We invest each Investment Fund of Separate Account No. 51, in shares of a
corresponding Portfolio (PORTFOLIO) of the Hudson River Trust (TRUST), a mutual
fund whose shares are purchased by the separate accounts of insurance companies.
The prospectus for the Trust, which is attached to this prospectus, describes
the investment objectives, policies and risks of the Portfolios.
Employer plan assets invested in a Fund will fluctuate in value with the
investment performance of that Fund. The Bond Fund is available only to employer
plans that signed an agreement to invest monies in the Bond Fund prior to June
1, 1994.
This prospectus provides important information you should be aware of before
investing. Additional information is included in the Statement of Additional
Information (SAI) dated March 10, 1997 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 42 of this
prospectus. To obtain a copy of the SAI free of charge, complete the SAI request
form on page 41 and mail it to us, or call or write:
The Equitable Life Assurance Society of the United States -- RIA Service Office
Attn. SAI Request
200 Plaza Drive
Secaucus, NJ 07094-3689
or call
(800) 967-4560
(201) 583-2302
(Business Days, 9 A.M. to 5 P.M. Eastern time)
or fax
(201) 583-2304, 2305, or 2306
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.
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE.
MARCH 10, 1997
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COPYRIGHT 1997
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES.
ALL RIGHTS RESERVED.
888-1121 (3/97)
Cat. No. 127257
<PAGE>
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TABLE OF CONTENTS
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PART I -- RIA SUMMARY PAGE 3
Equitable Life 3
RIA Terms 3
Participation and Funding Requirements 4
Miscellaneous 4
Investment Options 4
Charges and Fees 4
Cash Available to a Participant Under RIA Before
Retirement 5
Benefit Payments 5
Fee Tables 5
Condensed Financial Information 7
Investment Policies and Objectives 13
Contributions, Transfers and Withdrawals 14
Loans 14
Communications with Us 14
PART II -- CHARGES AND FEES PAGE 15
Charges Which Are Reflected in Reductions in the
Unit Value 15
Charges Which Reduce the Number of Units in RIA 16
PART III -- EQUITABLE LIFE AND ITS FUNDS PAGE 17
Equitable Life 17
About Our Funds 17
The Trust 17
Purchase and Redemption of Units 17
How We Determine the Unit Value 18
Investment Objectives and Policies 18
Bond Fund 18
Balanced Fund 19
Common Stock Fund 20
Aggressive Stock Fund 21
Investment Management 21
Rates of Return 22
Inception Dates and Comparative
Benchmarks 22
Annualized Rates of Return 23
Cumulative Rates of Return 24
PART IV -- THE GUARANTEED INTEREST ACCOUNT PAGE 26
General 26
The Guarantees 26
Current and Minimum Interest Rates 26
Classes of Employer Plans 26
Charges and Fees 26
Deferred Payout Provision 27
PART V -- PROVISIONS OF RIA AND RETIREMENT PAGE 29
BENEFITS
Contributions; Frequency and Amount 29
Rollover or Transfer from a Plan 29
Selecting Investment Options 29
Allocation Choices 29
Transfer Provisions 29
Special Rules Applicable to Plans That
May Invest in the Bond Fund 30
Loan Provision 30
Benefit Payments General 31
Cash Distributions 31
Annuity Benefits 31
Amount of Fixed Annuity Payments 32
Payment of Annuity 32
Assignment and Alienation 32
Creditors' Claims 32
When We Pay Proceeds 32
Periodic Reports 32
If a Plan Fails to Qualify 32
Modification or Contract Discontinuance/
Termination 32
PART VI -- MISCELLANEOUS MATTERS PAGE 33
How We Are Regulated 33
Commissions and Service Fees 33
Copies of the Master Retirement Trust Agreement 33
Fiduciaries 33
Acceptance 33
Voting Rights 33
Our Rights 34
Legal Proceedings 34
Experts 34
Where to Get Additional Information 34
Changes in Funding Vehicle 34
PART VII -- TAX AND ERISA CONSIDERATIONS PAGE 35
Tax Aspects of Contributions to a Plan 35
Tax Aspects of Distributions from a Plan 36
Certain Rules Applicable to Plan Loans 38
Impact of Taxes to Equitable Life 38
Certain Rules Applicable to Plans Designed to
Comply With Section 404(c) of ERISA 38
PART VIII -- PARTICIPANT RECORDKEEPING SERVICES PAGE 40
(OPTIONAL)
SAI TABLE OF CONTENTS PAGE 41
Index
Financial Statements
SAI REQUEST FORM PAGE 41
INFORMATION REGARDING SEPARATE ACCOUNT NO. 51
RIA, as funded through Separate Account No. 51, currently is being offered by
means of Equitable Life's Prospectus dated May 1, 1995, as supplemented on May
1, 1996, and SAI dated May 1, 1996. For that reason, the information contained
in this Prospectus dated March 10, 1997, with respect to Separate Account No.
51, is set forth as of December 31, 1995, consistent with the information
contained in the Prospectus dated May 1, 1995, as supplemented on May 1, 1996.
Financial statements of Separate Account No. 51 as of December 31, 1995, are
contained in the SAI dated May 1, 1996.
2
<PAGE>
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PART I -- RIA SUMMARY
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EQUITABLE LIFE
We are The Equitable Life Assurance Society of the United States. "We," "us" or
"Equitable Life" refers to us. We are a New York stock life insurance company
that has been in business since 1859.
RIA TERMS
RIA is an investment program designed for employer plans that qualify for
tax-favored treatment under Section 401(a) of the Code. Eligible employer plans
include defined benefit plans, defined contribution plans or profit-sharing
plans, including 401(k) plans. RIA is composed of two group annuity contracts
(CONTRACTS), a MASTER RETIREMENT TRUST agreement, a participation or
installation agreement, an optional participant recordkeeping services (PRS)
agreement and fifteen investment options. The trustee of the Master Retirement
Trust has entered into the two Contracts with us to implement RIA. Currently The
Chase Manhattan Bank, N.A., acts as trustee under the Master Retirement Trust.
The sole responsibility of Chase Manhattan Bank, N.A. is to serve as a party to
the Contracts. It has no responsibility for the administration of RIA.
The INVESTMENT FUNDS OF SEPARATE ACCOUNT NO. 51 are the Money Market Fund,
Intermediate Government Securities Fund, Quality Bond Fund, High Yield Fund,
Growth & Income Fund, Equity Index Fund, Global Fund, International Fund,
Conservative Investors Fund and Growth Investors Fund. Each invests in
corresponding Portfolios of the Trust. The other funds are held in pooled
separate accounts as follows:
The BOND FUND is our Separate Account No. 13 -- Pooled.
The BALANCED FUND is our Separate Account No. 10 -- Pooled.
The COMMON STOCK FUND is our Separate Account No. 4 -- Pooled.
The AGGRESSIVE STOCK FUND is our Separate Account No. 3 -- Pooled.
A PARTICIPANT-DIRECTED EMPLOYER PLAN is an employer plan that by its terms
permits investment directions by participants for contribution allocations or
transfers of account accumulations among investment options. The provisions of
one of the Contracts govern this plan.
A TRUSTEE-DIRECTED EMPLOYER PLAN permits these same directions to be made only
by the employer, a trustee or any named fiduciary or an authorized delegate of
the plan. The provisions of the other Contract govern this plan. At our sole
discretion, a trustee-directed plan may change its participation basis to a
participant-directed plan.
An EMPLOYER is an employer, a plan trustee or other named fiduciary, or an
authorized delegate, of the plan. The employer is specified in the RIA adoption
documents.
The PLAN TRUSTEE is generally responsible for instructing us as to the
investment of plan contributions (including allocations and transfers) and
withdrawals, and receives amounts withdrawn from RIA.
A BUSINESS DAY is any day on which Equitable Life is open and the New York Stock
Exchange is open for trading. We are closed on national business holidays,
Martin Luther King, Jr. Day and the Friday after Thanksgiving. We may also
choose to close on the day immediately preceding or following a national
business holiday or due to emergency conditions. Our Business Day ends at 4:00
p.m. Eastern time.
A TRANSACTION DATE is the Business Day we receive a contribution at the RIA
contribution processing office with properly completed and signed allocation
instructions, or a properly completed and signed written or facsimile request
for a financial transaction at the RIA Service Office. (For the addresses, see
the inside back cover of this prospectus.)
An EXCLUSIVE FUNDING EMPLOYER PLAN is one which uses RIA as the exclusive
funding vehicle for the assets of an employer plan. The annual amount of
contributions must be at least $10,000.
Subject to our sole discretion, A PARTIAL FUNDING EMPLOYER PLAN is one which
uses RIA as a partial investment funding vehicle for an employer plan. The
aggregate amount of contributions in the initial participation year must be at
least $50,000 and the annual aggregate amount of contributions thereafter must
be at least $25,000.
An exclusive funding employer plan may not change its participation basis to
that of a partial funding employer plan, or vice versa, unless the underwriting
and other requirements referred to above are satisfied and approved by us.
We reserve
o the right to change these amounts in the future for new sales only; and
o the right to impose higher annual minimums for certain plans.
We will give you advance notice of any such changes.
THE EMPLOYER OR PLAN SPONSOR, AS THE CASE MAY BE, IS RESPONSIBLE FOR DETERMINING
WHETHER RIA IS A SUITABLE FUNDING VEHICLE AND SHOULD CAREFULLY READ THE
PROSPECTUS AND INSTALLATION DOCUMENTS BEFORE SIGNING A PARTICIPATION OR
INSTALLATION AGREEMENT.
NOTE TO PARTICIPANTS: This prospectus describes RIA as it is generally available
to employer plans. However, the terms and conditions of the employer's plan
govern which aspects of RIA are available to participants. Therefore, the
employer's plan may be different from the features of RIA described in this
prospectus.
3
<PAGE>
NOTE TO EMPLOYERS: Equitable Life's duties and responsibilities are limited to
those described in this prospectus. Except as explicitly set forth in the PRS
program, we do not provide administrative services in connection with an
employer plan. SEE PART VIII -- PARTICIPANT RECORDKEEPING SERVICES (OPTIONAL).
In addition, no Equitable Life Agent or firm operated by an Equitable Life Agent
(AGENT) is authorized to solicit or agree to perform plan administrative
services in his capacity as an Agent. If an employer or trustee engages an Agent
to provide administrative support services to an employer plan, the employer or
trustee engages that Agent as its representative rather than Equitable Life's.
EQUITABLE LIFE IS NOT LIABLE TO ANY EMPLOYER, TRUSTEE OR EMPLOYER PLAN FOR ANY
DAMAGES ARISING FROM OR IN CONNECTION WITH ANY PLAN ADMINISTRATION SERVICES
PERFORMED OR AGREED TO BE PERFORMED BY AN AGENT.
PARTICIPATION AND FUNDING REQUIREMENTS
You may participate in RIA as either an exclusive funding employer plan or a
partial funding employer plan, subject to our sole discretion and underwriting
standards and on a case-by-case basis.
To enroll in RIA, a partnership, sole proprietor or corporation must adopt the
Master Retirement Trust as part of its employer plan, and the employer must
execute the participation or installation agreement and provide us with certain
plan information. No contributions will be accepted until the Transaction Date
on which we accept the enrollment of the employer plan.
MISCELLANEOUS
This prospectus describes units of interest (UNITS) in the Funds which are
registered under the Securities Act of 1933 (REGISTERED UNITS). Pursuant to an
exemption under the Securities Act of 1933, the Units maintained by corporate or
governmental entities (CORPORATE PLANS) are not Registered Units. In all other
respects, Registered Units are identical to unregistered Units.
INVESTMENT OPTIONS
There are fifteen investment options available for employers to fund their
plans: the Guaranteed Interest Account and the Money Market Fund, Intermediate
Government Securities Fund, Bond Fund, Quality Bond Fund, High Yield Fund,
Growth & Income Fund, Equity Index Fund, Common Stock Fund, Global Fund,
International Fund, Aggressive Stock Fund, Conservative Investors Fund, Balanced
Fund, and Growth Investors Fund. All of the Funds except for the Bond Fund,
Balanced Fund, Common Stock Fund and Aggressive Stock Fund, invest in shares of
a corresponding Portfolio of a mutual fund called The Hudson River Trust
(TRUST). The Trust prospectus (found in the second part of this booklet)
describes the investment objectives and policies of the available Portfolios.
The investment objectives and policies of the Bond Fund, Balanced Fund, Common
Stock Fund and Aggressive Stock Fund are described in this prospectus under PART
III -- EQUITABLE LIFE AND ITS FUNDS and in the SAI under PART I -- FUND
INFORMATION. If the Employer or Plan Trustee does not select all fifteen
Investment Options in the RIA program, your choices will be limited to the
Investment Options selected. If the Plan is intended to comply with the
requirements of ERISA Section 404(c), the Employer or the Plan Trustee is
responsible for making sure that the Investment Options chosen constitute a
broad range of investment choices as required by the Department of Labor (DOL)
Section 404(c) regulations. See "PLANS DESIGNED TO COMPLY WITH SECTION 404(C) OF
ERISA" in PART VII -- TAX AND ERISA CONSIDERATIONS.
CHARGES AND FEES
INVESTMENT MANAGEMENT AND FINANCIAL ACCOUNTING FEE FOR THE BOND, BALANCED,
COMMON STOCK AND AGGRESSIVE STOCK FUNDS. An investment management and financial
accounting fee equal to 0.50% of the assets in the Bond, Balanced, Common Stock
and Aggressive Stock Funds, is reflected in the daily Unit value for each of
these Funds. The Bond, Balanced, Common Stock and Aggressive Stock Funds incur
certain commissions, fees and expenses, including audit, custody and other
expenses, as part of their portfolio transactions and overall operation of these
Funds are reflected in the Unit values.
SEPARATE ACCOUNT ADMINISTRATIVE CHARGE FOR THE INVESTMENT FUNDS OF SEPARATE
ACCOUNT NO. 51. An administrative charge at an annual rate of 0.05% of the
assets is reflected in the daily Unit value for each Investment Fund.
TRUST CHARGES. Investment advisory fees and other expenses of the Trust are
charged daily against the Trust's assets. These charges are reflected in the
Portfolio's daily share price and in the Unit value for the Investment Funds of
Separate Account No. 51.
ONGOING OPERATIONS FEE. The ongoing operations fee, which is paid monthly, is
based on a declining scale which starts at a maximum annual rate of 1.25% of the
combined balances of all of the Investment Options in which the employer plan
assets are allocated.
PARTICIPANT RECORDKEEPING SERVICES. If the employer elects to enroll in RIA's
PRS program, there is an annual charge of $25 per participant under the employer
plan. The charge is applied on a pro rata basis against the combined balances of
all the Investment Options in which the employer plan assets are invested and is
deducted monthly. See PART VIII -- PARTICIPANT RECORDKEEPING SERVICES
(OPTIONAL).
LOAN FEE. We charge an employer plan a loan fee in an amount equal to 1% of the
loan principal amount on the Transaction Date a loan is made.
CONTINGENT WITHDRAWAL CHARGE. We impose a contingent withdrawal charge against
withdrawals made from RIA at any time up to and including the ninth anniversary
of the date on which the employer plan began its participation in RIA. The
maximum contingent withdrawal charge is 6% of the employer plan assets
withdrawn. Outstanding loan balances are included in the plan's assets for
purposes of assessing the contingent withdrawal charge. See PART II -- CHARGES
AND FEES -- CONTINGENT WITHDRAWAL CHARGE.
FIXED ANNUITY ADMINISTRATIVE CHARGE. If a fixed annuity under RIA is elected by
or on behalf of a participant or by a beneficiary, an administrative charge of
$175 will be deducted from the amount of the employer plan proceeds applied to
purchase the annuity.
PREMIUM TAX CHARGE. At the time an amount is applied to an annuity distribution
option, we currently deduct a charge based on any applicable state or local
taxes imposed on the transaction. We reserve the right to deduct any such charge
from each contribution or from withdrawals. The current premium tax rate that
might be imposed ranges from 0% to 2.25%. The rate is 1% in Puerto Rico and 5%
in the Virgin Islands.
4
<PAGE>
DIRECT BILLING. Subject to a written agreement between Equitable Life and an
employer, the employer has the option of being billed directly for the Ongoing
Operations fee and, if applicable, the fee for PRS.
We reserve the right to change certain of the charges and fees discussed above.
However, the investment advisory fees for the Portfolios of the Trust cannot be
changed without a vote of that Portfolio's shareholders.
CASH AVAILABLE TO A PARTICIPANT UNDER
RIA BEFORE RETIREMENT
The amount of any cash payments that may be available to a participant before
retirement will depend on the terms of the employer plan and will be affected by
the charges to the employer plan and investment performance of the Funds.
Certain cash withdrawals by a participant that are permitted under an employer
plan prior to retirement may give rise to tax penalties or other adverse tax
consequences. See PART II -- CHARGES AND FEES, PART V -- PROVISIONS OF RIA AND
RETIREMENT BENEFITS and PART VII -- TAX AND ERISA CONSIDERATIONS.
BENEFIT PAYMENTS
At retirement, in accordance with the employer plan, a participant can receive
fixed annuity payments funded through our general account, a lump sum payment or
a combination of both. RIA does not offer variable annuity payments. The amount
available for retirement benefits will depend upon the amount invested in the
Guaranteed Interest Account and the Funds and the investment performance of the
Funds, and may be affected by charges to the employer plan. See PART V --
PROVISIONS OF RIA AND RETIREMENT BENEFITS.
Disability and death benefits are provided in accordance with the employer plan;
RIA does not have separate disability or death benefit provisions.
We pay benefit distribution payments withdrawn from RIA to the plan trustee of
the employer plan.
FEE TABLES
The purpose of these Tables is to assist you in understanding the various costs
and expenses which may affect employer plan balances participating in the Funds.
See PART II -- CHARGES AND FEES and PART V -- PROVISIONS OF RIA AND RETIREMENT
BENEFITS for a description of fees for optional PRS, loan fees, annuity purchase
charges and state or local tax charges. If an annuity benefit is elected under
RIA, a $175 annuity benefit charge will be imposed and a charge for any
applicable premium taxes will be deducted from the amount applied to provide an
annuity benefit. The Tables reflect annualized expenses of Funds including, for
Separate Account No. 51, the corresponding Trust Portfolio. Annualized expenses
for the Separate Account No. 51 Funds are for the period ended December 31,
1995. Annualized expenses for the Bond, Balanced, Common Stock and Aggressive
Stock Funds are for the period ended December 31, 1996.
As explained in Part IV, the Guaranteed Interest Account is not a Fund.
Therefore, the only expenses shown in the Table which apply to the Guaranteed
Interest Account are the "Contingent Withdrawal Charge" and the "Ongoing
Operations Fee." In addition, there is a loan fee charged against the Guaranteed
Interest Account which is equal to 1% of the principal amount of the loan.
Certain expenses and fees shown in these Tables may not apply to your plan. To
determine whether a particular item in a Table applies (and the actual amount,
if any), consult the portion of the prospectus indicated in the notes.
<TABLE>
<CAPTION>
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COMMON AGGRESSIVE
BOND BALANCED STOCK STOCK
FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PARTICIPATING PLAN
TRANSACTION EXPENSES:
Sales Load on Purchases............................................ [----------------------None-----------------------]
Maximum Contingent Withdrawal Charge (as a percentage of
plan balances) (1).............................................. [-------------------6% Maximum--------------------]
Maximum Annual Ongoing Operations Fee (as a percentage
of plan balances) (2)........................................... [-----------------1.25% Maximum-------------------]
SEPARATE ACCOUNT ANNUAL EXPENSES:
Administrative Charge.............................................. None None None None
Annual Investment Management Fee Including Financial
Accounting Fees (as a percentage of plan balances in
each Fund)...................................................... 0.50% 0.50% 0.50% 0.50%
---- ---- ---- ----
Total Separate Account Annual Expenses (3)...................... 0.50% 0.50% 0.50% 0.50%
==== ==== ==== ====
TRUST ANNUAL EXPENSES: [----------------not applicable-------------------]
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The contingent withdrawal charge is waived in certain circumstances. The
charge reduces to 2% of the amount withdrawn in the ninth participation
year and cannot be imposed after the ninth anniversary of a plan's
participation in RIA. See PART II -- CHARGES AND FEES -- CONTINGENT
WITHDRAWAL CHARGE.
(2) The annual ongoing operations fee is applied on a decremental scale,
declining to 0.50% on the portion of plan balances over $1,000,000, except
for plans that adopted RIA before February 9, 1986. See PART II -- CHARGES
AND FEES.
(3) The Total Separate Account Annual Expenses are reflected in the Unit
value.
</FN>
</TABLE>
5
<PAGE>
INVESTMENT FUNDS OF SEPARATE ACCOUNT NO. 51
-------------------------------------------
<TABLE>
<CAPTION>
CONSER-
INTERMEDIATE VATIVE GROWTH
MONEY GOVERNMENT QUALITY HIGH GROWTH & EQUITY INTER- INVES- INVES-
MARKET SECURITIES BOND YIELD INCOME INDEX GLOBAL NATIONAL TORS TORS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PARTICIPATING PLAN TRANSACTION
EXPENSES
Sales Load On Purchases........... [-----------------------------------------None-------------------------------------------]
Maximum Contingent Withdrawal
Charge (as a percentage of
Plan Balances) (1) ............. [-------------------------------------6% Maximum-----------------------------------------]
Maximum Annual Ongoing
Operations Fee (as a [-----------------------------------1.25% Maximum----------------------------------------]
percentage of plan balances)(2)
SEPARATE ACCOUNT ANNUAL EXPENSES
Administrative Charge(3)(5)....... [-----------------------------------------0.05%------------------------------------------]
TRUST ANNUAL EXPENSES
Investment Advisory Fee (b)....... 0.40% 0.50% 0.55% 0.55% 0.55% 0.35% 0.53% 0.90% 0.55% 0.52%
Other Expenses(b)................. 0.04% 0.07% 0.04% 0.05% 0.05% 0.13% 0.08% 0.13% 0.04% 0.04%
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total Annual Expenses
for the Trust(4)(5)........... 0.44% 0.57% 0.59% 0.60% 0.60% 0.48% 0.61% 1.03% 0.59% 0.56%
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
(b) Annualized.
<FN>
Notes:
(1) The contingent withdrawal charge is waived in certain circumstances. The
charge reduces to 2% of the amount withdrawn in the ninth participation year
and cannot be imposed after the ninth anniversary of a plan's participation
in RIA. See PART II -- CHARGES AND FEES -- CONTINGENT WITHDRAWAL CHARGE.
(2) The annual ongoing operations fee is applied on a decremental scale,
declining to 0.50% on the portion of plan balances over $1,000,000, except
for plans that adopted RIA before February 9, 1986. See PART II -- CHARGES
AND FEES.
(3) Separate Account expenses are shown as a percentage of each Investment
Fund's average value. We reserve the right to increase the separate account
administrative charge upon 90 days written notice to the employer. See PART
II -- CHARGES AND FEES.
(4) The Hudson River Trust expenses are annualized and shown as a percentage of
each portfolio's average value. See PART II -- CHARGES AND FEES -- TRUST
CHARGES TO PORTFOLIOS. Expenses shown for all portfolios are for the period
ended December 31, 1995. The investment advisory fee for each Portfolio may
vary from year to year depending upon the average daily net assets of the
respective Portfolio of the Trust. The maximum investment advisory fees,
however, cannot be changed without a vote of that Portfolio's shareholders.
The other direct operating expenses will also fluctuate from year to year
depending on actual expenses. The Trust expenses are shown as a percentage
of each Portfolio's average value. See PART II -- CHARGES AND FEES -- TRUST
CHARGES TO PORTFOLIOS.
(5) The Separate Account Annual Expenses and Trust Annual Expenses are reflected
in the Unit value.
</FN>
</TABLE>
6
<PAGE>
EXAMPLES --
The examples below show the expenses that a plan would pay in two hypothetical
situations, assuming a single investment of $1,000 in each Fund listed and a 5%
annual return on assets. For purposes of these examples, the ongoing operations
fee is computed by reference to the actual aggregate annual ongoing operations
fee as a percentage of total assets held under the Contracts invested in
Registered Units. The expenses shown would be lower for corporate plans which
generally have greater total assets. See Note (2) to the Table above. These
examples assume that no loan has been taken and do not reflect PRS or annuity
benefit charges or a charge for premium taxes, none of which may apply to any
particular Participant.
IF THE ENTIRE EMPLOYER PLAN BALANCE IS WITHDRAWN AT THE END OF EACH PERIOD
SHOWN, THE EXPENSE WOULD BE --
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Money Market (1)........ 75.41 96.79 118.95 156.12
Intermediate Government
Securities (1)....... 74.52 94.06 114.25 145.66
Bond (2)................ 75.36 96.64 118.69 155.55
Quality Bond (1)........ 76.88 101.34 126.75 173.36
High Yield (1).......... 76.97 101.64 127.27 174.49
Growth & Income (1)..... 76.97 101.64 127.27 174.49
Equity Index (1)........ 75.80 98.01 121.04 160.74
Common Stock (2)........ 75.36 96.64 118.69 155.55
Global (1).............. 77.07 101.94 127.79 175.63
International (1)....... 81.18 114.57 149.36 222.44
Aggressive Stock (2).... 75.36 96.64 118.69 155.55
Blended Funds:
Conservative 76.88 101.34 126.75 173.36
Investors (1)
Balanced (2)......... 75.36 96.64 118.69 155.55
Growth Investors (1). 76.58 100.43 125.20 169.93
IF THE ENTIRE EMPLOYER PLAN BALANCE IS NOT WITHDRAWN AT THE END OF EACH PERIOD
SHOWN, THE EXPENSE WOULD BE --
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Money Market (1)........ 13.20 41.07 71.03 156.12
Intermediate Government
Securities (1)....... 14.55 45.22 78.11 171.07
Bond (2)................ 13.15 40.91 70.76 155.55
Quality Bond (1)........ 14.76 45.86 79.19 173.36
High Yield (1).......... 14.86 46.18 79.73 174.49
Growth & Income (1)..... 14.86 46.18 79.73 174.49
Equity Index (1)........ 13.61 42.35 73.21 160.74
Common Stock (2)........ 13.15 40.91 70.76 155.55
Global (1).............. 14.97 46.50 80.28 175.63
International (1)....... 19.35 59.83 102.84 222.44
Aggressive Stock (2).... 13.15 40.91 70.76 155.55
Blended Funds:
Conservative 14.76 45.86 79.19 173.36
Investors (1)
Balanced (2)......... 13.15 40.91 70.76 155.55
Growth Investors (1). 14.45 44.90 77.56 169.93
- --------------------------------------------------------------
(1) For the period ended December 31, 1995.
(2) For the period ended December 31, 1996.
These examples should not be considered a representation of past or future
expenses for each Fund. Actual expenses may be greater or less than those shown
above. Similarly, the annual rate of return assumed in the examples is not an
estimate or guarantee of future investment performance.
CONDENSED FINANCIAL INFORMATION
The following tables give information about income, expenses and capital changes
of the Bond, Balanced, Common Stock and Aggressive Stock Funds, and Unit values
of the Investment Funds of Separate Account No. 51, attributable to a Registered
Unit outstanding for the periods indicated, along with other supplementary data.
Registered Units have been offered under RIA in the Bond, Balanced, Common Stock
and Aggressive Stock Funds as of May 1, 1992, January 23, 1985, April 8, 1985
and July 7, 1986, respectively. Registered and Non-Registered Units for the
Investment Funds of Separate Account No. 51 were first offered under RIA on June
1, 1994. Non-registered Units have been offered under RIA in the Bond Fund since
1991, the Balanced and Common Stock Funds since 1983 and the Aggressive Stock
Fund since 1986.
Condensed Financial Information for the Portfolios is contained in the Hudson
River Trust prospectus attached to this prospectus.
High portfolio turnover rates may result in additional transaction and brokerage
expenses which are reflected in the Unit values.
The selected per unit data and ratios for the years ended December 31, 1996,
1995 and 1994 have been audited by Price Waterhouse LLP, independent
accountants, as stated in their report on the FINANCIAL STATEMENTS contained in
Part III of the SAI. The financial statements of the separate accounts as well
as the Consolidated Financial Statements of Equitable Life are contained in the
SAI. These tables should be read in conjunction with the Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
SEPARATE ACCOUNT NO. 13 -- POOLED (BOND FUND) OF THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE PERIOD INDICATED AND OTHER SUPPLEMENTARY DATA
(NOTE F)
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------- MAY 1, 1992-
1996 1995 1994 1993 DECEMBER 31, 1992
------------ ------------ ------------ ------------ -----------------------
<S> <C> <C> <C> <C> <C>
Income............................. $ 3.09 $ 3.07 $ 2.32 $ 2.18 $ 0.59
Expenses (Note B).................. (0.25) (0.23) (0.12) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income ............. 2.84 2.84 2.20 2.18 0.59
Net realized and unrealized gain
(loss) on investments (Note C)... (1.49) 3.72 (2.99) 1.65 2.37
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Bond Fund
Unit Value....................... 1.35 6.56 (0.79) 3.83 2.96
Bond Fund Unit
Value (Note A):
Beginning of Period............ 48.91 42.35 43.14 39.31 36.35
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period.................. $50.26 $48.91 $42.35 $43.14 $39.31
===================================================================================================================================
Ratio of expenses to average net
assets attributable to Units
(Note B)....................... 0.50% 0.50% 0.36% N/A N/A
Ratio of net investment income to
average net assets
attributable to Units.......... 5.81% 6.17% 5.12% 5.17% 6.00% (Note D)
Number of registered Bond Fund Units
outstanding at end of period .... 2,698 2,392 1,632 545 288
Portfolio turnover rate (Note E)... 137% 288% 264% 254% 151%
===================================================================================================================================
</TABLE>
See Notes following tables.
8
<PAGE>
<TABLE>
<CAPTION>
SEPARATE ACCOUNT NO. 10 -- POOLED (BALANCED FUND) OF THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE PERIODS INDICATED AND OTHER SUPPLEMENTARY DATA
(NOTE F)
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income.............................. $ 3.60 $ 3.18 $ 2.63 $ 2.67 $ 2.69 $ 2.63 $ 3.08 $ 3.04 $ 2.30 $ 1.63
Expenses (Note B) .................. (0.50) (0.43) (0.23) -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income............... 3.10 2.75 2.40 2.67 2.69 2.63 3.08 3.04 2.30 1.63
Net realized and unrealized gain
(loss) on investments(Note C)..... 7.66 13.34 (9.48) 7.28 (4.51) 20.34 (3.17) 8.66 3.44 (3.54)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Balanced
Fund Unit Value................... 10.76 16.09 (7.08) 9.95 (1.82) 22.97 (0.09) 11.70 5.74 (1.91)
Balanced Fund Unit Value (Note A):
Beginning of Period............... 94.86 78.77 85.85 75.90 77.72 54.75 54.84 43.14 37.40 39.31
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period..................... $105.62 $94.86 $78.77 $85.85 $75.90 $77.72 $54.75 $54.84 $43.14 $37.40
====================================================================================================================================
Ratio of expenses to average net
assets attributable to Units
(Note B)........................ 0.50% 0.50% 0.30% N/A N/A N/A N/A N/A N/A N/A
Ratio of net investment income to
average net assets attributable
to Units........................ 3.13% 3.19% 2.94% 3.31% 3.68% 4.15% 5.78% 6.12% 5.70% 3.79%
Number of registered Balanced Fund
Units outstanding at end
of period....................... 52,080 73,979 86,914 87,242 81,860 80,964 86,377 86,942 67,815 54,112
Portfolio turnover rate (Note E) ... 177% 170% 107% 102% 90% 114% 199% 175% 172% 238%
====================================================================================================================================
</TABLE>
See Notes following tables.
9
<PAGE>
<TABLE>
<CAPTION>
SEPARATE ACCOUNT NO. 4 -- POOLED (COMMON STOCK FUND) OF THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE PERIODS INDICATED AND OTHER SUPPLEMENTARY DATA
(NOTE F)
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income........................... $ 2.99 $ 3.98 $ 3.83 $ 3.69 $ 3.13 $ 2.74 $ 3.82 $ 3.42 $ 2.52 $ 2.37
Expenses (Note B) ............... (2.51) (2.03) (1.00) -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income............ 0.48 1.95 2.83 3.69 3.13 2.74 3.82 3.42 2.52 2.37
Net realized and unrealized gain
(loss) on investments
(Note C)..................... 80.65 108.54 (8.98) 56.16 1.86 96.86 (26.92) 62.70 19.19 4.86
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
Common Stock Fund Unit Value... 81.13 110.49 (6.15) 59.85 4.99 99.60 (23.10) 66.12 21.71 7.23
Common Stock
Fund Unit Value (Note A):
Beginning of Period.......... 457.41 346.92 353.07 293.22 288.23 188.63 211.73 145.61 123.90 116.67
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period................ $538.54 $457.41 $346.92 $353.07 $293.22 $288.23 $188.63 $211.73 $145.61 $123.90
====================================================================================================================================
Ratio of expenses to average
net assets attributable to Units
(Note B)..................... 0.50% 0.50% 0.30% N/A N/A N/A N/A N/A N/A N/A
Ratio of net investment income to
average net assets attributable
to Units..................... 0.10% 0.49% 0.81% 1.17% 1.13% 1.14% 2.02% 1.85% 1.84% 1.69%
Number of registered Common Stock
Fund Units outstanding at end
of period.................... 24,332 25,937 27,438 24,924 23,331 20,799 18,286 14,129 8,461 5,466
Portfolio turnover rate
(Note E) ....................... 105% 108% 91% 82% 68% 66% 93% 113% 101% 121%
====================================================================================================================================
</TABLE>
See Notes following tables.
10
<PAGE>
<TABLE>
<CAPTION>
SEPARATE ACCOUNT NO. 3 -- POOLED (AGGRESSIVE STOCK FUND) OF THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE PERIODS INDICATED AND OTHER SUPPLEMENTARY DATA
(NOTE F)
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income........................... $ 1.33 $ 0.98 $ 0.71 $ 1.01 $ 1.21 $ 1.06 $ 1.03 $ 1.06 $ 0.60 $ 0.62
Expenses (Note B) ............... (0.98) (0.75) (0.37) -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income............ 0.35 0.23 0.34 1.01 1.21 1.06 1.03 1.06 0.60 0.62
Net realized and unrealized gain
(loss) on investments
(Note C)..................... 38.04 40.49 (5.81) 17.43 (4.23) 55.15 4.45 17.77 0.35 (1.36)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
Aggressive Stock
Fund Unit Value.............. 38.39 40.72 (5.47) 18.44 (3.02) 56.21 5.48 18.83 0.95 (0.74)
Aggressive Stock
Fund Unit Value (Note A):
Beginning of Period.......... 170.67 129.95 135.42 116.98 120.00 63.79 58.31 39.48 38.53 39.27
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period................ $209.06 $170.67 $129.95 $135.42 $116.98 $120.00 $63.79 $58.31 $39.48 $38.53
====================================================================================================================================
Ratio of expenses to average
net assets attributable to Units
(Note B)..................... 0.50% 0.50% 0.30% N/A N/A N/A N/A N/A N/A N/A
Ratio of net investment income to
average net assets attributable
to Units....................... 0.18% 0.15% 0.25% 0.82% 1.09% 1.11% 1.72% 2.09% 1.47% 1.35%
Number of registered
Aggressive Stock Fund Units
outstanding at end
of period...................... 26,777 26,043 26,964 23,440 21,917 14,830 8,882 5,519 3,823 2,630
Portfolio turnover rate
(Note E) ....................... 118% 137% 94% 83% 71% 63% 48% 92% 103% 227%
====================================================================================================================================
</TABLE>
See Notes following tables.
11
<PAGE>
Notes:
A. The values for a Registered Bond Fund, Balanced Fund, Common Stock
Fund and Aggressive Stock Fund Unit on May 1, 1992, January 23,
1985, April 8, 1985 and July 7, 1986, the first date on which
payments were allocated to purchase Registered Units in each Fund,
were $36.35, $28.07, $84.15 and $44.82, respectively.
B. Certain expenses under RIA are borne directly by employer plans
participating in RIA. Accordingly, those charges and fees discussed
under PART II -- CHARGES AND FEES are not included above and did not
affect the Fund Unit values. Those charges and fees are recovered
through an appropriate reduction in the number of Units credited to
each employer plan participating in the Fund unless the charges and
fees are billed directly to the employer. The dollar amount
recovered is included in the expenses in the Statements of
Operations and Changes in Net Assets for each Fund, which appear in
PART III -- FINANCIAL STATEMENTS of the SAI.
As of June 1, 1994, the Annual Investment Management and Financial
Accounting Fee is deducted from the assets of the Bond, Balanced,
Common Stock and Aggressive Stock Funds and is reflected in the
computation of their unit values. If all charges and fees had been
made directly against employer plan assets in the Funds and had been
reflected in the computation of Fund Unit Value, RIA Registered Unit
expenses would have amounted to $0.70, $1.52, $7.81 and $3.09 for
the year ended December 31, 1996 on a per Unit basis for the Bond,
Balanced, Common Stock and Aggressive Stock Funds, respectively. For
the same reporting periods, the ratio of expenses to average net
assets attributable to Registered Units would have been (on an
annualized basis) 1.43%, 1.54%, 1.57% and 1.59%, for the Bond,
Balanced, Common Stock and Aggressive Stock Funds, respectively.
C. See Note 2 to Financial Statements of Separate Account Nos. 13
(Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 51 which appear in
Part III of the SAI.
D. Annualized basis.
E. The portfolio turnover rate excludes all short-term U.S. Government
securities and all other securities whose maturities at the time of
acquisition were one year or less. The rate stated is the annual
turnover rate for the entire Separate Account Nos. 13 -- Pooled, 10
-- Pooled, 4 -- Pooled and 3 -- Pooled.
F. Income, expenses, gains and losses shown above pertain only to
employer plans' accumulations attributable to RIA Registered Units.
Other plans and trusts also participate in Separate Account Nos. 13
-- Pooled, 10 -- Pooled, 4 -- Pooled and 3 -- Pooled and may have
operating results and other supplementary data different from those
shown above.
<TABLE>
<CAPTION>
SEPARATE ACCOUNT NO. 51 (POOLED) UNIT VALUES
INTERMEDIATE
MONEY GOVERNMENT QUALITY HIGH GROWTH EQUITY CONSERVATIVE GROWTH
MARKET SECURITIES BOND YIELD & INCOME INDEX GLOBAL INTERNATIONAL INVESTORS INVESTORS
FUND FUND FUND FUND FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit Value as of:
December 31, 1994...... $102.65 $ 98.94 $ 99.83 $ 98.99 $ 99.81 $101.71 $ 99.84 $ -- $ 99.83 $ 99.52
December 31, 1995...... $108.49 $112.07 $116.76 $118.64 $123.78 $138.75 $118.56 $104.60 $120.14 $125.70
Number of Registered Units
Outstanding at
December 31, 1995...... 1,374 248 52 40 1,323 641 6,314 -- 236 4,502
</TABLE>
12
<PAGE>
INVESTMENT POLICIES AND OBJECTIVES
The investment objectives and policies of the Bond, Balanced, Common Stock and
Aggressive Stock Funds are summarized below. Similarly, the investment
objectives and policies of the corresponding Portfolios of the Trust are
summarized for each of the Investment Funds of Separate Account No. 51.
Investment policies and objectives are explained in more detail in this
prospectus under PART III -- EQUITABLE AND ITS FUNDS and in the SAI under PART I
- -- FUND INFORMATION, and, with respect to the Portfolios, in the Trust's
prospectus and SAI. Investment objective and policies can be expected to affect
the rate of return for the Fund and the market and financial risks to which the
Fund is subject. There is no assurance that the objectives described below will
be met.
The MONEY MARKET FUND invests in the Trust's Money Market Portfolio which
invests primarily in high quality short-term money market instruments. Its
objective is to achieve high level of current income while preserving assets and
maintaining liquidity.
The INTERMEDIATE GOVERNMENT SECURITIES FUND invests in the Trust's Intermediate
Government Securities Portfolio which invests primarily in debt securities
issued or guaranteed by the U.S. Government, its agencies and instrumentalities.
Each investment will have a final maturity of not more than 10 years or a
duration not exceeding that of a 10-year Treasury note. Its objective is to
achieve high current income consistent with relative stability of principal.
The BOND FUND invests primarily in publicly traded fixed income securities, such
as bonds, debentures and notes. Its objective is to achieve maximum total
return, consistent with investment quality, with less volatility than a
long-term bond account. The weighted average duration of the total portfolio
will be between one and five years.
The QUALITY BOND FUND invests in the Trust's Quality Bond Portfolio which
invests primarily in investment grade fixed-income securities. Its objective is
to achieve current income consistent with preservation of capital.
The HIGH YIELD FUND invests in the Trust's High Yield Portfolio which invests
primarily in a diversified mix of high yield, fixed-income securities involving
greater volatility of price and risk of principal and income than high quality
fixed-income securities. Its objective is to achieve high return through a
combination of current income and capital appreciation. The medium and lower
quality debt securities in which the Portfolio may invest are known as "junk
bonds." See "Investment Policies of the High Yield Portfolio -- Risk Factors"
under "Investment Objectives and Policies" in the Trust prospectus.
The GROWTH & INCOME FUND invests in the Trust's Growth & Income Portfolio which
invests primarily in income producing common stocks and securities convertible
into common stocks. Its objective is to achieve high total return through a
combination of current income and capital appreciation.
The EQUITY INDEX FUND invests in the Trust's Equity Index Portfolio which
invests in securities in the Standard & Poor's 500 Index (the INDEX) which the
adviser believes will, in the aggregate, approximate the performance results of
the Index. Its objective is to achieve a total return performance (before Trust
expenses) that approximates the investment performance of the Index, including
reinvestment of dividends, at a risk level consistent with that of the Index.
The COMMON STOCK FUND invests primarily in common stocks and other equity-type
securities, generally issued by intermediate- and large-sized companies. Its
objective is to achieve long-term capital growth.
The GLOBAL FUND invests in the Trust's Global Portfolio which invests primarily
in equity securities of non-United States as well as United States companies.
Its objective is to achieve long-term growth of capital.
The INTERNATIONAL FUND invests in the Trust's International Portfolio which
invests primarily in equity securities selected principally to permit
participation in non-United States companies with prospects for growth. Its
objective is to achieve long-term growth of capital.
The AGGRESSIVE STOCK FUND invests primarily in securities of medium- and
smaller-sized companies (with capitalization's generally between $50 million to
$1.5 billion) perceived to have greater growth potential than larger companies.
Its objective is to achieve long-term capital growth, consistent with investment
quality.
Blended Funds:*
The CONSERVATIVE INVESTORS FUND invests in the Trust's Conservative Investors
Portfolio which invests in a diversified mix of publicly traded, fixed-income
and equity securities; asset mix and security selection are primarily based upon
factors expected to reduce risk. The Portfolio is generally expected to hold
approximately 70% of its assets in fixed-income securities and 30% in equity
securities. Its objective is high total return consistent with the adviser's
opinion, without undue risk to principal.
The BALANCED FUND invests primarily in common stocks, other equity-type
instruments, longer-term fixed-income securities, publicly traded debt
securities and short-term money market instruments. Its objective is to achieve
both appreciation of capital and current income.
- ----------
*For convenience, we have included the Balanced Fund as a Blended Fund, because
it invests in both equity and debt securities. The Balanced Fund is not part of
the Trust and is not managed by Alliance in the same manner as the Trust's
Conservative Investors and Growth Investors Portfolios.
13
<PAGE>
The GROWTH INVESTORS FUND invests in the Trust's Growth Investors Portfolio
which invests in a diversified mix of publicly traded, fixed-income and equity
securities; asset mix and security selection are primarily based upon factors
expected to increase possibility of high long-term return. The Portfolio is
generally expected to hold approximately 70% of its assets in equity securities
and 30% in fixed-income securities. Its objective is high total return
consistent with the adviser's determination of reasonable risk.
CONTRIBUTIONS, TRANSFERS AND WITHDRAWALS
All contributions under an employer plan should be sent to the "CONTRIBUTIONS
ONLY" address listed at the end of this prospectus. We will process transactions
in accordance with instructions received from the employer/plan sponsor. We will
allocate contributions among and process withdrawals from one or more investment
options by dollar amount. We will transfer accumulated invested amounts among
the investment options in any whole number percentage or by dollar amount. All
transactions are effective as of the Transaction Date.
Changes in the allocation percentages of contributions made subsequent to the
initial allocation among the Investment Options and transfers of accumulated
invested amounts among the Investment Options may be made subject to our
consent, but when permitted, are made without charge and are not subject to tax
liability. See PART IV -- THE GUARANTEED INTEREST ACCOUNT and PART V --
PROVISIONS OF RIA AND RETIREMENT BENEFITS -- ALLOCATION CHOICES and PART V --
TRANSFER PROVISIONS.
Withdrawals from any Fund for purposes of transfers among Investment Options,
loan transactions (see below) or to provide benefits under RIA are made by the
redemption of Units. In all cases, the value of a Unit changes in accordance
with the investment experience of the Fund. Fund investment performance does not
affect the number of Units owned in a Fund at any one time.
LOANS
Plan loans are available in our RIA program to the plan trustees of the employer
plan. We pay the loan amount to the plan trustees of the employer plan. It is
the responsibility of the plan administrator, the plan trustees and/or the
employer, and not Equitable Life, to properly administer any loan made to the
plan participants in accordance with the provisions of the plan and to the
extent allowed by the Code and ERISA. See PART V -- PROVISIONS OF RIA AND
RETIREMENT BENEFITS.
COMMUNICATIONS WITH US
Our Agents are available for information and assistance and can answer questions
about RIA. INFORMATION AND DAILY FUND UNIT VALUES MAY BE OBTAINED BY CALLING THE
RIA SERVICE OFFICE, TOLL-FREE, AT 1-800-967-4560. WRITTEN COMMUNICATIONS,
INCLUDING REQUESTS FOR CONTRIBUTION ALLOCATION CHANGES, LOANS, TRANSFERS OR
WITHDRAWALS, MUST BE SENT DIRECTLY TO US AT THE RIA SERVICE OFFICE LISTED ON THE
INSIDE BACK COVER OF THIS PROSPECTUS.
Transaction requests must be made by the authorized person for the employer plan
as shown on our records (referred to herein as the employer, as explained
above), in a written or facsimile form acceptable to us and signed by the
employer. All requests will be effective on the Transaction Date. In certain
cases, transfers may not be effected until approved by us. See PART V --
PROVISIONS OF RIA AND RETIREMENT BENEFITS -- ALLOCATION CHOICES and TRANSFER
PROVISIONS.
We will honor your properly completed transaction requests received via
facsimile only if we receive a properly completed transaction request form. The
request form must be signed by an individual who the plan trustees have
previously authorized in writing. We are not responsible for determining the
accuracy of a transmission and are not liable for any consequences, including,
but not limited to, investment losses and lost investment gains, resulting from
a faulty or incomplete transmission. If your request form is not properly
completed we will contact you within 24 hours of our receipt of your facsimile.
We will use our best efforts to acknowledge receipt of a facsimile transmission,
but our failure to acknowledge or a failure in your receipt of such
acknowledgment will not invalidate your transaction request. If you do not
receive acknowledgment of your facsimile within 24 hours, contact the RIA
Service Office on the toll-free 800 number.
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- --------------------------------------------------------------------------------
PART II -- CHARGES AND FEES
- --------------------------------------------------------------------------------
There are two general types of expenses you may incur under RIA. The first
includes expenses which are reflected as reductions in the Unit values of the
Funds. These charges apply to all amounts invested in RIA, including amounts
being distributed under installment payout options.
The second type of charge is typically stated in terms of a defined percentage
or dollar amount and is deducted by reducing the number of Units in the
appropriate Funds and the number of dollars in the GIA.
No deductions are made from contributions for sales expenses. We reserve the
right (1) to change from time to time the charges and fees described in this
prospectus upon prior notice to the employer and (2) to establish separate fee
schedules for requested non-routine administrative services and for newly
scheduled services not presently contemplated under the Contracts.
Under PART V -- PROVISIONS OF RIA AND RETIREMENT BENEFITS, we discuss a $175
annuity benefit charge and the possible application of a charge for state tax
which may arise if an annuity benefit is elected under RIA. We also discuss the
operation of the Ongoing Operations Fee and the Contingent Withdrawal Charge in
the event a loan is outstanding.
The Ongoing Operations Fee and the Participant Recordkeeping Services Charge,
each described on page 16 under CHARGES WHICH REDUCE THE NUMBER OF UNITS IN RIA,
can be paid either under a direct billing arrangement we have with the employer
or by redeeming the number of Units in each Fund applicable to the employer plan
or, finally, by reducing the amount of proceeds payable under the employer plan.
CHARGES WHICH ARE REFLECTED IN REDUCTIONS IN THE UNIT VALUE
Trust Charges to Portfolios
Investment Advisory fees charged daily against assets of the Trust, direct
operating expenses of the Trust (such as trustees' fees, expenses of independent
auditors and legal counsel, bank and custodian charges and liability insurance),
and certain investment-related expenses of the Trust (such as brokerage
commissions and other expenses related to the purchases and sale of securities),
are reflected in each Portfolio's daily share price. The maximum investment
advisory fees paid by the Portfolios cannot be changed without a vote by the
shareholders. The maximum investment advisory fees are as follows:
DAILY AVERAGE NET ASSETS
--------------------------------
FIRST NEXT OVER
$350 $400 $750
MILLION MILLION MILLION
-------- --------- ---------
Money Market.................. .400% .375% .350%
Intermediate Government
Securities................. .500% .475% .450%
High Yield, Global,
Conservative Investors
and Growth Investors....... .550% .525% .500%
FIRST NEXT OVER
$500 $500 $1
MILLION MILLION BILLION
-------- --------- ---------
Quality Bond and
Growth & Income............ .550% .525% .500%
FIRST NEXT OVER
$750 $750 $1.5
MILLION MILLION BILLION
-------- --------- ---------
Equity Index.................. .350% .300% .250%
FIRST NEXT OVER
$500 $1 $1.5
MILLION BILLION BILLION
-------- --------- ---------
International................. .900% .850% .800%
All of these fees and expenses are described more fully in the Trust prospectus
attached to this prospectus. Since the Trust shares are purchased at their net
asset value, these fees and expenses are passed on to the Investment Funds of
Separate Account No. 51 and are reflected in their Unit values. See PART III --
EQUITABLE LIFE AND ITS FUNDS.
Investment Management and Financial Accounting Fee Applicable to the Bond,
Balanced, Common Stock and Aggressive Stock Funds
We make a daily charge for investment management and financial accounting fees
at an annual rate equal to 0.50% of the assets in the Bond, Balanced, Common
Stock and Aggressive Stock Funds that is reflected in the daily Unit values for
the Funds. This is the fee charged for services as described in PART III --
EQUITABLE LIFE AND ITS FUNDS.
Separate Account Administrative Charge for the Investment Funds of Separate
Account No. 51
We make a daily charge at an annual rate of 0.05% of the assets invested in the
Investment Funds of Separate Account No. 51. The charge is designed to reimburse
us for our costs in providing the administrative services in connection with the
Contracts. See PART III -- EQUITABLE LIFE AND ITS FUNDS.
15
<PAGE>
CHARGES WHICH REDUCE THE NUMBER OF UNITS IN RIA
Contingent Withdrawal Charge
We impose a contingent withdrawal charge (CWC) against withdrawals made from RIA
at any time up to and including the ninth anniversary of the date on which the
employer plan began its participation in RIA. However, a CWC will not be applied
against amounts withdrawn for the purpose of making benefit distribution
payments unless such withdrawals are made (i) on or after the date of
discontinuance of an employer plan's participation in RIA or (ii) as a result of
a full or partial termination, within the meaning of applicable Internal Revenue
Service (IRS) or court interpretations. A CWC will be applied against amounts
withdrawn for purposes of making benefit payments to participants who terminated
employment either voluntarily or involuntarily, BUT ONLY when such terminations
are attributable to (i) the employer's merger with another company, (ii) the
sale of the employer or (iii) the bankruptcy of the employer which leads to the
full or partial termination of the plan or the discontinuance of the employer
plan's participation in RIA.
Outstanding loan balances are included in the plan's assets for purposes of
assessing the CWC. There is no CWC on transfers between the Investment Options.
However, unless otherwise agreed to in writing by an officer of Equitable Life,
withdrawals from RIA for the purpose of transferring to another investment
option under the employer plan will be subject to the CWC. Withdrawals from RIA
for the purpose of paying plan expenses or the premium on a life insurance
policy, including one held under the employer plan (See PART VI -- COMMISSIONS
AND SERVICE FEES), are not considered in-service withdrawals or any other type
of benefit distribution and are subject to the CWC. The amount of any CWC is
determined in accordance with the rate schedule set forth below.
- --------------------------------------------------------------
WITHDRAWAL IN
PARTICIPATION
YEARS CONTINGENT WITHDRAWAL CHARGE
- --------------------------------------------------------------
1 or 2 6% of Amount Withdrawn
3 or 4 5%
5 or 6 4%
7 or 8 3%
9 2%
10 and later 0%
- --------------------------------------------------------------
Benefit distribution payments are those payments that become payable with
respect to participants under the terms of the employer plan as follows: (1) as
the result of the retirement, death or disability of a participant; (2) as the
result of a participant's separation from service as defined under Section
402(d)(4)(A) of the Code; (3) in connection with a loan transaction, if the loan
is repaid in accordance with its terms; (4) as a minimum distribution pursuant
to Section 401(a)(9) of the Code; (5) as a hardship withdrawal pursuant to
Section 401(k) of the Code; (6) pursuant to a qualified domestic relations order
(QDRO) under Section 414(p) of the Code, but only if the QDRO specifically
requires that the plan administrator withdraw amounts for payment to an
alternate payee; (7) as a result of an in-service withdrawal attributable to the
after-tax contributions of a participant; or (8) as a result of an in-service
withdrawal from a profit-sharing plan after meeting a minimum number of years of
service and/or participation in the plan, and the attainment of a minimum age
specified in the plan. Prior to any withdrawal from RIA for benefit distribution
purposes, Equitable Life reserves the right to receive from the employer and/or
trustees of the plan, evidence satisfactory to it that such benefit distribution
conforms to at least one of the types mentioned above. See PART V -- PROVISIONS
OF RIA AND RETIREMENT BENEFITS.
The CWC is designed to recover the unamortized sales and promotion expenses and
initial enrollment expenses.
Ongoing Operations Fee
The Ongoing Operations Fee is based on the combined net balances (including any
outstanding loan balance) of an employer plan in the Investment Options at the
close of business on the last Business Day of each month. The amount of the
Ongoing Operations Fee is determined under the rate schedule that applies to the
employer plan. Except as discussed above, it is paid from the employer plan
balances at the close of business on the last Business Day of the following
month.
Set forth below is the rate schedule for employer plans which adopted RIA after
February 9, 1986. Information concerning the rate schedule for employer plans
that adopted RIA on or before February 9, 1986 is included in the SAI under PART
I -- FUND INFORMATION.
- --------------------------------------------------------------
COMBINED BALANCE
OF MONTHLY
INVESTMENT OPTIONS RATE
- --------------------------------------------------------------
First $ 150,000 1/12 of 1.25%
Next $ 350,000 1/12 of 1.00%
Next $ 500,000 1/12 of 0.75%
Over $1,000,000 1/12 of 0.50%
- --------------------------------------------------------------
The Ongoing Operations Fee is designed to cover such expenses as Contract
underwriting and issuance for employer plans, employer plan-level recordkeeping,
processing transactions and benefit distributions, administratively maintaining
the Investment Options, commissions, promotion of RIA, administrative costs
(including certain enrollment and other servicing costs), systems development,
legal and technical support, product and financial planning and part of our
general overhead expenses. Administrative costs and overhead expenses include
such items as salaries, rent, postage, telephone, travel, office equipment and
stationery, and legal, actuarial and accounting fees.
Participant Recordkeeping Services Charge
The PRS is an optional service. If this service is elected, we charge a per
participant annual fee of $25. The fee is deducted on a monthly basis at the
rate of $2.08 per participant. The amount of the fee for an employer plan is
determined at the close of business on the last Business Day of each month based
on the number of participants enrolled with us at that time. Except as discussed
above, we charge the amount against the combined balances of each participant in
the Investment Options at the close of business on the last Business Day of the
following month.
The PRS fee covers expenses incurred for establishing and maintaining individual
records, issuing statements and reports for individual employees and employer
plans, and processing individual transactions and benefit distributions. We are
not responsible for reconciling participants' individual account balances with
the entire amount of the employer plan where we do not maintain individual
account balances. See PART VIII -- PARTICIPANT RECORDKEEPING SERVICES
(OPTIONAL).
Loan Fee
We charge a loan fee in an amount equal to 1% of the loan principal amount on
the Transaction Date the plan loan is made. See PART V -- PROVISIONS OF RIA AND
RETIREMENT BENEFITS.
16
<PAGE>
- --------------------------------------------------------------------------------
PART III -- EQUITABLE LIFE AND ITS FUNDS
- --------------------------------------------------------------------------------
EQUITABLE LIFE
EQUITABLE LIFE is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest life
insurance companies in the United States. Equitable Life has been selling
annuities since the turn of the century. Our Home Office is located at 787
Seventh Avenue, New York, New York 10019. 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-UAP. AXA-UAP beneficially owns 63.9% 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-UAP is
able to exercise significant influence over the operations and capital structure
of the Holding Company and its subsidiaries, including Equitable Life. AXA-UAP,
a French company, is the holding company for an international group of insurance
and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed approximately
$239.8 billion of assets as of December 31, 1996, including third party assets
of approximately $184.8 billion. We are one of the nation's leading pension fund
managers. These assets are primarily managed for retirement and annuity programs
for businesses, tax-exempt organizations and individuals. This broad customer
base includes nearly half the Fortune 100, more than 42,000 small businesses,
state and local retirement funds in more than half the 50 states, approximately
250,000 employees of educational and non-profit institutions, as well as nearly
500,000 individuals. Millions of Americans are covered by Equitable Life's
annuity, life, health and pension contracts.
ABOUT OUR FUNDS
We established the Bond, Balanced, Common Stock and Aggressive Stock Funds under
the Insurance Law of New York State and as separate investment accounts in 1981,
1979, 1969 and 1969, respectively. Each of these Funds is a pooled separate
investment account used as an investment vehicle for contributions under
tax-favored employee benefit plans participating in the Fund, including employer
plans participating in RIA. The assets of the Bond, Balanced, Common Stock and
Aggressive Stock Funds, consisting of separate portfolios of securities and cash
items, are managed by us through one of our subsidiaries that also manages the
Trust. Because of exclusionary provisions, none of the Funds is subject to
regulation under the Investment Company Act of 1940, as amended (1940 ACT).
We established the Growth Investors, Conservative Investors and Global Funds as
Investment Funds of Separate Account No. 51 under the Insurance Law of New York
State in 1993. The Money Market, Intermediate Government Securities, Quality
Bond, High Yield, Growth & Income and Equity Index Funds were established as
Investment Funds of Separate Account No. 51 in 1994. The International Fund was
established as an investment fund of Separate Account No. 51 on September 1,
1995. The Investment Funds of Separate Account No. 51 invest in shares of a
corresponding Portfolio of the Trust which are actively managed as described in
the attached Trust Prospectus.
The assets of the Funds are our property; however, the portion of the assets of
the Funds equal to the reserves and other contract liabilities with respect to
the Funds will not be chargeable with liabilities arising out of any other
business we may conduct. Income, gains or losses, whether or not realized, from
assets allocated to the Funds are credited to or charged against the Fund
without regard to our other income, gains or losses.
THE TRUST
The Trust is an open-end, diversified management investment company, more
commonly called a mutual fund. As a "series" type of mutual fund, it issues
several different series of stock, each of which relates to a different
Portfolio of the Trust. The Trust commenced operations in January 1976 with a
predecessor of its Common Stock Portfolio. The Trust does not impose a sales
charge.
PURCHASE AND REDEMPTION OF UNITS
Amounts allocated to the Funds pursuant to an employer plan, with respect to
contributions submitted and transfers of accumulations from other Investment
Options (and in appropriate circumstances upon repayments of loans), are
invested in Separate Account No. 13 -- Pooled, Separate Account No. 10 --
Pooled, Separate Account No. 4 -- Pooled or Separate Account No. 3 -- Pooled,
respectively, through the purchase of Bond Fund Units, Balanced Fund Units,
Common Stock Fund Units or Aggressive Stock Fund Units. Similarly, amounts
allocated to the Investment Funds of Separate Account No. 51 are invested
through the purchase of Money Market Units, Intermediate Government Securities
Units, Quality Bond Units, High Yield Units, Growth & Income Units, Equity Index
Units, Global Units, International Units, Conservative Investors Units or Growth
Investors Units. The number of Units of each Fund purchased is equal to the
amount of the payment allocated to that Fund, divided by that Fund's Unit value
determined as of the Transaction Date. See PART I -- FUND INFORMATION in the
SAI. The resulting number of Units does not vary because of any subsequent
fluctuation in value, but the Unit values fluctuate to reflect the investment
income, realized and unrealized capital gains and losses of the Funds (or the
Trust's Portfolios), fees and expenses in connection with
17
<PAGE>
portfolio transactions, investment management fees, and the annual operation of
the Funds.
Amounts withdrawn from a Fund for the purposes of payments of employer plan
benefits, transfers of accumulations to other Investment Options, loans or
payments of certain charges and fees when due are effected by reducing the
number of Units in the appropriate Fund. The number of Units redeemed for an
employer plan for such purposes is determined by the amount to be withdrawn
divided by the Unit value on the Transaction Date.
HOW WE DETERMINE THE UNIT VALUE
The Unit values (rounded to the nearest cent) of the Bond, Balanced, Common
Stock and Aggressive Stock Funds were $36.35, $28.07, $84.15, and $44.82,
respectively, on May 1, 1992, January 23, 1985, April 8, 1985 and July 7, 1986,
respectively, the first date on which Registered Units under the Contracts were
purchased in these Funds under RIA. The Unit values (rounded to the nearest
cent) of the Money Market, Intermediate Government Securities, Quality Bond,
High Yield, Growth & Income, Equity Index, Global, Conservative Investors and
Growth Investors Funds were $10.00 on June 1, 1994, the first date on which
Registered Units under the Contracts were purchased in these Funds. The Unit
value (rounded to the nearest cent) of the International Fund was $100.00 on
September 1, 1995, the first date on which registered Units under the Contracts
were purchased in this Fund.
We calculate Unit values for the Funds at the end of each Business Day. The Unit
value for the Bond, Balanced, Common Stock and Aggressive Stock Funds reflect
investment performance (including related expenses) and the investment
management and financial accounting fee. The Unit values for the Investment
Funds of Separate Account No. 51 reflect investment performance, the Separate
Account Administrative Charge and, indirectly, Trust expenses. For each of the
Funds, we determine the Unit value by multiplying the Unit value for the
preceding Business Day by the "net investment factor" for that subsequent day.
For a description of how the net investment factors are determined, see PART I
- -- FUND INFORMATION in the SAI.
When payments are invested in a Fund, the number of Units outstanding
attributable to each Fund is correspondingly increased; and when amounts are
withdrawn from a Fund, the number of Units outstanding attributable to that Fund
is correspondingly decreased. See PART I -- FUND INFORMATION in the SAI.
INVESTMENT OBJECTIVES AND POLICIES
Before deciding whether amounts will be allocated entirely to one of the Funds
or entirely to the Guaranteed Interest Account, or divided among the Investment
Options, the investment objectives and policies should be considered.
Each Fund, or Trust Portfolio in which an Investment Fund of Separate Account
No. 51 is invested, has different investment objectives and policies. The
differences may affect the return of each Fund, as well as the market and
financial risks of each. 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. 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. There is no
assurance that the objectives of any of the Funds will be met. All investments
involve risk and there can be no guarantee against loss resulting from an
investment in the Funds.
Set forth below is information regarding the investment objectives and policies
of the Bond, Balanced, Common Stock and Aggressive Stock Funds. Additional
information regarding investment restrictions and requirements with respect to
these Funds, is given in the SAI in PART I -- FUND INFORMATION. A Statement of
Investments of the Bond, Balanced, Common Stock and Aggressive Stock Funds is
included in the financial statements of Separate Account No. 13 -- Pooled,
Separate Account No. 10 -- Pooled, Separate Account No. 4 -- Pooled and Separate
Account No. 3 -- Pooled, respectively, in Part III of the SAI.
Information regarding the investment objectives and policies, as well as
investment restrictions and requirements, with respect to the corresponding
Trust Portfolios in which the Investment Funds of Separate Account No. 51 are
invested, is included in the Trust's prospectus and SAI. A statement of
investments for each of the Portfolios is included in the Trust's financial
statements in the Trust's SAI.
BOND FUND
The Bond Fund invests primarily in publicly traded fixed-income securities, such
as bonds, debentures and notes. Its objective is to achieve maximum total
return, consistent with investment quality, with less volatility than a
long-term bond account.
The Bond Fund seeks to achieve its objective by investing primarily in
fixed-income securities including, but not limited to, the following:
obligations issued or guaranteed by the U.S. Government (such as U.S. Treasury
securities), its agencies (such as the Government National Mortgage
Association), or instrumentalities (such as the Federal National Mortgage
Association); corporate debt securities; mortgage pass-through securities;
collateralized mortgage obligations; asset-backed securities; zero coupon bonds;
and equipment trust certificates. All such securities will be investment grade,
i.e., rated within the four highest credit categories by S&P (AAA, AA, A or BBB)
or by Moody's (Aaa, Aa, A or Baa) or, if unrated, will be of comparable
investment quality as determined by our credit analysis. Bonds rated below A by
S&P or Moody's are more susceptible to adverse economic conditions or changing
circumstances than those rated A or higher but are regarded as having an
adequate capacity to pay principal and interest.
The fixed-income securities in which the Bond Fund invests have maturities less
than or equal to ten years. The weighted average duration of the total portfolio
will be between one and five years. Duration is a principle used in selecting
portfolio securities that indicates a particular fixed-income security's price
volatility. Duration is measured by taking into account all of the expected
payments relating to that security and the time in the future when each payment
will be made and weighting all such times by the present value of the
corresponding payments. The duration of a fixed-income security with interest
payments occurring prior to its maturity is always
18
<PAGE>
shorter than its term to maturity. In addition, given identical maturities, the
lower the stated rate of interest of a fixed-income security, the longer its
duration, and, conversely, the higher the stated rate of interest of a
fixed-income security, the shorter its duration. We believe that the Bond Fund's
policy of purchasing intermediate duration bonds significantly reduces the
volatility of the Fund's unit price over that of a long-term bond account.
While the Bond Fund will invest primarily in the types of fixed-income
securities described above, the Bond Fund may also invest in high-quality money
market securities, which may include obligations of the U.S. Government, its
agencies and instrumentalities; negotiable certificates of deposit; banker's
acceptances or bank time deposits; repurchase agreements; master demand notes;
and other money market instruments of the type described below for the Balanced
Fund. See BALANCED FUND below. The Bond Fund may purchase these money market
securities directly or may acquire units in our Separate Account No. 2A. See
COMMON STOCK FUND on page 20. For temporary or defensive purposes the Bond Fund
may invest directly or indirectly in money market securities without limitation.
The Bond Fund may purchase fixed-income securities and money market securities
having adjustable rates of interest with periodic demand features. The Bond Fund
may also purchase fixed-income securities and certain money market securities on
a when-issued or delayed delivery basis. The price of when-issued securities is
fixed at the time of commitment, but delivery and payment for such securities
may take place up to 90 days after the date of the commitment. The securities so
purchased are subject to market fluctuation, and no interest accrues to the
purchaser during this period. When-issued securities involve a risk of loss if
the value of the security declines prior to the settlement date. For additional
information on the instruments in which the Bond Fund invests, See PART I --
FUND INFORMATION -- CERTAIN INVESTMENTS OF THE BOND FUND in the SAI.
The Bond Fund is designed for participants who seek a greater rate of return
than that normally provided by money market investments and less volatility than
that experienced by long-term bond investments. Both the financial and market
risks of an investment in the Bond Fund are expected to be less than those for
the Common Stock, Balanced and Aggressive Stock Funds. Nevertheless, the Bond
Fund's unit price and yield will fluctuate. Interest rate fluctuations will
affect the value of Bond Fund Units but will not affect the income received from
the Fund's portfolio securities. A decline in prevailing interest rates
generally will increase the value of the securities held by the Bond Fund, while
an increase in prevailing interest rates usually reduces the value of the Bond
Fund's portfolio securities.
The portfolio turnover rate for the Bond Fund cannot be accurately predicted and
may be high.
BALANCED FUND
The Balanced Fund's investment objective is to achieve both appreciation of
capital and current income by investments in a diversified portfolio of common
stocks, other equity-type securities and longer-term fixed-income securities,
and current income by investments in publicly traded debt securities and
short-term money market instruments. The investment mix is determined by the
Fund manager.
We will vary the portion of the Balanced Fund's assets invested in each type of
security in accordance with our evaluation of economic conditions, the general
level of common stock prices, anticipated interest rates and other relevant
considerations, including our assessment of the risks associated with each
investment medium. The Fund is subject to the risk that we may incorrectly
predict changes in the relative values of the equity and debt markets.
In general, publicly traded equity securities will comprise the greatest portion
of the Balanced Fund's assets. At the years ended December 31, 1985 through
1996, the percentage of the Balanced Fund's assets invested in equity securities
(including equity-type securities such as convertible preferred stocks or
convertible debt instruments) has ranged from 50% to 57%.
The Fund's non-money market debt securities will consist primarily of publicly
traded securities issued or guaranteed by the United States Government or its
agencies or instrumentalities, and corporate fixed-income securities, including,
but not limited to, bank obligations, notes, asset-backed securities, mortgage
pass-through obligations, collateralized mortgage obligations, zero coupon bonds
and preferred stock. The Balanced Fund may also buy debt securities with equity
features such as conversion or exchange rights, or warrants for the acquisition
of stock or participations, based on revenues, sales or profits. The Balanced
Fund's non-money market debt securities will be subject to the same investment
quality criteria at the time of purchase, as are described above for the
non-money market investments of the Bond Fund. The average maturity of the
non-money market debt securities held by the Balanced Fund will vary according
to market conditions and the state of interest rate cycles.
The Balanced Fund may invest in money market securities through our Separate
Account No. 2A or directly. See COMMON STOCK FUND on page 20. The investments
the Balanced Fund makes in money market instruments will be payable only in
United States dollars and will consist principally of securities issued or
guaranteed by the United States Government or one of its agencies or
instrumentalities, negotiable certificates of deposit, bankers' acceptances or
bank time deposits, repurchase agreements (covering securities issued or
guaranteed by the United States Government or one of its agencies or
instrumentalities, certificates of deposit or bankers' acceptances), commercial
paper that is rated Prime-1 by Moody's Investors Services, Inc. (MOODY'S) or A-1
or A-1 Plus by Standard & Poor's Corporation (S&P), unrated commercial paper,
master demand notes or variable amount floating rate notes of any issuer that
has an outstanding issue of unsecured debt that is currently rated Aa or better
by Moody's or AA or better by S&P with less than one year to maturity. Such
investments may include certificates of deposit and time deposits of London
Branches of United States banks (these investments are usually referred to as
EURODOLLARS) and certificates of deposit and commercial paper issued by Schedule
B Banks (Canadian chartered bond subsidiaries of United States banks). For
additional information concerning the debt instruments in which the Balanced
Fund may invest, see PART I -- FUND INFORMATION -- CERTAIN INVESTMENTS OF THE
BOND AND BALANCED FUNDS in the SAI.
Mortgage pass-through securities and certain collateralized mortgage
obligations, asset-backed securities and other debt instruments in which the
Fund may invest, are
19
<PAGE>
subject to prepayments prior to their stated maturity. It is usually not
possible to accurately predict the rate at which prepayments will be made, which
rate may be affected, among other things, by changes in generally prevailing
market interest rates. If prepayments occur, the Fund suffers the risk that it
will not be able to reinvest the proceeds at as high a rate of interest as it
had previously been receiving. Also, the Fund will incur a loss to the extent
that prepayments are made for an amount that is less than the value at which the
security was then being carried by the Fund. Moreover, securities that may be
prepaid tend to increase in value less during times of declining interest rates,
and to decrease in value more during times of increasing interest rates, than do
securities that are not subject to prepayment.
The Fund may invest up to 10% of its total assets in securities that are not
readily marketable and may invest up to 20% of its total assets in foreign
securities. Certain risks of investment in illiquid or foreign securities are
discussed below under COMMON STOCK FUND. The Balanced Fund may enter into
contracts for the purchase or sale of a specific foreign currency at a future
date at a price set at the time of the contract. Generally, such forward
contracts will be for a period of less than three months. The Fund will enter
into such forward contracts for hedging purposes only. These transactions will
include forward purchases or sales of foreign currencies for the purpose of
protecting the dollar value of securities denominated in a foreign currency, or
protecting the dollar equivalent of interest or dividends to be paid on such
securities. Forward contracts are traded in the inter-bank market, and not on
organized commodities or securities exchanges. Accordingly, the Fund is
dependent upon the good faith and creditworthiness of the other party to the
transaction, as evaluated by the Fund's manager.
The Balanced Fund's investment policies permit hedging transactions, such as
through the use of stock index or interest rate futures. Although the Balanced
Fund currently has no plans to enter into such transactions, information about
such transactions is included in the SAI under PART I -- FUND INFORMATION --
CERTAIN INVESTMENTS OF THE BOND AND BALANCED FUNDS.
The Balanced Fund may enter into forward commitments for the purchase or sale of
securities and may purchase and sell securities on a when-issued or delayed
delivery basis. For more information about these investment techniques see PART
I -- FUND INFORMATION -- CERTAIN INVESTMENTS OF THE BOND AND BALANCED FUNDS in
the SAI.
Because the types and proportions of the Balanced Fund's assets are expected to
change frequently in accordance with market conditions, an annual portfolio
turnover rate cannot be predicted.
COMMON STOCK FUND
The Common Stock Fund's investment objective is to achieve long-term capital
growth. We try to achieve this objective 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 Common Stock Fund invests in securities of companies of any
capitalization but is generally invested primarily in securities of
intermediate- to large-size companies.
The Common Stock Fund invests primarily in common stocks and other equity-type
securities (such as convertible preferred stocks or convertible debt
instruments). The Common Stock 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 participations based
on revenues, sales or profit. If, in light of economic conditions and the
general level of stock prices, it appears that the Common Stock Fund's
investment objective will not be met by buying equities, non-equity investments
may be substantial. The Common Stock Fund may invest up to 10% of its total
assets in securities which are restricted as to resale under Federal securities
law (generally referred to as "restricted securities").
The Common Stock Fund may make temporary investments in government obligations,
short-term commercial paper and other money market instruments of the types
purchased by the Balanced Fund. It may buy these directly or acquire units in
our Separate Account No. 2A. We established Separate Account No. 2A in 1983 to
provide a more efficient means for 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 a repurchase agreement
requiring repurchases in 60 days or less. Units in Separate Account No. 2A are
not registered under the Securities Act of 1933 (1933 Act). Some amounts may be
invested in securities which are restricted as to disposition under Federal
securities law.
While equity investments will be made primarily in securities of U.S. companies
or foreign companies doing substantial business here, a limited portion of the
Common Stock Fund's investments may be made in the securities of established
foreign companies without substantial business here. The amount of these
investments will not generally exceed 15% of the value of the Common Stock
Fund's assets. 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 Common
Stock Fund may invest in foreign securities directly and through ADRs, and may
hold some foreign securities outside the United States. The Common Stock Fund
intends to invest in foreign securities only when the potential benefits to the
Common Stock Fund are deemed to outweigh the risks.
In addition to the general risks inherent in any equity investment, and the
market and financial risks discussed above, investment in the Common Stock Fund
is subject to the risk of investment in foreign securities and restricted
securities. Foreign investments may involve risks not present in domestic
investments, such as changes in the political or economic climate of countries
in which portfolio 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. ADRs do not lessen the foreign exchange risk
inherent to investing in the securities of foreign issuers. However, by
investing in ADRs rather than directly in foreign issuers' stock, the Common
Stock Fund will
20
<PAGE>
avoid currency risks during the settlement period for either purchases or sales.
Restricted securities are generally less liquid than registered securities and
market quotations for such securities may not be readily available. The Common
Stock Fund may not be able to sell restricted securities except pursuant to
registration under applicable Federal and State securities laws or pursuant to
SEC rules which limit their sale to certain purchasers and may require that they
be held by the Common Stock Fund for a specified period of time prior to resale.
Because of these restrictions, at times the Common Stock Fund may not be readily
able to sell them at fair market value. From time to time, the equity holdings
in the Common Stock Fund may be concentrated in the securities of a relatively
small number of issues. In no event will an investment be made for the Fund in
securities of one issuer if such investment would cause more than 10% of the net
asset value of the Common Stock Fund to be invested in the securities of such
issuer, and no investment will be made for the Fund if such investment would
cause more than 40% of the net asset 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 while it is held in the Common Stock Fund. As of
December 31, 1996, 28.6% of the Common Stock Fund's assets was held in the
securities of four issuers. See PORTFOLIO OF INVESTMENTS in the SAI.
The Common Stock Fund will generally hold its investments for an extended
period, and the annual portfolio turnover rate will normally be under 125%.
AGGRESSIVE STOCK FUND
The Aggressive Stock Fund seeks to achieve long-term capital growth, consistent
with investment quality. It will attempt to achieve this objective by investing
primarily in securities of medium- and smaller-sized companies (with
capitalizations generally between $50 million to $1.5 billion) which are
perceived to have greater growth potential than larger companies.
Most of the time, the Aggressive Stock Fund will invest primarily in common
stocks of medium- and smaller-sized companies. It may also invest in securities
not generally considered defined growth stocks, but that may have unusual value
or potential. For example, opportunities for capital growth exist from time to
time in what are believed to be cyclical industries, companies whose securities
are temporarily undervalued, special situations, younger but not widely known
companies and companies doing business in countries whose economies are
expanding. The Aggressive Stock Fund may invest in foreign companies without
substantial business activities in the United States. Industry diversification
is not an objective of the Aggressive Stock Fund and it may at times be less
diversified than a traditional equity portfolio. Some other equity-type
investments may also be made. The Aggressive Stock Fund may also invest in
short-term debt securities such as corporate notes and the types of temporary
money market investments described above for the Balanced Fund. The Aggressive
Stock Fund may invest up to 10% of its total assets in restricted securities.
See BALANCED FUND and COMMON STOCK FUND on pages 19 and 20.
Medium- and smaller-sized companies may be dependent on only one or two
products. They may be more vulnerable to the competition from larger companies
with greater resources and to economic conditions affecting their market sector.
Therefore, consistent earnings may not be as likely in smaller companies as they
may be in more established companies. Such companies may also be more dependent
on access to equity markets to raise capital than larger companies with ability
to support debt. Small- and intermediate-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. These stocks may rise and fall more
than the overall market.
Foreign and restricted securities in the Aggressive Stock Fund are subject to
the risks described above for the Common Stock Fund.
IN LIGHT OF THE AGGRESSIVENESS OF ITS POLICIES AND THE LESS DIVERSIFIED NATURE
OF ITS INVESTMENTS, AS PARTICIPANTS NEAR RETIREMENT, THEY SHOULD PERIODICALLY
REEVALUATE THE AMOUNT ALLOCATED TO THE AGGRESSIVE STOCK FUND.
Many investments which we believe would have the greatest growth potential may
involve greater risks than are inherent in the Common Stock Fund and the
Balanced Fund.
In general, the annual portfolio turnover rate of the Aggressive Stock Fund is
not expected to exceed 150%.
INVESTMENT MANAGEMENT
As the investment manager of the Bond, Balanced, Common Stock and Aggressive
Stock Funds, we invest and reinvest the assets of these Funds in a manner
consistent with the policies described above under INVESTMENT OBJECTIVES AND
POLICIES OF THE FUNDS.
In providing these services to the Bond, Balanced, Common Stock and Aggressive
Stock Funds, we currently use the personnel and facilities of our majority-owned
subsidiary, Alliance Capital Management L.P. (ALLIANCE), for portfolio selection
and transaction services. Alliance is also the investment adviser for the Trust.
Alliance is a registered investment adviser under the Investment Advisors Act of
1940 and acts as an investment adviser to various separate accounts and general
accounts of Equitable Life and other affiliated insurance companies. Alliance's
main office is located at 1345 Avenue of the Americas, New York, New York 10105.
On December 31, 1996, Alliance was managing $182.8 billion in assets.
The securities held in the Bond, Balanced, Common Stock and Aggressive Stock
Funds must be reviewed and approved by the Investment Committee of our Board of
Directors. Subject to the Investment Committee's broad supervisory authority,
our investment officers 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 of these Funds, investment opportunities are
allocated among these Funds in an impartial manner based on certain factors such
as the Funds' investment objectives and their then-current investment and cash
positions.
Our parent, The Holding Company, owns 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
21
<PAGE>
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.
To the extent permitted by law, and consistent with the Bond, Balanced, Common
Stock and Aggressive Stock Funds transaction practices discussed in this
prospectus and the SAI, these Funds may engage in securities and other
transactions with the above entities or may invest in shares of the investment
companies with which those entities have affiliations.
RATES OF RETURN
In order to show how the performance of the Funds may affect employer balances,
the following tables provide a historical view of investment performance. The
information presented includes performance results for each Fund including, for
the Investment Funds of Separate Account No. 51, performance results since
inception of the corresponding Portfolios, along with the appropriate
benchmarks. These performance results are based on the change in the Unit value
for the periods shown. Note that year-to-date figures are not annualized.
Performance data for the Bond, Balanced, Common Stock and Aggressive Stock Funds
reflect (i) the investment results of the Fund since inception and (ii) the
investment management and financial accounting fee. We have recalculated
performance prior to June 1, 1994 to reflect the deduction of this fee even
though it did not apply as an asset-based charge. Performance data for the
Investment Funds of Separate Account No. 51 reflect (i) the investment results
of the corresponding Portfolios of the Trust from the date of inception of those
Portfolios, (ii) the actual investment advisory fee and direct operating
expenses of the relevant Portfolio and (iii) the Separate Account Administrative
Charge (although this latter charge was not an asset-based charge before the
Portfolios were available under RIA). None of the data reflects the Ongoing
Operations Fee, which may be paid by a reduction in the number of Units credited
under an employer plan and applied (for employer plans enrolled in RIA on or
after February 9, 1986, on a decremental scale based on employer plan balances),
or loan fee, annuity benefit charge or charge for premium taxes, which may not
be applicable to any particular Participant. Because rates of return do not
reflect the Ongoing Operations Fee or other charges and fees applicable to
employer plans under RIA, the rate of return for an employer plan would be lower
if such charges and fees were reflected.
For amounts allocated or transferred to a Fund, investment return and principal
will fluctuate and Unit values may be worth more or less than the original cost
when redeemed.
Market indices are not subject to any charges for investment advisory fees
typically associated with a managed portfolio. Comparisons with these
benchmarks, therefore, are of limited use. We include them because they are
widely known and may help you to understand the universe or securities from
which each Fund is likely to select its holdings.
INCEPTION DATES AND COMPARATIVE BENCHMARKS
MONEY MARKET: May 11, 1982; Salomon Brothers Three-Month T-Bill Index (3-Month
T-Bill).
INTERMEDIATE GOVERNMENT SECURITIES: April 1, 1991; Lehman Intermediate
Government Bond Index (Lehman Intermediate Government).
BOND: May 1, 1981; Lehman Intermediate Government/ Corporate Bond Index (Lehman
Intermediate GC).
QUALITY BOND: October 1, 1993; Lehman Aggregate Bond Index (Lehman Aggregate).
HIGH YIELD: January 2, 1987; Merrill Lynch High Yield Master Index (Master High
Yield).
GROWTH & INCOME: October 1, 1993; 75% Standard & Poor's 500 Index (S&P 500), and
25% Value Line Convertible Index (75% S&P 500/25% Value Line Conv.).
EQUITY INDEX: March 1, 1994; S&P 500 which includes reinvested dividends.
COMMON STOCK: July 1, 1969; Standard & Poor's 500 Index (S&P 500e), which
includes reinvested dividends.
GLOBAL: August 31, 1987; Morgan Stanley Capital International World Index (MSCI
World).
INTERNATIONAL: April 3, 1995; Morgan Stanley Capital International Europe,
Australia, Far East Index (MSCI EAFE).
AGGRESSIVE STOCK: May 1, 1969; 50% Russell 2000 Small Stock Index and 50% S&P
Mid-Cap Total Return (50% Russell 2000/50% S&P Mid-Cap).
CONSERVATIVE INVESTORS: October 2, 1989; 70% Lehman Treasury Bond Composite
Index and 30% S&P 500 (70% Lehman Treas./30% S&P 500).
BALANCED: June 25, 1979; 50% S&P 500 and 50% Lehman Government/Corporate Bond
Index (50% S&P 500/50% Lehman Corp.).
GROWTH INVESTORS: October 2, 1989; 30% Lehman Government/Corporate Bond Index
and 70% S&P 500 (30% Lehman Treas./70% S&P 500).
The Lipper Mutual Funds Survey (LIPPER) records the performance of over 7,000
mutual funds. According to Lipper Analytical Services, Inc., the data are
presented net of investment management fees, direct operating expenses, and, for
funds with Rule 12b-1 plans, asset-based sales charges. Lipper data provide a
more accurate picture of RIA performance relative to that of other mutual funds
underlying retirement plan products than the market indices.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of return
reflect performance over a stated period of time. Annualized rates of return
represent the annual rate of growth that would have produced the same cumulative
return, if performance had been constant over the entire period.
The performance of the Funds does not represent the actual experience of a
particular participating employer plan; the amount and timing of contributions
affects individual performance, as do Fund expenses. For a discussion of charges
and fees and how they are deducted from a RIA plan, see PART II -- CHARGES AND
FEES.
PAST PERFORMANCE IS NOT A GUARANTEE OR INDICATION OF FUTURE RESULTS. NO
PROVISIONS HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS OR UPON
DISTRIBUTION.
22
<PAGE>
- --------------------------------------------------------------------------------
ANNUALIZED RATES OF RETURN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MONEY MARKET (1) 5.69% 4.19% 4.43% 5.97% - % 7.37%
Lipper VA Money Market 5.37 3.89 4.12 5.64 - 7.15
3-Month T-Bill 5.74 4.34 4.47 5.77 - 7.09
INTERMEDIATE GOVERNMENT
SECURITIES (1) 13.27 6.16 - - - 7.58
Lipper VA U.S. Government 15.75 6.56 - - - 8.03
Lehman Intermediate Government 14.41 6.74 - - - 8.17
BOND (2) 2.77 5.15 6.13 7.34 - 10.39
Lipper Intermediate
Government Funds Average 1.72 4.50 5.88 6.92 9.36 9.86
Lehman Intermediate GC 4.05 5.58 6.53 .91 - 10.75
QUALITY BOND (1) 16.97 - - - - 4.49
Lipper VA Corporate Bond A-Rated 18.45 - - - - 5.38
Lehman Aggregate 18.47 - - - - 6.46
HIGH YIELD (1) 19.86 12.75 14.89 - - 10.15
Lipper VA High Yield 16.44 10.18 16.58 - - 8.98
Master High Yield 19.91 11.57 17.17 - - 11.28
GROWTH & INCOME (1) 24.01 - - - - 9.61
Lipper VA Growth & Income 30.82 - - - - 13.47
75% S&P 500/25% Value Line Conv. 34.93 - - - - 15.45
EQUITY INDEX (1) 36.41 - - - - 19.12
Lipper VA S&P Index Funds 36.84 - - - - 18.92
S&P 500 37.54 - - - - 19.89
COMMON STOCK (2) 17.74 15.03 13.04 16.09 15.85 13.18
Lipper Growth Funds Avg. 19.24 15.23 13.04 13.47 14.58 10.64
S&P 500e 22.96 19.66 15.20 15.28 14.55 11.86
GLOBAL (1) 18.76 18.15 16.44 - - 11.32
Lipper VA Global 16.05 13.96 12.28 - - 7.87
MSCI World 20.72 15.83 11.74 - - 6.75
AGGRESSIVE STOCK (2) 22.50 15.49 11.47 17.76 17.27 11.11
Lipper Small Company Growth Funds
Avg. 20.20 15.31 15.10 14.22 15.43 10.04
50% S&P 500/50% NASDAQ 17.85 14.14 14.80 14.29 - -
THE BLENDED FUNDS:
CONSERVATIVE INVESTORS (1) 20.34 8.49 10.10 - - 9.61
Lipper VA Income 25.08 10.80 12.85 - - 10.28
70% Lehman Treas./30% S&P 500 24.11 10.41 11.73 - - 10.55
BALANCED (2) 11.34 7.08 6.07 9.98 - 13.92
Lipper Balanced Portfolio 13.76 11.67 10.73 11.09 12.66 13.46
50% S&P 500/50% Lehman Govt./Corp. 12.93 13.15 11.47 12.30 - 13.83
GROWTH INVESTORS (1) 26.31 12.10 17.07 - - 16.01
Lipper VA Flexible Portfolio 25.08 10.80 12.85 - - 10.28
30% Lehman Corp./70% S&P 500 32.05 13.35 14.70 - - 11.97
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the period ending December 31, 1995.
(2) For the period ending December 31, 1996.
23
<PAGE>
- --------------------------------------------------------------------------------
CUMULATIVE RATES OF RETURN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MONEY MARKET (1) 5.69% 13.12% 24.22% 78.66% - % 179.66%
Lipper VA Money Market 5.37 12.13 22.34 73.21 - 172.66
3-Month T-Bill 5.74 13.58 24.45 75.23 - 170.07
INTERMEDIATE GOVERNMENT
SECURITIES (1) 13.27 19.66 - - - 41.48
Lipper VA U.S. Government 15.75 21.09 - - - 44.66
Lehman Intermediate Government 14.41 21.60 - - - 45.17
BOND (2) 2.77 16.27 34.62 103.07 - 370.73
Lipper Intermediate
Government Funds Average 1.72 14.16 33.20 95.80 - 342.75
Lehman Intermediate GC 4.05 17.68 37.21 114.06 - 396.18
QUALITY BOND (1) 16.97 - - - - 10.37
Lipper VA Corporate Bond A-Rated 18.45 - - - - 12.58
Lehman Aggregate 18.47 - - - - 15.09
HIGH YIELD (1) 19.86 43.34 100.17 - - 138.60
Lipper VA High Yield 16.44 33.90 116.45 - - 118.26
Master High Yield 19.91 38.89 120.85 - - 161.50
GROWTH & INCOME (1) 24.01 - - - - 22.91
Lipper VA Growth & Income 30.82 - - - - 33.24
75% S&P 500/25% Value Line Conv. 34.93 - - - - 38.14
EQUITY INDEX (1) 36.41 - - - - 37.83
Lipper VA S&P Index Funds 36.84 - - - - 37.40
S&P 500 37.54 - - - - 39.30
COMMON STOCK (2) 17.74 52.21 84.60 344.76 1,796.80 2,908.60
Lipper Growth 19.24 53.78 87.06 266.86 1,662.40 1,852.47
S&P 500 22.96 71.34 102.85 314.34 1,413.26 2,085.09
GLOBAL (1) 18.76 64.95 114.04 - - 144.65
Lipper VA Global 16.05 48.34 79.41 - - 90.34
MSCI World 20.72 55.39 74.20 - - 72.38
AGGRESSIVE STOCK (2) 22.50 54.06 72.12 412.96 2,321.01 1,743.56
Lipper Small Company Growth Funds 20.20 54.13 104.43 288.11 1,767.32 1,510.00
Avg.
50% S&P 500/50% NASDAQ 17.85 48.69 99.38 280.32 - -
THE BLENDED FUNDS:
CONSERVATIVE INVESTORS (1) 20.34 27.70 61.75 - - 77.32
Lipper VA Income 25.08 36.25 84.60 - - 85.64
70% Lehman Treas./30% S&P 500 24.11 34.58 74.09 - - 87.24
BALANCED (2) 11.34 22.78 34.27 158.91 - 880.23
Lipper Balanced Portfolio 13.76 39.41 66.98 188.07 - 825.31
50% S&P 500/50% Lehman Govt./Corp. 12.93 44.87 72.14 218.95 - 869.08
GROWTH INVESTORS (1) 26.31 40.86 119.90 - - 152.80
Lipper VA Flexible Portfolio 25.08 36.25 84.60 - - 85.64
30% Lehman Corp./70% S&P 500 32.05 45.64 98.56 - - 102.72
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the period ending December 31, 1995.
(2) For the period ending December 31, 1996.
24
<PAGE>
<TABLE>
<CAPTION>
YEAR-BY-YEAR RATES OF RETURN
- ----------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE
MONEY GOVERNMENT QUALITY HIGH GROWTH & EQUITY
MARKET SECURITIES BOND BOND YIELD INCOME INDEX
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1985 8.11% -- % 19.53% -- % -- % -- % -- %
1986 6.55 -- 13.79 -- -- -- --
1987 6.58 -- 1.58 -- 4.62* -- --
1988 7.27 -- 6.21 -- 9.68 -- --
1989 9.13 -- 13.29 -- 5.08 -- --
1990 8.19 -- 7.82 -- -1.15 -- --
1991 6.13 12.03* 14.45 -- 24.40 -- --
1992 3.48 5.54 6.03 -- 12.26 -- --
1993 2.94 10.52 9.21 -0.52* 23.08 -0.27* --
1994 3.96 -4.42 -2.03 -5.15 -2.83 -0.62 1.04*
1995 5.69 13.27 15.48 16.97 19.86 24.01 36.41
1996 -- -- 2.77 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
COMMON AGGRESSIVE CONSERVATIVE GROWTH
STOCK GLOBAL INTERNATIONAL STOCK INVESTORS BALANCED INVESTORS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1985 32.06% -- % -- % 18.07% -- % 25.27% -- %
1986 13.81 -- -- 1.61 -- 16.19 --
1987 5.67 -13.28* -- -2.36 -- -5.34 --
1988 16.94 10.83 -- 1.94 -- 14.78 --
1989 44.68 26.67 -- 46.97 3.08* 26.48 3.98*
1990 -11.35 -6.11 -- 8.85 6.35 -0.65 10.56
1991 52.03 30.49 -- 87.18 19.79 41.23 48.84
1992 1.22 -0.56 -- -3.01 5.74 -2.83 4.88
1993 19.81 32.06 -- 15.19 10.71 12.54 15.20
1994 -1.94 5.18 -- -4.24 -4.15 -8.43 -3.19
1995 31.85 18.76 10.66* 31.33 20.34 20.43 26.31
1996 17.74 -- -- 22.50 -- 11.34 --
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Unannualized.
25
<PAGE>
- --------------------------------------------------------------------------------
PART IV -- THE GUARANTEED INTEREST ACCOUNT
- --------------------------------------------------------------------------------
GENERAL
Contributions allocated to the Guaranteed Interest Account become part of our
general account, which supports all of our insurance and annuity guarantees and
our general obligations. Our general account, as part of our insurance and
annuity operations, is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulation of
all jurisdictions in which we are authorized to do business, as discussed in
PART VI -- MISCELLANEOUS MATTERS. Because of applicable exemptive and
exclusionary provisions, interests in our general account have not been
registered under the Securities Act of 1933 nor is the general account an
investment company under the 1940 Act. Accordingly, neither our general account
nor any interests in our general account are subject to regulation under the
Securities Act of 1933 or 1940 Act, and we have been advised that the staff of
the SEC has not made a review of the information which is included in this
prospectus or in the SAI relating to our general account and the Guaranteed
Interest Account. 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.
THE GUARANTEES
The Guaranteed Interest Account provides an investment option in which the value
of the principal will not fluctuate. The amount allocated to the Guaranteed
Interest Account earns interest at the current guaranteed interest rate which is
an annual effective rate. After interest is credited, certain charges and fees
are deducted. The value of an employer plan's investment in the Guaranteed
Interest Account is, at any time, the total contributions allocated to the
Guaranteed Interest Account, PLUS the interest earned, LESS (i) employer plan
benefit payments, (ii) other employer plan withdrawals (including loans) and
(iii) charges and fees provided for under the Contracts.
Interest is credited through and allocated on the Transaction Date of any
transfer or withdrawal request. Interest is credited for each day of the month
on the amount maintained for the employer plan at the beginning of the day at a
daily rate equivalent to the guaranteed interest rate applicable to the employer
plan. The annual effective rate does not reflect deductions of fees and
expenses.
CURRENT AND MINIMUM INTEREST RATES
Except as described below, the "current" rate is the rate of interest that we
actually credit to amounts in the Guaranteed Interest Account for a given
calendar year. Current rates are declared for each class of employer plans
before the beginning of each calendar year. In addition to the current rate, we
declare "minimum" rates for the next two calendar years. The minimum interest
rates will never be lower than 4%. In general, we expect to declare current
rates in any year greater than the previously declared minimum rates for that
year. If the employer plan is permitted to invest in the Bond Fund, we may at
times have the right to declare a lower "current" rate of interest (REVISED
RATE) which will be applicable for the remainder of the calendar year only to
new amounts contributed or transferred by the employer plan to the Guaranteed
Interest Account. See PART V -- PROVISIONS OF RIA AND RETIREMENT BENEFITS --
SPECIAL RULES APPLICABLE TO PLANS THAT MAY INVEST IN THE BOND FUND, for
circumstances in which a revised rate might be declared. Such revised rate will
reflect market interest rates for money market instruments and other short-term
investments existing at the time any such amount is contributed or transferred
to the Guaranteed Interest Account without regard to any previously declared
minimum rate.
THE CURRENT RATE OF INTEREST FOR 1997, AND THE 1998 AND 1999 MINIMUM RATES OF
INTEREST GUARANTEED FOR EACH CLASS, ARE STATED IN THE PROPOSAL DOCUMENTS
SUBMITTED TO SPONSORS OF PROSPECTIVE RIA EMPLOYER PLANS. The establishment of
new classes will not decrease the rates applicable to employer plans already
assigned to a previous class. The effective current rate for 1998 and the
minimum rates effective for calendar years 1999 and 2000 will be declared in
December 1997.
CLASSES OF EMPLOYER PLANS
We assign an employer plan to a "class" of employer plans upon its participation
in the Master Retirement Trust in order to facilitate the determination of
current and minimum guaranteed rates of interest that are applicable for that
employer plan participating in our Guaranteed Interest Account. The initial
class of employer plans to which an employer plan is assigned will depend on the
adoption effective date.
However, we reserve the right to, at any time during a calendar year, (1) close
a class and begin a new class for employer plans adopting the Master Retirement
Trust during the balance of the calendar year or (2) combine two or more classes
of employer plans. When we begin a new class of employer plans or combine two or
more classes of employer plans we will not decrease the "current" or "minimum"
guaranteed rates of interest for a class once those rates have been declared.
CHARGES AND FEES
The ongoing operations fee, contingent withdrawal charge, loan fee, PRS charge,
annuity benefit charge and the charge for applicable state taxes discussed in
PART II -- CHARGES AND FEES apply to employer plan balances maintained in the
Guaranteed Interest Account. The loan fee is applied on the Transaction Date
that the loan amount is paid out of the Guaranteed Interest Account.
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DEFERRED PAYOUT PROVISION
With respect to trustee-directed employer plans which are terminating their RIA
Contract, there is a deferred payout provision. Under that provision, we can
defer payment of the employer plan balance held in the Guaranteed Interest
Account less the contingent withdrawal charge by paying out the balance in six
installments over five years. During the deferred payout period, the balances
upon which we defer payment continue to earn the current interest rate declared
for each year. The ongoing operations fee continues to be deducted monthly from
the balance during the deferred payout period.
When the deferred payout provision is imposed, any trustee-directed employer
plan benefits becoming due during the deferred payout period will not be paid
from the employer plan balance in the Guaranteed Interest Account but, if
sufficient funds are available, would be paid from the new funding vehicle for
the trustee-directed employer plan. Participant-directed employer plans are not
subject to the deferred payout provision.
27
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<TABLE>
<CAPTION>
ILLUSTRATION OF DEFERRED PAYOUT PROVISION
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSACTION DATE END OF YEAR 1 END OF YEAR 2 END OF YEAR 3 END OF YEAR 4 END OF YEAR 5
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Guaranteed Interest Account
Plan Assets
- -Withdrawal Charge
- ------------------
Distribution Amount 1
Dist. Amt. 1 = 1st Payment
- ------------
6
Dist. Amount 1
- -1st payment
- ------------
Balance 1 ---] Balance 1
+ Interest
- Operations Fee
----------------
Distribution Amount 2
Dist. Amt. 2 = 2nd Payment
------------
5
Dist. Amount 2
- 2nd payment
-------------
Balance 2 ---] Balance 2
+ Interest
- Operations Fee
----------------
Distribution Amount 3
Dist. Amt. 3 = 3rd Payment
------------
4
Dist. Amount 3
- 3rd payment
-------------
Balance 3 ---] Balance 3
+ Interest
- Operations Fee
----------------
Distribution Amount 4
Dist. Amt. 4 = 4th Payment
------------
3
Dist. Amount 4
- 4th payment
-------------
Balance 4 ---] Balance 4
+ Interest
- Operations Fee
----------------
Distribution Amount 5
Dist. Amt. 5 = 5th Payment
------------
2
Dist. Amount 5
- 5th payment
-------------
Balance 5 ---] Balance 5
+ Interest
- Operations Fee
----------------
Final Distribution
</TABLE>
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- --------------------------------------------------------------------------------
PART V -- PROVISIONS OF RIA AND RETIREMENT BENEFITS
- --------------------------------------------------------------------------------
CONTRIBUTIONS; FREQUENCY AND AMOUNT
When RIA is utilized as the exclusive investment funding vehicle for the assets
of an employer plan, the annual aggregate amount of contributions must be at
least $10,000 (EXCLUSIVE FUNDING EMPLOYER PLAN).
In our sole discretion, RIA may also be utilized as a partial investment funding
vehicle for employer plans. In such cases, the aggregate amount of contributions
in the initial participation year must be at least $50,000 and the annual
aggregate amount of contributions thereafter must be at least $25,000 (PARTIAL
FUNDING EMPLOYER PLANS). There is no required minimum for the amount of each
contribution where employer plan contributions are made on a basis more frequent
than annually. The total amount of contributions under an employer plan is
limited by law. See PART VII -- TAX CONSIDERATIONS.
ROLLOVER OR TRANSFER FROM A PLAN
An employer can change the funding of an existing plan to use RIA.
Before making a change, the following should be carefully considered:
o The comparative costs and benefits under existing funding arrangements and
under RIA; and
o The amendments or changes that may have to be made in the plan if funds are
transferred.
To make a rollover or transfer to RIA, funds must be in cash. Therefore, any
assets accumulated under an existing plan will have to be liquidated for cash.
SELECTING INVESTMENT OPTIONS
An employer can elect to fund the employer plan with any number of the
Investment Options available under the Contracts. Generally, for
participant-directed plans, if the employer elects to fund the employer plan by
selecting any of the Intermediate Government Securities, Quality Bond, High
Yield or Conservative Investors Funds and intends for the employer plan to
comply with the requirements of ERISA Section 404(c), the employer should also
select the Money Market Fund. If the employer intends for the employer plan to
comply with ERISA Section 404(c) and none of the Money Market, Intermediate
Government Securities, Quality Bond, High Yield or Conservative Investors Funds
is selected, the employer should elect the Guaranteed Interest Account as a
funding option. If the employer selects any of the Money Market, Bond,
Intermediate Government Securities, Quality Bond, High Yield or Conservative
Investors Funds and the Guaranteed Interest Account, certain restrictions will
apply to transfers out of the Guaranteed Interest Account. The Bond Fund is
available only to employer plans that signed an Agreement to participate in that
Fund prior to June 1, 1994, and special transfer rules apply for these employer
plans. See SPECIAL RULES APPLICABLE TO PLANS THAT MAY INVEST IN THE BOND FUND in
this Section. If the Employer adds any of the Investment Funds of Separate
Account No. 51, the Bond Fund will no longer be subject to any transfer
restrictions. However, transfers out of the Guaranteed Interest Account will be
subject to certain restrictions. See TRANSFER PROVISIONS in this Section.
ALLOCATION CHOICES
Contributions may be allocated to the Investment Options by dollar amounts or in
any whole number percentages that total 100% in accordance with the allocation
instructions on file.
In addition to our rules, allocation changes may be subject to employer plan
provisions which may limit or disallow such movements. Allocation changes may be
made without charge.
EXCEPT AS PROVIDED BELOW IN CONNECTION WITH TRUSTEE-DIRECTED PLANS, AMOUNTS TO
BE ALLOCATED TO AN INVESTMENT OPTION TO EFFECTUATE PERMITTED CONTRIBUTION
ALLOCATION CHANGES WILL BE EFFECTIVE ON THE TRANSACTION DATE.
For allocations to the Guaranteed Interest Account in connection with
trustee-directed plans, any proposed change in an employer plan's contribution
allocation must be provided to us by written notice at least 60 days before the
effective date of the proposed change.
TRANSFER PROVISIONS
Transfers of accumulated amounts among the Investment Options will be permitted
at any time and in any amount, subject to the transfer limitations described in
this section. In addition to our rules, transfers among the Investment Options
may be subject to employer plan provisions which may limit or disallow such
movements. Transfers among the Investment Options may be made without charge.
Under certain situations, amounts transferred out of the Guaranteed Interest
Account during the calendar quarter in which the request is made and the three
preceding calendar quarters (TRANSFER PERIOD) are subject to a transfer
limitation described in this section.
PARTICIPANT-DIRECTED EMPLOYER PLANS THAT HAVE ELECTED THE PRS: If the employer
elects to fund the employer plan with the Guaranteed Interest Account and the
Money Market, Bond, Intermediate Government Securities, Quality Bond, High Yield
or Conservative Investors Funds, during any transfer period, the maximum amount
that may be transferred by a participant from the Guaranteed Interest Account is
equal to the greater of: (i) 25% of the amount the participant had in the
Guaranteed Interest Account as of the last calendar day of the prior calendar
year and (ii) the total of all amounts the participant transferred out of the
Guaranteed Interest Account during the prior calendar year. Generally, this
means that new participants will not be able to transfer amounts out of the
Guaranteed Interest Account during the first calendar year of their
participation under the Contract.
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<PAGE>
If assets have been transferred from another funding vehicle by the Employer,
the participant, for the remainder of that calendar year, may transfer to the
Funds up to 25% of such transferred amount that the participant initially
allocated to the Guaranteed Interest Account.
PARTICIPANT-DIRECTED EMPLOYER PLANS THAT HAVE NOT ELECTED THE PRS: If the
employer elects to fund the employer plan with the Guaranteed Interest Account
and the Money Market, Bond, Intermediate Government Securities, Quality Bond,
High Yield or Conservative Investors Funds, during any transfer period the
maximum amount that may be transferred from the Guaranteed Interest Account is
equal to the greater of: (i) 25% of the amount the employer plan had in the
Guaranteed Interest Account as of the last calendar day of the prior calendar
year and (ii) the total of all amounts the employer plan transferred out of the
Guaranteed Interest Account during the prior calendar year. The employer plan is
responsible for monitoring this transfer limitation.
If assets have been transferred from another funding vehicle by the Employer,
the trustee on behalf of the participant, for the remainder of that calendar
year, may transfer to the Funds up to 25% of such transferred amount that was
initially allocated to the Guaranteed Interest Account.
TRUSTEE-DIRECTED PLANS: Transfers of accumulated amounts among the Investment
Options will be permitted as determined by us in our sole discretion only.
If assets have been transferred from another funding vehicle by the Employer,
the plan trustee, for the remainder of that calendar year may transfer to an
Investment Option up to 25% of such transferred amount that was initially
allocated to the Guaranteed Interest Account.
SPECIAL RULES APPLICABLE TO PLANS
THAT MAY INVEST IN THE BOND FUND
The Bond Fund is available only to Participant-directed employer plans that
signed an agreement to participate in that Fund prior to June 1, 1994. Special
transfer rules, described below, apply to these employer plans when none of the
Investment Funds of Separate Account No. 51 is available (OLD EMPLOYER PLANS).
If the Employer for an old employer plan adds any of the Investment Funds of
Separate Account No. 51, the Bond Fund will no longer be subject to any transfer
restrictions. However, transfers out the Guaranteed Interest Account will be
subject to certain restrictions. See TRANSFER PROVISIONS in this Section.
TRANSFERS TO THE BOND FUND: Except as described below, a plan participant in an
old employer plan may elect to transfer to the Bond Fund any whole percentage up
to and including 100% of the amounts arising from participant-directed
contributions that are held on behalf of the plan participant under any other
Investment Option. Requests to transfer amounts to the Bond Fund will be
processed only if, on the Transaction Date with respect to such transfer, the
current guaranteed interest rate with respect to the employer plan's Guaranteed
Interest Account is higher than the then-current benchmark treasury rate.
A BENCHMARK TREASURY RATE will be determined on the Business Day coinciding with
or last preceding the 10th day of each month and will be applicable to transfer
requests with Transaction Dates that occur on or after the 16th day of the month
but before the 16th day of the immediately following month. The BENCHMARK
TREASURY RATE will be equal to the Five Year Constant Maturity rate (as
published in Federal Reserve Statistical Release H.15) for the Business Day on
which the rate is determined. The benchmark treasury rate can also be obtained
via a daily tape recording which can be accessed by calling the RIA Service
Office at 1-800-967-4560.
If we receive a request for a transfer of amounts into the Bond Fund that would
occur on a Transaction Date on which such a transfer is not permitted, we will
not process the transfer and will so notify the Employer within four Business
Days. We will not redirect the transfer to another Investment Option and will
not maintain any record of such request for future processing.
TRANSFERS FROM THE BOND FUND: Except as described below, a plan participant in
an old employer plan may elect to transfer any whole percentage (up to and
including 100%) of the amounts held in the Bond Fund on behalf of such
participant to one, or any combination, of the other Investment Options.
RESTRICTIONS AFFECTING THE GUARANTEED INTEREST ACCOUNT: We reserve the right to
declare a lower revised interest rate (see PART IV -- THE GUARANTEED INTEREST
ACCOUNT -- CURRENT AND MINIMUM INTEREST RATES) applicable only to new
contributions and transfers (ALLOCATIONS) being made to the Guaranteed Interest
Account from any Fund available under the employer plan, if all of the following
conditions exist:
- -- on the Transaction Date with respect to the allocation, the aggregate amount
held in the Bond Fund with respect to all employer plans comprising
Equitable Life's Small Pension book of business is at least 10% of the
aggregate amount then held under all the contracts which fund those plans;
- -- on the Transaction Date with respect to the allocation, the otherwise
applicable "current" guaranteed interest rate with respect to the employer
plan's Guaranteed Interest Account exceeds the benchmark treasury rate by at
least 0.75%; and
- -- prior allocations to the Guaranteed Interest Account for the employer plan
during that calendar year equal or exceed 110% of the average annual
allocations to the Guaranteed Interest Account for the employer plan during
the three immediately preceding calendar years.
If we declare a revised rate the employer or plan trustee may, by written
notice, withdraw all or part of the amount that would be credited with such
lower revised rate, without deduction of the contingent withdrawal charge. The
investment, for the remainder of the calendar year, of such withdrawn or
returned amounts in a funding vehicle other than RIA shall not be considered a
violation of an employer plan's exclusive funding obligation provided such
amount is contributed to RIA at the beginning of the following calendar year.
LOAN PROVISION
Loans to plan trustees on behalf of participants are permitted in our RIA
program. It is the plan administrator's responsibility to administer the loan
program. See PART VII -- TAX AND ERISA CONSIDERATIONS.
The following are important features of the RIA loan provision.
o A loan will be permitted only from the Guaranteed Interest Account. If the
amount requested to be bor-
30
<PAGE>
rowed plus the loan fee and loan reserve we discuss below is more than the
amount available in the Guaranteed Interest Account for the loan
transaction, the employer can move the additional amounts necessary from one
or more Funds to the Guaranteed Interest Account.
o The plan administrator determines the interest rate, the maximum term and
all other terms and conditions of the loan.
o Repayment of loan principal and interest can be made only to the Guaranteed
Interest Account. The employer must identify the portion of the repayment
amount which is principal and which is interest.
o Upon repayment of a loan amount, any repayment of loan principal and loan
reserve (see below) taken from one or more Funds for loan purposes may be
moved back to a Fund.
o We charge a loan fee in an amount equal to 1% of the loan principal amount
on the Transaction Date a loan is made. The Contingent Withdrawal Charge
will be applied to any unpaid principal, as if the amount had been withdrawn
on the day the principal payment was due. See PART II -- CHARGES AND FEES.
o The minimum amount of a loan for a participant is $1,000, and the maximum
amount is 90% of the balances in all the Investment Options for a
participant. An employer plan, the Code and the Department of Labor (DOL)
(as described in PART VII -- TAX AND ERISA CONSIDERATIONS) may impose
additional conditions or restrictions on loan transactions.
o On the Transaction Date a loan is made, we create a loan reserve account in
the Guaranteed Interest Account in an amount equal to 10% of the loan
amount. The 10% loan reserve is intended to cover (1) the ongoing operations
fee applicable to amounts borrowed, (2) the possibility of our having to
deduct applicable contingent withdrawal charges (see PART II -- CHARGES AND
FEES) and (3) the deduction of any other withholdings, if required. The loan
amount will not earn any interest under the Contracts while the loan is
outstanding. The amount of the loan reserve will continue to earn interest
at the Guaranteed Interest Account rate applicable for the employer plan.
o The ongoing operations fee will apply to the sum of the Investment Option
balances (including the loan reserve) plus any unpaid loan principal. If the
employer plan is terminated or any amount is withdrawn, or if any withdrawal
from RIA results in the reduction of the 10% loan reserve amount in the
Guaranteed Interest Account, during the time a loan is outstanding, the
contingent withdrawal charge will be applied to any principal loan balances
outstanding as well as to any employer plan balances (including the loan
reserve) in the Investment Options. See PART II -- CHARGES AND FEES.
BENEFIT PAYMENTS GENERAL
Subject to the provisions of an employer plan, proceeds for the participant may
be applied to any one of the following benefit choices offered by RIA:
o purchase of one of our annuities;
o lump sum distribution;
o use of part of the proceeds to purchase one of our annuities with the
balance to be paid as a lump sum; or
o permitted cash withdrawal.
The amount used to purchase any one form of annuity under the Contracts, net of
all applicable charges and fees, must be at least $3,500. See PART II -- CHARGES
AND FEES-- CONTINGENT WITHDRAWAL CHARGE.
We require that the amount of any benefit distribution from an employer plan
that uses RIA as a partial investment funding vehicle be in proportion to the
amount of plan assets held in RIA unless some other method is specifically
agreed upon in writing between Equitable and the trustees of the employer plan.
CASH DISTRIBUTIONS
Requests for cash distributions must be made to us on an aggregate as opposed to
a participant-by-participant basis, except for employer plans using the PRS. See
PART VIII -- PARTICIPANT RECORDKEEPING SERVICES (OPTIONAL). Distribution checks
are made payable to the trustees of the plan. The plan trustees are responsible
for distribution of funds to the participant or other payee and for any
applicable Federal and state income tax withholding and reporting. See PART VII
- -- TAX AND ERISA CONSIDERATIONS.
ANNUITY BENEFITS
Subject to the provisions of an employer plan, we have available under RIA the
following forms of fixed annuities.
o LIFE ANNUITY: An annuity which guarantees a lifetime income to the retired
employee-participant (ANNUITANT) and ends with the last monthly payment
before the annuitant's death. There is no death benefit associated with this
annuity form and it provides the highest monthly amount of any of the
guaranteed life annuity forms. If this form of annuity is selected, it is
possible that only one payment will be made if the annuitant dies after that
payment.
o LIFE ANNUITY-PERIOD CERTAIN: This annuity form guarantees a lifetime income
to the annuitant and, if the annuitant dies during a previously selected
minimum payment period, continuation of payments to a designated beneficiary
for the balance of the period. The minimum period is usually 5, 10, 15 or 20
years.
o LIFE ANNUITY-REFUND CERTAIN: This annuity form guarantees a lifetime income
to the annuitant and, if the annuitant dies before the initial single
premium has been recovered, payments will continue to a designated
beneficiary until the single premium has been recovered. If no beneficiary
survives the annuitant, the refund will be paid in one lump sum to the
estate.
o PERIOD CERTAIN ANNUITY: Instead of guaranteed lifetime income, this annuity
form provides for payments to the annuitant over a specified period, usually
5, 10, 15 or 20 years, with payments continuing to the designated
beneficiary for the balance of the period if the annuitant dies before the
period expires.
o QUALIFIED JOINT AND SURVIVOR LIFE ANNUITY: This annuity form guarantees
lifetime income to the annuitant, and, after the annuitant's death, the
continuation of income to the surviving spouse. Generally, unless a married
annuitant elects otherwise with the written consent of his spouse, this will
be the form of annuity
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<PAGE>
payment. If this form of annuity is selected, it is possible that only one
payment will be made if both the annuitant and the spouse die after that
payment.
All of the forms outlined above (with the exception of Qualified Joint and
Survivor Life Annuity) are available as either Single or Joint life annuities.
We offer other forms not outlined here. Your Agent can provide details.
AMOUNT OF FIXED-ANNUITY PAYMENTS
Our forms of a fixed annuity provide monthly payments of specified amounts.
Fixed-annuity payments, once begun, will not change. The size of payments will
depend on the form of annuity that is chosen, our annuity rate tables in effect
when the first payment is made, and, in the case of a life income annuity, on
the annuitant's age. The tables in our Contracts show monthly payments for each
$1,000 of proceeds applied under an annuity. If our annuity rates in effect on
the annuitant's retirement date would yield a larger payment, those current
rates will apply instead of the tables. Our annuity rate tables are designed to
determine the amounts required for the annuity benefits elected and for
administrative and investment expenses and mortality and expense risks. Under
our Contracts we can change the annuity rate tables every five years. Such
changes would not affect annuity payments being made.
PAYMENT OF ANNUITY
Amounts in the Funds to be applied to retirement benefits are made available by
the redemption of Units. The proceeds, plus any amounts in the Guaranteed
Interest Account, less a $175 ADMINISTRATIVE CHARGE and PREMIUM TAX CHARGE, if
applicable, are applied to purchase the form of distribution selected.
ASSIGNMENT AND ALIENATION
The employer plan balances and rights under RIA cannot be assigned, sold,
alienated, discounted or pledged as collateral for a loan or other obligation to
any party (this reference to a loan does not apply to a loan discussed above
under LOAN PROVISION), except to the extent allowed by law for a Qualified
Domestic Relations Order (QDRO), as that term is defined in the Code.
CREDITORS' CLAIMS
Proceeds payable under our Contracts cannot be assigned or encumbered by the
payee.
All proceeds under our Contracts will be paid free from the claims of creditors
to the extent allowed by law.
WHEN WE PAY PROCEEDS
Application of proceeds to an annuity and payments or withdrawals out of the
Investment Options ordinarily will be made promptly after the Transaction Date.
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. We may also
defer withdrawals from the Funds for up to 60 days and pay any withdrawals from
the plan in installments in order to protect the interests of the other contract
holders in a Fund.
PERIODIC REPORTS
We send the employer a report each quarter that shows transactions in the
Investment Options during the quarter for the employer plan, the number of Units
in the Funds credited to the employer plan, the Unit values and the balances in
all of the Investment Options as of the end of the quarter.
The employer will also receive an annual report and a semi-annual report
containing financial statements of the Funds and a list of the Funds' or Trust's
portfolio securities.
The employer automatically receives a confirmation notice following the
processing of a financial Investment Option transaction.
IF A PLAN FAILS TO QUALIFY
If an employer plan fails to maintain its qualification under the Code, we can
terminate the employer plan's participation under RIA. If we terminate the
employer plan's participation under RIA, we will withdraw the employer plan
balances from the Investment Options, less applicable charges and fees and any
outstanding loan balances, and pay the amounts to the trustees of the plan.
MODIFICATION OR CONTRACT
DISCONTINUANCE/TERMINATION
The Contracts are group annuity contracts which may be modified between us and
United States Trust Company under the Master Retirement Trust agreement and, by
such agreement, have been amended from time to time. However, no change to the
Contracts can reduce annuities in the course of payment.
The trustee under the Master Retirement Trust agreement at any time upon notice
to us may resign and we may appoint a successor trustee.
We can discontinue offering RIA at any time. Discontinuance of RIA would not
affect annuities in the course of payment, but no further contributions would be
accepted by us. The employer may elect to maintain Investment Options balances
with us to provide annuity benefits in accordance with the terms of the
Contracts. The employer may elect to discontinue the participation of the
employer plan in RIA at any time upon advance written notice to us. WE MAY
ELECT, UPON WRITTEN NOTICE TO THE EMPLOYER, TO DISCONTINUE THE PARTICIPATION OF
THE EMPLOYER PLAN IN RIA IF (1) THE EMPLOYER FAILS TO COMPLY WITH ANY TERMS OF
THE MASTER RETIREMENT TRUST, (2) THE EMPLOYER FAILS TO MAKE THE REQUIRED MINIMUM
CONTRIBUTIONS, (3) AS MAY BE AGREED UPON IN WRITING BETWEEN EQUITABLE LIFE AND
THE EMPLOYER IF THE PLAN FAILS TO MAINTAIN MINIMUM AMOUNTS OF FUNDS INVESTED IN
RIA, OR (4) THE EMPLOYER FAILS TO COMPLY WITH ANY REPRESENTATIONS AND WARRANTIES
MADE BY THE EMPLOYER, TRUSTEES OR EMPLOYER PLAN TO EQUITABLE LIFE IN CONNECTION
WITH THE EMPLOYER PLAN'S PARTICIPATION IN RIA. See PART I -- RIA SUMMARY --
PARTICIPATION AND FUNDING REQUIREMENTS.
At any time on or after the participation of the employer in RIA has been
discontinued, we may withdraw the entire amount of the employer plan assets held
in the Investment Options, and pay them to the trustee of the employer plan,
subject to our right to defer payout of amounts held in the Guaranteed Interest
Account, less any applicable charges and fees and outstanding loan balances. See
PART II -- CHARGES AND FEES and PART IV -- THE GUARANTEED INTEREST ACCOUNT.
Reference is made to copies of the Contracts, as amended and modified, which
have been filed as an exhibit to our Registration Statement, as amended from
time to time, and which are incorporated by reference herein.
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- --------------------------------------------------------------------------------
PART VI -- MISCELLANEOUS MATTERS
- --------------------------------------------------------------------------------
HOW WE ARE REGULATED
We are regulated and supervised by the New York State Insurance Department. In
addition, we are subject to the insurance laws and regulations in all
jurisdictions where we are authorized to do business. We submit annual reports
on our operations and finances to insurance officials in these jurisdictions.
The officials review our reports to be sure we are financially sound and that we
are complying with applicable laws and regulations.
The Contracts have been approved by the New York State Insurance Department. Its
regulation and Contract approvals do not involve any supervision of the
investment policies of the Funds or the selection of investments except to
determine compliance with New York insurance laws.
We are also subject to various Federal securities laws and regulations. However,
this does not involve supervision by the SEC of us or of the management or
investment practices or policies of the Funds or the Trust portfolios.
We are registered with the SEC as a broker-dealer under the Securities Exchange
Act of 1934. We are also a member of the National Association of Securities
Dealers, Inc. (NASD). We offer RIA through our Agents who are licensed by state
insurance officials and, where necessary, qualified by the NASD.
COMMISSIONS AND SERVICE FEES
Our Agents who assist in establishing an employer plan in RIA and providing
necessary services (not including recordkeeping services) are entitled to
receive commissions and service fees from us, which are paid to Agents and are
not in addition to the fees and charges we describe under PART II -- CHARGES AND
FEES. Any service fees paid to Agents are contingent upon their providing
service satisfactory to us.
While the charges and fees we receive from a RIA employer plan initially may be
less than the commissions and service fees paid to Agents by us, it is expected
that over time those charges and fees will be adequate to cover all expenses.
CERTAIN RETIREMENT PLANS THAT USE RIA MAY ALLOW EMPLOYER PLAN ASSETS TO BE USED
IN PART TO BUY LIFE INSURANCE POLICIES RATHER THAN APPLYING ALL OF THE
CONTRIBUTIONS TO RIA. Our Agents will receive commissions on any such Equitable
Life life insurance policies at standard rates. These commissions are subject to
regulation by state law and are at rates higher than those applicable to
commissions payable for placing an employer plan under RIA.
COPIES OF THE MASTER RETIREMENT TRUST AGREEMENT
We give a copy of the Master Retirement Trust and participation agreement to the
employer before the participation agreement is signed. It is recommended that
the contents of the Master Retirement Trust and participation agreement be fully
understood before the participation agreement is signed. Consultation with
independent financial counsel or tax counsel regarding the suitability of the
Master Retirement Trust and participation agreement is advisable, as we are not
permitted to give such advice.
FIDUCIARIES
We are registered as an investment adviser under the Investment Advisors Act of
1940, and we acknowledge that we are an investment manager and a fiduciary, as
defined in ERISA, with respect to employer plan assets that are allocated to the
Bond, Balanced, Common Stock and Aggressive Stock Funds under RIA.
ACCEPTANCE
The employer or plan sponsor, as the case may be, is solely responsible for
determining whether RIA is a suitable funding vehicle and should, therefore,
carefully read the prospectus and installation materials before the
participation agreement is signed.
VOTING RIGHTS
No voting rights apply to any of the Separate Accounts or the Guaranteed
Interest Account. As legal owners of the shares of the Trust held in Separate
Account No. 51 which invests in the Trust, however, we have the right to vote on
certain matters. The Trust is not required 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 Trust allocated to the Investment Funds of Separate Account
No. 51 in accordance with instructions received from employers, participants or
trustees, as the case may be, in the respective Investment Funds of Separate
Account No. 51. Each participant for whom we maintain records and, in other
cases, the employer or trustee, will be allowed to instruct us on how to vote
shares of the Trust in proportion to their interest in the Investment Funds of
Separate Account No. 51 as of the record date for the shareholder meeting. If we
do not receive instructions in time from all shareholders, we will vote the
shares for which no instructions have been received in the same proportion as we
vote shares for which we have received instructions. If you invest in Separate
Account No. 51, you will receive periodic reports relating to the Trust and
proxy material together with a voting instruction form, in connection with
shareholder meetings.
Currently, we control the Trust. Trust shares are held by other separate
accounts of ours and by separate accounts of insurance companies affiliated and
unaffiliated with us. Shares held by these separate accounts will generally be
voted according to the instructions of the owners of insurance policies and
contracts funded through those separate accounts, thus diluting the effect of
your voting instructions.
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OUR RIGHTS
We reserve the right to take certain actions in connection with our operations
and the operations of the Funds as permitted by applicable law. If necessary, we
will seek approval by participants in RIA.
We have reserved all rights to our corporate name or any part of it. We may
allow our Funds and other entities to use our name but we may also withdraw this
right.
We may unilaterally amend or modify the Contracts or the Master Retirement Trust
without the consent of the employer or plan sponsor, as the case may be, in
order to keep the Contracts or the Master Retirement Trust in compliance with
law.
LEGAL PROCEEDINGS
We are engaged in various litigation. In our judgment, no litigation is of
material importance to our total assets.
EXPERTS
The financial statements as of December 31, 1996 and for each of the two years
in the period then ended included in the SAI for Separate Account Nos. 13, 10, 4
and 3 and the condensed financial information for each of the three years in the
period ended December 31, 1996 and the Separate Account No. 51 condensed
financial information 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,
1996 and for each of the two years in the period then ended included in the SAI
for Equitable Life have been so included in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
WHERE TO GET ADDITIONAL INFORMATION
We have filed with the SEC a registration statement relating to the Units and
the offering described in this prospectus and augmented with the information in
the related SAI. The registration statement, which is required by the Securities
Act of 1933, contains additional information that is not required in this
prospectus or SAI under the rules and regulations of the SEC. Copies of the
registration statement may be obtained from the SEC's main office in Washington,
D.C. upon payment of the applicable fee.
CHANGES IN FUNDING VEHICLE
A qualified retirement plan may ordinarily change the means of funding
retirement benefits. Persons contemplating such a change in order to participate
in RIA should carefully consider the relative advantages and disadvantages of
such a change, including, in particular, comparative cost factors and benefits
available under RIA and under existing investing vehicles. Such a change may
affect only future contributions or may include the transfer of funds previously
contributed. If funds already invested are transferred to us, they will normally
be accepted only in cash, making necessary liquidation of the assets accumulated
under the existing funding media. If a transfer is contemplated, it may be
advisable to study the terms of the existing funding vehicle for the employer
plan, with special reference to any liquidation charges or termination costs
that may be incurred.
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PART VII -- TAX AND ERISA CONSIDERATIONS
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Employer retirement plans that may qualify for tax-favored treatment are
governed by the provisions of the Internal Revenue Code (CODE) and the Employee
Retirement Income Security Act (ERISA). The Code is administered by the Internal
Revenue Service (IRS). ERISA is administered primarily by the Department of
Labor (DOL).
Provisions of the Code and ERISA include requirements for various features
including:
o participation, vesting and funding;
o nondiscrimination;
o limits on contributions and benefits;
o distributions;
o penalties;
o duties of fiduciaries;
o prohibited transactions; and
o withholding, reporting and disclosure.
IT IS THE RESPONSIBILITY OF THE EMPLOYER, PLAN TRUSTEE AND PLAN ADMINISTRATOR TO
SATISFY THE REQUIREMENTS OF THE CODE AND ERISA.
This prospectus does not provide detailed tax or ERISA information. The
following discussion briefly outlines the Code provisions relating to
contributions to and distributions from certain tax-qualified retirement plans,
although some information on other provisions is also provided. Various tax
disadvantages, including penalties, may result from actions that conflict with
requirements of the Code or ERISA, and regulations or other interpretations
thereof, In addition, Federal tax laws and ERISA are continually under review by
the Congress, and any changes in those laws, or in the regulations pertaining to
those laws, may affect the tax treatment of amounts contributed to tax-qualified
retirement plans or the legality of fiduciary actions under ERISA.
Certain tax advantages of tax-qualified retirement plans may not be available
under certain state and local tax laws. This outline does not discuss the effect
of any state or local tax laws. It also does not discuss the effect of federal
estate and gift tax laws (or state and local estate, inheritance and other
similar tax laws). This outline assumes that the participant does not
participate in any other qualified retirement plan. Finally, it should be noted
that many tax consequences depend on the particular jurisdiction or
circumstances of a participant or beneficiary.
THE PROVISIONS OF THE CODE AND ERISA ARE HIGHLY COMPLEX, FOR COMPLETE
INFORMATION ON THESE PROVISIONS, AS WELL AS ALL OTHER FEDERAL, STATE, LOCAL AND
OTHER TAX CONSIDERATIONS, QUALIFIED LEGAL AND TAX ADVISERS SHOULD BE CONSULTED.
TAX ASPECTS OF CONTRIBUTIONS TO A PLAN
Corporations, partnerships and self-employed individuals can establish qualified
plans for the working owners and their employees who participate in the plan.
Qualified plans established by partnerships and sole proprietorships are
frequently referred to as "Keogh" plans. The trustee or plan administrator may
make contributions on behalf of the plan participants which are deductible from
the employer's Federal gross income. Employer contributions which exceed the
amount currently deductible are subject to a 10% penalty tax. There are special
rules for corporate plans and Keogh plans which are top heavy plans (i.e., more
than 60% of the contributions or benefits are allocated to certain highly
compensated employees otherwise known as key employees).
The limits on the amount of contributions that can be made and/or forfeitures
that can be allocated to each participant in defined contribution plans is the
lesser of $30,000 or 25% of the compensation or earned income for each
participant. The employer may not consider compensation in excess of $160,000 in
calculating contributions or benefits to the plan. This amount may be adjusted
for cost of living changes in future years. For self-employed individuals,
earned income is defined so as to exclude deductible contributions made to all
tax-qualified retirement plans, including Keogh plans, and takes into account
the deduction for one-half the individual's self-employment tax. Deductions for
aggregate contributions to profit-sharing plans may not exceed 15% of all
participants' compensation.
Special limits on deductions for contributions to one or more defined
contribution plans and one or more defined benefit plans are in effect through
1999, but will be eliminated thereafter. Special limits on contributions apply
to anyone who participates in more than one qualified plan or who controls
another trade or business. In addition, there is an overall limit on the total
amount of contributions and benefits under all tax-qualified retirement plans in
which an individual participates.
The deductible limits for corporate plans and Keogh plans which are defined
benefit plans are based on the minimum funding standard determined by the plan
actuary each year. No participant can receive a benefit which exceeds the lesser
of (i) $90,000 ($125,000 as indexed for inflation for the 1997 plan year) or
(ii) 100% of the participant's average compensation for the consecutive
three-year period which results in the highest such average. The $90,000 limit
is actuarially reduced for participants retiring prior to the social security
retirement age and actuarially increased for participants retiring after the
social security retirement age. Special grandfathering rules apply to certain
participants whose benefits exceed the $90,000 limit.
A qualified plan may allow the participant to direct the employer to make
contributions which will not be in-
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cluded in the employee's income (elective deferrals) by entering into a salary
reduction agreement with the employer under Section 401(k) of the Code. The
401(k) plan, otherwise known as a cash or deferred arrangement, must not allow
withdrawals of elective deferrals and the earnings thereon prior to the earliest
of the following events: (i) attainment of age 59 1/2, (ii) death, (iii)
disability, (iv) certain business dispositions and plan terminations or (v)
termination of employment. In addition, in service withdrawals of elective
deferrals (but not earnings after 1988) may be made in the case of financial
hardship.
A participant cannot elect to defer annually more than $7,000 ($9,500 as indexed
for inflation in 1997) under all salary reduction arrangements in which the
individual participates.
A qualified plan must not discriminate in favor of highly compensated employees.
Two special nondiscrimination rules limit contributions and benefits for highly
compensated employees in the case of (1) a 401(k) plan and (2) any defined
contribution plan, whether or not a 401(k) plan, which provides for employer
matching contributions to employee after-tax contributions or elective
deferrals. Generally, these nondiscrimination tests require an employer to
compare the deferrals or the aggregate contributions, as the case may be, made
by the eligible highly compensated employees with those made by the non-highly
compensated employees, although alternative simplified tests will be available
in 1999. Highly compensated participants include five percent owners, employees
earning more than $80,000 for the prior year and employees who are in the top
20% of all employees based on compensation.
However, beginning in 1997, 401(k) plans can adopt a "Simple 401(k)" feature
which will enable the plan to meet nondiscrimination requirements without
testing. The Simple 401(k) feature requires the plan to meet specified
contribution, vesting and exclusive plan requirements.
TAX ASPECTS OF DISTRIBUTIONS FROM A PLAN
Amounts held under qualified plans are generally not subject to Federal income
tax until benefits are distributed to the participant or other recipient. In
addition, there will not be any tax liability for transfers of any part of the
value of an employer plan among the Investment Options.
The various types of benefit payments include withdrawals, annuity payments and
lump sum distributions. Each benefit payment made to the participant or other
recipient is generally fully taxable as ordinary income. An exception to this
general rule is made, however, to the extent a distribution is treated as a
recovery of after-tax contributions made by the participant.
In addition to income tax, the taxable portion of any distribution may be
subject to a 10% penalty tax. See "Penalty Tax on Premature Distributions" in
this Section.
Income Taxation of Withdrawals
The amount of any partial distribution prior to the annuity starting date is
treated as ordinary income except to the extent the distribution is treated as a
withdrawal of after-tax contributions. Withdrawals from a qualified plan are
normally treated as pro rata withdrawals of after-tax contributions and earnings
on those contributions. If the plan allowed withdrawals prior to separation from
service as of May 5, 1986, however, all after-tax contributions made prior to
January 1, 1987 may be withdrawn tax-free prior to withdrawing any taxable
amounts.
As discussed in this Section in "Certain Rules Applicable to Plan Loans," taking
a loan or failing to repay an outstanding loan as required may, in certain
situations, be treated as a taxable distribution.
Income Taxation of Annuity Payments
In the case of a distribution in the form of an annuity, the amount of each
annuity payment is treated as ordinary income except where the participant has a
cost basis in the annuity.
The cost basis is equal to the amount of after-tax contributions, plus any
employer contributions that had to be included in gross income in prior years.
If the participant has a cost basis in the annuity, a portion of each payment
received will be excluded from gross income to reflect the return of the cost
basis. The remainder of each payment will be includable in gross income as
ordinary income. The excludable portion is based on the ratio of the
participant's cost basis in the annuity on the annuity starting date to the
expected return, generally determined in accordance with a statutory table,
under the annuity as of such date. The full amount of the payments received
after the cost basis of the annuity is recovered is fully taxable. If there is a
refund feature under the annuity, the beneficiary of the refund may recover the
remaining cost basis as payments are made. If the participant (and beneficiary
under a joint and survivor annuity) die prior to recovering the full cost basis
of the annuity, a deduction is allowed on the participant's (or beneficiary's)
final tax return.
Income Taxation of Lump Sum Distributions
If benefits are paid in a lump sum, the payment may be eligible for the special
tax treatment accorded lump sum distributions. Under the five-year averaging
method (and in certain cases, favorable ten-year averaging and long-term capital
gain treatment), the tax on the distribution is calculated separately from taxes
on other income for that year. To qualify, the participant must have
participated in the plan for at least five years and the distribution must
consist of the entire balance to the credit of the participant. The distribution
must be made in one taxable year of the recipient and must be made (i) after the
participant has attained age 59 1/2 or (ii) on account of tHe participant's (a)
death, (b) separation from service (not applicable to self-employed individuals)
or (c) disability (applicable only to self-employed individuals). This provision
will be eliminated after December 31, 1999.
Eligible Rollover Distributions
Many types of distributions from qualified plans are "eligible rollover
distributions" that can be rolled over directly to another qualified plan or an
individual retirement arrangement (IRA), or rolled over to another plan or IRA
within 60 days of receipt by the individual. Death benefits received by a
spousal beneficiary may only be rolled over into an IRA. To the extent a
distribution is rolled over, it remains tax deferred. Distributions not rolled
over directly, however, are subject to 20% mandatory withholding. See "Federal
Income Tax Withholding" in this Section.
The taxable portion of most distributions will generally be an "eligible
rollover distribution" unless the distribution is one of a series of
substantially equal periodic payments made (not less frequently than annually)
(1) for the life (or life expectancy) of the participant or the joint lives (or
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joint life expectancies) of the participant and his or her designated
beneficiary, or (2) for a specified period of ten years or more. Nondeductible
voluntary contributions may not be rolled over.
In addition, none of the following is treated an eligible rollover distribution:
o minimum distributions required under Section 401(a)(9) of the Code (see
"Distribution Requirements and Limits" below);
o certain corrective distributions in plans subject to Sections 401(k), 401(m)
or 402(g) of the Code;
o certain loans that are treated as distributions under Section 72(p) of the
Code;
o P.S. 58 costs (incurred if the plan provides life insurance protection for
participants);
o dividends paid on employer securities as described in Section 404(k) of the
Code; and
o a distribution to a non-spousal beneficiary.
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 distributions eligible for rollover are in fact rolled over, the favorable
averaging rules discussed above in "Income Taxation of Lump Sum Distributions"
will not be available for any future distributions made before 2000.
Penalty Tax on Premature Distributions
An additional 10% penalty tax is imposed on all taxable amounts distributed to a
participant who has not reached age 59 1/2 unless the distribution falls within
a specifiEd exception or is rolled over into an IRA or other qualified plan. The
specified exceptions are for (a) distributions made on account of the
participant's death or disability, (b) distributions (which begin after
separation from service) in the form of a life annuity or substantially equal
periodic installments over the participant's life expectancy (or the joint life
expectancy of the participant and the beneficiary), (c) distributions due to
separation from active service after age 55 and (d) distributions used to pay
certain extraordinary medical expenses.
Federal Income Tax Withholding
Mandatory Federal income tax withholding at a 20% rate will apply to all
"eligible rollover distributions" unless the participant elects to have the
distribution directly rolled over to another qualified plan or IRA. See the
description above of "Eligible Rollover Distributions."
With respect to distributions that are not eligible rollover distributions,
Federal income tax must be withheld on the taxable portion of pension and
annuity payments, unless the recipient elects otherwise. The rate of withholding
will depend on the type of distribution and, in certain cases, the amount of the
distribution. Special rules may apply to foreign recipients, or United States
citizens residing outside the United States. If a recipient does not have
sufficient income tax withheld, or make sufficient estimated income tax
payments, the recipient may incur penalties under the estimated income tax
rules. Recipients should consult their tax advisers to determine whether they
should elect out of withholding.
Requests not to withhold Federal income tax must be made in writing prior to
receiving payments and submitted in accordance with the terms of the employer
plan. No election out of withholding is valid unless the recipient provides the
recipient's correct taxpayer identification number and a U.S. residence address.
State Income Tax Withholding
Certain states have indicated that pension and annuity withholding will apply to
payments made to residents of such states. In some states a recipient may elect
out of state income tax withholding, even if Federal withholding applies. It is
not clear whether such states may require mandatory withholding with respect to
eligible rollover distributions that are not rolled over (as described in this
Section under "Eligible Rollover Distributions"). Contact your tax adviser to
see how state withholding may apply to your payment.
Distribution Requirements and Limits
Distributions from qualified plans generally must commence no later than April 1
of the calendar year following the calendar year in which the participant
attains age 70 1/2 (or retires from the employer (if later)). Distributions can
generally be made (1) in a lump sum payment, (2) over the life of the
participant, (3) over the joint lives of the participant and his or her
designated beneficiary, (4) over a period not extending beyond the life
expectancy of the participant or (5) over a period not extending beyond the
joint life expectancies of the participant and his or her designated
beneficiary. The minimum amount required to be distributed in each year after
minimum distributions are required to begin is described in the Code, Treasury
Regulations and IRS guidelines. If a designated beneficiary is other than a
participant's spouse, certain minimum incidental benefit requirements also
apply.
If the participant dies after required distribution has begun, payment of the
remaining interest under the plan must be made at least as rapidly as under the
method used prior to the participant's death. If a participant dies before
required distribution has begun, payment of the entire interest under the plan
must be completed within five years after death, unless payments to a designated
beneficiary begin within one year of the participant's death and are made over
the beneficiary's life or over a period certain which does not extend beyond the
beneficiary's life expectancy. If the surviving spouse is the designated
beneficiary, the spouse may delay the commencement of such payments up until the
date that the participant would have attained age 70 1/2. Distributions received
by a beneficiary are generally given the same tax treatment the participant
would have received if distribution had been made to the participant.
If there is an insufficient distribution in any year, a 50% tax may be imposed
on the amount by which the minimum required to be distributed exceeds the amount
actually distributed. Failure to have distributions made as the Code and
Treasury Regulations require may result in plan disqualification.
The Code imposes a 15% excise tax on a participant's aggregate excess
distributions from all tax-favored retirement plans. The excise tax is in
addition to the ordinary income tax due, but is reduced by the amount (if any)
of the early distribution penalty tax imposed by the Code. This tax is
temporarily suspended for distributions
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to the participant for the years 1997, 1998 and 1999. However, the excise tax
continues to apply for estate tax purposes. In certain cases the estate tax
imposed on a deceased participant's estate will be increased if the accumulated
value of the participant's interest in tax-favored retirement plans is
excessive. The aggregate accumulations will be subject to excise tax in 1997 if
they exceed the present value of a hypothetical life annuity paying $160,000 a
year.
Spousal Requirements
In the case of many corporate and Keogh plans, if a participant is married at
the time benefit payments become payable, unless the participant elects
otherwise with written consent of the spouse, the benefit must be paid in the
form of a qualified joint and survivor annuity (QJSA). A QJSA is an annuity
payable for the life of the participant with a survivor annuity for the life of
the spouse in an amount which is not less than one-half of the amount payable to
the participant during his or her lifetime. In addition, most loans require that
a married participant's beneficiary must be the spouse, unless the spouse
consents in writing to the designation of a different beneficiary.
CERTAIN RULES APPLICABLE TO PLAN LOANS
The following are Federal tax and ERISA rules that apply to loan provisions of
all employer plans. Employer plans may have additional restrictions. Employers
and participants should review these matters with their own tax advisers before
requesting a loan. There will not generally be any tax liability with respect to
properly made loans in accordance with an employer plan. A loan may be in
violation of applicable provisions unless it complies with the following
conditions:
o With respect to specific loans made by the plan to a plan participant, the
loan administrator determines the interest rate, the maximum term and all
other terms and conditions of the loan.
o In general, the term of the loan cannot exceed five years unless the loan is
used to acquire the participant's primary residence.
o All principal and interest must be amortized in substantially level payments
over the term of the loan, with payments being made at least quarterly.
o The amount of a loan to a participant, when aggregated with all other loans
to the participant from all qualified plans of the employer, cannot exceed
the greater of $10,000 or 50% of the participant's non-forfeitable accrued
benefits, and cannot exceed $50,000 in any event. This $50,000 limit is
reduced by the excess (if any) of the highest outstanding loan balance over
the previous twelve months over the outstanding balance of plan loans on the
date the loan was made.
o For loans made prior to January 1, 1987 and not renewed, modified,
renegotiated or extended after December 31, 1986 the $50,000 maximum
aggregate loan balance is not required to be reduced, the quarterly
amortization requirement does not apply, and the term of a loan may exceed
five years if used to purchase the principal residence of the participant or
a member of his or her family, as defined in the Code.
o Only 50% of the participant's vested account balance may serve as security
for a loan. To the extent that a participant borrows an amount which should
be secured by more than 50% of the participant's vested account balance, it
is the responsibility of the trustee or plan administrator to obtain the
additional security.
o Loans must be available to all plan participants, former participants who
still have account balances under the plan, beneficiaries and alternate
payees on a reasonably equivalent basis.
o Each new or renewed loan must bear a reasonable rate of interest
commensurate with the interest rates charged by persons in the business of
lending money for loans that would be made under similar circumstances.
o Many plans provide that the participant's spouse must consent in writing to
the loan.
o Except to the extent permitted in accordance with the terms of a prohibited
transaction exemption issued by DOL, loans are not available (i) in a Keogh
(non-corporate plan to an owner-employee or a partner who owns more than 10%
of a partnership or (ii) to 5% shareholders in an S corporation.
o If the loan does not qualify under the conditions above, the participant
fails to repay the interest or principal when due, or in some instances, if
the participant separates from service or the plan is terminated, the amount
borrowed or not repaid may be treated as a distribution. The participant may
be required to include as ordinary income the unpaid amount due and a 10%
penalty tax on early distributions may apply. The plan should report the
amount of the unpaid loan balance to the IRS as a distribution. See "Tax
Aspects of Distributions From a Plan" in this Section.
o The loan requirements and provisions of RIA shall apply regardless of the
plan administrator's guidelines.
IMPACT OF TAXES TO EQUITABLE LIFE
Under existing Federal income tax law, no taxes are payable on investment income
and capital gains of the Funds that are applied to increase the reserves under
the Contracts. Accordingly, Equitable Life does not anticipate that it will
incur any Federal income tax liability attributable to income allocated to the
variable annuity contracts participating in the Investment Funds and it does not
currently impose a charge for Federal income tax on this income when it computes
Unit values for the Investment Funds. If changes in Federal tax laws or
interpretations thereof would result in Equitable Life being taxed, then
Equitable Life may impose a charge against the Investment Funds (on some or all
Contracts) to provide for payment of such taxes.
CERTAIN RULES APPLICABLE TO PLANS DESIGNED TO COMPLY WITH SECTION 404(C) OF
ERISA
Section 404(c) of ERISA, and the related DOL regulation, provide that if a plan
participant or beneficiary exercises control over the assets in his or her plan
account, plan fiduciaries will not be liable for any loss that is the direct and
necessary result of the plan participant's or beneficiary's exercise of control.
As a result, if the plan complies
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with Section 404(c) and the DOL regulation thereunder, the plan participant can
make and is responsible for the results of his or her own investment decisions.
Section 404(c) plans must provide, among other things, that a broad range of
investment choices are available to plan participants and beneficiaries and must
provide such plan participants and beneficiaries with enough information to make
informed investment decisions. Compliance with the Section 404(c) regulation is
completely voluntary by the plan sponsor, and the plan sponsor may choose not to
comply with Section 404(c). The RIA Program provides employer plans with the
broad range of investment choices and information needed in order to meet the
requirements of the Section 404(c) regulation. If the plan is intended to be a
Section 404(c) plan, it is, however, the plan sponsor's responsibility to see
that the requirements of the DOL regulation are met. Equitable Life and its
Agents shall not be responsible if a plan fails to meet the requirements of
Section 404(c).
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PART VIII -- PARTICIPANT RECORDKEEPING SERVICES (OPTIONAL)
- --------------------------------------------------------------------------------
SERVICES PROVIDED
Under the Participant Recordkeeping Services (PRS) program elected by the
employer or plan trustees, we
o establish an individual participant account for each participant covered by
the employer plan based on data received from the employer or trustees;
o receive and deposit contributions on behalf of participants to individual
participant accounts;
o maintain for the employer records reflecting for each participant in the
employer plan the contributions, transfers, loan transactions, withdrawals
and investment experience and interest accrued, as applicable, on an
individual participant's proportionate values in the employer plan;
o provide to the employer for its individual participants' reports reflecting
the activity in the individual participant's proportionate interest in the
employer plan; and
o process transfers and distributions of the participant's portion of his or
her share of the employer plan assets among the Investment Options as
instructed by the employer.
The employer or plan trustees are responsible for providing Equitable Life with
required information and for complying with our procedures relating to the PRS
program. We will not be liable for errors in recordkeeping if the information
provided by the employer or plan trustee is not provided on a timely basis or is
incorrect.
The plan administrator retains full responsibility for the income tax
withholding and reporting requirements including required notices to the
participants of the employer plan, as set forth in the Code and applicable
Treasury Regulations.
INVESTMENT OPTIONS
The Employer must select the Guaranteed Interest Account when PRS is elected.
FEES
For this service we charge an annual fee of $25 per active participant paid in
twelve equal monthly installments of $2.08. The fee is deducted from the
individual participant's account at the end of each month by means of a
reduction of Units out of the Investment Options and a cash withdrawal from the
Guaranteed Interest Account. We retain the right to change the fee upon 30 days'
notice to the employer. See PART II -- CHARGES AND FEES.
ENROLLMENT
The employer may enroll for PRS at the time the employer plan is established
with us under RIA or at any time thereafter upon approval by us, at our sole
discretion.
We have summarized the main features of PRS here, and participation in this
aspect of the RIA program is subject to the terms set forth in the participation
agreement (including any separate supplementary agreement) entered into between
us and the employer.
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STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
- --------------------------------------------------------------------------------
PART I-- FUND INFORMATION.............................................. 2
General ............................................................ 2
Restrictions and Requirements of the Bond, Balanced, Common Stock
and Aggressive Stock Funds ....................................... 2
Certain Investments of the Bond Fund ............................... 2
How We Determine the Unit Value .................................... 4
Summary of Unit Values ............................................. 5
Money Market Yield Information ..................................... 9
Brokerage Fees and Charges for Securities Transactions ............. 10
Ongoing Operations Fee ............................................. 11
PART II -- MANAGEMENT FOR THE BOND, BALANCED, COMMON STOCK AND
AGGRESSIVE STOCK FUNDS AND EQUITABLE LIFE .......................... 12
Funds .............................................................. 12
Distribution ....................................................... 12
Equitable Life ..................................................... 12
Directors ........................................................ 12
Officer-Directors ................................................ 13
Other Officers ................................................... 13
PART III-- FINANCIAL STATEMENTS ....................................... 14
Index .............................................................. 14
Financial Statements ............................................... 14
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If you wish to obtain a free copy of the Statement of Additional Information,
send or fax this request form to:
Equitable Life -- RIA Service Office
Attn. SAI Request
200 Plaza Drive
Secaucus, NJ 07094-3689
Tel: (800) 967-4560
(201) 583-2302
(Business Days, 9 A.M. to 5 P.M. Eastern time)
Fax: (201) 583-2304, 2305, or 2306
- --------------------------------------------------------------------------------
Please send me a copy of the Statement of Additional Information for RIA dated
March 10, 1997.
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip Code
- --------------------------------------------------------------------------------
Client Number
41
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================================================================================
[RIA LOGO]
SEPARATE ACCOUNT UNITS OF INTEREST
UNDER GROUP ANNUITY CONTRACTS
<TABLE>
<S> <C> <C>
O MONEY MARKET FUND O GROWTH & INCOME FUND BLENDED FUNDS:
O INTERMEDIATE GOVERNMENT O EQUITY INDEX FUND O CONSERVATIVE INVESTORS FUND
SECURITIES FUND O COMMON STOCK FUND O BALANCED FUND
O BOND FUND O GLOBAL FUND O GROWTH INVESTORS FUND
O QUALITY BOND FUND O INTERNATIONAL FUND
O HIGH YIELD FUND O AGGRESSIVE STOCK FUND
</TABLE>
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
---------------------------------------------------------
RIA SERVICE OFFICE:
Equitable Life
RIA Service Office
200 Plaza Drive
Secaucus, NJ 07094-3689
Tel.: (800) 967-4560
(201) 583-2302
(9 A.M. to 5 P.M. Eastern time)
Fax: (201) 583-2304, 2305, or 2306
(To obtain pre-recorded Fund unit values, use our toll-free number listed above)
ADDRESS FOR CONTRIBUTIONS ONLY:
Equitable Life
RIA/EPP
P.O. Box 13503
Newark, NJ 07188
EXPRESS MAIL ADDRESS FOR CONTRIBUTIONS ONLY:
First Chicago National Processing Center (FCNPC)
300 Harmon Meadow Boulevard
Attn: Box 13503
Secaucus, NJ 07094
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42
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[EQUITABLE - MEMBER OF THE GLOBAL AXA GROUP LOGO]
The Equitable Life Assurance Society of the United States
New York, NY 10104 (212) 554-1234
888-1121 Cat. #12757
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STATEMENT OF ADDITIONAL INFORMATION
MARCH 10, 1997
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SEPARATE ACCOUNT UNITS OF INTEREST UNDER
GROUP ANNUITY CONTRACTS
<TABLE>
<S> <C> <C>
o MONEY MARKET FUND o GROWTH & INCOME FUND BLENDED FUNDS:
o INTERMEDIATE GOVERNMENT o EQUITY INDEX FUND o CONSERVATIVE INVESTORS FUND
SECURITIES FUND o COMMON STOCK FUND o BALANCED FUND
o BOND FUND o GLOBAL FUND o GROWTH INVESTORS FUND
o QUALITY BOND FUND o INTERNATIONAL FUND
o HIGH YIELD FUND o AGGRESSIVE STOCK FUND
</TABLE>
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
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[RIA LOGO]
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TABLE OF CONTENTS
PAGE
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PART I -- FUND INFORMATION .......................................... 2
General........................................................... 2
Restrictions and Requirements of the Bond, Balanced,
Common Stock and Aggressive Stock Funds ........................ 2
Certain Investments of the Bond and Balanced Funds................ 2
How We Determine the Unit Value................................... 4
Summary of Unit Values ........................................... 5
Money Market Yield Information ................................... 9
Brokerage Fees and Charges for Securities Transactions ........... 10
Ongoing Operations Fee ........................................... 11
PART II -- MANAGEMENT FOR THE BOND, BALANCED,
COMMON STOCK AND AGGRESSIVE STOCK FUNDS AND EQUITABLE LIFE.......... 12
Funds ............................................................ 12
Distribution ..................................................... 12
Equitable Life ................................................... 12
Directors......................................................... 12
Officer-Directors ................................................ 13
Other Officers ................................................... 13
PART III -- FINANCIAL STATEMENTS .................................... 14
Index ............................................................ 14
Financial Statements.............................................. 14
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This Statement of Additional Information (SAI) is not a prospectus. It should be
read in conjunction with the prospectus for our Retirement Investment Account
(RIA), dated March 10, 1997 (PROSPECTUS), and any supplements.
Terms defined in the Prospectus have the same meaning in the SAI unless the
context otherwise requires.
You can obtain a copy of the Prospectus, and any supplements to the Prospectus,
from us free of charge by writing or calling the RIA Service Office listed on
the back of this SAI, or by contacting your Equitable Life Agent. Our Home
Office is located at 1290 Avenue of the Americas, New York, N.Y. 10104 (212)
554-1234.
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Copyright 1997 The Equitable Life Assurance Society of the United States.
All rights reserved.
888-1122 (3/97)
Cat. No. 127256
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PART I -- FUND INFORMATION
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GENERAL
In our Prospectus we discuss in more detail, among other things, the structure
of the Bond, Balanced, Common Stock and Aggressive Stock Funds, their investment
objectives and policies, including types of portfolio securities they may hold
and levels of investment risks that may be involved and investment management.
We also summarize certain of these matters with respect to the Investment Funds
and their corresponding Portfolios. See PART I -- RIA SUMMARY AND PART III --
EQUITABLE LIFE AND ITS FUNDS in the Prospectus.
Here we will discuss special restrictions, requirements and transaction expenses
that apply to the Bond, Balanced, Common Stock and Aggressive Stock Funds,
certain investments of the Bond Fund and determination of the value of Units for
all Funds, including some historical information. Investment objectives and
policies, as well as restrictions, requirements and risks pertaining to the
corresponding Portfolios of the Money Market, Intermediate Government
Securities, Quality Bond, High Yield, Growth & Income, Equity Index, Global,
International, Conservative Investors and Growth Investors Funds are found in
the Trust Prospectus and SAI.
RESTRICTIONS AND REQUIREMENTS OF THE BOND, BALANCED, COMMON STOCK AND
AGGRESSIVE STOCK FUNDS
Neither the Common Stock Fund nor the Balanced Fund will make an investment in
an industry if that investment would cause the Fund's holding in that industry
to exceed 25% of the Fund's assets.
The Bond Fund, Common Stock Fund and Aggressive Stock Funds will not purchase or
write puts or calls (options). The Balanced Fund's investment policies do not
prohibit hedging transactions such as through the use of put and call options
and stock index or interest rate futures. However, the Balanced Fund currently
has no plans to enter into such transactions.
The following investment restrictions apply to the Bond, Balanced, Common Stock
and Aggressive Stock Funds. None of those Funds will:
o trade in foreign exchange (except transactions incidental to the settlement
of purchases or sales of securities for a Fund and contracts for the
purchase or sale of a specific foreign currency at a future date at a price
set at the time of the contract);
o make an investment in order to exercise control or management over a
company;
o underwrite the securities of other companies, including purchasing
securities that are restricted under the 1933 Act or rules or regulations
thereunder (restricted securities cannot be sold publicly until they are
registered under the 1933 Act), except as stated below;
o make short sales, except when the Fund has, by reason of ownership of other
securities, the right to obtain securities of equivalent kind and amount
that will be held so long as they are in a short position;
o trade in commodities or commodity contracts (except the Balanced Fund is
not prohibited from entering into hedging transactions through the use of
stock index or interest rate futures);
o purchase real estate or mortgages, except as stated below. The Funds may
buy shares of real estate investment trusts listed on stock exchanges or
reported on NASDAQ;
o have more than 5% of its assets invested in the securities of any one
registered investment company. A Fund may not own more than 3% of a
registered investment company's outstanding voting securities. The Fund's
total holdings of registered investment company securities may not exceed
10% of the value of the Fund's assets;
o purchase any security on margin or borrow money except for short-term
credits necessary for clearance of securities transactions;
o make loans, except loans through the purchase of debt obligations or
through entry into repurchase agreements; or
o invest more than 10% of its total assets in restricted securities, real
estate investments, or portfolio securities not readily marketable.
CERTAIN INVESTMENTS OF THE BOND AND BALANCED FUNDS
The following are brief descriptions of certain types of investments which may
be made by the Bond and Balanced Funds and certain risks and investment
techniques.
MORTGAGE PASS-THROUGH SECURITIES. The Bond and Balanced Funds may invest in
mortgage pass-through securities, which are securities representing interests in
pools of mortgages. Principal and interest payments made on the mortgages in the
pools are passed through to the holder of such securities. Payment of principal
and interest on some mortgage pass-through securities (but not the market value
of the securities themselves) may be
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guaranteed by the full faith and credit of the U.S. Government (in the case of
securities guaranteed by the Government National Mortgage Association, or
"GNMA"), or guaranteed by agencies or instrumentalities of the U.S. Government
(in the case of securities guaranteed by the Federal National Mortgage
Association ("FNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC")
which are supported only by discretionary authority of the U.S. Government to
purchase the agency's obligations). Mortgage pass-through securities created by
non-governmental issuers (such as commercial banks, savings and loan
institutions, private mortgage insurance companies, mortgage bankers, and other
secondary market issuers) may be supported by various forms of insurance or
guarantees, including individual loan, title, pool, and hazard insurance, and
letters of credit, which may be issued by governmental entities, private
insurers or the mortgage poolers.
COLLATERALIZED MORTGAGE OBLIGATIONS. The Bond and Balanced Funds may invest in
collateralized mortgage obligations ("CMOs"). CMOs are debt securities
collateralized by underlying mortgage loans or pools of mortgage pass-through
securities guaranteed by GNMA, FHLMC or FNMA and are generally issued by limited
purpose finance subsidiaries of U.S. Government instrumentalities. CMOs are not,
however, mortgage pass-through securities. Rather, they are pay-through
securities, i.e., securities backed by the cash flow from the underlying
mortgages. Investors in CMOs are not owners of the underlying mortgages, which
serve as collateral for such debt securities, but are simply owners of a debt
security backed by such pledged assets. CMOs are typically structured into
multiple classes, with each class bearing a different stated maturity and having
different payment streams. Monthly payments of principal, including prepayments,
are first returned to investors holding the shortest maturity class; investors
holding longer maturity classes receive principal payments only after the
shorter class or classes have been retired.
ASSET-BACKED SECURITIES. The Bond and Balanced Funds may purchase asset-backed
securities that represent either fractional interests or participation in pools
of leases, retail installment loans or revolving credit receivables held by a
trust or limited purpose finance subsidiary. Such asset-backed securities may be
secured by the underlying assets (such as Certificates for Automobile
Receivables) or may be unsecured (such as Credit Card Receivable Securities).
Depending on the structure of the asset-backed security, monthly or quarterly
payments of principal and interest or interest only are passed-through like
mortgage pass-through securities or paid through (like CMOs) to certificate
holders. Asset-backed securities may be guaranteed up to certain amounts by
guarantees, insurance or letters of credit issued by a financial institution
affiliated or unaffiliated with the originator of the pool.
Underlying automobile sales contracts and credit card receivables are, of
course, subject to prepayment (although to a lesser degree than mortgage
pass-through securities), which may shorten the securities' weighted average
life and reduce their overall return to certificate holders. Certificate holders
may also experience delays in payment if the full amounts due on underlying
loans, leases or receivables are not realized because of unanticipated legal or
administrative costs of enforcing the contracts or because of depreciation or
damage to the collateral (usually automobiles) securing certain contracts, or
other factors. The value of these securities also may change because of changes
in the market's perception of the creditworthiness of the servicing agent for
the pool, the originator of the pool, or the financial institution providing
credit support enhancement for the pool. If consistent with its investment
objective and policies, the Bond and Balanced Funds may invest in other
asset-backed securities that may be developed in the future.
ZERO-COUPON BONDS. The Bond and Balanced Funds may invest in zero-coupon bonds.
Such bonds may be issued directly by agencies and instrumentalities of the U.S.
Government or by private corporations. Zero-coupon bonds may originate as such
or may be created by stripping an outstanding bond. Zero-coupon bonds do not
make regular interest payments. Instead, they are sold at a deep discount from
their face value. Because a zero-coupon bond does not pay current income, its
price can be very volatile when interest rates change.
REPURCHASE AGREEMENTS. In repurchase agreements, the Bond or Balanced Fund buys
securities from a seller, usually a bank or brokerage firm, with the
understanding that the seller will repurchase the securities at a higher price
at a future date. During the term of the repurchase agreement the Fund retains
the securities subject to the repurchase agreement as collateral securing the
seller's repurchase obligation, continually monitors on a daily basis the market
value of the securities subject to the agreement and requires the seller to
deposit with the Fund collateral equal to any amount by which the market value
of the securities subject to the repurchase agreement falls below the resale
amount provided under the repurchase agreement. We evaluate the creditworthiness
of sellers with whom we enter into repurchase agreements. Such transactions
afford an opportunity for the Fund to earn a fixed rate of return on available
cash at minimal market risk, although the Fund may be subject to various delays
and risks of loss if the seller is unable to meet its obligation to repurchase.
The Funds currently treat repurchase agreements maturing in more than seven days
as illiquid securities.
DEBT SECURITIES SUBJECT TO PREPAYMENT RISKS. Mortgage pass-through securities
and certain collateralized mortgage obligations, asset-backed securities and
other debt instruments in which the Balanced Fund may invest are subject to
prepayments prior to their stated maturity. It is usually not possible to
accurately predict the rate at which prepayments will be made, which rate may be
affected, among other things, by changes in generally
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prevailing market interest rates. If prepayments occur, the Fund suffers the
risk that it will not be able to reinvest the proceeds at as high a rate of
interest as it had previously been receiving. Also, the Fund will incur a loss
to the extent that prepayments are made for an amount that is less than the
value at which the security was then being carried by the Fund. Moreover,
securities that may be prepaid tend to increase in value less during times of
declining interest rates, and to decrease in value more during times of
increasing interest rates, than do securities that are not subject to
prepayment.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Bond and Balanced Funds may
purchase and sell securities on a when-issued or delayed delivery basis. In
these transactions, securities are purchased or sold by a Fund with payment and
delivery taking place in the future in order to secure what is considered to be
an advantageous price or yield to the Fund at the time of entering into the
transaction. However, the market value of such securities at the time of
settlement may be more or less than the purchase price then payable. When a Fund
engages in when-issued or delayed delivery transactions, the Fund relies on the
other party to consummate the transaction. Failure to consummate the transaction
may result in the Fund missing the opportunity of obtaining a price or yield
considered to be advantageous. When-issued and delayed delivery transactions are
generally expected to settle within three months from the date the transactions
are entered into, although the Fund may close out its position prior to the
settlement date. A Fund will sell on a forward settlement basis only securities
it owns or has the right to acquire.
FOREIGN CURRENCY FORWARD CONTRACTS. The Balance Fund may enter into contracts
for the purchase or sale of a specific foreign currency at a future date at a
price set at the time of the contract. Generally, such forward contracts will be
for a period of less than three months. The Fund will enter into such forward
contracts for hedging purposes only. These transactions will include forward
purchases or sales of foreign currencies for the purpose of protecting the
dollar value of securities denominated in a foreign currency or protecting the
dollar equivalent of interest or dividends to be paid on such securities.
Forward contracts are traded in the inter-bank market, and not on organized
commodities or securities exchanges. Accordingly, the Fund is dependent upon the
good faith and creditworthiness of the other party to the transaction, as
evaluated by the Fund's manager. To the extent inconsistent with any
restrictions in the SAI concerning the Fund's trading in foreign exchange, this
paragraph will control.
HEDGING TRANSACTIONS. The Balanced Fund may engage in hedging transactions which
are designed to protect against anticipated adverse price movements in
securities owned or intended to be purchased by the Fund. When interest rates go
up, the market value of outstanding debt securities declines and vice versa. In
recent years the volatility of the market for debt securities has increased
significantly, and market prices of longer-term obligations have been subject to
wide fluctuations, particularly as contrasted with those of short-term
instruments. The Fund will take certain risks into consideration when
determining which, if any, options or financial futures contracts it will use.
If the price movements of hedged portfolio securities are in fact favorable to
the Fund, the hedging transactions will tend to reduce and may eliminate the
economic benefit to the Fund which otherwise would result. Also, the price
movements of options and futures used for hedging purposes may not correlate as
anticipated with price movements of the securities being hedged. This can make a
hedge transaction less effective than anticipated and could result in a loss.
The options and futures markets can sometimes become illiquid and the exchanges
on which such instruments are traded may impose trading halts or delays on the
exercise of options and liquidation of futures positions in certain
circumstances. This could in some cases operate to the Fund's detriment.
HOW WE DETERMINE THE UNIT VALUE
In our Prospectus, we discuss how employer plan assets are put into and taken
out of the Funds by the purchase and redemption of Units under the Contracts,
respectively. See PART III -- EQUITABLE LIFE AND ITS FUNDS in the Prospectus.
Here we will discuss how we determine the value of Units.
When contributions are invested in the Funds, the number of Units outstanding
attributable to each Fund is correspondingly increased; and when amounts are
withdrawn from one of these Funds, the number of Units outstanding attributable
to that Fund is correspondingly decreased.
We calculate Unit values at the end of each Business Day. For the Bond,
Balanced, Common Stock and Aggressive Stock Funds, the Unit values reflect
investment performance and investment management and financial accounting fees.
We determine the respective Unit values for these Funds by multiplying the Unit
value for the preceding Business Day by the net investment factor for that
subsequent day. We determine the net investment factor as follows:
o First, we take the value of the Fund's assets at the close of business on
the preceding Business Day.
o Next, we add the investment income and capital gains, realized and
unrealized, that are credited to the assets of the Fund during the Business
Day for which the net investment factor is being determined.
o Then, we subtract the capital losses, realized and unrealized, and
investment management and financial accounting fees charged to the Fund
during that Business Day.
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o Finally, we divide this amount by the value of the Fund's assets at the
close of the preceding Business Day.
Prior to June 1, 1994, for the Bond, Balanced, Common Stock and Aggressive Stock
Funds, the investment management and financial accounting fees were deducted
monthly from employer plan balances in these Funds.
Assets of the Bond, Balanced, Common Stock and Aggressive Stock Funds are valued
as follows:
o Common stocks and other equity-type securities listed on national
securities exchanges and certain over-the-counter issues traded on the
NASDAQ system are valued at the last sale price or, if no sale, at the
latest available bid price. Other unlisted securities reported on the
NASDAQ system are valued at inside (highest) quoted bid prices.
o Foreign securities not traded directly, or in ADR form in the United States
are valued at the last sale price in the local currency on an exchange in
the country of origin. Foreign currency is converted into dollars at
current exchange rates.
o United States Treasury securities and other obligations issued or
guaranteed by the United States Government, its agencies or
instrumentalities are valued at representative quoted prices.
o Long-term (i.e., maturing in more than a year) publicly traded corporate
bonds are valued at prices obtained from a bond pricing service of a major
dealer in bonds when such prices are available; however, in circumstances
where it is deemed appropriate to do so, an over-the-counter or exchange
quotation may be used.
o Short-term debt securities maturing in 60 days or less are valued at
amortized cost, which approximates market value. Short-term debt securities
maturing in more than 60 days are valued at representative quoted prices.
The Funds can acquire short-term debt securities directly or through the
acquisition of units in our Separate Account No. 2A. See PART III --
EQUITABLE LIFE AND ITS FUNDS in the Prospectus.
o Convertible preferred stocks listed on national securities exchanges are
valued as of their last sale price or, if there is no last sale, at the
latest available bid price.
o Convertible bonds and unlisted convertible preferred stocks are valued at
bid prices obtained from one or more major dealers in such securities;
where there is a discrepancy between dealers, values may be adjusted based
on recent premium spreads to the underlying common stock.
o The unit value of Separate Account No. 2A is calculated each day the New
York Stock Exchange is open for trading by dividing (i) the value of the
portfolio securities and other assets of Separate Account No. 2A at the
close of the business on that day (before giving effect to amounts
contributed or withdrawn during that day), by (ii) the total number of
units outstanding at the close of business on the preceding day. Separate
Account No. 2A invests in short-term securities which mature in 60 days or
less from the date of purchase or are subject to a repurchase agreement
requiring repurchase in 60 days or less. The assets of Separate Account No.
2A are valued as described with respect to the Separate Accounts.
The Unit value for an Investment Fund of Separate Account No. 51 for any
Business Day (together with any preceding non-Business Days (VALUATION PERIOD)
is equal to the Unit value for the preceding Valuation Period multiplied by the
net investment factor for that Investment Fund for that Valuation Period. The
net investment factor for a Valuation Period is
(a\b) - c
where
a is the value of the Investment Fund's shares of the corresponding Portfolio
at the end of the Valuation Period before giving effect to any amounts
allocated to or withdrawn from the Investment Fund for the Valuation
Period. For this purpose, we use the share value reported to us by the
Trust. This share value is after deduction for investment advisory fees and
other expenses of the Trust.
b is the value of the Investment Fund's shares of the corresponding Portfolio
at the end of the preceding Valuation Period (after any amounts are
allocated or withdrawn for that Valuation Period).
c is the daily factor for the Separate Account Administrative Charge
multiplied by the number of calendar days in the Valuation Period.
Our investment officers and the Trust's investment adviser determine in good
faith the fair value of securities and other assets that do not have a readily
available market price in accordance with accepted accounting practices and
applicable laws and regulations.
See PART III -- EQUITABLE LIFE AND ITS FUNDS in the Prospectus.
SUMMARY OF UNIT VALUES
All of the Funds were established by us pursuant to the New York Insurance Law.
The Bond, Balanced, Common Stock and Aggressive Stock Funds were established in
1981, 1979, 1969 and 1969, respectively. We show in the tables below the Unit
values of these Funds on the last Business Day of each year since each Fund
began operations. However, Units in the Funds were not made available under RIA
until subsequent dates.
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Prior to June 1, 1994, the Unit values quoted for the Bond, Balanced, Common
Stock and Aggressive Stock Funds did not reflect the deduction of the Investment
Management and Financial Accounting Fee. That fee was assessed by reducing the
number of Units that the employer plan had in these Funds. The Unit values shown
for the periods included in the following table through the last business day of
December, 1993 reflect the actual performance of the Funds before the Investment
Management and Financial Accounting Fee had been reflected in their computation.
The Investment Management and Financial Accounting Fee is reflected in Unit
values beginning with the last business day of 1994.
We established the Growth Investors, Conservative Investors and Global Investors
Funds as Investment Funds of Separate Account No. 51 in 1993. The Money Market,
Intermediate Government Securities, Quality Bond, High Yield, Growth & Income
and Equity Index Funds were established as Investment Funds of Separate Account
No. 51 in 1994 and the International Fund was established on September 1, 1995.
The tables below set forth the Unit values as of the end of each year since each
Fund began operations.
See GENERAL in this SAI. In computing the Unit values, no provisions have been
made for the effect of taxes on income and gains or upon distribution.
THE UNIT VALUES REFLECT THOSE CHARGES AND FEES AS DESCRIBED IN THE RIA
PROSPECTUS UNDER PART II. ALSO DESCRIBED IN PART II ARE CHARGES AND FEES WHICH
ARE PAID BY THE REDUCTION OF THE NUMBER OF UNITS CREDITED TO AN EMPLOYER PLAN
UNDER RIA.
The following Unit values are provided to demonstrate the changes for the period
shown.
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BOND FUND
(SEPARATE ACCOUNT NO. 13 -- POOLED)
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Last Business Last Business
Day of Fund Day of Fund
December Unit Value December Unit Value
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1981 $11.11 1989 $29.59
1982 14.18 1990 32.07
1983 15.15 1991 36.89
1984 17.36 1992 39.31
1985 20.85 1993 43.14
1986 23.85 1994 42.35*
1987 24.35 1995 48.91*
1988 25.99 1996 50.26*
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BALANCED FUND
(SEPARATE ACCOUNT NO. 10 -- POOLED)
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Last Business Last Business
Day of Fund Day of Fund
December Unit Value December Unit Value
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1979 $11.17 1988 $ 43.14
1980 16.32 1989 54.84
1981 15.41 1990 54.75
1982 22.32 1991 77.72
1983 26.13 1992 75.90
1984 26.74 1993 85.85
1985 33.66 1994 78.77*
1986 39.31 1995 94.86*
1987 37.40 1996 105.62*
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* The 1994, 1995 and 1996 Unit values reflect the deduction of the Investment
Management and Financial Accounting Fee.
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COMMON STOCK FUND
(SEPARATE ACCOUNT NO. 4 -- POOLED)
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Last Business Last Business
Day of Fund Day of Fund
December Unit Value December Unit Value
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1969 $15.47 1983 $ 78.26
1970 15.87 1984 76.85
1971 20.18 1985 102.00
1972 25.40 1986 116.67
1973 23.46 1987 123.90
1974 17.06 1988 145.61
1975 21.94 1989 211.73
1976 26.01 1990 188.63
1977 23.79 1991 288.23
1978 26.56 1992 293.22
1979 35.21 1993 353.07
1980 52.91 1994 346.92*
1981 51.22 1995 457.41*
1982 64.94 1996 538.54*
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AGGRESSIVE STOCK FUND
(SEPARATE ACCOUNT NO. 3 -- POOLED)
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Last Business Last Business
Day of Fund Day of Fund
December Unit Value December Unit Value
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1969 $ 8.69 1983 $ 36.05
1970 7.26 1984 32.41
1971 8.63 1985 38.45
1972 9.73 1986 39.27
1973 7.07 1987 38.53
1974 4.72 1988 39.48
1975 6.71 1989 58.31
1976 7.91 1990 63.79
1977 7.52 1991 120.00
1978 8.95 1992 116.98
1979 14.66 1993 135.42
1980 23.81 1994 129.95*
1981 20.76 1995 170.67*
1982 27.45 1996 209.06*
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*The 1994, 1995 and 1996 Unit values reflect the deduction of the Investment
Management and Financial Accounting Fee.
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MONEY MARKET FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
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1994 $102.65
1995 108.49
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INTERMEDIATE GOVERNMENT SECURITIES FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
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1994 $ 98.94
1995 112.07
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QUALITY BOND FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
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1994 $ 99.83
1995 116.76
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HIGH YIELD FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
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1994 $ 98.99
1995 118.64
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GROWTH & INCOME FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
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1994 $ 99.81
1995 123.78
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EQUITY INDEX FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
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1994 $101.71
1995 138.75
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GLOBAL FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
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1994 $ 99.84
1995 118.56
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INTERNATIONAL FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
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1995 $104.60
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CONSERVATIVE INVESTORS FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
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1994 $ 99.83
1995 120.14
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GROWTH INVESTORS FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
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1994 $ 99.52
1995 125.70
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MONEY MARKET YIELD INFORMATION
The Money Market Fund calculates yield information for seven-day periods. The
seven-day current yield calculation is based on a hypothetical employer plan
with one Unit at the beginning of the period. To determine the seven-day rate of
return, the net change in the Unit value is computed by subtracting the Unit
value at the beginning of the period from a Unit value, exclusive of capital
changes, at the end of the period.
The net change is then reduced by the average Ongoing Operations Fee factor
(explained below). This reduction is made to recognize the deduction of the
Ongoing Operations Fee which is not reflected in the Unit value. See ONGOING
OPERATIONS FEE IN PART II -- CHARGES AND FEES of the prospectus. Accumulation
Unit Values reflect all other accrued expenses of the Money Market Fund.
The adjusted net change is divided by the Unit value at the beginning of the
period to obtain the adjusted base period rate of return. This seven-day
adjusted base period return is then multiplied by 365/7 to produce an annualized
seven-day current yield figure carried to the nearest one-hundredth of one
percent.
The actual dollar amount of the Ongoing Operations Fee that is deducted from the
Money Market Fund will vary for each employer plan depending upon how the plan's
balance is allocated among the Investment Options. To determine the effect of
the Ongoing Operations Fee on the yield, we start with the total dollar amount
of the fees deducted from the Fund on the last Business Day of the prior month.
This amount is multiplied by 7/30.417 to produce an average Ongoing Operations
Fee factor which is used in all weekly yield computations for the ensuing
quarter. The average Ongoing Operations Fee factor and the Separate Account
Administrative Charge is then divided by the number of Money Market Fund Units
as of the end of the prior month, and the resulting quotient is deducted from
the net change in Unit value for the seven-day period.
The effective yield is obtained by modifying the current yield to give effect to
the compounding nature of the Money Market Fund's investments, as follows: the
unannualized adjusted base period return is compounded by adding one to the
adjusted base period return, raising the sum to a power equal to 365 divided by
7, and subtracting one from the result, i.e., effective yield = (base period
return + 1) 365/7-1.
The Money Market Fund yield will fluctuate daily. Accordingly, yields for any
given period are not necessarily representative of future results. In addition,
the value of Units of the Money Market Fund will fluctuate and not remain
constant.
The Money Market Fund yield reflects charges that are not normally reflected in
the yields of other investments and therefore may be lower when compared with
yields of other investments. Money Market Fund yields should not be compared to
the return on fixed rate investments which guarantee rates of interest for
specified periods, such as the Guaranteed Interest Account or bank deposits. The
yield should not be compared to the yield of money market funds made available
to the general public because their yields usually are calculated on the basis
of a constant $1 price per share and they pay earnings in dividends which accrue
on a daily basis.
9
<PAGE>
The Money Market Fund's seven-day current yield for the RIA Contracts was 4.60%
for the period ended December 31, 1995. The effective yield for that period was
4.71%. Because these yields reflect the deduction of the Ongoing Operations Fee
and the Separate Account Administrative Charge, they are lower than the
corresponding yield figures for the Money Market Portfolio which reflect only
the deduction of Trust-level expenses.
BROKERAGE FEES AND CHARGES FOR SECURITIES TRANSACTIONS
We discuss in the Prospectus that we are the investment manager of the Bond,
Balanced, Common Stock and Aggressive Stock Funds. As the investment manager of
these Funds, we invest and reinvest the assets of these Funds in a manner
consistent with the policies described in the Prospectus. In providing these
services we currently use the personnel and facilities of our majority-owned
subsidiary, Alliance, for portfolio selection and transaction services,
including arranging the execution of portfolio transactions. Alliance is also
the investment manager for the Trust. Information on brokerage fees and charges
for securities transactions for the Trust's Portfolios is provided in the Trust
prospectus. See PART III -- EQUITABLE LIFE AND ITS FUNDS -- INVESTMENT
MANAGEMENT in the Prospectus.
The Bond, Balanced, Common Stock and Aggressive Stock Funds are charged for
securities brokers commissions, transfer taxes and other fees and expenses
relating to their operation. Transactions in equity securities for a Fund are
executed primarily through brokers which receive a commission paid by the Fund.
Brokers are selected by Alliance. Alliance seeks to obtain the best price and
execution of all orders placed for the portfolio of the Funds, considering all
the circumstances. If transactions are executed in the over-the-counter market
Alliance will deal with the principal market makers, unless more favorable
prices or better execution is otherwise obtainable. There are occasions on which
portfolio transactions for the Funds may be executed as part of concurrent
authorizations to purchase or sell the same security for certain other accounts
or clients advised by Alliance. Although these concurrent authorizations
potentially can be either advantageous or disadvantageous to the Funds, they are
effected only when it is believed that to do so is in the best interest of the
Funds. When these concurrent authorizations occur, the objective is to allocate
the executions among the accounts or clients in a fair manner.
We try to choose only brokers which we believe will obtain the best prices and
executions on securities transactions. Subject to this general requirement, we
also consider the amount and quality of securities research services provided by
a broker. Typical research services include general economic information and
analyses and specific information on and analyses of companies, industries and
markets. Factors in evaluating research services include the diversity of
sources used by the broker and the broker's experience, analytical ability and
professional stature.
The receipt of research services from brokers tends to reduce our expenses in
managing the Bond, Balanced, Common Stock and Aggressive Stock Funds. This is
taken into account when setting the expense charges. Brokers who provide
research services may charge somewhat higher commissions than those who do not.
However, we will select only brokers whose commissions we believe are reasonable
in all the circumstances.
We periodically evaluate the services provided by brokers and prepare internal
proposals for allocating among those various brokers business for all the
accounts we manage or advise. That evaluation involves consideration of the
overall capacity of the broker to execute transactions, its financial condition,
its past performance and the value of research services provided by the broker
in servicing the various accounts advised or managed by us. Generally, we do not
tell brokers that we will try to allocate a particular amount of business to
them. We do occasionally let brokers know how their performance has been
evaluated.
Research information obtained by us may be used in servicing all clients or
accounts under our management, including our general account. Similarly, not all
research provided by a broker or dealer with which the Funds transact business
will necessarily be used in connection with those Funds.
Transactions for the Bond, Balanced, Common Stock and Aggressive Stock Funds in
the over-the-counter market are normally executed as principal transactions with
a dealer that is a principal market maker in the security, unless a better price
or better execution can be obtained from another source. Under these
circumstances, the Funds pay no commission. Similarly, portfolio transactions in
money market and debt securities will normally be executed through dealers or
underwriters under circumstances where the Fund pays no commission.
When making securities transactions for the Bond, Balanced, Common Stock and
Aggressive Stock Funds that do not involve paying a brokerage commission (such
as the purchase of short-term debt securities), we seek to obtain prompt
execution in an effective manner at the best price. Subject to this general
objective, we may give orders to dealers or underwriters who provide investment
research. None of the Funds will pay a higher price, however, and the fact that
we may benefit from such research is not considered in setting the expense
charges.
In addition to using brokers and dealers to execute portfolio securities
transactions for clients or accounts we manage, we may enter into other types of
business transactions with brokers or dealers. These other transactions will be
unrelated to allocation of the Funds' portfolio transactions.
We own Donaldson, Lufkin & Jenrette Inc. (DLJ). A DLJ subsidiary, Donaldson,
Lufkin & Jenrette Securities Corporation (DLJ SECURITIES CORP.), is one of the
nation's largest investment banking and securities firms. Another DLJ
subsidiary, Autranet, Inc., is a securities broker that markets independently
originated research to institutions. Through the Pershing Division of DLJ
Securities Corp., DLJ supplies correspondent services, including order
execution, securities
10
<PAGE>
clearance and other financial services to numerous independent regional
securities firms and banks.
To the extent permitted by law, and consistent with the Fund transaction
practices discussed in this SAI and the Prospectus, the Bond, Balanced, Common
Stock and Aggressive Stock Funds may engage in securities and other transactions
with the above entities or may invest in shares of the investment companies with
which those entities have affiliations. During 1996, there were no transactions
effected through DLJ subsidiaries and therefore no commissions were paid.
For the years ended December 31, 1996, 1995 and 1994, total brokerage
commissions for Separate Account No. 10 -- Pooled were $931,317, $1,016,342 and
$801,704, respectively; for Separate Account 4 -- Pooled were $5,682,578,
$6,044,623 and $4,738,796, respectively; and for Separate Account No. 3 --
Pooled were $1,268,209, $1,547,073 and $908,990, respectively. For 1996, total
brokerage commissions for Separate Account No. 13 -- Pooled were $0. As of
December 31, 1996, commissions of $821,445, $5,463,647 and $1,242,539 were paid
to brokers providing research services to Separate Account No. 10 -- Pooled,
Separate Account No. 4 -- Pooled and Separate Account No. 3 -- Pooled,
respectively, on portfolio transactions of $452,035,380, $3,287,148,404 and
$553,297,591, respectively.
ONGOING OPERATIONS FEE
We determine the Ongoing Operations Fee based on the combined net balances of an
employer plan in all the Investment Options (including any outstanding loan
balances) at the close of business on the last Business Day of each month. For
employer plans that adopted RIA on or before February 9, 1986, we use the rate
schedule set forth below, and apply it to the employer plan balances at the
close of business on the last Business Day of the following month. For employer
plans that adopted RIA after February 9, 1986 we use the rate schedule set forth
in the Prospectus. See PART II -- CHARGES AND FEES in the Prospectus.
COMBINED BALANCE MONTHLY
OF INVESTMENT OPTIONS RATE
- ----------------------------------------------------------------
First $ 150,000 1/12 of 1.25%
Next $ 350,000 1/12 of 1.00%
Next $ 500,000 1/12 of 0.75%
Next $1,500,000 1/12 of 0.50%
Over $2,500,000 1/12 of 0.25%
11
<PAGE>
- --------------------------------------------------------------------------------
PART II -- MANAGEMENT FOR THE BOND, BALANCED, COMMON
STOCK AND AGGRESSIVE STOCK FUNDS AND EQUITABLE LIFE
- --------------------------------------------------------------------------------
FUNDS
In the Prospectus we give information about us, our Bond, Balanced, Common Stock
and Aggressive Stock Funds and how we, together with Alliance, provide
investment management for the investments and operations of these Funds. See
PART III -- EQUITABLE LIFE AND ITS FUNDS in the Prospectus. The amounts of the
investment management and financial accounting fees we received from employer
plans participating through registered Contracts in the Balanced, Common Stock
and Aggressive Stock Funds in 1996 were $33,735, $64,279 and $26,432,
respectively; in 1995 were $35,578, $55,579 and $20,636, respectively; in 1994
were $36,984, $46,821 and $16,789, respectively. The amount of such fees
received under the Bond Fund in 1996, 1995 and 1994 were $640, $455 and $219,
respectively.
DISTRIBUTION
EQ Financial Services, Inc. (EQ FINANCIAL) performs all sales functions for the
Separate Accounts and may be deemed to be their principal underwriter under the
1940 Act and is also the principal underwriter of the Trust. EQ Financial is
registered with the SEC as a broker-dealer under the Securities Exchange Act of
1934 (EXCHANGE ACT) and is a member of the National Association of Securities
Dealers, Inc. EQ Financial's principal business address is 1755 Broadway, New
York, New York 10019. The contracts are distributed through Equitable's Agents
who are registered representatives of EQ Financial.
EQUITABLE LIFE
We are managed by a Board of Directors. See PART III -- EQUITABLE LIFE AND ITS
FUNDS in the Prospectus. Our Directors, certain of our executive officers and
their principal occupations are set forth below.
- --------------------------------------------------------------------------------
DIRECTORS
Name Principal Occupation
- --------------------------------------------------------------------------------
Claude Bebear Chairman and Chief Executive Officer, AXA
Christopher Brocksom Chief Executive Officer, AXA Equity and
Law Life Assurance Society
Francoise Colloc'h Executive Vice President -- Culture -- Management
-- Communications, AXA
Henri de Castries Executive Vice President -- Finance, AXA
Joseph L. Dionne Chairman and Chief Executive Officer,
The McGraw-Hill Companies
William T. Esrey Chairman and Chief Executive Officer,
Sprint Corporation
Jean-Rene Fourtou Chairman and Chief Executive Officer,
Rhone-Poulenc, S.A.
Norman C. Francis President, Xavier University of Louisiana
Donald J. Greene Counselor-at-Law, Partner,
LeBoeuf, Lamb, Greene & MacRae
John T. Hartley Retired Chairman and Chief Executive Officer,
Harris Corporation
John H. F. Haskell, Jr. Director and Managing Director,
Dillon, Read & Co., Inc.
Mary R. (Nina) Henderson President, CPC International, Inc.
(1993 to present)
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, L.P.
12
<PAGE>
Unless otherwise indicated, the following persons have been involved in the
management of Equitable Life in various executive positions during the last five
years.
- --------------------------------------------------------------------------------
OFFICER-DIRECTORS
Name Principal Occupation
- --------------------------------------------------------------------------------
James M. Benson President and Chief Executive Officer;
prior thereto, President, Management
Compensation Group
William T. McCaffrey Senior Executive Vice President and
Chief Operating Officer
Joseph P. Melone President and Chief Executive Officer,
The Equitable Companies Incorporated;
Chairman of the Board, Equitable Life
- --------------------------------------------------------------------------------
OTHER OFFICERS
Name Principal Occupation
- --------------------------------------------------------------------------------
Stanley B. Tulin Senior Executive Vice President and
Chief Financial Officer; prior thereto, Chairman,
Insurance Consulting and Actuarial Practise,
Coopers & Lybrand
Robert E. Garber Executive Vice President and General Counsel
Peter D. Noris Executive Vice President and Chief Investment
Officer; prior thereto, Vice President/Manager
Insurance Company Investment Strategies Group,
Salomon Brothers, Inc.
Jose Suquet Executive Vice President and Chief Agency Officer
Gordon G. Dinsmore Senior Vice President
Alvin H. Fenichel Senior Vice President and Controller
Kevin R. Byrne Vice President and Treasurer
Paul J. Flora Senior Vice President and Auditor
Pauline Sherman Vice President, Secretary and
Associate General Counsel
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
PART III -- FINANCIAL STATEMENTS
INDEX
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SEPARATE ACCOUNT NOS. 13
(POOLED), 10 (POOLED), 4 (POOLED) Report of Independent Accountants -- ............................................. FSA-1
AND 3 (POOLED)
- ------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Statement of Assets and Liabilities, December 31, 1996............................ FSA-2
NO. 13 (POOLED) Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1996 and 1995............................................ FSA-3
Portfolio of Investments, December 31, 1996....................................... FSA-4
- ------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Statement of Assets and Liabilities, December 31, 1996............................ FSA-6
NO. 10 (POOLED) Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1996 and 1995............................................ FSA-7
Portfolio of Investments, December 31, 1996....................................... FSA-8
- ------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Statement of Assets and Liabilities, December 31, 1996............................ FSA-24
NO. 4 (POOLED) Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1996 and 1995............................................ FSA-25
Portfolio of Investments, December 31, 1996....................................... FSA-26
- ------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT Statement of Assets and Liabilities, December 31, 1996............................ FSA-30
NO. 3 (POOLED) Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1996 and 1995............................................ FSA-31
Portfolio of Investments, December 31, 1996....................................... FSA-32
- ------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NOS. 13 Notes to Financial Statements..................................................... FSA-36
(POOLED), 10 (POOLED), 4 (POOLED)
AND 3 (POOLED)
- ------------------------------------------------------------------------------------------------------------------------------------
THE EQUITABLE LIFE ASSURANCE Report of Independent Accountants -- ............................................. F-1
SOCIETY OF THE UNITED STATES Consolidated Balance Sheets as of December 31, 1996 and 1995 ..................... F-2
Consolidated Statements of Earnings for the Years Ended
December 31, 1996, 1995 and 1994 ................................................. F-3
Consolidated Statements of Shareholder's Equity for the Years
Ended December 31, 1996, 1995 and 1994 ........................................... F-4
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994 ................................................. F-5
Notes to Consolidated Financial Statements ....................................... F-6
- ------------------------------------------------------------------------------------------------------------------------------------
The financial statements of the Funds reflect fees, charges and other expenses of the
Separate Accounts applicable to Contracts under RIA as in effect during the periods
covered, as well as the expense charges made in accordance with the terms of all other
contracts participating in the respective Funds.
</TABLE>
14
<PAGE>
================================================================================
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED)
AND 3 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Report of Independent Accountants
- -------------------------------------------------------------------------------
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and the Participants in the
Retirement Investment Account
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and
changes in net assets present fairly, in all material respects, the financial
position of Separate Account Nos. 13, 10, 4 and 3 of The Equitable Life
Assurance Society of the United States ("Equitable Life") at December 31, 1996
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, 1996 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 audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The selected per unit information
(appearing under "Condensed Financial Information" in the prospectus) 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 10, 1997
FSA-1
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 13 (POOLED) (THE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
December 31, 1996
- --------------------------------------------------------------------------------------------------------------
ASSETS:
<S> <C>
Investments (Notes 2 and 3):
Long-term debt securities -- at value (amortized cost: $125,614,004)........................ $126,308,683
Participation in Separate Account No. 2A -- at amortized cost, which
approximates market value, equivalent to 26,290 units at $255.57......................... 6,719,102
Cash ........................................................................................ 57,687
Receivables:
Interest................................................................................... 1,609,187
Other...................................................................................... 17,217
- -------------------------------------------------------------------------------------------------------------
Total assets............................................................................ 134,711,876
- -------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Due to Equitable Life's General Account.................................................... 18,369
Investment management fees payable......................................................... 684
Accrued expenses............................................................................. 22,994
- -------------------------------------------------------------------------------------------------------------
Total liabilities....................................................................... 42,047
- -------------------------------------------------------------------------------------------------------------
NET ASSETS................................................................................... $134,669,829
=============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-2
<PAGE>
===============================================================================
SEPARATE ACCOUNT NO. 13 (POOLED) (THE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
<TABLE>
<CAPTION>
Statements of Operations and Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1996 1995
- -------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
<S> <C> <C>
INVESTMENT INCOME (NOTE 2) -- Interest................................. $ 11,040,900 $ 16,735,643
EXPENSES (NOTE 4)...................................................... (970,909) (1,643,257)
- -------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME.................................................. 10,069,991 15,092,386
- -------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain (loss) from security transactions ....................... (634,764) 12,461,336
- -------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year.................................................... 6,646,163 (2,530,637)
End of year.......................................................... 694,679 6,646,163
- -------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation ........................ (5,951,484) 9,176,800
- -------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ................ (6,586,248) 21,638,136
- -------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations...................... 3,483,743 36,730,522
- -------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions.......................................................... 48,188,476 26,805,952
Withdrawals............................................................ (130,604,690) (159,649,077)
- -------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals... (82,416,214) (132,843,125)
- -------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS ................................................ (78,932,471) (96,112,603)
NET ASSETS -- BEGINNING OF YEAR ....................................... 213,602,300 309,714,903
- -------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR ............................................. $134,669,829 $213,602,300
=============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-3
<PAGE>
===============================================================================
SEPARATE ACCOUNT NO. 13 (POOLED) (THE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- --------------------------------------------------------------------------------
LONG-TERM DEBT SECURIITES:
CREDIT-SENSITIVE
BANKS (7.9%)
Chase Manhattan Corp.
8.625% Sub. Deb., 2002 ...................... $ 5,000,000 $ 5,419,100
CS First Boston
7.75%, 2006 ................................. 5,000,000 5,217,800
-----------
10,636,900
-----------
FINANCIAL SERVICES (15.2%)
Bear Stearns Co.
6.75%, 2001 ................................ 5,000,000 5,011,850
Ford Motor Credit Co.
6.125%, 2006 ............................... 4,400,000 4,131,336
Merrill Lynch & Co., Inc.
8.0%, 2002 ................................. 4,525,000 4,775,776
Morgan Stanley Group, Inc.
5.625%, 1999 ............................... 6,650,000 6,564,348
-----------
20,483,310
-----------
INSURANCE (3.7%)
Prudential Insurance Co. of America
6.875%, 2003 ............................... 5,000,000 4,945,550
-----------
MORTGAGE RELATED (7.9%)
Citibank Credit Card Master Trust
Zero Coupon, 2003 .......................... 6,000,000 4,616,220
Premier Auto Trust
7.15% Series 95-5, 1999 .................... 6,000,000 6,045,000
-----------
10,661,220
-----------
U.S. GOVERNMENT (56.6%)
U.S. Treasury:
6.375% Note, 1999 .......................... 19,765,000 19,937,944
7.75% Note, 1999 ........................... 25,135,000 26,281,784
5.625% Note, 2001 .......................... 12,000,000 11,763,756
5.75% Note, 2003 ........................... 14,700,000 14,259,000
6.5% Note, 2005 ............................ 4,000,000 4,027,500
-----------
76,269,984
-----------
TOTAL CREDIT-SENSITIVE (91.3%) ................ 122,996,964
-----------
TECHNOLOGY
TELECOMMUNICATIONS (2.5%)
Compania Telecom Chile
7.625%, 2006 ............................... 3,230,000 3,311,719
-----------
TOTAL TECHNOLOGY (2.5%) ....................... 3,311,719
-----------
TOTAL LONG-TERM DEBT SECURITIES (93.8%)
(Amortized Cost $125,614,004) .............. 126,308,683
-----------
FSA-4
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 13 (POOLED) (THE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Concluded)
- -------------------------------------------------------------------------------
VALUE
(NOTE 3)
- -------------------------------------------------------------------------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 26,290 units
at $255.57 each (5.0%)....................................... $ 6,719,102
------------
TOTAL INVESTMENTS (98.8%)
(Amortized Cost $132,333,106)................................ 133,027,785
CASH AND RECEIVABLES LESS LIABILITIES (1.2%)................... 1,642,044
============
NET ASSETS (100.0%)............................................ $134,669,829
============
See Notes to Financial Statements.
FSA-5
<PAGE>
===============================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
December 31, 1996
- --------------------------------------------------------------------------------------------------------------
ASSETS:
Investments (Notes 2 and 3):
<S> <C>
Common stocks -- at value (cost: $129,934,036)........................................... $150,745,399
Preferred stocks -- at value (cost: $1,439,770).......................................... 2,015,395
Long-term debt securities -- at value (amortized cost: $139,089,406)..................... 141,817,397
Participation in Separate Account No. 2A -- at amortized cost, which
approximates market value, equivalent to 88,051 units at $255.57....................... 22,503,485
Cash ...................................................................................... 55,995
Receivables:
Interest................................................................................. 1,847,704
Securities sold.......................................................................... 487,633
Dividends................................................................................ 205,847
- --------------------------------------------------------------------------------------------------------------
Total assets........................................................................... 319,678,855
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Securities purchased..................................................................... 1,316,198
Due to Equitable Life's General Account.................................................. 4,989,608
Investment management fees payable....................................................... 3,279
Accrued expenses............................................................................ 219,440
- --------------------------------------------------------------------------------------------------------------
Total liabilities...................................................................... 6,528,525
- --------------------------------------------------------------------------------------------------------------
NET ASSETS.................................................................................. $313,150,330
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-6
<PAGE>
===============================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
<TABLE>
<CAPTION>
Statements of Operations and Changes in Net Assets
- ---------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1996 1995
- ---------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
<S> <C> <C>
Interest................................................................ $ 9,820,381 $ 11,113,819
Dividends (net of foreign taxes withheld --
1996: $115,641 and 1995: $6,516)..................................... 2,417,609 3,014,441
- ---------------------------------------------------------------------------------------------------------------
Total................................................................... 12,237,990 14,128,260
EXPENSES (NOTE 4)....................................................... (4,691,514) (5,349,200)
- ---------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME................................................... 7,546,476 8,779,060
- ---------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from security and foreign currency transactions........... 35,223,719 16,986,767
- ---------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments and
foreign currency transactions:
Beginning of year.................................................... 34,125,491 (8,178,659)
End of year.......................................................... 24,115,275 34,125,491
- ---------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation.......................... (10,010,216) 42,304,150
- ---------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS......................... 25,213,503 59,290,917
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations....................... 32,759,979 68,069,977
- ---------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions........................................................... 68,031,967 65,614,609
Withdrawals............................................................. (161,825,766) (153,764,130)
- ---------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals.... (93,793,799) (88,149,521)
DECREASE IN NET ASSETS.................................................. (61,033,820) (20,079,544)
NET ASSETS -- BEGINNING OF YEAR......................................... 374,184,150 394,263,694
===============================================================================================================
NET ASSET -- END OF YEAR................................................ $313,150,330 $374,184,150
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-7
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- -------------------------------------------------------------------------------
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS (0.8%)
Akzo Nobel N.V ................................ 2,740 $ 374,072
Bayer AG ...................................... 10,600 430,186
Freeport-McMoran, Inc. ........................ 21,600 693,900
Holliday Chemical Holdings PLC ................ 46,500 97,981
Monsanto Co. .................................. 16,000 622,000
Olin Corp. .................................... 3,650 137,331
Toagosei Co. Ltd. ............................. 9,000 31,863
UBE Industries Ltd. ........................... 15,000 42,483
-----------
2,429,816
-----------
CHEMICALS -- SPECIALTY (0.2%)
Crompton & Knowles Corp. ...................... 8,600 165,550
Cytec Industries, Inc.* ....................... 8,900 361,563
NGK Insulators ................................ 7,000 66,488
-----------
593,601
-----------
METALS & MINING (0.4%)
Century Aluminum Co. .......................... 7,100 122,475
Gibraltar Steel Corp.* ........................ 5,500 144,375
Kaiser Aluminum Corp.* ........................ 7,000 81,375
Mitsubishi Materials Corp. .................... 12,000 48,493
Nippon Light Metal Co. ........................ 16,000 65,763
Pechiney SA (A Shares) ........................ 2,759 115,603
Reynolds Metals Co. ........................... 9,300 524,288
Steel Dynamics, Inc.* ......................... 6,800 130,050
Western Mining Corp. Ltd. ..................... 23,022 145,111
-----------
1,377,533
-----------
PAPER (0.1%)
UPM-Kymmene Oy ................................ 6,510 136,653
Fletcher Forestry Shares ...................... 18,000 30,158
-----------
166,811
-----------
STEEL (0.3%)
NKK Corp.* .................................... 50,000 112,685
Nippon Steel Corp. ............................ 43,000 126,984
Nisshin Steel Co. Ltd. ........................ 77,000 206,778
Pohang Iron & Steel Co. Ltd. (ADR) ............ 4,000 81,000
Tokyo Steel Manufacturing Co. Ltd. ............ 19,000 270,702
Usinor Sacilor ................................ 10,000 145,514
-----------
943,663
-----------
TOTAL BASIC MATERIALS (1.8%) .................. 5,511,424
-----------
FSA-8
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.8%)
Culligan Water Technologies, Inc.* .................. 3,000 $ 121,500
Philip Environmental, Inc.* ......................... 8,700 126,150
Republic Industries, Inc.* .......................... 7,100 221,431
Superior Services, Inc.* ............................ 1,300 26,488
United States Filter Corp.* ......................... 4,000 127,000
United Waste Systems, Inc.* ......................... 4,000 137,500
USA Waste Services, Inc.* ........................... 42,000 1,338,750
WMX Technologies, Inc. .............................. 15,000 489,375
----------
2,588,194
----------
PRINTING, PUBLISHING & BROADCASTING (1.5%)
British Sky Broadcasting Group PLC .................. 22,400 200,309
Cablevision Systems Corp. (Class A)* ................ 22,000 673,750
Dainippon Printing Co. Ltd. ......................... 11,000 192,816
Evergreen Media Corp. (Class A)* .................... 8,200 205,000
EZ Communications, Inc. (Class A)* .................. 2,200 80,575
Liberty Media Group (Class A)* ...................... 3,900 111,394
New York Times Co. .................................. 21,800 828,400
Pearson PLC ......................................... 13,300 170,767
Reed International .................................. 15,720 296,633
Reuters Holdings .................................... 24,900 320,561
Schibsted ASA ....................................... 3,160 58,314
Sinclair Broadcast Group, Inc.* ..................... 3,000 78,000
Singapore Press Holdings ............................ 11,000 216,966
Television Broadcasts Ltd. .......................... 31,000 123,847
Time Warner, Inc. ................................... 10,050 376,875
Universal Outdoor Holdings, Inc.* ................... 2,800 65,800
Viacom, Inc. (Class B)* ............................. 20,722 722,680
----------
4,722,687
----------
PROFESSIONAL SERVICES (0.5%)
Adecco SA ........................................... 375 94,135
Ceridian Corp.* ..................................... 18,400 745,200
Equity Corporation International* ................... 3,300 66,000
Ha-Lo Industries, Inc.* ............................. 8,375 230,313
Interim Services, Inc.* ............................. 2,000 71,000
ISS International Service System A/S (Class B)* ..... 5,150 135,594
Telespectrum Worldwide, Inc.* ....................... 8,600 136,525
----------
1,478,767
----------
TRUCKING, SHIPPING (0.2%)
Bergesen Dy AS (A Shares) ........................... 9,450 231,529
Kamigumi Co. Ltd. ................................... 11,000 72,187
Mayne Nickless Ltd. ................................. 12,000 82,029
Nippon Express Co. Ltd. ............................. 15,000 102,841
Toyo Kanetsu ........................................ 13,000 45,126
Unitor ASA* ......................................... 1,950 25,113
----------
558,825
----------
TOTAL BUSINESS SERVICES (3.0%) ...................... 9,348,473
----------
FSA-9
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
CAPITAL GOODS
AEROSPACE (0.5%)
Boeing Co. ........................................ 5,100 $ 542,513
British Aerospace ................................. 10,500 230,241
General Electric Co. PLC .......................... 34,200 223,806
Swire Pacific Ltd. (Class A) ...................... 11,000 104,887
United Technologies Corp. ......................... 7,800 514,800
----------
1,616,247
----------
BUILDING & CONSTRUCTION (0.5%)
American Standard Companies, Inc.* ................ 13,400 512,550
Bouygues .......................................... 2,239 232,164
Daito Trust Construction Co. ...................... 12,978 144,561
GTM Entrepose ..................................... 2,231 103,197
Maeda Road Construction Co. ....................... 5,000 57,852
Matsushita Electric Works Ltd. .................... 14,000 120,525
National House Industrial Co. ..................... 10,000 132,976
Shimizu Corp. ..................................... 13,000 97,099
Wimpey (George) PLC ............................... 90,900 196,987
----------
1,597,911
----------
BUILDING MATERIALS & FOREST PRODUCTS (0.5%)
BPB Industries PLC ................................ 14,600 95,917
Buckeye Cellulose Corp.* .......................... 2,700 71,887
Hepworth PLC ...................................... 15,300 66,443
Hughes Supply, Inc. ............................... 2,800 120,750
Louisiana Pacific Corp. ........................... 8,900 188,013
Martin Marietta Materials, Inc. ................... 30,000 697,500
Rugby Group PLC ................................... 75,300 122,547
Stora Kopparbergs (Series B) ...................... 14,300 195,023
----------
1,558,080
----------
ELECTRICAL EQUIPMENT (0.7%)
Alcatel Alsthom ................................... 530 42,576
General Electric Co. .............................. 20,900 2,066,488
Sumitomo Electric Industries ...................... 11,000 153,873
----------
2,262,937
----------
MACHINERY (0.5%)
Amano Corp. ....................................... 14,000 149,901
Daifuku Co., Inc. ................................. 11,000 138,675
Furukawa Co., Ltd. ................................ 20,000 67,352
Ishikawajima Harima Heavy Industries .............. 17,000 75,598
KSB AG-Vorzug ..................................... 1,000 155,966
Legris Industries ................................. 4,390 184,873
Mitsubishi Heavy Industries Ltd. .................. 19,000 150,937
Siebe PLC ......................................... 13,000 240,965
TI Group PLC ...................................... 27,100 270,194
----------
1,434,461
----------
TOTAL CAPITAL GOODS (2.7%) ........................ 8,469,636
----------
FSA-10
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
CONSUMER CYCLICALS
AIRLINES (0.4%)
Lufthansa AG .................................... 15,000 $ 202,560
Mesa Airline, Inc.* ............................. 8,300 56,025
Northwest Airlines Corp. (Class A)* ............. 20,400 798,150
Qantas Airways Ltd. ............................. 17,000 28,376
Singapore Airlines Ltd. ......................... 3,000 27,228
----------
1,112,339
----------
APPAREL, TEXTILE (0.9%)
Designer Holdings Ltd.* ......................... 5,800 93,525
Kuraray Co. Ltd. ................................ 20,000 184,785
Mohawk Industries, Inc.* ........................ 5,600 123,200
Nine West Group, Inc.* .......................... 4,700 217,963
Polymer Group, Inc.* ............................ 5,600 77,700
Reebok International Ltd. ....................... 45,500 1,911,000
Stage Stores, Inc.* ............................. 4,900 89,424
Tommy Hilfiger Corp.* ........................... 3,200 153,600
Warnaco Group, Inc. (Class A) ................... 3,900 115,537
----------
2,966,734
----------
AUTO-RELATED (0.2%)
Asahi Glass Co. Ltd. ............................ 26,000 244,711
Magneti Marelli Spa* ............................ 45,500 56,542
Miller Industries, Inc.* ........................ 4,050 81,000
Sumitomo Rubber Industries, Inc. ................ 10,000 74,519
Team Rental Group, Inc.* ........................ 9,500 153,188
----------
609,960
----------
AUTOS & TRUCKS (0.3%)
Bajaj Auto Ltd. (GDR) ........................... 6,500 171,438
Honda Motor Corp. ............................... 5,000 142,906
Toyota Motor Corp. .............................. 22,000 632,588
Volkswagen AG* .................................. 260 107,714
----------
1,054,646
----------
FOOD SERVICES, LODGING (0.9%)
Brinker International, Inc.* .................... 47,500 760,000
Compass Group PLC* .............................. 16,900 178,775
Doubletree Corp.* ............................... 4,380 197,100
Host Marriott Corp.* ............................ 27,900 446,400
Innkeepers USA Trust ............................ 7,500 104,063
Interstate Hotels Co.* .......................... 5,100 144,075
La Quinta Motor Inns, Inc. ...................... 45,400 868,275
Suburban Lodges of America, Inc.* ............... 5,500 88,000
----------
2,786,688
----------
HOUSEHOLD FURNITURE, APPLIANCES (1.0%)
Electrolux B .................................... 1,770 102,786
First Brands Corp. .............................. 21,200 601,550
Industrie Natuzzi (ADR) ......................... 3,400 78,200
Matsushita Electric Industrial Co. .............. 20,000 326,397
Sunbeam Corp. ................................... 78,700 2,026,525
----------
3,135,458
----------
FSA-11
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
LEISURE-RELATED (1.2%)
Carnival Corp. ................................. 2,500 $ 82,500
Cyrk, Inc.* .................................... 56,500 734,500
Disney (Walt) Co. .............................. 23,733 1,652,410
Harman International Industries, Inc. .......... 3,100 172,438
Ladbroke Group PLC ............................. 66,800 264,345
Learning Company, Inc.* ........................ 2,800 40,250
Rank Group PLC ................................. 39,800 296,930
Resorts World BHD .............................. 36,000 163,928
Salomon SA ..................................... 1,700 145,803
Shimano, Inc. .................................. 7,000 119,074
-----------
3,672,178
-----------
PHOTO & OPTICAL (0.0%)
Fuji Photo Film Co. ............................ 3,000 98,955
-----------
RETAIL -- GENERAL (2.1%)
AutoZone, Inc.* ................................ 75,600 2,079,000
British Airport Author PLC ..................... 31,600 263,362
CompUSA, Inc.* ................................. 65,800 1,357,125
Consolidated Stores Corp.* ..................... 3,250 104,406
Dayton Hudson Corp. ............................ 24,500 961,625
Fingerhut Cos., Inc. ........................... 37,000 453,250
Kingfisher PLC ................................. 9,300 100,610
Kokuyo Co. ..................................... 5,000 123,478
Petco Animal Supplies, Inc.* ................... 5,450 113,088
Sainsbury (J) PLC .............................. 40,600 269,861
Sears PLC ...................................... 127,000 206,686
Vendex International N.V ....................... 5,700 243,676
Woolworths Ltd. ................................ 108,492 261,292
-----------
6,537,459
-----------
TOTAL CONSUMER CYCLICALS (7.0%) ................ 21,974,417
-----------
CONSUMER NONCYCLICALS
BEVERAGES (0.7%)
Bass Breweries ............................. 16,000 225,033
Cadbury Schweppes PLC ...................... 26,600 224,425
Coca-Cola Amatil Ltd. ...................... 12,503 133,666
Coca-Cola Co. .............................. 22,200 1,168,275
Grand Metropolitan ......................... 30,100 236,680
Kirin Brewery Co. .......................... 10,000 98,437
Lion Nathan Ltd. ........................... 33,000 79,087
-----------
2,165,603
-----------
CONTAINERS (0.6%)
Crown Cork & Seal Co., Inc. ................ 26,000 1,413,750
Hub Group, Inc. (Class A)* ................. 4,200 112,350
Schmalbach Lubeca AG* ...................... 970 238,277
-----------
1,764,377
-----------
FSA-12
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
DRUGS (3.7%)
Amgen, Inc.* .................................... 18,000 $ 978,750
Apothekers Cooperatie Opg-CV .................... 2,250 64,688
Astra AB (A Shares) ............................. 5,400 266,864
Biogen, Inc.* ................................... 31,526 1,221,633
Centocor, Inc.* ................................. 41,500 1,483,625
Eisai Co. Ltd. .................................. 7,000 137,812
Geltex Pharmaceuticals, Inc.* ................... 6,100 147,925
Glaxo-Wellcome PLC .............................. 16,000 259,843
Medicis Pharmaceutical Corp. (Class A)* ......... 2,300 101,200
MedImmune, Inc.* ................................ 5,000 85,000
Merck & Co., Inc. ............................... 23,300 1,846,525
Novartis AG* .................................... 656 751,325
Orion-Yhtymae Oy (B Shares) ..................... 6,710 258,347
Pfizer, Inc. .................................... 21,400 1,773,525
Revco D.S., Inc.* ............................... 10,300 381,100
Sankyo Co. ...................................... 2,000 56,645
Smithkline Beecham PLC .......................... 17,800 246,842
Santen Pharmaceutical Co. ....................... 4,000 82,894
Taisho Pharmaceutical Co. ....................... 6,000 141,439
Takeda Chemical Industries ...................... 5,000 104,913
Yamanouchi Pharmaceutical ....................... 12,000 246,611
United Natural Foods, Inc.* ..................... 5,700 96,900
Warner-Lambert Co. .............................. 10,100 757,500
-----------
11,491,906
-----------
FOODS (1.0%)
Campbell Soup Co. ............................... 13,350 1,071,338
CSM N.V.* ....................................... 1,000 55,535
House Foods Industry ............................ 5,000 80,736
Nabisco Holdings Corp. (Class A) ................ 26,920 1,046,515
Nestle AG ....................................... 335 359,653
Orkla A/S 'A', .................................. 1,890 132,090
Suedzucker AG ................................... 460 224,500
Viscofan Envoltura .............................. 1,200 17,575
Yakult Honsha Co. ............................... 9,000 93,256
Yamakazi Baking Co. ............................. 5,000 79,871
-----------
3,161,069
-----------
HOSPITAL SUPPLIES & SERVICES (1.8%)
Columbia/HCA Healthcare Corp. ................... 41,500 1,691,125
Compdent Corp.* ................................. 2,700 95,175
Coventry Corp.* ................................. 8,100 75,052
Enterprise Systems, Inc.* ....................... 5,700 133,950
Medtronic, Inc. ................................. 13,200 897,600
National Surgery Centers, Inc.* ................. 3,100 117,800
Oxford Health Plans, Inc.* ...................... 15,400 901,863
Pacificare Health Systems, Inc. (Class B)* ...... 5,500 468,875
Rotech Medical Corp.* ........................... 5,100 107,100
Steris Corp.* ................................... 23,224 1,010,244
-----------
5,498,784
-----------
FSA-13
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
RETAIL -- FOOD (0.3%)
Delhaize Freres .................................. 1,870 $ 111,192
Ito Yokado Co. Ltd. .............................. 3,000 130,559
Kesko* ........................................... 2,900 40,940
Seven-Eleven Japan Ltd. .......................... 9,000 526,898
Tesco PLC ........................................ 7,600 46,154
-----------
855,743
-----------
SOAPS & TOILETRIES (0.9%)
Colgate Palmolive Co. ............................ 13,600 1,254,600
Gillette Corp. ................................... 16,500 1,282,875
KAO Corp. ........................................ 16,000 186,512
Shiseido Co. ..................................... 12,000 138,848
-----------
2,862,835
-----------
TOBACCO (0.9%)
BAT Industries ................................... 18,900 156,869
Hanjaya Mandala Sampoerna ........................ 46,000 245,385
Japan Tobacco, Inc. .............................. 22 149,124
Philip Morris Cos., Inc. ......................... 22,410 2,523,926
Tabacalera SA .................................... 3,420 147,368
-----------
3,222,672
-----------
TOTAL CONSUMER NONCYCLICALS (9.9%) ............... 31,022,989
-----------
CREDIT-SENSITIVE
BANKS (1.7%)
AMMB Holdings BHD ................................ 14,000 117,521
Banco Santander SA ............................... 1,980 126,833
Bangkok Bank Public Co. .......................... 4,000 38,681
Bank of Tokyo-Mitsubishi Bank .................... 14,000 259,908
Barclays Bank .................................... 25,500 437,059
Chase Manhattan Corp. ............................ 2,000 178,500
Chiba Bank ....................................... 12,000 81,858
Den Danske Bank .................................. 3,600 290,467
First Union Corp. ................................ 27,800 2,057,200
Kredietbank ...................................... 420 137,785
Malayan Banking Berhad ........................... 10,000 110,869
Mitsui Trust & Banking Co. ....................... 38,000 296,952
National Westminster Bank* ....................... 18,500 217,251
Overseas Chinese Bank ............................ 14,600 181,548
Overseas Union Bank Ltd. ......................... 19,000 146,645
Philippine Commercial International Bank ......... 1,000 13,118
Sparbanken Sverige AB (Shares A) ................. 4,300 73,777
Sparekassen Bikuben A/S* ......................... 1,700 79,700
State Bank of India (GDR)* ....................... 7,000 101,500
Thai Farmers Bank Public Co. ..................... 22,000 137,253
Thai Farmers Bank Public Co.-- Warrants* ......... 750 205
Tokai Bank ....................................... 17,000 177,619
-----------
5,262,249
-----------
FSA-14
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (2.8%)
Aames Financial Corp. ............................. 2,900 $ 104,038
American Express Co. .............................. 30,700 1,734,550
Beneficial Corp. .................................. 5,750 364,406
Daiwa Securities Co. Ltd. ......................... 6,000 53,363
Dean Witter Discover & Co. ........................ 27,900 1,848,375
Hambrecht & Quist Group* .......................... 4,900 105,963
Incentive AB (B Shares)* .......................... 770 55,894
Industrial Credit & Investment Corp. (GDR)* ....... 8,000 78,000
ING Groep N.V ..................................... 11,300 406,595
Japan Securities Finance Co. ...................... 16,000 186,512
MBNA Corp. ........................................ 43,900 1,821,850
Merrill Lynch & Co., Inc. ......................... 15,300 1,246,950
Nikko Securities Co. .............................. 15,000 111,907
Nomura Securities Co. ............................. 15,000 225,369
Oxford Resources Corp. (Class A)* ................. 5,300 163,638
RAC Financial Group, Inc.* ........................ 3,600 76,050
Union Acceptance Corp. (Class A)* ................. 7,300 129,575
----------
8,713,035
----------
INSURANCE (2.5%)
AMEV N.V .......................................... 11,430 400,032
Assurances Generales de France .................... 8,470 273,436
Baloise Holdings .................................. 120 241,165
Istituto Naz Delle Assicurazioni .................. 145,800 189,931
ITT Hartford Group, Inc. .......................... 700 47,250
Life Re Corp. ..................................... 32,500 1,255,313
MGIC Investment Corp. ............................. 9,500 722,000
Mitsui Marine & Fire Insurance Co. ................ 21,000 112,970
PennCorp Financial Group, Inc. .................... 25,800 928,800
PMI Group, Inc. ................................... 2,600 143,975
TIG Holdings, Inc. ................................ 25,500 863,813
Travelers Group, Inc. ............................. 54,899 2,491,042
Sumitomo Marine & Fire Insurance Co. .............. 17,000 105,690
United Assurance Group PLC ........................ 20,200 166,275
----------
7,941,692
----------
REAL ESTATE (0.3%)
Hysan Development Co. Ltd. ........................ 14,000 55,750
Hysan Development Co. Ltd. -- Warrants* ........... 850 769
JP Realty, Inc. ................................... 3,500 90,563
Macerich Co. ...................................... 3,400 88,825
New World Development Co. ......................... 9,000 60,799
Sefimeg ........................................... 1,500 108,702
Societe des Immeubles de France SA ................ 1,561 92,062
Simco S.A ......................................... 1,145 99,968
Sumitomo Realty & Development Co. ................. 19,000 119,765
Unibail S.A ....................................... 1,550 154,149
Union Immobiliere de France ....................... 1,230 100,396
Wharf Holdings .................................... 15,000 74,859
----------
1,046,607
----------
FSA-15
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
UTILITY -- ELECTRIC (0.7%)
Cinergy Corp. .................................. 10,500 $ 350,438
FPL Group, Inc. ................................ 16,700 768,200
Korea Electric Power (ADR) ..................... 5,000 102,500
Malakoff BHD* .................................. 16,000 78,559
Manila Electric Co. ............................ 13,000 106,274
National Grid Group PLC ........................ 78,500 262,905
Tokyo Electric Power Co., Inc. ................. 7,000 153,527
Veba AG ........................................ 7,000 402,586
-----------
2,224,989
-----------
UTILITY -- GAS (0.2%)
Anglian Water PLC .............................. 21,700 219,328
Hong Kong & China Gas Co. ...................... 27,400 52,961
Hong Kong & China Gas Co.-- Warrants* .......... 2,700 1,501
Osaka Gas Co. .................................. 33,000 90,329
Tokyo Gas Co. .................................. 70,000 189,794
-----------
553,913
-----------
UTILITY -- TELEPHONE (0.4%)
British Telecommunications ..................... 31,100 210,179
Frontier Corp. ................................. 8,500 192,313
LCI International, Inc.* ....................... 9,000 193,500
Telecom Corp. of New Zealand ................... 28,000 142,917
Telecom Italia Spa ............................. 99,900 259,485
WorldCom, Inc.* ................................ 8,000 208,500
-----------
1,206,894
-----------
TOTAL CREDIT-SENSITIVE (8.6%) .................. 26,949,379
-----------
ENERGY
COAL & GAS PIPELINES (0.2%)
Nabors Industries, Inc.* ....................... 33,000 635,250
-----------
OIL -- DOMESTIC (1.2%)
Apache Corp. ................................... 22,500 795,938
Costilla Energy, Inc.* ......................... 11,900 162,138
Louis Dreyfus Natural Gas Corp.* ............... 62,900 1,077,163
Louisiana Land & Exploration Co. ............... 7,300 391,463
KCS Energy, Inc. ............................... 3,300 117,975
Tom Brown, Inc.* ............................... 27,500 574,063
Ultramar Diamond Shamrock Corp. ................ 2,764 87,412
Union Pacific Resources Group, Inc. ............ 13,974 408,740
-----------
3,614,892
-----------
OIL -- INTERNATIONAL (1.2%)
British Petroleum Co. PLC ...................... 31,600 379,208
Elf Aquitaine .................................. 3,770 343,176
ENI Spa ........................................ 45,500 233,518
Exxon Corp. .................................... 19,800 1,940,400
Mitsubishi Oil Co. ............................. 18,000 107,711
Repsol SA ...................................... 4,250 163,147
Shell Transport & Trading Co.* ................. 9,800 169,814
Tatneft (ADR)* ................................. 800 38,400
Total Compagnie Francaise ...................... 5,173 420,739
-----------
3,796,113
-----------
FSA-16
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
OIL -- SUPPLIES & CONSTRUCTION (1.6%)
BJ Services Co.* ................................ 17,700 $ 902,700
Baker Hughes, Inc. .............................. 35,600 1,228,200
Halliburton Co. ................................. 5,000 301,250
Noble Drilling Corp.* ........................... 18,000 357,750
Parker Drilling Co.* ............................ 10,700 102,988
Rowan Cos., Inc.* ............................... 8,600 194,575
Saipem Spa* ..................................... 24,100 110,897
Schlumberger, Ltd. .............................. 7,900 789,013
Transocean Offshore, Inc. ....................... 18,300 1,146,037
-----------
5,133,410
-----------
RAILROADS (1.1%)
Burlington Northern Santa Fe .................... 12,000 1,036,500
Canadian Pacific Ltd. ........................... 32,000 848,000
East Japan Railway Co. .......................... 41 184,449
Genesee & Wyoming, Inc. (Class A)* .............. 4,200 145,950
Guangshen Railway Co. Ltd. (ADR)* ............... 4,000 82,500
Union Pacific Corp. ............................. 16,500 992,063
-----------
3,289,462
-----------
TOTAL ENERGY (5.3%) ............................. 16,469,127
-----------
TECHNOLOGY
ELECTRONICS (4.4%)
Advanced Semiconductor Engineering (GDR)* ....... 6,060 57,570
Altera Corp.* ................................... 24,100 1,751,769
BMC Industries, Inc. ............................ 6,300 198,450
Cisco Systems, Inc.* ............................ 43,300 2,754,963
Exabyte Corp.* .................................. 6,500 86,938
Hirose Electric Co. Ltd. ........................ 5,000 289,699
HMT Technology Corp.* ........................... 4,800 72,075
Hoya Corp. ...................................... 9,000 353,596
IDT Corp.* ...................................... 6,200 68,200
Insight Enterprises, Inc.* ...................... 2,600 72,800
Intel Corp. ..................................... 15,600 2,042,625
Intergraph Corp.* ............................... 15,000 153,750
Kandenko Co. Ltd. ............................... 9,000 85,485
Kent Electronics Corp.* ......................... 4,300 110,725
Kyocera Corp. ................................... 2,000 124,687
National Semiconductor Corp.* ................... 3,000 73,125
Network General Corp.* .......................... 3,700 111,925
Rohm Co. Ltd. ................................... 9,000 590,623
Seagate Technology, Inc.* ....................... 20,600 813,700
SGS-Thomson Microelectronics N.V.* .............. 650 45,977
Systemsoft Corp.* ............................... 5,500 81,813
TDK Corp. ....................................... 7,000 456,351
Teradyne, Inc.* ................................. 5,000 121,875
Texas Instruments, Inc. ......................... 2,750 175,313
Uniphase Corp.* ................................. 1,700 89,250
Ushio, Inc.* .................................... 13,000 141,439
Westell Technologies, Inc.* ..................... 3,300 75,488
Yamatake-Honeywell Co. .......................... 7,000 113,030
3Com Corp.* ..................................... 35,850 2,630,494
3D Labs, Inc. Ltd.* ............................. 2,600 59,800
-----------
13,803,535
-----------
FSA-17
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
OFFICE EQUIPMENT (0.6%)
Applix, Inc.* ...................................... 4,200 $ 91,875
Canon, Inc. ........................................ 14,000 309,472
Compaq Computer Corp.* ............................. 13,670 1,014,998
Read-Rite Corp.* ................................... 5,700 143,925
Sterling Software, Inc.* ........................... 10,200 322,575
Storage Technology Corp.* .......................... 3,000 142,875
-----------
2,025,720
-----------
OFFICE EQUIPMENT SERVICES (2.4%)
Comverse Technology, Inc.* ......................... 7,800 294,938
Electronic Data Systems Corp. ...................... 12,900 557,925
First Data Corp. ................................... 24,400 890,600
Informix Corp.* .................................... 98,500 2,006,938
Microsoft Corp.* ................................... 12,200 1,008,025
Oracle Corp.* ...................................... 54,200 2,262,850
Premisys Communications, Inc.* ..................... 2,000 67,500
Sterling Commerce, Inc.* ........................... 13,265 467,590
Structural Dynamics Research Corp. (Class A)* ...... 4,000 80,000
-----------
7,636,366
-----------
TELECOMMUNICATIONS (1.3%)
Act Networks, Inc.* ................................ 2,600 94,900
Asia Satellite Telecommunications Holdings Ltd.* ... 4,000 9,282
Cable Design Technologies* ......................... 3,000 93,375
Comnet Cellular, Inc.* ............................. 3,300 91,987
DDI Corp. .......................................... 113 747,414
Deutsche Telekom AG* ............................... 3,810 79,478
ICG Communications, Inc.* .......................... 5,000 88,125
Korea Mobile Telecommunications Corp. (ADR) ........ 20,497 263,898
MFS Communications Co., Inc.* ...................... 8,186 446,137
Millicom International Cellular SA* ................ 2,000 64,250
Netscape Communications Corp.* ..................... 14,800 841,750
PT Indosat ......................................... 73,000 216,341
PT Telekomunikasi Indonesia ........................ 60,000 103,513
Scientific Atlanta, Inc. ........................... 25,800 387,000
Telecel-Comunicacoes Pessoai SA* ................... 500 31,935
Vodafone Group ..................................... 40,600 171,445
Winstar Communications, Inc.* ...................... 4,900 102,900
Xircom* ............................................ 4,600 100,050
-----------
3,933,780
-----------
TOTAL TECHNOLOGY (8.7%) ............................ 27,399,401
-----------
DIVERSIFIED
MISCELLANEOUS (1.1%)
Allied Signal, Inc. ................................ 28,700 1,922,900
BTR PLC ............................................ 65,650 319,401
Cie Generale des Eaux .............................. 1,233 152,803
Citic Pacific Ltd. ................................. 23,000 133,519
First Pacific Co. .................................. 75,289 97,828
Hanson PLC ......................................... 91,200 127,331
Tomkins PLC ........................................ 42,100 193,646
U.S. Industries, Inc.* ............................. 19,000 653,125
-----------
TOTAL DIVERSIFIED (1.1%) ........................... 3,600,553
-----------
FSA-18
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (48.1%)
(Cost $129,934,036) .......................... $150,745,399
------------
PREFERRED STOCKS:
BASIC MATERIALS
CHEMICALS (0.1%)
Henkel KGAA* .................................... 5,850 292,348
------------
TOTAL BASIC MATERIALS (0.1%) .................... 292,348
------------
CONSUMER CYCLICALS
APPAREL, TEXTILE (0.0%)
Designer Finance Trust
6.0% Conv. .................................... 2,000 92,500
------------
RETAIL -- GENERAL (0.1%)
Hornbach Holding AG ............................. 2,440 174,422
------------
TOTAL CONSUMER CYCLICALS (0.1%) ................. 266,922
------------
CONSUMER NONCYCLICALS
CONTAINERS (0.0%)
Crown Cork & Seal Co., Inc.
4.5% Conv. .................................... 2,200 114,400
------------
TOTAL CONSUMER NONCYCLICALS (0.0%) .............. 114,400
------------
CREDIT-SENSITIVE
BANKS (0.1%)
First Chicago NBD Corp.
5.75% Conv., Series B ........................ 4,300 388,075
------------
FINANCIAL SERVICES (0.0%)
Money Store
6.5% Conv. .................................... 3,800 104,025
------------
INSURANCE (0.1%)
PennCorp. Financial Group, Inc.
7.0% Conv. .................................... 2,500 148,750
------------
TOTAL CREDIT-SENSITIVE (0.2%) ................... 640,850
------------
TECHNOLOGY
TELECOMMUNICATIONS (0.3%)
MFS Communications Co., Inc.
8.0% Conv. .................................... 5,900 538,375
Nokia Oy Cum .................................... 2,800 162,500
------------
TOTAL TECHNOLOGY (0.3%) ......................... 700,875
------------
TOTAL PREFERRED STOCKS (0.7%)
(Cost $1,439,770) ............................. 2,015,395
------------
FSA-19
<PAGE>
===============================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- -------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- -------------------------------------------------------------------------------
LONG-TERM DEBT SECURITIES:
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.1%)
United Waste Systems, Inc.
4.5% Conv., 2001 ................................ $ 240,000 $ 290,400
----------
PRINTING, PUBLISHING & BROADCASTING (1.6%)
Time Warner Entertainment Co.
8.375%, 2023 .................................... 4,825,000 4,891,923
----------
PROFESSIONAL SERVICES (0.2%)
Career Horizons, Inc.
7.0% Conv., 2002 ................................ 70,000 137,288
Danka Business Systems PLC
6.75% Conv., 2002 ............................... 155,000 209,250
First Financial Management Corp.
5.0% Conv., 1999 ................................ 220,000 369,875
----------
716,413
----------
TOTAL BUSINESS SERVICES (1.9%) ..................... 5,898,736
----------
CAPITAL GOODS
MACHINERY (0.1%)
DII Group, Inc.
6.0% Conv., 2002 ................................ 200,000 190,000
----------
TOTAL CAPITAL GOODS (0.1%) ......................... 190,000
----------
CONSUMER CYCLICALS
APPAREL, TEXTILE (0.1%)
Nine West Group, Inc.
5.5% Conv., 2003 ................................ 305,000 303,474
----------
FOOD SERVICES, LODGING (0.1%)
HFS, Inc.
4.5% Conv., 1999 ................................ 105,000 347,549
----------
RETAIL -- GENERAL (0.1%)
Saks Holdings, Inc.
5.5% Conv., 2006 ................................ 150,000 138,000
----------
TOTAL CONSUMER CYCLICALS (0.3%) .................... 789,023
----------
CONSUMER NONCYCLICALS
DRUGS (0.1%)
MedImmune, Inc.
7.0% Conv. Sub., 2003 ........................... 175,000 188,563
Quintiles Transnational Corp.
4.25% Conv., 2000 ............................... 115,000 120,750
----------
309,313
----------
FSA-20
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- --------------------------------------------------------------------------------
HOSPITAL SUPPLIES & SERVICES (0.2%)
American Medical Response, Inc.
5.25% Conv., 2001 ........................... $ 160,000 $ 172,400
Healthsouth Corp.
5.0% Conv., 2001 ............................ 90,000 186,187
Phycor, Inc.
4.5% Conv., 2003 ............................ 235,000 228,831
Tenet Healthcare Corp.
6.0% Conv., 2005 ............................ 160,000 168,000
-----------
755,418
-----------
TOTAL CONSUMER NONCYCLICALS (0.3%) ............. 1,064,731
-----------
CREDIT-SENSITIVE
BANKS (1.6%)
Sumitomo Bank International
0.75% Conv., 2001 ........................... Yen 26,000,000 237,415
St. George Bank Ltd.
7.15%, 2005 ................................. $ 4,850,000 4,842,337
-----------
5,079,752
-----------
FINANCIAL SERVICES (3.0%)
Aames Financial Corp.
5.5% Conv., 2006 ............................ 130,000 175,663
Bankamerica Capital II
8.0%, 2026 .................................. 5,000,000 5,095,250
Leasing Solutions, Inc.
6.875% Conv., 2003 .......................... 260,000 260,000
Morgan Stanley Group, Inc.
6.5%, 2001 .................................. 4,000,000 3,985,360
-----------
9,516,273
-----------
INSURANCE (2.8%)
Conseco Finance Trust II
8.7%, 2026 .................................. 3,500,000 3,518,095
John Hancock Mutual Life Insurance Co
7.375%, 2024 ................................ 5,000,000 4,819,350
Penn Treaty American Corp.
6.25% Conv., 2003 ........................... 105,000 113,925
-----------
8,451,370
-----------
MORTGAGE-RELATED (10.3%)
Federal Home Loan Mortgage Corp.
7.0%, 2011 .................................. 9,403,034 9,400,101
Federal National Mortgage Association:
6.5%, 2011 .................................. 9,492,908 9,320,850
7.0%, 2026 .................................. 6,632,744 6,489,729
Government National Mortgage Association
7.5%, 2026 .................................. 7,069,998 7,074,417
-----------
32,285,097
-----------
FOREIGN GOVERNMENT (0.7%)
Province of Quebec
7.125%, 2024 ................................ 2,175,000 2,088,740
-----------
FSA-21
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- --------------------------------------------------------------------------------
UTILITY -- GAS (1.3%)
RAS Laffan Liquid Natural Gas
8.294%, 2014 ............................... $ 4,000,000 $ 4,064,860
------------
U.S. GOVERNMENT (21.6%)
U.S. Treasury:
6.375%, 1999 ............................... 20,850,000 21,032,438
5.75%, 2000 ................................ 16,925,000 16,702,859
7.75%, 2000 ................................ 12,250,000 12,820,397
6.25%, 2001 ................................ 5,860,000 5,863,663
5.75%, 2003 ................................ 6,215,000 6,028,550
6.50%, 2005 ................................ 5,225,000 5,260,922
------------
67,708,829
------------
TOTAL CREDIT-SENSITIVE (41.3%) ................ 129,194,921
------------
ENERGY
COAL & GAS PIPELINES (0.0%)
Swift Energy Co.
6.25% Conv., 2006 .......................... 120,000 131,700
------------
OIL -- SUPPLIES & CONSTRUCTION (0.1%)
Seacor Holdings
5.375% Conv. Sub. Notes, 2006 .............. 110,000 127,600
------------
TOTAL ENERGY (0.1%) ........................... 259,300
------------
TECHNOLOGY
ELECTRONICS (1.0%)
Altera Corp.
5.75% Conv. Sub. Note, 2002 ................ 275,000 425,563
Applied Magnetics Corp.:
7.0% Conv., 2006 ........................... 320,000 566,400
7.0% Conv. Euro, 2006 ...................... 60,000 106,200
C-Cube Microsystems, Inc.
5.875% Conv., 2005 ......................... 170,000 220,150
Checkpoint Systems, Inc.
5.25% Conv., 2005 .......................... 75,000 109,594
LSI Logic Corp.
5.5% Conv., 2001 ........................... 135,000 296,325
Plasma & Materials Technologies, Inc.
7.125% Conv., 2001 ......................... 225,000 220,500
Sanmina Corporation
5.5% Conv., 2002 ........................... 240,000 501,900
SCI Systems, Inc.
5.0% Conv., 2006 ........................... 265,000 302,763
S3 Incorporated
5.75% Conv. Sub. Note, 2003 ................ 125,000 136,875
3Com Corp.
10.25% Conv., 2001 ......................... 180,000 397,350
------------
3,283,620
------------
FSA-22
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED) (THE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Concluded)
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS (0.2%)
BBN Corp.
6.0% Conv., 2012 ................................. $ 320,000 $ 310,400
Comverse Technology, Inc.
5.75% Conv. Sub., 2006 ........................... 375,000 388,592
Bay Networks, Inc.
5.25%, 2003 ...................................... 90,000 81,225
------------
780,217
------------
TOTAL TECHNOLOGY (1.2%) ............................. 4,063,837
------------
DIVERSIFIED
MISCELLANEOUS (0.1%)
Thermo Electron Corp.
5.0% Euro Conv., 2001 ............................ 180,000 356,849
------------
TOTAL DIVERSIFIED (0.1%) ............................ 356,849
------------
TOTAL LONG-TERM DEBT SECURITIES (45.3%)
(Amortized Cost $139,089,406) .................... 141,817,397
------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 88,051 units
at $255.57 each (7.2%) ........................... 22,503,485
------------
TOTAL INVESTMENTS (101.3%)
(Cost/Amortized Cost $292,966,697) ............... 317,081,676
LIABILITIES IN EXCESS OF CASH AND RECEIVABLES (-1.3%) (3,931,346)
------------
NET ASSETS (100.0%) ................................. $313,150,330
============
*Non-income producing.
See Notes to Financial Statements.
FSA-23
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED) (THE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
December 31, 1996
- ---------------------------------------------------------------------------------------------------------------
ASSETS:
Investments (Notes 2 and 3):
<S> <C>
Common stocks -- at market value (cost: $1,991,952,527)................................. $2,440,835,888
Preferred stocks -- at market value (cost: $1,742,250).................................. 1,809,000
Long-term debt securities -- at value (amortized cost: $2,863,053)...................... 2,493,750
Participation in Separate Account No. 2A -- at amortized cost, which
approximates market value, equivalent to 85,593 units at $255.57...................... 21,875,326
Cash....................................................................................... 2,419,444
Receivables:
Securities sold......................................................................... 18,681,125
Dividends............................................................................... 474,057
- --------------------------------------------------------------------------------------------------------------
Total assets........................................................................... 2,488,588,590
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Securities purchased.................................................................... 13,390,630
Due to Equitable Life's General Account................................................. 15,548,100
Investment management fees payable...................................................... 7,688
Accrued expenses........................................................................... 475,122
Amount retained by Equitable Life in Separate Account No. 4 (Note 1)....................... 641,292
- --------------------------------------------------------------------------------------------------------------
Total liabilities...................................................................... 30,062,832
- --------------------------------------------------------------------------------------------------------------
NET ASSETS (NOTE 1):
Net assets attributable to participants' accumulations..................................... 2,432,753,839
Reserves and other contract liabilities attributable to annuity benefits................... 25,771,919
- --------------------------------------------------------------------------------------------------------------
NET ASSETS................................................................................. $2,458,525,758
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-24
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED) (THE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
<TABLE>
<CAPTION>
Statements of Operations and Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends (net of foreign taxes withheld -- 1996: $62,998
and 1995: $239,657)............................................... $ 13,755,557 $ 19,610,344
Interest and amortization of premium................................. 292,364 (852,218
- -------------------------------------------------------------------------------------------------------------
Total................................................................ 14,047,921 18,758,126
EXPENSES (NOTE 4).................................................... (18,524,630) (16,007,109
- -------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS)......................................... (4,476,709) 2,751,017
- -------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 2):
Realized gain from security and foreign currency transactions........ 218,176,662 260,870,246
- -------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments and
foreign currency transactions:
Beginning of year................................................. 290,870,386 41,831,973
End of year....................................................... 448,580,808 290,870,386
- -------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation....................... 157,710,422 249,038,413
- -------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS...................... 375,887,084 509,908,659
- -------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations.................... 371,410,375 512,659,676
- -------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions........................................................ 552,427,638 422,289,107
Withdrawals.......................................................... (590,972,941) (474,530,080
- -------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals. (38,545,303) (52,240,973
- -------------------------------------------------------------------------------------------------------------
Decrease in accumulated amount retained by Equitable Life in
Separate Account No. 4 (Note 1)................................... 536,145 113,489
- -------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS............................................... 333,401,217 460,532,192
NET ASSETS -- BEGINNING OF YEAR...................................... 2,125,124,541 1,664,592,349
=============================================================================================================
NET ASSETS -- END OF YEAR............................................ $2,458,525,758 $2,125,124,541
=============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-25
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED) (THE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
COMMON STOCKS:
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (1.7%)
Republic Industries, Inc.* .................... 1,355,000 $ 42,259,063
------------
PRINTING, PUBLISHING & BROADCASTING (0.1%)
Australis Media Ltd. Conv. Note* .............. 25,000,000 2,483,906
------------
PROFESSIONAL SERVICES (0.7%)
Ceridian Corp.* ............................... 170,000 6,885,000
Service Corp. International ................... 360,000 10,080,000
------------
16,965,000
------------
TOTAL BUSINESS SERVICES (2.5%) ................ 61,707,969
------------
CONSUMER CYCLICALS
AIRLINES (6.9%)
America West Airlines, Inc. (Class B)* ........ 1,250,000 19,843,750
Continental Airlines, Inc. (Class B)* ......... 1,300,000 36,725,000
Delta Air Lines, Inc. ......................... 375,000 26,578,125
KLM Royal Dutch Airlines ...................... 230,000 6,411,250
Northwest Airlines Corp. (Class A)* ........... 1,400,000 54,775,000
UAL Corp.* .................................... 400,000 25,000,000
------------
169,333,125
------------
FOOD SERVICES, LODGING (1.2%)
Host Marriott Corp.* .......................... 1,000,000 16,000,000
La Quinta Motor Inns, Inc. .................... 700,000 13,387,500
------------
29,387,500
------------
HOUSEHOLD FURNITURE, APPLIANCES (1.2%)
Industrie Natuzzi (ADR) ....................... 1,000,000 23,000,000
Sunbeam Corp. ................................. 255,800 6,586,850
------------
29,586,850
------------
LEISURE-RELATED (0.3%)
Carnival Corp. ................................ 225,000 7,425,000
------------
RETAIL -- GENERAL (1.6%)
AutoZone, Inc.* ............................... 500,000 13,750,000
CompUSA, Inc.* ................................ 1,200,000 24,750,000
------------
38,500,000
------------
TOTAL CONSUMER CYCLICALS (11.2%) .............. 274,232,475
------------
CONSUMER NONCYCLICALS
DRUGS (1.5%)
Centocor, Inc.* ............................... 750,000 26,812,500
Geltex Pharmaceuticals, Inc.* ................. 210,000 5,092,500
MedImmune, Inc.* .............................. 300,000 5,100,000
------------
37,005,000
------------
FSA-26
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED) (THE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
HOSPITAL SUPPLIES & SERVICES (1.9%)
Columbia/HCA Healthcare Corp. ................. 540,000 $ 22,005,000
Oxford Health Plans, Inc.* .................... 200,000 11,712,500
Saint Jude Medical, Inc.* ..................... 310,000 13,213,750
------------
46,931,250
------------
SOAPS & TOILETRIES (1.0%)
Colgate Palmolive Co. ......................... 275,000 25,368,750
------------
TOBACCO (6.7%)
Loews Corp. ................................... 1,750,000 164,937,500
------------
TOTAL CONSUMER NONCYCLICALS (11.1%) ........... 274,242,500
------------
CREDIT-SENSITIVE
BANKS (1.0%)
First Union Corp. ............................. 320,000 23,680,000
------------
FINANCIAL SERVICES (8.0%)
A.G. Edwards, Inc. ............................ 300,000 10,087,500
Dean Witter Discover & Co. .................... 420,000 27,825,000
Legg Mason, Inc. .............................. 935,000 35,997,500
MBNA Corp. .................................... 900,000 37,350,000
Merrill Lynch & Co., Inc. ..................... 1,000,000 81,500,000
Resource Bancshares Mortgage Group, Inc. ...... 248,800 3,545,400
------------
196,305,400
------------
INSURANCE (11.4%)
CNA Financial Corp.* .......................... 1,700,000 181,900,000
IPC Holdings Ltd. ............................. 207,400 4,640,575
Life Re Corp. ................................. 721,000 27,848,625
NAC Re Corp. .................................. 564,600 19,125,825
PMI Group, Inc. ............................... 12,600 697,725
Travelers Group, Inc. ......................... 1,020,000 46,282,500
------------
280,495,250
------------
UTILITY -- TELEPHONE (7.8%)
Frontier Corp. ................................ 365,000 8,258,125
Telephone & Data Systems, Inc. ................ 4,550,000 164,937,500
WorldCom, Inc.* ............................... 755,000 19,677,188
------------
192,872,813
------------
TOTAL CREDIT-SENSITIVE (28.2%) ................ 693,353,463
------------
ENERGY
COAL & GAS PIPELINES (0.2%)
Nabors Industries, Inc.* ...................... 250,000 4,812,500
------------
OIL -- DOMESTIC (0.5%)
Ultramar Diamond Shamrock Corp. ............... 408,000 12,903,000
------------
OIL -- INTERNATIONAL (0.0%)
Tatneft (ADR)* ................................ 19,000 912,000
------------
FSA-27
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED) (THE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
<TABLE>
<CAPTION>
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------------------------------------
OIL -- SUPPLIES & CONSTRUCTION (8.8%)
<S> <C> <C>
Coflexip*.............................................................. 75,000 $ 1,968,750
Diamond Offshore Drilling, Inc.*....................................... 350,000 19,950,000
ENSCO International, Inc.*............................................. 550,000 26,675,000
Marine Drilling Co., Inc.*............................................. 56,500 1,112,344
Noble Drilling Corp.*.................................................. 1,100,000 21,862,500
Parker Drilling Co.*................................................... 4,900,000 47,162,500
Rowan Cos., Inc.*...................................................... 4,000,000 90,500,000
Transocean Offshore, Inc. ............................................. 110,000 6,888,750
--------------
216,119,844
--------------
TOTAL ENERGY (9.5%).................................................... 234,747,344
--------------
TECHNOLOGY
ELECTRONICS (13.7%)
Applied Materials, Inc.*............................................... 250,000 8,984,375
Cisco Systems, Inc.*................................................... 3,000,000 190,875,000
IDT Corp.*............................................................. 155,000 1,705,000
LSI Logic Corp.*....................................................... 210,000 5,617,500
Seagate Technology, Inc.*.............................................. 2,150,000 84,925,000
Teradyne, Inc.*........................................................ 603,000 14,698,125
3Com Corp.*............................................................ 400,000 29,350,000
--------------
336,155,000
--------------
OFFICE EQUIPMENT (1.7%)
Compaq Computer Corp.*................................................. 400,000 29,700,000
Sterling Software, Inc.*............................................... 376,700 11,913,138
--------------
41,613,138
--------------
OFFICE EQUIPMENT SERVICES (4.5%)
Checkfree Corp.*....................................................... 416,700 7,135,988
Electronic Data Systems Corp. ......................................... 900,000 38,925,000
Informix Corp.*........................................................ 1,150,000 23,431,250
Oracle Corp.*.......................................................... 400,000 16,700,000
Sterling Commerce, Inc.*............................................... 700,000 24,675,000
--------------
110,867,238
--------------
TELECOMMUNICATIONS (16.8%)
American Online, Inc.*................................................. 150,000 4,987,500
American Satellite Network -- Rights*.................................. 70,000 0
Cellular Communications Puerto Rico, Inc.*............................. 482,200 9,523,450
Colt Telecom Group PLC (ADR)*.......................................... 175,000 3,368,750
Deutsche Telekom AG (ADR)*............................................. 1,300,000 26,487,500
DSC Communications Corp.*.............................................. 720,000 12,870,000
MFS Communications Co., Inc.*.......................................... 820,000 44,690,000
Millicom International Cellular S.A.*.................................. 1,775,000 57,021,874
Netscape Communications Corp.*......................................... 400,000 22,750,000
Nokia Corp. (ADR)...................................................... 600,000 34,575,000
Palmer Wireless, Inc.*................................................. 102,000 1,071,000
Rogers Cantel Mobile Communications, Inc. (Class B) (ADR)*............. 1,364,100 26,429,437
Scientific Atlanta, Inc. .............................................. 2,650,400 39,756,000
U.S. Cellular Corp.*................................................... 3,200,000 89,200,000
Vanguard Cellular Systems, Inc. (Class A)*............................. 2,615,000 41,186,250
--------------
413,916,761
--------------
TOTAL TECHNOLOGY (36.7%)............................................... 902,552,137
--------------
</TABLE>
FSA-28
<PAGE>
===============================================================================
SEPARATE ACCOUNT NO. 4 (POOLED) (THE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
<TABLE>
<CAPTION>
Portfolio of Investments -- December 31, 1996 (Concluded)
- --------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TOTAL COMMON STOCKS (99.2%)
(Cost $1,991,952,527)............................................... $2,440,835,888
--------------
PREFERRED STOCKS:
CONSUMER CYCLICALS
AIRLINES (0.1%)
Continental Airlines Financial Trust
8.5% Conv., 2020.................................................... 27,000 1,809,000
--------------
TOTAL CONSUMER CYCLICALS (0.1%)........................................ 1,809,000
--------------
TOTAL PREFERRED STOCKS (0.1%)
(Cost $1,742,250)................................................... 1,809,000
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
LONG-TERM DEBT SECURITIES: AMOUNT
TECHNOLOGY ----------
TELECOMMUNICATIONS (0.1%)
<S> <C> <C>
U.S. Cellular Corp.,
Zero Coupon Conv., 2015............................................. $7,500,000 2,493,750
--------------
TOTAL TECHNOLOGY (0.1%)................................................ 2,493,750
--------------
TOTAL LONG-TERM DEBT SECURITIES (0.1%)
(Amortized Cost $2,863,053)......................................... 2,493,750
--------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 85,593 units
at $255.57 (0.9%) each.............................................. 21,875,326
--------------
TOTAL INVESTMENTS (100.3%)
(Cost/Amortized Cost $2,018,433,156)................................ 2,467,013,964
LIABILITIES IN EXCESS OF CASH AND RECEIVABLES (-0.3%).................. (7,846,914
AMOUNT RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT NO. 4 (0.0%) (Note 1).............................. (641,292
--------------
NET ASSETS (100.0%).................................................... $2,458,525,758
==============
Reserves attributable to participants' accumulations................... $2,432,753,839
Reserves and other contract liabilities attributable to annuity benefits 25,771,919
--------------
NET ASSETS ............................................................ $2,458,525,758
==============
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
FSA-29
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED) (THE AGGRESSIVE STOCK FUND)
of The Equitable Life Assurance Society of the United States
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
- ---------------------------------------------------------------------------------------------------------------
December 31, 1996
- ---------------------------------------------------------------------------------------------------------------
ASSETS:
<S> <C>
Investments (Notes 2 and 3):
Common stocks -- at market value (cost: $373,457,990).................................... $429,928,523
Participation in Separate Account No. 2A -- at amortized cost, which
approximates market value, equivalent to 92,858 units at $255.57....................... 23,732,041
Cash........................................................................................ 29,501
Receivables:
Securities sold.......................................................................... 274,498
Dividends................................................................................ 31,519
- ---------------------------------------------------------------------------------------------------------------
Total assets............................................................................ 453,996,082
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Securities purchased..................................................................... 2,701,994
Due to Equitable Life's General Account.................................................. 7,596,637
Investment management fees payable....................................................... 3,829
Accrued expenses............................................................................ 166,762
- ---------------------------------------------------------------------------------------------------------------
Total liabilities....................................................................... 10,469,222
===============================================================================================================
NET ASSETS.................................................................................. $443,526,860
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-30
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED) (THE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
<TABLE>
<CAPTION>
Statements of Operations and Changes in Net Assets
- ---------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1996 1995
- ---------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
<S> <C> <C>
Dividends (net of foreign taxes withheld -- 1996: $-0- and 1995: $21,522).. $ 888,868 $1,552,241
Interest................................................................... 1,847,954 729,465
- --------------------------------------------------------------------------------------------------------------
Total...................................................................... 2,736,822 2,281,706
EXPENSES (NOTE 4).......................................................... (5,268,842) (4,967,053)
- --------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS........................................................ (2,532,020) (2,685,347)
- --------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from security and foreign currency transactions.............. 83,136,492 75,694,748
- --------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year....................................................... 62,843,978 42,542,366
End of year............................................................. 56,470,533 62,843,978
- --------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation............................. (6,373,445) 20,301,612
- --------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS............................ 76,763,047 95,996,360
- --------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations.......................... 74,231,027 93,311,013
- --------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions.............................................................. 226,778,696 205,540,949
Withdrawals................................................................ (199,186,117) (266,542,005)
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to contributions and
withdrawals................................................................ 27,592,579 (61,001,056)
- --------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS..................................................... 101,823,606 32,309,957
NET ASSETS -- BEGINNING OF YEAR............................................ 341,703,254 309,393,297
- --------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR.................................................. $443,526,860 $341,703,254
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-31
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED) (THE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS -- SPECIALTY (4.5%)
Crompton & Knowles Corp. ........................ 399,100 $ 7,682,675
Cytec Industries, Inc.* ......................... 243,900 9,908,438
IDEXX Laboratories, Inc.* ....................... 64,700 2,329,200
-----------
19,920,313
-----------
METALS & MINING (2.0%)
Cyprus Amax Minerals Co. ........................ 106,700 2,494,112
Kaiser Aluminium Corp.* ......................... 94,100 1,093,913
Titanium Metals Corp.* .......................... 163,600 5,378,350
-----------
8,966,375
-----------
STEEL (2.3%)
AK Steel Holding Corp. .......................... 155,000 6,141,875
Worthington Industries, Inc. .................... 230,400 4,176,000
-----------
10,317,875
-----------
TOTAL BASIC MATERIALS (8.8%) .................... 39,204,563
-----------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (6.9%)
Philip Environmental, Inc.* ..................... 190,700 2,765,150
Republic Industries, Inc.* ...................... 314,700 9,814,706
USA Waste Services, Inc.* ....................... 414,000 13,196,250
Wheelabrator Technologies, Inc. ................. 309,000 5,021,250
-----------
30,797,356
-----------
PRINTING, PUBLISHING & BROADCASTING (4.1%)
Comcast Corp. (Class A) ......................... 602,700 10,735,594
Evergreen Media Corp. (Class A)* ................ 297,400 7,435,000
-----------
18,170,594
-----------
TRUCKING, SHIPPING (1.6%)
Xtra Corp. ...................................... 159,800 6,931,325
-----------
TOTAL BUSINESS SERVICES (12.6%) ................. 55,899,275
-----------
CONSUMER CYCLICALS
AIRLINES (4.0%)
America West Airlines, Inc. (Class B)* .......... 241,400 3,832,225
Continental Airlines Inc. (Class B)* ............ 198,800 5,616,100
Delta Air Lines, Inc. ........................... 66,500 4,713,187
Northwest Airlines Corp. (Class A)* ............. 94,500 3,697,313
-----------
17,858,825
-----------
APPAREL, TEXTILE (8.7%)
Mohawk Industries, Inc.* ........................ 145,100 3,192,200
Nine West Group, Inc.* .......................... 364,100 16,885,138
Polymer Group, Inc.* ............................ 299,000 4,148,625
Shaw Industries, Inc. ........................... 302,900 3,559,075
Tommy Hilfiger Corp.* ........................... 131,800 6,326,400
Unifi, Inc. ..................................... 145,700 4,680,612
-----------
38,792,050
-----------
FSA-32
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED) (THE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
AUTO-RELATED (0.9%)
NAL Financial Group, Inc.* ....................... 400,000 $ 3,850,000
------------
FOOD SERVICES, LODGING (6.5%)
Choice Hotels International, Inc.* ............... 202,700 3,572,588
Doubletree Corp.* ................................ 69,300 3,118,500
Extended Stay America, Inc.* ..................... 184,100 3,705,012
Host Marriott Corp.* ............................. 893,900 14,302,400
La Quinta Motor Inns, Inc. ....................... 76,200 1,457,325
Studio Plus Hotels, Inc.* ........................ 53,200 837,900
Suburban Lodges of America, Inc.* ................ 123,400 1,974,400
------------
28,968,125
------------
HOUSEHOLD FURNITURE, APPLIANCES (2.1%)
Industrie Natuzzi (ADR) .......................... 254,000 5,842,000
Sunbeam Corp. .................................... 138,300 3,561,225
------------
9,403,225
------------
LEISURE-RELATED (5.7%)
Electronic Arts, Inc.* ........................... 88,000 2,634,500
Harman International Industries, Inc. ............ 175,700 9,773,313
Hasbro, Inc. ..................................... 226,900 8,820,737
ITT Corp.* ....................................... 95,200 4,129,300
------------
25,357,850
------------
RETAIL -- GENERAL (3.4%)
AutoZone, Inc.* .................................. 168,500 4,633,750
Circuit City Stores, Inc. ........................ 254,500 7,666,813
Pep Boys Manny Moe & Jack ........................ 80,800 2,484,600
------------
14,785,163
------------
TOTAL CONSUMER CYCLICALS (31.3%) ................. 139,015,238
------------
CONSUMER NONCYCLICALS
DRUGS (3.9%)
Biogen, Inc.* .................................... 192,600 7,463,250
Centocor, Inc.* .................................. 216,400 7,736,300
MedImmune, Inc.* ................................. 120,900 2,055,300
------------
17,254,850
------------
HOSPITAL SUPPLIES & SERVICES (8.0%)
Health Management Association, Inc. (Class A)* ... 173,900 3,912,750
Healthsouth Corp.* ............................... 364,925 14,095,228
Manor Care, Inc. ................................. 202,700 5,472,900
Saint Jude Medical, Inc.* ........................ 284,850 12,141,731
------------
35,622,609
------------
SOAPS & TOILETRIES (1.7%)
Dial Corp. ....................................... 293,200 4,324,700
Estee Lauder Cos. (Class A) ...................... 57,100 2,904,963
------------
7,229,663
------------
TOTAL CONSUMER NONCYCLICALS (13.6%) .............. 60,107,122
------------
FSA-33
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED) (THE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
CREDIT-SENSITIVE
FINANCIAL SERVICES (1.1%)
Aames Financial Corp. ......................... 130,300 $ 4,674,512
-----------
INSURANCE (3.2%)
CNA Financial Corp.* .......................... 132,500 14,177,500
-----------
UTILITY -- TELEPHONE (2.7%)
Telephone & Data Systems, Inc. ................ 336,300 12,190,875
-----------
TOTAL CREDIT-SENSITIVE (7.0%) ................. 31,042,887
-----------
ENERGY
OIL -- DOMESTIC (4.9%)
Oryx Energy Co.* .............................. 245,900 6,086,025
Ultramar Diamond Shamrock Corp. ............... 489,880 15,492,455
-----------
21,578,480
-----------
OIL -- SUPPLIES & CONSTRUCTION (4.6%)
Diamond Offshore Drilling, Inc.* .............. 188,104 10,721,927
Rowan Cos, Inc.* .............................. 442,300 10,007,038
-----------
20,728,965
-----------
TOTAL ENERGY (9.5%) ........................... 42,307,445
-----------
TECHNOLOGY
ELECTRONICS (3.1%)
American Power Conversion Corp.* .............. 22,000 599,500
DT Industries, Inc. ........................... 68,100 2,383,500
Pairgain Technologies, Inc.* .................. 22,600 687,887
Parametric Technology Corp.* .................. 157,600 8,096,700
Xylan Corp.* .................................. 65,900 1,861,675
-----------
13,629,262
-----------
OFFICE EQUIPMENT (2.0%)
Read-Rite Corp.* .............................. 108,300 2,734,575
Storage Technology Corp.* ..................... 73,400 3,495,675
Symantec Corp.* ............................... 175,500 2,544,750
-----------
8,775,000
-----------
OFFICE EQUIPMENT SERVICES (4.2%)
Baan Company N.V.* ............................ 110,000 3,822,500
Fore Systems, Inc.* ........................... 128,500 4,224,437
Informix Corp.* ............................... 165,000 3,361,875
Premisys Communications, Inc.* ................ 104,100 3,513,375
Sterling Commerce, Inc.* ...................... 105,907 3,733,222
-----------
18,655,409
-----------
FSA-34
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED) (THE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
<TABLE>
<CAPTION>
Portfolio of Investments -- December 31, 1996 (Concluded)
- --------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (4.8%)
<S> <C> <C>
American Satellite Network -- Rights*.................................. 9,550 $ 0
Andrew Corp.*.......................................................... 81,900 4,345,819
Glenayre Technologies, Inc.*........................................... 157,600 3,398,250
Millicom International Cellular S.A.*.................................. 153,460 4,929,903
Tellabs, Inc.*......................................................... 79,400 2,987,425
U.S. Cellular Corp.*................................................... 125,700 3,503,887
Vanguard Cellular Systems, Inc. (Class A)*............................. 135,050 2,127,038
------------
21,292,322
------------
TOTAL TECHNOLOGY (14.1%)............................................... 62,351,993
------------
TOTAL COMMON STOCKS (96.9%)
(Cost $373,457,990)................................................. 429,928,523
------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 92,858 units
at $255.57 each (5.4%).............................................. 23,732,041
------------
TOTAL INVESTMENTS (102.3%)
(Cost/Amortized Cost $397,190,031).................................. 453,660,564
LIABILITIES IN EXCESS OF CASH AND RECEIVABLES (-2.3%).................. (10,133,704)
------------
NET ASSETS (100.0%).................................................... $443,526,860
============
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
FSA-35
<PAGE>
================================================================================
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED)
AND 3 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Separate Account Nos. 13 (Pooled) (the Bond Fund), 10 (Pooled) (the Balanced
Fund), 4 (Pooled) (the Common Stock Fund) and 3 (Pooled) (the Aggressive
Stock 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 $641,292 as shown
in the Statement 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 employees, managers and
agents of Equitable Life in Separate Account Nos. 10, 4 and 3 aggregated
$25,996,744 (8.3%), $288,921,270 (11.8%) and $99,049,571 (22.3%),
respectively, at December 31, 1996 and $22,742,258 (6.1%), $246,531,777
(11.6%) and $68,328,503 (20.0%), respectively, at December 31, 1995, 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.
Equitable Life and Alliance seek to obtain the best price and execution of
all orders placed for the portfolios of 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 accordance with GAAP requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from these 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.
Equitable Life's internal short-term investment account, Separate Account No.
2A, was established to provide a more flexible and efficient vehicle to
combine and invest temporary cash positions of certain eligible accounts
(Participating Funds) under Equitable Life's management. Separate Account No.
2A invests in debt securities maturing in sixty days or less from the date of
the acquisition. At December 31, 1996, the amortized cost of investments held
in Separate Account No. 2A consists of the following:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Amortized
Cost %
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial Paper, 5.30% - 6.9% due 01/02/97 through 02/18/97........... $292,301,486 87.9%
Time Deposits, 6.5% due 01/02/97 ...................................... 40,000,000 12.0
-------------------------------------------------------------------------------------------------------
Total Investments...................................................... 332,301,486 99.9
Cash and Receivables Less Liabilities.................................. 175,640 0.1
=======================================================================================================
Net Assets of Separate Account No. 2A.................................. $332,477,126 100.0%
=======================================================================================================
Units Outstanding...................................................... 1,300,905
Unit Value............................................................. $255.57
========================================================================================================
</TABLE>
Participating Funds purchase or redeem units depending on each participating
account's excess cash availability or cash needs to meet its liabilities.
Separate Account No. 2A is not subject to investment management fees.
Short-term debt securities may also be purchased directly by the Funds.
FSA-36
<PAGE>
================================================================================
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED), AND 3 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
For 1996 and 1995, investment security transactions, excluding short-term
debt securities, were as follows:
<TABLE>
<CAPTION>
Separate Account No. 13 Separate Account No. 10
------------------------------ --------------------------------
Cost of Net Proceeds Cost of Net Proceeds
Purchases of Sales Purchases of Sales
------------- ------------- -------------- -------------
Stocks and long-term corporate
debt securities:
<S> <C> <C> <C> <C>
1996....................... $ 55,142,675 $ 63,207,109 $337,043,222 $416,837,259
1995....................... 155,464,426 155,157,632 374,948,659 389,169,100
U.S. Government obligations:
1996....................... $163,410,870 $222,895,782 $226,791,922 $234,990,432
1995....................... 487,651,584 504,632,056 219,815,471 172,433,013
Separate Account No. 4 Separate Account No. 3
------------------------------- --------------------------------
Cost of Net Proceeds Cost of Net Proceeds
Purchases of Sales Purchases of Sales
-------------- -------------- -------------- -------------
Stocks and long-term corporate
debt securities:
1996....................... $2,439,864,229 $2,487,456,851 $450,676,363 $434,241,789
1995....................... 2,037,876,834 2,082,648,235 460,486,634 525,937,180
U.S. Government obligations:
1996....................... -- -- -- --
1995....................... -- -- -- --
</TABLE>
3. Investment securities for the Funds are valued as follows:
Stocks listed on national securities exchanges and certain over-the-counter
issues traded on the National Association of Securities Dealers, Inc.
automated quotation (NASDAQ) national market system are valued at the last
sale price, or, if there is no sale, at the latest available bid price.
Foreign securities not traded directly, or in American Depository Receipt
(ADR) form in the United States, are valued at the last sale price in the
local currency on an exchange in the country of origin. Foreign currency is
converted into its U.S. dollar equivalent at current exchange rates.
United States Treasury securities and other obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities are valued
at representative quoted prices.
Long-term (i.e., maturing in more than a year) publicly-traded corporate
bonds are valued at prices obtained from a bond pricing service of a major
dealer in bonds when such prices are available; however, in circumstances
where Equitable Life and Alliance deem it appropriate to do so, an
over-the-counter or exchange quotation may be used.
Convertible preferred stocks listed on national securities exchanges are
valued at their last sale price or, if there is no sale, at the latest
available bid price.
Convertible bonds and unlisted convertible preferred stocks are valued at bid
prices obtained from one or more major dealers in such securities; where
there is a discrepancy between dealers, values may be adjusted based on
recent premium spreads to the underlying common stock.
Other assets that do not have a readily available market price are valued at
fair value as determined in good faith by Equitable Life's investment
officers.
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 relating to the Funds are deducted in accordance with the
terms of the various contracts which participate in the Funds. These expenses
consist of asset management fees, administrative and sales-related fees, and
operating expenses, as specified in each contract. Depending upon the terms
of a contract, sales related fees and operating expenses are paid (i) by a
reduction of an appropriate number of Fund Units or (ii) by a direct payment.
These charges and fees are recorded as expenses in the accompanying
Statements of Operations and Changes in Net Assets, and as an offsetting
contribution to the Funds from the contract holders. Asset management fee is
deducted in the daily unit values for the Funds.
5. No Federal income tax based on net income or realized and unrealized capital
gains was applicable to contracts participating in the Funds by reason of
applicable provisions of the Internal Revenue Code and no Federal income tax
payable by Equitable Life will affect such contracts. Accordingly, no Federal
income tax provision is required.
FSA-37
<PAGE>
February 10, 1997
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, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of Equitable Life's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 2 to the consolidated financial statements, Equitable Life
changed its methods of accounting for long-duration participating life insurance
contracts and long-lived assets in 1996, for loan impairments in 1995 and for
postemployment benefits in 1994.
/s/ Price Waterhouse LLP
F-1
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value................. $ 18,077.0 $ 15,899.9
Mortgage loans on real estate................................. 3,133.0 3,638.3
Equity real estate............................................ 3,297.5 3,916.2
Policy loans.................................................. 2,196.1 1,976.4
Investment in and loans to affiliates......................... 685.0 636.6
Other equity investments...................................... 597.3 621.1
Other invested assets......................................... 288.7 706.1
----------------- -----------------
Total investments......................................... 28,274.6 27,394.6
Cash and cash equivalents....................................... 538.8 774.7
Deferred policy acquisition costs............................... 3,104.9 3,075.8
Amounts due from discontinued GIC Segment....................... 996.2 2,097.1
Other assets.................................................... 2,552.2 2,718.1
Closed Block assets............................................. 8,495.0 8,582.1
Separate Accounts assets........................................ 29,646.1 24,566.6
----------------- -----------------
TOTAL ASSETS.................................................... $ 73,607.8 $ 69,209.0
================= =================
LIABILITIES
Policyholders' account balances................................. $ 21,865.6 $ 21,911.2
Future policy benefits and other policyholders' liabilities..... 4,416.6 4,007.3
Short-term and long-term debt................................... 1,766.9 1,899.3
Other liabilities............................................... 2,785.1 3,380.7
Closed Block liabilities........................................ 9,091.3 9,221.4
Separate Accounts liabilities................................... 29,598.3 24,531.0
----------------- -----------------
Total liabilities......................................... 69,523.8 64,950.9
----------------- -----------------
Commitments and contingencies (Notes 10, 12, 13, 14 and 15)
SHAREHOLDER'S EQUITY
Common stock, $1.25 par value 2.0 million shares
authorized, issued and outstanding............................ 2.5 2.5
Capital in excess of par value.................................. 3,105.8 3,105.8
Retained earnings............................................... 798.7 788.4
Net unrealized investment gains................................. 189.9 396.5
Minimum pension liability....................................... (12.9) (35.1)
----------------- -----------------
Total shareholder's equity................................ 4,084.0 4,258.1
----------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY...................... $ 73,607.8 $ 69,209.0
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee
income................................................ $ 874.0 $ 788.2 $ 715.0
Premiums................................................ 597.6 606.8 625.6
Net investment income................................... 2,175.9 2,088.2 1,998.6
Investment (losses) gains, net.......................... (9.8) 5.3 91.8
Commissions, fees and other income...................... 1,081.8 897.1 847.4
Contribution from the Closed Block...................... 125.0 143.2 137.0
----------------- ----------------- -----------------
Total revenues.................................... 4,844.5 4,528.8 4,415.4
----------------- ----------------- -----------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances.... 1,270.2 1,248.3 1,201.3
Policyholders' benefits................................. 1,317.7 1,008.6 914.9
Other operating costs and expenses...................... 2,048.0 1,775.8 1,857.7
----------------- ----------------- -----------------
Total benefits and other deductions............... 4,635.9 4,032.7 3,973.9
----------------- ----------------- -----------------
Earnings from continuing operations before Federal
income taxes, minority interest and cumulative
effect of accounting change........................... 208.6 496.1 441.5
Federal income taxes.................................... 9.7 120.5 100.2
Minority interest in net income of consolidated
subsidiaries.......................................... 81.7 62.8 50.4
----------------- ----------------- -----------------
Earnings from continuing operations before
cumulative effect of accounting change................ 117.2 312.8 290.9
Discontinued operations, net of Federal income taxes.... (83.8) - -
Cumulative effect of accounting change, net of Federal
income taxes.......................................... (23.1) - (27.1)
----------------- ----------------- -----------------
Net Earnings............................................ $ 10.3 $ 312.8 $ 263.8
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Common stock, at par value, beginning and end of year......... $ 2.5 $ 2.5 $ 2.5
----------------- ----------------- -----------------
Capital in excess of par value, beginning of year as
previously reported......................................... 2,913.6 2,913.6 2,613.6
Cumulative effect on prior years of retroactive restatement
for accounting change....................................... 192.2 192.2 192.2
----------------- ----------------- -----------------
Capital in excess of par value, beginning of year as restated. 3,105.8 3,105.8 2,805.8
Additional capital in excess of par value..................... - - 300.0
----------------- ----------------- -----------------
Capital in excess of par value, end of year................... 3,105.8 3,105.8 3,105.8
----------------- ----------------- -----------------
Retained earnings, beginning of year as previously reported... 781.6 484.0 217.6
Cumulative effect on prior years of retroactive restatement
for accounting change....................................... 6.8 (8.4) (5.8)
----------------- ----------------- -----------------
Retained earnings, beginning of year as restated.............. 788.4 475.6 211.8
Net earnings.................................................. 10.3 312.8 263.8
----------------- ----------------- -----------------
Retained earnings, end of year................................ 798.7 788.4 475.6
----------------- ----------------- -----------------
Net unrealized investment gains (losses), beginning of year
as previously reported...................................... 338.2 (203.0) 131.9
Cumulative effect on prior years of retroactive restatement
for accounting change....................................... 58.3 (17.5) 12.7
----------------- ----------------- -----------------
Net unrealized investment gains (losses), beginning of
year as restated............................................ 396.5 (220.5) 144.6
Change in unrealized investment (losses) gains................ (206.6) 617.0 (365.1)
----------------- ----------------- -----------------
Net unrealized investment gains (losses), end of year......... 189.9 396.5 (220.5)
----------------- ----------------- -----------------
Minimum pension liability, beginning of year.................. (35.1) (2.7) (15.0)
Change in minimum pension liability........................... 22.2 (32.4) 12.3
----------------- ----------------- -----------------
Minimum pension liability, end of year........................ (12.9) (35.1) (2.7)
----------------- ----------------- -----------------
TOTAL SHAREHOLDER'S EQUITY, END OF YEAR....................... $ 4,084.0 $ 4,258.1 $ 3,360.7
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Net earnings.................................................. $ 10.3 $ 312.8 $ 263.8
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Interest credited to policyholders' account balances........ 1,270.2 1,248.3 1,201.3
Universal life and investment-type policy fee income........ (874.0) (788.2) (715.0)
Investment losses (gains)................................... 9.8 (5.3) (91.8)
Change in Federal income taxes payable...................... (197.1) 221.6 38.3
Other, net.................................................. 364.4 127.3 (19.4)
----------------- ----------------- -----------------
Net cash provided by operating activities..................... 583.6 1,116.5 677.2
----------------- ----------------- -----------------
Cash flows from investing activities:
Maturities and repayments................................... 2,275.1 1,897.4 2,323.8
Sales....................................................... 8,964.3 8,867.1 5,816.6
Return of capital from joint ventures and limited
partnerships.............................................. 78.4 65.2 39.0
Purchases................................................... (12,559.6) (11,675.5) (7,564.7)
Decrease (increase) in loans to discontinued GIC Segment.... 1,017.0 1,226.9 (40.0)
Other, net.................................................. 56.7 (624.7) (478.1)
----------------- ----------------- -----------------
Net cash (used) provided by investing activities.............. (168.1) (243.6) 96.6
----------------- ----------------- -----------------
Cash flows from financing activities:
Policyholders' account balances:
Deposits.................................................. 1,925.4 2,586.5 2,082.5
Withdrawals............................................... (2,385.2) (2,657.1) (2,864.4)
Net decrease in short-term financings....................... (.3) (16.4) (173.0)
Additions to long-term debt................................. - 599.7 51.8
Repayments of long-term debt................................ (124.8) (40.7) (199.8)
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.................................................. (66.5) (48.4) 26.5
----------------- ----------------- -----------------
Net cash (used) by financing activities....................... (651.4) (791.8) (676.4)
----------------- ----------------- -----------------
Change in cash and cash equivalents........................... (235.9) 81.1 97.4
Cash and cash equivalents, beginning of year.................. 774.7 693.6 596.2
----------------- ----------------- -----------------
Cash and Cash Equivalents, End of Year........................ $ 538.8 $ 774.7 $ 693.6
================= ================= =================
Supplemental cash flow information
Interest Paid............................................... $ 109.9 $ 89.6 $ 34.9
================= ================= =================
Income Taxes (Refunded) Paid................................ $ (10.0) $ (82.7) $ 49.2
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) ORGANIZATION
The Equitable Life Assurance Society of the United States ("Equitable
Life") converted to a stock life insurance company on July 22, 1992 and
became a wholly owned subsidiary of The Equitable Companies Incorporated
(the "Holding Company"). Equitable Life's insurance business is
conducted principally by Equitable Life and its wholly owned life
insurance subsidiary, Equitable Variable Life Insurance Company
("EVLICO"). Effective January 1, 1997, EVLICO was merged into Equitable
Life, which will continue to conduct the Company's insurance business.
Equitable Life's investment management business, which comprises the
Investment Services segment, is conducted principally by Alliance
Capital Management L.P. ("Alliance"), Equitable Real Estate Investment
Management, Inc. ("EREIM") and Donaldson, Lufkin & Jenrette, Inc.
("DLJ"), an investment banking and brokerage affiliate. AXA-UAP ("AXA"),
a French holding company for an international group of insurance and
related financial services companies, is the Holding Company's largest
shareholder, owning approximately 60.8% at December 31, 1996 (63.6%
assuming conversion of Series E Convertible Preferred Stock held by AXA
and 54.4% if all securities convertible into, and options on, common
stock were to be converted or exercised).
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
-----------------------------------------------------
The accompanying consolidated financial statements are prepared in
conformity with generally accepted accounting principles ("GAAP").
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 Equitable Life or its subsidiaries has control
and a majority economic interest (collectively, including its
consolidated subsidiaries, the "Company"). The Company's investment in
DLJ is reported on the equity basis of accounting. Closed Block assets
and liabilities and results of operations are presented in the
consolidated financial statements as single line items (see Note 6).
Unless specifically stated, all disclosures contained herein supporting
the consolidated financial statements exclude the Closed Block related
amounts.
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).
The years "1996," "1995" and "1994" refer to the years ended December
31, 1996, 1995 and 1994, respectively.
Certain reclassifications have been made in the amounts presented for
prior periods to conform these periods with the 1996 presentation.
F-6
<PAGE>
Closed Block
------------
As of July 22, 1992, Equitable Life established the Closed Block for the
benefit of certain classes of individual participating policies for
which Equitable Life had a dividend scale payable in 1991 and which were
in force on that date. Assets were allocated to the Closed Block in an
amount which, together with anticipated revenues from policies included
in the Closed Block, was reasonably expected to be sufficient to support
such business, including provision for payment of claims, certain
expenses and taxes, and for continuation of dividend scales payable in
1991, assuming the experience underlying such scales continues.
Assets allocated to the Closed Block inure solely to the benefit of the
holders of policies included in the Closed Block and will not revert to
the benefit of the Holding Company. The plan of demutualization
prohibits the reallocation, transfer, borrowing or lending of assets
between the Closed Block and other portions of Equitable Life's General
Account, any of its Separate Accounts or to any affiliate of Equitable
Life without the approval of the New York Superintendent of Insurance
(the "Superintendent"). Closed Block assets and liabilities are carried
on the same basis as similar assets and liabilities held in the General
Account. The excess of Closed Block liabilities over Closed Block assets
represents the expected future post-tax contribution from the Closed
Block which would be recognized in income over the period the policies
and contracts in the Closed Block remain in force.
Discontinued Operations
-----------------------
In 1991, the Company's management adopted a plan to discontinue the
business operations of the GIC Segment, consisting of the Group
Non-Participating Wind-Up Annuities ("Wind-Up Annuities") and Guaranteed
Interest Contract ("GIC") 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 Wind-Up Annuities.
Subsequent losses incurred have been charged to the two loss provisions.
Management reviews the adequacy of the allowance and reserve each
quarter. During the fourth quarter 1996 review, management determined it
was necessary to increase the allowance for expected future losses of
the GIC Segment. Management believes the loss provisions for GIC
contracts and Wind-Up Annuities at December 31, 1996 are adequate to
provide for all future losses; however, the determination of loss
provisions continues to involve numerous estimates and subjective
judgments regarding the expected performance of discontinued operations
investment assets. There can be no assurance the losses provided for
will not differ from the losses ultimately realized (See Note 7).
Accounting Changes
------------------
In 1996, the Company changed its method of accounting for long-duration
participating life insurance contracts, primarily within the Closed
Block, in accordance with the provisions prescribed by Statement of
Financial Accounting Standards ("SFAS") No. 120, "Accounting and
Reporting by Mutual Life Insurance Enterprises and by Insurance
Enterprises for Certain Long-Duration Participating Contracts". The
effect of this change, including the impact on the Closed Block, was to
increase earnings from continuing operations before cumulative effect of
accounting change by $19.2 million, net of Federal income taxes of $10.3
million for 1996. The financial statements for 1995 and 1994 have been
retroactively restated for the change which resulted in an increase
(decrease) in earnings before cumulative effect of accounting change of
$15.2 million, net of Federal income taxes of $8.2 million, and $(2.6)
million, net of Federal income tax benefit of $1.0 million,
respectively. Shareholder's equity increased $199.1 million as of
January 1, 1994 for the effect of retroactive application of the new
method. (See "Deferred Policy Acquisition Costs," "Policyholders'
Account Balances and Future Policy Benefits" and Note 6.)
The Company implemented SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," as of
January 1, 1996. The statement requires long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances
F-7
<PAGE>
indicate the carrying value of such assets may not be recoverable.
Effective with SFAS No. 121's adoption, impaired real estate is written
down to fair value with the impairment loss being included in investment
gains (losses), net. Before implementing SFAS No. 121, valuation
allowances on real estate held for the production of income were
computed using the forecasted cash flows of the respective properties
discounted at a rate equal to the Company's cost of funds. The adoption
of the statement resulted in the release of valuation allowances of
$152.4 million and recognition of impairment losses of $144.0 million on
real estate held and used. Real estate which management has committed to
disposing of by sale or abandonment is classified as real estate to be
disposed of. Valuation allowances on real estate to be disposed of
continue to be computed using the lower of estimated fair value or
depreciated cost, net of disposition costs. Implementation of the SFAS
No. 121 impairment requirements relative to other assets to be disposed
of resulted in a charge for the cumulative effect of an accounting
change of $23.1 million, net of a Federal income tax benefit of $12.4
million, due to the writedown to fair value of building improvements
relating to facilities being vacated beginning in 1996.
In the first quarter of 1995, the Company adopted 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.
Beginning coincident with issuance of SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," 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 $149.4 million, net of deferred policy
acquisition costs ("DAC"), amounts attributable to participating group
annuity contracts and deferred Federal income taxes.
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.
New Accounting Pronouncements
-----------------------------
The FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation,"
which permits entities to recognize as expense over the vesting period
the fair value of all stock-based awards on the date of grant or,
alternatively, to continue to apply the provisions of Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations. Companies which elect to
continue to apply APB Opinion No. 25 must provide pro forma net income
disclosures for employee stock option grants made in 1995 and future
years as if the fair-value-based method defined in SFAS No. 123 had been
applied. The Company accounts for stock option plans sponsored by the
Holding Company, DLJ and Alliance in accordance with the provisions of
APB Opinion No. 25 (see Note 21).
F-8
<PAGE>
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities".
SFAS No. 125 specifies the accounting and reporting requirements for
transfers of financial assets, the recognition and measurement of
servicing assets and liabilities and extinguishments of liabilities.
SFAS No. 125 is effective for transactions occurring after December 31,
1996 and is to be applied prospectively. In December 1996, the FASB
issued SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125," which defers for one year the
effective date of provisions relating to secured borrowings and
collateral and transfers of financial assets that are part of repurchase
agreements, dollar-roll, securities lending and similar transactions.
Management has not yet determined the effect of implementing SFAS No.
125.
Valuation of Investments
------------------------
Fixed maturities identified as available for sale are reported at
estimated fair value. The amortized cost of fixed maturities is adjusted
for impairments in value deemed to be other than temporary.
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. Impaired real
estate is written down to fair value with the impairment loss being
included in investment gains (losses) net. Valuation allowances on real
estate available for sale are computed using the lower of current
estimated fair value or depreciated cost, net of disposition costs.
Prior to the adoption of SFAS No. 121, valuation allowances on real
estate held for the production of income were computed using the
forecasted cash flows of the respective properties discounted at a rate
equal to the Company's cost of funds.
Policy loans are stated at unpaid principal balances.
Partnerships and joint venture interests in which the Company does not
have control 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 which are passed through to the contractholders
are reflected as interest credited to policyholders' account balances.
F-9
<PAGE>
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, participating group annuity contracts, and DAC related to
universal life and investment-type products and participating
traditional life contracts.
Recognition of Insurance Income and Related Expenses
----------------------------------------------------
Premiums from universal life and investment-type contracts are reported
as deposits to policyholders' account balances. Revenues from these
contracts consist of amounts assessed during the period against
policyholders' account balances for mortality charges, policy
administration charges and surrender charges. Policy benefits and claims
that are charged to expense include benefit claims incurred in the
period in excess of related policyholders' account balances.
Premiums from participating and non-participating traditional life and
annuity policies with life contingencies generally are recognized as
income when due. Benefits and expenses are matched with such income so
as to result in the recognition of profits over the life of the
contracts. This match is accomplished by means of the provision for
liabilities for future policy benefits and the deferral and subsequent
amortization of policy acquisition costs.
For contracts with a single premium or a limited number of premium
payments due over a significantly shorter period than the total period
over which benefits are provided, premiums are recorded as income when
due with any excess profit deferred and recognized in income in a
constant relationship to insurance in force or, for annuities, the
amount of expected future benefit payments.
Premiums from individual health contracts are recognized as income over
the period to which the premiums relate in proportion to the amount of
insurance protection provided.
Deferred Policy Acquisition Costs
---------------------------------
The costs of acquiring new business, principally commissions,
underwriting, agency and policy issue expenses, all of which vary with
and are primarily related to the production of new business, are
deferred. DAC is subject to recoverability testing at the time of policy
issue and loss recognition testing at the end of each accounting period.
For universal life products and investment-type products, DAC is
amortized over the expected total life of the contract group (periods
ranging from 15 to 35 years and 5 to 17 years, respectively) as a
constant percentage of estimated gross profits arising principally from
investment results, mortality and expense margins and surrender charges
based on historical and anticipated future experience, updated at the
end of each accounting period. The effect on the amortization of DAC of
revisions to estimated gross profits is reflected in earnings in the
period such estimated gross profits are revised. The effect on the DAC
asset that would result from realization of unrealized gains (losses) is
recognized with an offset to unrealized gains (losses) in consolidated
shareholder's equity as of the balance sheet date.
For participating traditional life policies (substantially all of which
are in the Closed Block), DAC is amortized over the expected total life
of the contract group (40 years) as a constant percentage based on the
present value of the estimated gross margin amounts expected to be
realized over the life of the contracts using the expected investment
yield. At December 31, 1996, the expected investment yield ranged from
7.30% grading to 7.68% over 13 years. Estimated gross margin includes
anticipated premiums and investment results less claims and
administrative expenses, changes in the net level premium reserve and
expected annual policyholder dividends. Deviations of actual results
from estimated experience are reflected in earnings in the period such
deviations occur. The effect on the DAC asset that would result from
realization of unrealized gains (losses) is recognized with an offset to
unrealized gains (losses) in consolidated shareholder's equity as of the
balance sheet date.
F-10
<PAGE>
For non-participating traditional life and annuity policies with life
contingencies, DAC is amortized in proportion to anticipated premiums.
Assumptions as to anticipated premiums are estimated at the date of
policy issue and are consistently applied during the life of the
contracts. Deviations from estimated experience are reflected in
earnings in the period such deviations occur. For these contracts, the
amortization periods generally are for the total life of the policy.
For individual health benefit insurance, DAC is amortized over the
expected average life of the contracts (10 years for major medical
policies and 20 years for disability income ("DI") products) in
proportion to anticipated premium revenue at time of issue. In the
fourth quarter of 1996, the DAC related to DI contracts issued prior to
July 1993 was written off.
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.
For participating traditional life policies, future policy benefit
liabilities are calculated using a net level premium method on the basis
of actuarial assumptions equal to guaranteed mortality and dividend fund
interest rates. The liability for annual dividends represents the
accrual of annual dividends earned. Terminal dividends are accrued in
proportion to gross margins over the life of the contract.
For non-participating traditional life insurance policies, future policy
benefit liabilities are estimated using a net level premium method on
the basis of actuarial assumptions as to mortality, persistency and
interest established at policy issue. Assumptions established at policy
issue as to mortality and persistency are based on the Insurance Group's
experience which, together with interest and expense assumptions,
include a margin for adverse deviation. When the liabilities for future
policy benefits plus the present value of expected future gross premiums
for a product are insufficient to provide for expected future policy
benefits and expenses for that product, DAC is written off and
thereafter, if required, a premium deficiency reserve is established by
a charge to earnings. Benefit liabilities for traditional annuities
during the accumulation period are equal to accumulated contractholders'
fund balances and after annuitization are equal to the present value of
expected future payments. Interest rates used in establishing such
liabilities range from 2.25% to 11.5% for life insurance liabilities and
from 2.25% to 13.5% for annuity liabilities.
During the fourth quarter of 1996, a loss recognition study on
participating group annuity contracts and conversion annuities ("Pension
Par") was completed which included management's revised estimate of
assumptions, including expected mortality and future investment returns.
The study's results prompted management to establish a premium
deficiency reserve which decreased earnings from continuing operations
and net earnings by $47.5 million ($73.0 million pre-tax).
Individual health benefit liabilities for active lives are estimated
using the net level premium method, and assumptions as to future
morbidity, withdrawals and interest. Benefit liabilities for disabled
lives are estimated using the present value of benefits method and
experience assumptions as to claim terminations, expenses and interest.
During the fourth quarter of 1996, the Company completed a loss
recognition study of the DI business which incorporated management's
revised estimates of future experience with regard to morbidity,
investment returns, claims and administration expenses and other
factors. The study indicated DAC was not recoverable and the reserves
were not sufficient. Earnings from continuing operations and net
earnings decreased by $208.0 million ($320.0 million pre-tax) as a
result of strengthening DI reserves by $175.0 million and writing off
unamortized DAC of $145.0 million. The determination of DI reserves
requires making assumptions and estimates relating to a variety of
factors, including morbidity and interest rates, claims experience and
lapse
F-11
<PAGE>
rates based on then known facts and circumstances. Such factors as claim
incidence and termination rates can be affected by changes in the
economic, legal and regulatory environments and work ethic. While
management believes its DI reserves have been calculated on a reasonable
basis and are adequate, there can be no assurance reserves will be
sufficient to provide for future liabilities.
Claim reserves and associated liabilities for individual disability
income and major medical policies were $711.8 million and $639.6 million
at December 31, 1996 and 1995, respectively (excluding $175.0 million of
reserve strengthening in 1996). Incurred benefits (benefits paid plus
changes in claim reserves) and benefits paid for individual DI and major
medical policies (excluding $175.0 million of reserve strengthening in
1996) are summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Incurred benefits related to current year.......... $ 189.0 $ 176.0 $ 188.6
Incurred benefits related to prior years........... 69.1 67.8 28.7
----------------- ---------------- -----------------
Total Incurred Benefits............................ $ 258.1 $ 243.8 $ 217.3
================= ================ =================
Benefits paid related to current year.............. $ 32.6 $ 37.0 $ 43.7
Benefits paid related to prior years............... 153.3 137.8 132.3
----------------- ---------------- -----------------
Total Benefits Paid................................ $ 185.9 $ 174.8 $ 176.0
================= ================ =================
</TABLE>
Policyholders' Dividends
------------------------
The amount of policyholders' dividends to be paid (including those on
policies included in the Closed Block) is determined annually by
Equitable Life's Board of Directors. The aggregate amount of
policyholders' dividends is related to actual interest, mortality,
morbidity and expense experience for the year and judgment as to the
appropriate level of statutory surplus to be retained by Equitable Life.
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, if any, would be accrued as
policyholders' dividends.
At December 31, 1996, participating policies, including those in the
Closed Block, represent approximately 24.2% ($52.3 billion) of directly
written life insurance in force, net of amounts ceded.
Federal Income Taxes
--------------------
The Company files a consolidated Federal income tax return with the
Holding Company and its non-life insurance subsidiaries. Current Federal
income taxes were 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 were
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.
F-12
<PAGE>
Assets and liabilities of the Separate Accounts, representing net
deposits and accumulated net investment earnings less fees, held
primarily for the benefit of contractholders, and for which the
Insurance Group does not bear the investment risk, are shown as separate
captions in the consolidated balance sheets. The Insurance Group bears
the investment risk on assets held in one Separate Account, therefore,
such assets are carried on the same basis as similar assets held in the
General Account portfolio. Assets held in the other Separate Accounts
are carried at quoted market values or, where quoted values are not
available, at estimated fair values as determined by the Insurance
Group.
The investment results of Separate Accounts on which the Insurance Group
does not bear the investment risk are reflected directly in Separate
Accounts liabilities. For 1996, 1995 and 1994, investment results of
such Separate Accounts were $2,970.6 million, $1,963.2 million and
$665.2 million, respectively.
Deposits to Separate Accounts are reported as increases in Separate
Accounts liabilities and are not reported in revenues. Mortality, policy
administration and surrender charges on all Separate Accounts are
included in revenues.
F-13
<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, 1996
-----------------
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 13,645.2 $ 451.5 $ 121.0 $ 13,975.7
Mortgage-backed.................... 2,015.9 11.2 20.3 2,006.8
U.S. Treasury securities and
U.S. government and
agency securities................ 1,539.4 39.2 19.3 1,559.3
States and political subdivisions.. 77.0 4.5 - 81.5
Foreign governments................ 302.6 18.0 2.2 318.4
Redeemable preferred stock......... 139.1 3.3 7.1 135.3
----------------- ----------------- ---------------- ---------------
Total Available for Sale............... $ 17,719.2 $ 527.7 $ 169.9 $ 18,077.0
================= ================= ================ ===============
Equity Securities:
Common stock......................... $ 98.7 $ 49.3 $ 17.7 $ 130.3
================= ================= ================ ===============
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
================= ================= ================ ===============
</TABLE>
For publicly traded fixed maturities and equity securities, estimated
fair value is determined using quoted market prices. For fixed
maturities without a readily ascertainable market value, the Company has
determined an estimated fair value using a discounted cash flow
approach, including provisions for credit risk, generally based upon the
assumption 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, 1996 and 1995, securities
without a readily ascertainable market value having an amortized cost of
$3,915.7 million and $3,748.9 million, respectively, had estimated fair
values of $4,024.6 million and $3,981.8 million, respectively.
F-14
<PAGE>
The contractual maturity of bonds at December 31, 1996 is shown below:
AVAILABLE FOR SALE
------------------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
---------------- -----------------
(IN MILLIONS)
Due in one year or less........... $ 539.6 $ 542.5
Due in years two through five..... 2,776.2 2,804.0
Due in years six through ten...... 6,044.7 6,158.1
Due after ten years............... 6,203.7 6,430.3
Mortgage-backed securities........ 2,015.9 2,006.8
---------------- -----------------
Total............................. $ 17,580.1 $ 17,941.7
================ =================
Bonds not due at a single maturity date have been included in the above
table in the year of final maturity. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
The Insurance Group's fixed maturity investment portfolio includes
corporate high yield securities consisting of public high yield bonds,
redeemable preferred stocks and directly negotiated debt in leveraged
buyout transactions. The Insurance Group seeks to minimize the higher
than normal credit risks associated with such securities by monitoring
the total investments in any single issuer or total investment in a
particular industry group. Certain of these corporate high yield
securities are classified as other than investment grade by the various
rating agencies, i.e., a rating below Baa or National Association of
Insurance Commissioners ("NAIC") designation of 3 (medium grade), 4 or 5
(below investment grade) or 6 (in or near default). At December 31,
1996, approximately 14.20% of the $17,563.7 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 includes amortized
costs of $5.5 million and $15.9 million at December 31, 1996 and 1995,
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 $2.2 million and $1.6
million as of December 31, 1996 and 1995, respectively. Gross interest
income that would have been recorded in accordance with the original
terms of restructured fixed maturities amounted to $1.4 million, $3.0
million and $7.5 million in 1996, 1995 and 1994, respectively. Gross
interest income on these fixed maturities included in net investment
income aggregated $1.3 million, $2.9 million and $6.8 million in 1996,
1995 and 1994, respectively.
F-15
<PAGE>
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Balances, beginning of year........................ $ 325.3 $ 284.9 $ 355.6
SFAS No. 121 release............................... (152.4) - -
Additions charged to income........................ 125.0 136.0 51.0
Deductions for writedowns and
asset dispositions............................... (160.8) (95.6) (121.7)
----------------- ---------------- -----------------
Balances, End of Year.............................. $ 137.1 $ 325.3 $ 284.9
================= ================ =================
Balances, end of year comprise:
Mortgage loans on real estate.................... $ 50.4 $ 65.5 $ 64.2
Equity real estate............................... 86.7 259.8 220.7
----------------- ---------------- -----------------
Total.............................................. $ 137.1 $ 325.3 $ 284.9
================= ================ =================
</TABLE>
At December 31, 1996, 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 $25.0 million
of fixed maturities and $2.6 million of mortgage loans on real estate.
At December 31, 1996 and 1995, 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 $12.4 million (0.4% of total
mortgage loans on real estate) and $87.7 million (2.4% of total mortgage
loans on real estate), respectively.
The payment terms of mortgage loans on real estate may from time to time
be restructured or modified. The investment in restructured mortgage
loans on real estate, based on amortized cost, amounted to $388.3
million and $531.5 million at December 31, 1996 and 1995, respectively.
These amounts include $1.0 million and $3.8 million of problem mortgage
loans on real estate at December 31, 1996 and 1995, 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 $35.5 million, $52.1 million and $44.9 million in 1996, 1995
and 1994, respectively. Gross interest income on these loans included in
net investment income aggregated $28.2 million, $37.4 million and $32.8
million in 1996, 1995 and 1994, respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
1996 1995
------------------- -------------------
(IN MILLIONS)
<S> <C> <C>
Impaired mortgage loans with provision for losses.................. $ 340.0 $ 310.1
Impaired mortgage loans with no provision for losses............... 122.3 160.8
------------------- -------------------
Recorded investment in impaired mortgage loans..................... 462.3 470.9
Provision for losses............................................... 46.4 62.7
------------------- -------------------
Net Impaired Mortgage Loans........................................ $ 415.9 $ 408.2
=================== ===================
</TABLE>
Impaired mortgage loans with no provision for losses are loans where the
fair value of the collateral or the net present value of the expected
future cash flows related to the loan equals or exceeds the recorded
investment. Interest income earned on loans where the collateral value
is used to measure impairment is recorded on a
F-16
<PAGE>
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 1996 and 1995, respectively, the Company's average recorded
investment in impaired mortgage loans was $552.1 million and $429.0
million. Interest income recognized on these impaired mortgage loans
totaled $38.8 million and $27.9 million for 1996 and 1995, respectively,
including $17.9 million and $13.4 million recognized on a cash basis.
The Insurance Group's investment in equity real estate is through direct
ownership and through investments in real estate joint ventures. At
December 31, 1996 and 1995, the carrying value of equity real estate
available for sale amounted to $345.6 million and $255.5 million,
respectively. For 1996, 1995 and 1994, respectively, real estate of
$58.7 million, $35.3 million and $189.8 million was acquired in
satisfaction of debt. At December 31, 1996 and 1995, the Company owned
$771.7 million and $862.7 million, respectively, of real estate acquired
in satisfaction of debt.
Depreciation of real estate is computed using the straight-line method
over the estimated useful lives of the properties, which generally range
from 40 to 50 years. Accumulated depreciation on real estate was $587.5
million and $662.4 million at December 31, 1996 and 1995, respectively.
Depreciation expense on real estate totaled $91.8 million, $121.7
million and $117.0 million for 1996, 1995 and 1994, respectively. As a
result of the implementation of SFAS No. 121, during 1996 no
depreciation expense has been recorded on real estate available for
sale.
F-17
<PAGE>
4) JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information of real estate joint ventures
(34 and 38 individual ventures as of December 31, 1996 and 1995,
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,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
FINANCIAL POSITION
Investments in real estate, at depreciated cost........................ $ 1,883.7 $ 2,684.1
Investments in securities, generally at estimated fair value........... 2,430.6 2,459.8
Cash and cash equivalents.............................................. 98.0 489.1
Other assets........................................................... 427.0 270.8
---------------- -----------------
Total assets........................................................... 4,839.3 5,903.8
---------------- -----------------
Borrowed funds - third party........................................... 1,574.3 1,782.3
Borrowed funds - the Company........................................... 137.9 220.5
Other liabilities...................................................... 415.8 593.9
---------------- -----------------
Total liabilities...................................................... 2,128.0 2,596.7
---------------- -----------------
Partners' Capital...................................................... $ 2,711.3 $ 3,307.1
================ =================
Equity in partners' capital included above............................. $ 806.8 $ 902.2
Equity in limited partnership interests not included above............. 201.8 212.8
Other.................................................................. 9.8 8.9
---------------- -----------------
Carrying Value......................................................... $ 1,018.4 $ 1,123.9
================ =================
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures............. $ 348.9 $ 463.5 $ 537.7
Revenues of other limited partnership interests.... 386.1 242.3 103.4
Interest expense - third party..................... (111.0) (135.3) (114.9)
Interest expense - the Company..................... (30.0) (41.0) (36.9)
Other expenses..................................... (282.5) (397.7) (430.9)
----------------- ---------------- -----------------
Net Earnings....................................... $ 311.5 $ 131.8 $ 58.4
================= ================ =================
Equity in net earnings included above.............. $ 73.9 $ 49.1 $ 18.9
Equity in net earnings of limited partnerships
interests not included above..................... 35.8 44.8 25.3
Other.............................................. .9 1.0 1.8
----------------- ---------------- -----------------
Total Equity in Net Earnings....................... $ 110.6 $ 94.9 $ 46.0
================= ================ =================
</TABLE>
F-18
<PAGE>
5) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities.................... $ 1,307.4 $ 1,151.1 $ 1,036.5
Mortgage loans on real estate....... 303.0 329.0 385.7
Equity real estate.................. 442.4 560.4 561.8
Other equity investments............ 94.3 76.9 36.1
Policy loans........................ 160.3 144.4 122.7
Other investment income............. 217.4 273.0 322.4
----------------- ---------------- -----------------
Gross investment income........... 2,524.8 2,534.8 2,465.2
----------------- ---------------- -----------------
Investment expenses............... 348.9 446.6 466.6
----------------- ---------------- -----------------
Net Investment Income............... $ 2,175.9 $ 2,088.2 $ 1,998.6
================= ================ =================
Investment gains (losses), net, including changes in the valuation
allowances, are summarized as follows:
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities................................... $ 60.5 $ 119.9 $ (14.3)
Mortgage loans on real estate...................... (27.3) (40.2) (43.1)
Equity real estate................................. (79.7) (86.6) 20.6
Other equity investments........................... 18.9 12.8 75.9
Issuance and sales of Alliance Units............... 20.6 - 52.4
Other.............................................. (2.8) (.6) .3
----------------- ---------------- -----------------
Investment (Losses) Gains, Net..................... $ (9.8) $ 5.3 $ 91.8
================= ================ =================
</TABLE>
Writedowns of fixed maturities amounted to $29.9 million, $46.7 million
and $30.8 million for 1996, 1995 and 1994, respectively, and writedowns
of equity real estate subsequent to the adoption of SFAS No. 121
amounted to $23.7 million for the year ended December 31, 1996.
For 1996, 1995 and 1994, respectively, proceeds received on sales of
fixed maturities classified as available for sale amounted to $8,353.5
million, $8,206.0 million and $5,253.9 million. Gross gains of $154.2
million, $211.4 million and $65.2 million and gross losses of $92.7
million, $64.2 million and $50.8 million, respectively, were realized on
these sales. The change in unrealized investment (losses) gains related
to fixed maturities classified as available for sale for 1996, 1995 and
1994 amounted to $(258.0) million, $1,077.2 million and $(742.2)
million, respectively.
During each of 1995 and 1994, one security classified as held to
maturity was sold. 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 costs 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 shareholder's equity for the eleven months ended November
30, 1995 and the year ended December 31,
F-19
<PAGE>
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 $395.6 million, offset by DAC of $126.5 million,
amounts attributable to participating group annuity contracts of $39.2
million and deferred Federal income taxes of $80.5 million.
For 1996, 1995 and 1994, investment results passed through to certain
participating group annuity contracts as interest credited to
policyholders' account balances amounted to $136.7 million, $131.2
million and $175.8 million, respectively.
In 1996, Alliance acquired the business of Cursitor-Eaton Asset
Management Company and Cursitor Holdings Limited (collectively,
"Cursitor") for approximately $159.0 million. The purchase price
consisted of $94.3 million in cash, 1.8 million of Alliance's publicly
traded units ("Alliance Units"), 6% notes aggregating $21.5 million
payable ratably over four years, and substantial additional
consideration which will be determined at a later date. The excess of
the purchase price, including acquisition costs and minority interest,
over the fair value of Cursitor's net assets acquired resulted in the
recognition of intangible assets consisting of costs assigned to
contracts acquired and goodwill of approximately $122.8 million and
$38.3 million, respectively, which are being amortized over the
estimated useful lives of 20 years. The Company recognized an investment
gain of $20.6 million as a result of the issuance of Alliance Units in
this transaction. At December 31, 1996, the Company's ownership of
Alliance Units was approximately 57.3%.
In 1994, Alliance sold 4.96 million newly issued Alliance Units to third
parties at prevailing market prices. 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.
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>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year as restated............. $ 396.5 $ (220.5) $ 144.6
Changes in unrealized investment (losses) gains.... (297.6) 1,198.9 (856.7)
Changes in unrealized investment losses
(gains) attributable to:
Participating group annuity contracts.......... - (78.1) 40.8
DAC............................................ 42.3 (216.8) 273.6
Deferred Federal income taxes.................. 48.7 (287.0) 177.2
----------------- ---------------- -----------------
Balance, End of Year............................... $ 189.9 $ 396.5 $ (220.5)
================= ================ =================
Balance, end of year comprises:
Unrealized investment gains (losses) on:
Fixed maturities............................... $ 357.8 $ 615.9 $ (461.3)
Other equity investments....................... 31.6 31.1 7.7
Other, principally Closed Block................ 53.1 93.1 (5.1)
----------------- ---------------- -----------------
Total........................................ 442.5 740.1 (458.7)
Amounts of unrealized investment (gains)
losses attributable to:
Participating group annuity contracts........ (72.2) (72.2) 5.9
DAC.......................................... (52.0) (94.3) 122.4
Deferred Federal income taxes................ (128.4) (177.1) 109.9
----------------- ---------------- -----------------
Total.............................................. $ 189.9 $ 396.5 $ (220.5)
================= ================ =================
</TABLE>
F-20
<PAGE>
6) CLOSED BLOCK
Summarized financial information of the Closed Block follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1996 1995
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost,
$3,820.7 and $3,662.8)...................................... $ 3,889.5 $ 3,896.2
Mortgage loans on real estate................................... 1,380.7 1,368.8
Policy loans.................................................... 1,765.9 1,797.2
Cash and other invested assets.................................. 336.1 440.9
DAC............................................................. 876.5 792.6
Other assets.................................................... 246.3 286.4
----------------- -----------------
Total Assets.................................................... $ 8,495.0 $ 8,582.1
================= =================
Liabilities
Future policy benefits and policyholders' account balances...... $ 8,999.7 $ 8,923.5
Other liabilities............................................... 91.6 297.9
----------------- -----------------
Total Liabilities............................................... $ 9,091.3 $ 9,221.4
================= =================
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other revenue......................... $ 724.8 $ 753.4 $ 798.1
Investment income (net of investment
expenses of $27.3, $26.7 and $19.0).............. 546.6 538.9 523.0
Investment losses, net............................. (5.5) (20.2) (24.0)
----------------- ---------------- -----------------
Total revenues............................... 1,265.9 1,272.1 1,297.1
----------------- ---------------- -----------------
Benefits and Other Deductions
Policyholders' benefits and dividends.............. 1,106.3 1,077.6 1,121.6
Other operating costs and expenses................. 34.6 51.3 38.5
----------------- ---------------- -----------------
Total benefits and other deductions.......... 1,140.9 1,128.9 1,160.1
----------------- ---------------- -----------------
Contribution from the Closed Block................. $ 125.0 $ 143.2 $ 137.0
================= ================ =================
</TABLE>
In the fourth quarter of 1996, the Company adopted SFAS No. 120, which
prescribes the accounting for individual participating life insurance
contracts, most of which are included in the Closed Block. The
implementation of SFAS No. 120 resulted in an increase (decrease) in the
contribution from the Closed Block of $27.5 million, $18.8 million and
$(14.0) million in 1996, 1995 and 1994, respectively.
The fixed maturity portfolio, based on amortized cost, includes $.4
million and $4.3 million at December 31, 1996 and 1995, respectively, of
restructured securities which includes problem fixed maturities of $.3
million and $1.9 million, respectively.
F-21
<PAGE>
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 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, offset by DAC amortization of $52.6 million.
At December 31, 1996 and 1995, problem mortgage loans on real estate had
an amortized cost of $4.3 million and $36.5 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had an amortized cost of $114.2 million and $137.7 million,
respectively. At December 31, 1996 and 1995, the restructured mortgage
loans on real estate amount included $.7 million and $8.8 million,
respectively, of problem mortgage loans on real estate.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Impaired mortgage loans with provision for losses......... $ 128.1 $ 106.8
Impaired mortgage loans with no provision for losses...... .6 10.1
---------------- -----------------
Recorded investment in impaired mortgages................. 128.7 116.9
Provision for losses...................................... 12.9 17.9
---------------- -----------------
Net Impaired Mortgage Loans............................... $ 115.8 $ 99.0
================ =================
</TABLE>
During 1996 and 1995, respectively, the Closed Block's average recorded
investment in impaired mortgage loans was $153.8 million and $146.9
million, respectively. Interest income recognized on these impaired
mortgage loans totaled $10.9 million and $5.9 million for 1996 and 1995,
respectively, including $4.7 million and $1.3 million recognized on a
cash basis.
Valuation allowances amounted to $13.8 million and $18.4 million on
mortgage loans on real estate and $3.7 million and $4.3 million on
equity real estate at December 31, 1996 and 1995, respectively.
Writedowns of fixed maturities amounted to $12.8 million, $16.8 million
and $15.9 million for 1996, 1995 and 1994, respectively. As of January
1, 1996, the adoption of SFAS No. 121 resulted in the recognition of
impairment losses of $5.6 million on real estate held and used.
Many expenses related to Closed Block operations are charged to
operations outside of the Closed Block; accordingly, the contribution
from the Closed Block does not represent the actual profitability of the
Closed Block operations. Operating costs and expenses outside of the
Closed Block are, therefore, disproportionate to the business outside of
the Closed Block.
F-22
<PAGE>
7) DISCONTINUED OPERATIONS
Summarized financial information of the GIC Segment follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1996 1995
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets
Mortgage loans on real estate........... $ 1,111.1 $ 1,485.8
Equity real estate...................... 925.6 1,122.1
Other invested assets................... 474.0 665.2
Other assets............................ 226.1 579.3
----------------- -----------------
Total Assets............................ $ 2,736.8 $ 3,852.4
================= =================
Liabilities
Policyholders' liabilities.............. $ 1,335.9 $ 1,399.8
Allowance for future losses............. 262.0 164.2
Amounts due to continuing operations.... 996.2 2,097.1
Other liabilities....................... 142.7 191.3
----------------- -----------------
Total Liabilities....................... $ 2,736.8 $ 3,852.4
================= =================
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Investment income (net of investment expenses
of $127.5, $153.1 and $183.3).................... $ 245.4 $ 323.6 $ 394.3
Investment (losses) gains, net..................... (18.9) (22.9) 26.8
Policy fees, premiums and other income............. .2 .7 .4
----------------- ---------------- -----------------
Total revenues..................................... 226.7 301.4 421.5
Benefits and other deductions...................... 250.4 326.5 443.2
Losses charged to allowance for future losses...... (23.7) (25.1) (21.7)
----------------- ---------------- -----------------
Pre-tax loss from operations....................... - - -
Pre-tax loss from strengthening of the
allowance for future losses...................... (129.0) - -
Federal income tax benefit......................... 45.2 - -
----------------- ---------------- -----------------
Loss from Discontinued Operations.................. $ (83.8) $ - $ -
================= ================ =================
</TABLE>
In 1991, management adopted a plan to discontinue the business
operations of the GIC Segment consisting of group non-participating
Wind-Up Annuities and the GIC lines of business. The loss allowance and
premium deficiency reserve of $569.6 million provided for in 1991 were
based on management's best judgment at that time.
The Company's quarterly process for evaluating the loss provisions
applies the current period's results of the discontinued operations
against the allowance, re-estimates future losses, and adjusts the
provisions, if appropriate. Additionally, as part of the Company's
annual planning process which takes place in the fourth quarter of each
year, investment and benefit cash flow projections are prepared. These
updated assumptions and estimates resulted in the need to strengthen the
loss provisions by $129.0 million, resulting in a post-tax charge of
$83.8 million to discontinued operations' results in the fourth quarter
of 1996.
F-23
<PAGE>
Management believes the loss provisions for Wind-Up Annuities and GIC
contracts at December 31, 1996 are adequate to provide for all future
losses; however, the determination of loss provisions continues to
involve numerous estimates and subjective judgments regarding the
expected performance of discontinued operations investment assets. There
can be no assurance the losses provided for will not differ from the
losses ultimately realized. To the extent actual results or future
projections of the discontinued operations differ from management's
current best estimates and assumptions underlying the loss provisions,
the difference would be reflected in the consolidated statements of
earnings in discontinued operations. In particular, to the extent
income, sales proceeds and holding periods for equity real estate differ
from management's previous assumptions, periodic adjustments to the loss
provisions are likely to result.
In January 1995, continuing operations transferred $1,215.4 million in
cash to the GIC Segment in settlement of its obligation to provide
assets to fund the accumulated deficit of the GIC Segment. 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, 1996, consisted of $1,080.0
million borrowed by the discontinued GIC Segment offset by $83.8 million
representing an obligation of continuing operations to provide assets to
fund the accumulated deficit of the GIC Segment.
Investment income included $88.2 million of interest income for 1994 on
amounts due from continuing operations. Benefits and other deductions
include $114.3 million, $154.6 million and $219.7 million of interest
expense related to amounts borrowed from continuing operations in 1996,
1995 and 1994, respectively.
Valuation allowances amounted to $9.0 million and $19.2 million on
mortgage loans on real estate and $20.4 million and $77.9 million on
equity real estate at December 31, 1996 and 1995, respectively. As of
January 1, 1996, the adoption of SFAS No. 121 resulted in a release of
existing valuation allowances of $71.9 million on equity real estate and
recognition of impairment losses of $69.8 million on real estate held
and used. Writedowns of fixed maturities amounted to $1.6 million, $8.1
million and $17.8 million for 1996, 1995 and 1994, respectively and
writedowns of equity real estate subsequent to the adoption of SFAS No.
121 amounted to $12.3 million for 1996.
The fixed maturity portfolio, based on amortized cost, includes $6.2
million and $15.1 million at December 31, 1996 and 1995, respectively,
of restructured securities. These amounts include problem fixed
maturities of $.5 million and $6.1 million at December 31, 1996 and
1995, respectively.
At December 31, 1996 and 1995, problem mortgage loans on real estate had
amortized costs of $7.9 million and $35.4 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had amortized costs of $208.1 million and $289.3 million,
respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Impaired mortgage loans with provision for losses....... $ 83.5 $ 105.1
Impaired mortgage loans with no provision for losses.... 15.0 18.2
---------------- -----------------
Recorded investment in impaired mortgages............... 98.5 123.3
Provision for losses.................................... 8.8 17.7
---------------- -----------------
Net Impaired Mortgage Loans............................. $ 89.7 $ 105.6
================ =================
</TABLE>
F-24
<PAGE>
During 1996 and 1995, the GIC Segment's average recorded investment in
impaired mortgage loans was $134.8 million and $177.4 million,
respectively. Interest income recognized on these impaired mortgage
loans totaled $10.1 million and $4.5 million for 1996 and 1995,
respectively, including $7.5 million and $.4 million recognized on a
cash basis.
At December 31, 1996 and 1995, the GIC Segment had $263.0 million and
$310.9 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,
--------------------------------------
1996 1995
----------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Short-term debt.................................... $ 174.1 $ -
----------------- -----------------
Long-term debt:
Equitable Life:
6.95% surplus notes scheduled to mature 2005..... 399.4 399.3
7.70% surplus notes scheduled to mature 2015..... 199.6 199.6
Eurodollar notes, 10.5% due 1997................. - 76.2
Zero coupon note, 11.25% due 1997................ - 120.1
Other............................................ .5 16.3
----------------- -----------------
Total Equitable Life......................... 599.5 811.5
----------------- -----------------
Wholly Owned and Joint Venture Real Estate:
Mortgage notes, 4.92% - 12.50% due through 2006.. 968.6 1,084.4
----------------- -----------------
Alliance:
Other............................................ 24.7 3.4
----------------- -----------------
Total long-term debt............................... 1,592.8 1,899.3
----------------- -----------------
Total Short-term and Long-term Debt................ $ 1,766.9 $ 1,899.3
================= =================
</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, 1996 range from 5.73% (the London Interbank Offering Rate
("LIBOR") plus 22.5 basis points) to 8.25% (the prime rate). There were
no borrowings outstanding under this bank credit facility at December
31, 1996.
F-25
<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,
1996.
In February 1996, Alliance entered into a new $250.0 million five-year
revolving credit facility with a group of banks which replaced its
$100.0 million revolving credit facility and its $100.0 million
commercial paper back-up revolving credit facility. Under the new
revolving credit facility, the interest rate, at the option of Alliance,
is a floating rate generally based upon a defined prime rate, a rate
related to the LIBOR or the Federal Funds rate. A facility fee is
payable on the total facility. The revolving credit facility will be
used to provide back-up liquidity for commercial paper to be used under
Alliance's $100.0 million commercial paper program, to fund commission
payments to financial intermediaries for the sale of Class B and C
shares under Alliance's mutual fund distribution system, and for general
working capital purposes. As of December 31, 1996, Alliance had not
issued any commercial paper under its $100.0 million commercial paper
program and there were no borrowings outstanding under Alliance's
revolving credit facility.
At December 31, 1996, long-term debt expected to mature in 1997 totaling
$174.1 million was reclassified as short-term debt.
Long-term Debt
--------------
Several of the long-term debt agreements have restrictive covenants
related to the total amount of debt, net tangible assets and other
matters. The Company is in compliance with all debt covenants.
On December 18, 1995, Equitable Life issued, in accordance with Section
1307 of the New York Insurance Law, $400.0 million of surplus notes
having an interest rate of 6.95% scheduled to mature in 2005 and $200.0
million of surplus notes having an interest rate of 7.70% scheduled to
mature in 2015 (together, the "Surplus Notes"). Proceeds from the
issuance of the Surplus Notes were $596.6 million, net of related
issuance costs. The unamortized discount on the Surplus Notes was $1.0
million at December 31, 1996. Payments of interest on or principal of
the Surplus Notes are subject to prior approval by the Superintendent.
The Company has pledged real estate, mortgage loans, cash and securities
amounting to $1,406.4 million and $1,629.7 million at December 31, 1996
and 1995, respectively, as collateral for certain long-term debt.
At December 31, 1996, aggregate maturities of the long-term debt based
on required principal payments at maturity for 1997 and the succeeding
four years are $494.9 million, $316.7 million, $19.7 million, $5.4
million, $0 million, respectively, and $946.7 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>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current............................... $ 97.9 $ (11.7) $ 4.0
Deferred.............................. (88.2) 132.2 96.2
----------------- ---------------- -----------------
Total................................... $ 9.7 $ 120.5 $ 100.2
================= ================ =================
</TABLE>
F-26
<PAGE>
The Federal income taxes attributable to consolidated operations are
different from the amounts determined by multiplying the earnings before
Federal income taxes and minority interest by the expected Federal
income tax rate of 35%. The sources of the difference and the tax
effects of each are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Expected Federal income tax expense..... $ 73.0 $ 173.7 $ 154.5
Non-taxable minority interest........... (28.6) (22.0) (17.6)
Differential earnings amount............ - - (16.8)
Adjustment of tax audit reserves........ 6.9 4.1 (4.6)
Equity in unconsolidated subsidiaries... (32.3) (19.4) (12.5)
Other................................... (9.3) (15.9) (2.8)
----------------- ---------------- -----------------
Federal Income Tax Expense.............. $ 9.7 $ 120.5 $ 100.2
================= ================ =================
</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 no longer is 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.
The components of the net deferred Federal income tax account are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 December 31, 1995
--------------------------------- ---------------------------------
ASSETS LIABILITIES Assets Liabilities
--------------- ---------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
DAC, reserves and reinsurance.......... $ - $ 166.0 $ - $ 304.4
Investments............................ - 328.6 - 326.9
Compensation and related benefits...... 259.2 - 293.0 -
Other.................................. - 1.8 - 32.3
--------------- ---------------- --------------- ---------------
Total.................................. $ 259.2 $ 496.4 $ 293.0 $ 663.6
=============== ================ =============== ===============
</TABLE>
The deferred Federal income taxes impacting operations reflect the net
tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes. The sources of these temporary differences
and the tax effects of each are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
DAC, reserves and reinsurance......... $ (156.2) $ 63.3 $ 12.0
Investments........................... 78.6 13.0 89.3
Compensation and related benefits..... 22.3 30.8 10.0
Other................................. (32.9) 25.1 (15.1)
----------------- ---------------- -----------------
Deferred Federal Income Tax
(Benefit) Expense................... $ (88.2) $ 132.2 $ 96.2
================= ================ =================
</TABLE>
F-27
<PAGE>
The Internal Revenue Service is in the process of examining the Holding
Company's consolidated Federal income tax returns for the years 1989
through 1991. Management believes these audits will have no material
adverse effect on the Company's results of operations.
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>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Direct premiums.................................... $ 461.4 $ 474.2 $ 476.7
Reinsurance assumed................................ 177.5 171.3 180.5
Reinsurance ceded.................................. (41.3) (38.7) (31.6)
----------------- ---------------- -----------------
Premiums........................................... $ 597.6 $ 606.8 $ 625.6
================= ================ =================
Universal Life and Investment-type Product
Policy Fee Income Ceded.......................... $ 48.2 $ 44.0 $ 27.5
================= ================ =================
Policyholders' Benefits Ceded...................... $ 54.1 $ 48.9 $ 20.7
================= ================ =================
Interest Credited to Policyholders' Account
Balances Ceded................................... $ 32.3 $ 28.5 $ 25.4
================= ================ =================
</TABLE>
Effective January 1, 1994, all in force business above $5.0 million was
reinsured. During 1996, the Company's retention limit on joint
survivorship policies was increased to $15.0 million. The Insurance
Group also reinsures the entire risk on certain substandard underwriting
risks as well as in certain other cases.
The Insurance Group cedes 100% of its group life and health business to
a third party insurance company. Premiums ceded totaled $2.4 million,
$260.6 million and $241.0 million for 1996, 1995 and 1994, respectively.
Ceded death and disability benefits totaled $21.2 million, $188.1
million and $235.5 million for 1996, 1995 and 1994, respectively.
Insurance liabilities ceded totaled $652.4 million and $724.2 million at
December 31, 1996 and 1995, respectively.
11) EMPLOYEE BENEFIT PLANS
The Company sponsors qualified and non-qualified defined benefit plans
covering substantially all employees (including certain qualified
part-time employees), managers and certain agents. The pension plans are
non-contributory. Equitable Life's and EREIM's benefits are based on a
cash balance formula or years of service and final average earnings, if
greater, under certain grandfathering rules in the plans. Alliance's
benefits are based on years of credited service, average final base
salary and primary social security benefits. The Company's funding
policy is to make the minimum contribution required by the Employee
Retirement Income Security Act of 1974.
Components of net periodic pension cost (credit) for the qualified and
non-qualified plans are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost....................................... $ 33.8 $ 30.0 $ 30.3
Interest cost on projected benefit obligations..... 120.8 122.0 111.0
Actual return on assets............................ (181.4) (309.2) 24.4
Net amortization and deferrals..................... 43.4 155.6 (142.5)
----------------- ---------------- -----------------
Net Periodic Pension Cost (Credit)................. $ 16.6 $ (1.6) $ 23.2
================= ================ =================
</TABLE>
F-28
<PAGE>
The funded status of the qualified and non-qualified pension plans is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Actuarial present value of obligations:
Vested.................................................. $ 1,672.2 $ 1,642.4
Non-vested.............................................. 10.1 10.9
---------------- -----------------
Accumulated Benefit Obligation............................ $ 1,682.3 $ 1,653.3
================ =================
Plan assets at fair value................................. $ 1,626.0 $ 1,503.8
Projected benefit obligation.............................. 1,765.5 1,743.0
---------------- -----------------
Projected benefit obligation in excess of plan assets..... (139.5) (239.2)
Unrecognized prior service cost........................... (17.9) (25.5)
Unrecognized net loss from past experience different
from that assumed....................................... 280.0 368.2
Unrecognized net asset at transition...................... 4.7 (7.3)
Additional minimum liability.............................. (19.3) (51.9)
---------------- -----------------
Prepaid Pension Cost...................................... $ 108.0 $ 44.3
================ =================
</TABLE>
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of projected benefit
obligations were 7.5% and 4.25%, respectively, at December 31, 1996 and
7.25% and 4.50%, respectively, at December 31, 1995. As of January 1,
1996 and 1995, the expected long-term rate of return on assets for the
retirement plan was 10.25% and 11%, respectively.
The Company recorded, as a reduction of shareholder's equity, an
additional minimum pension liability of $12.9 million and $35.1 million,
net of Federal income taxes, at December 31, 1996 and 1995,
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.
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 $34.7 million,
$36.4 million and $38.1 million for 1996, 1995 and 1994, 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 1996, 1995 and 1994, the Company made
estimated postretirement benefits payments of $18.9 million, $31.1
million and $29.8 million, respectively.
F-29
<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>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost....................................... $ 5.3 $ 4.0 $ 3.9
Interest cost on accumulated postretirement
benefits obligation.............................. 34.6 34.7 28.6
Net amortization and deferrals..................... 2.4 (2.3) (3.9)
----------------- ---------------- -----------------
Net Periodic Postretirement Benefits Costs......... $ 42.3 $ 36.4 $ 28.6
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Accumulated postretirement benefits obligation:
Retirees................................................ $ 381.8 $ 391.8
Fully eligible active plan participants................. 50.7 50.4
Other active plan participants.......................... 60.7 64.2
---------------- -----------------
493.2 506.4
Unrecognized prior service cost........................... 50.5 56.3
Unrecognized net loss from past experience different
from that assumed and from changes in assumptions....... (150.5) (181.3)
---------------- -----------------
Accrued Postretirement Benefits Cost...................... $ 393.2 $ 381.4
================ =================
</TABLE>
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 9.5% in 1996,
gradually declining to 3.5% in the year 2009 and in 1995 was 10%,
gradually declining to 3.5% in the year 2008. The discount rate used in
determining the accumulated postretirement benefits obligation was 7.50%
and 7.25% at December 31, 1996 and 1995, respectively.
If the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefits obligation as of December 31, 1996
would be increased 7%. The effect of this change on the sum of the
service cost and interest cost would be an increase of 8%.
12) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivatives
-----------
The Insurance Group primarily uses derivatives for asset/liability risk
management and for hedging individual securities. Derivatives mainly are
utilized to reduce the Insurance Group's exposure to interest rate
fluctuations. Accounting for interest rate swap transactions is on an
accrual basis. Gains and losses related to interest rate swap
transactions are amortized as yield adjustments over the remaining life
of the underlying hedged security. Income and expense resulting from
interest rate swap activities are reflected in net investment income.
The notional amount of matched interest rate swaps outstanding at
December 31, 1996 was $649.9 million. The average unexpired terms at
December 31, 1996 range from 2.2 to 2.7 years. At December 31, 1996, the
cost of terminating outstanding matched swaps in a loss position was
$8.3 million and the unrealized gain on outstanding matched swaps in a
gain position was $11.4 million. The Company has no intention of
terminating these contracts prior to maturity. During 1996, 1995 and
1994, net gains (losses) of $.2 million, $1.4 million and $(.2) million,
respectively, were recorded in connection with
F-30
<PAGE>
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, 1996 of contracts purchased and sold were $5,050.0 million
and $500.0 million, respectively. The net premium paid by Equitable Life
on these contracts was $22.5 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 to derivatives is by its
nature trading activities which are primarily for the purpose of
customer accommodations. DLJ's derivative activities consist primarily
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, 1996 and 1995.
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 universal life type contracts are measured at the
estimated fair value of the underlying assets. The estimated fair values
for single premium deferred annuities ("SPDA") are estimated using
projected cash flows discounted at current offering rates. The estimated
fair values for supplementary contracts not involving life contingencies
("SCNILC") and annuities certain are derived using discounted cash flows
based upon the estimated current offering rate.
Fair value for long-term debt is determined using published market
values, where available, or contractual cash flows discounted at market
interest rates. The estimated fair values for non-recourse mortgage debt
are determined by discounting contractual cash flows at a rate which
takes into account the level of current market interest rates and
collateral risk. The estimated fair values for recourse mortgage debt
are determined by discounting contractual cash flows at a rate based
upon current interest rates of other companies with credit ratings
similar to the Company. The Company's fair value of short-term
borrowings approximates their carrying value.
F-31
<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,
--------------------------------------------------------------------
1996 1995
--------------------------------- ---------------------------------
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.......... $ 3,133.0 $ 3,394.6 $ 3,638.3 $ 3,973.6
Other joint ventures................... 467.0 467.0 492.7 492.7
Policy loans........................... 2,196.1 2,221.6 1,976.4 2,057.5
Policyholders' account balances:
Association plans.................... 78.1 77.3 101.0 100.0
Group annuity contracts.............. 2,141.0 1,954.0 2,335.0 2,395.0
SPDA................................. 1,062.7 1,065.7 1,265.8 1,272.0
Annuities certain and SCNILC......... 654.9 736.2 646.4 716.7
Long-term debt......................... 1,592.8 1,557.7 1,899.3 1,962.9
Closed Block Financial Instruments:
-----------------------------------
Mortgage loans on real estate.......... 1,380.7 1,425.6 1,368.8 1,461.4
Other equity investments............... 105.0 105.0 151.6 151.6
Policy loans........................... 1,765.9 1,798.0 1,797.2 1,891.4
SCNILC liability....................... 30.6 34.9 34.8 39.6
GIC Segment Financial Instruments:
----------------------------------
Mortgage loans on real estate.......... 1,111.1 1,220.3 1,485.8 1,666.1
Fixed maturities....................... 42.5 42.5 107.4 107.4
Other equity investments............... 300.5 300.5 455.9 455.9
Guaranteed interest contracts.......... 290.7 300.5 329.0 352.0
Long-term debt......................... 102.1 102.2 135.1 136.0
</TABLE>
13) COMMITMENTS AND CONTINGENT LIABILITIES
The Company has provided, from time to time, certain guarantees or
commitments to affiliates, investors and others. These arrangements
include commitments by the Company, under certain conditions: to make
capital contributions of up to $244.9 million to affiliated real estate
joint ventures; to provide equity financing to certain limited
partnerships of $205.8 million at December 31, 1996, under existing loan
or loan commitment agreements; and to provide short-term financing loans
which at December 31, 1996 totaled $14.6 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, 1996, the Insurance Group had $51.6 million of letters
of credit outstanding.
F-32
<PAGE>
14) LITIGATION
A number of lawsuits has 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, EVLICO and The
Equitable of Colorado, Inc. ("EOC"), 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, EVLICO and EOC of the type referred to in this paragraph are the
litigations described in the following eight 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 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 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. On May 29, 1996, the New York County Supreme
Court entered a judgment dismissing the complaint with prejudice.
Plaintiffs have filed a notice of appeal of that judgment.
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. The Texas
action also claims that Equitable Life misrepresented to Texas
policyholders that the Texas Insurance Department had approved Equitable
Life's rate increases. These 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. On February 9, 1996, Equitable Life removed the Pennsylvania
action, Malvin, to the United States District Court for the Middle
District of Pennsylvania. Following the decision granting Equitable
Life's motion to dismiss the New York action (Golomb), on the consent of
the parties the District Court ordered an indefinite stay of all
proceedings in the Pennsylvania action, pending either party's right to
reinstate the proceeding, and ordered that for administrative purposes
the case be deemed administratively closed. On February 2, 1996,
Equitable Life removed the Texas action, Bowler, to the United States
District Court for the Northern District of Texas. On May 20, 1996, the
plaintiffs in Bowler amended their complaint by adding allegations of
misrepresentation regarding premium increases on other types of
guaranteed renewable major medical insurance policies issued by
Equitable Life up to and including 1983. On July 1, 1996, Equitable Life
filed a motion for summary judgment dismissing the first amended
complaint in its entirety. In August, 1996, the court granted plaintiffs
leave to file a supplemental complaint on behalf of a proposed class of
Texas policyholders claiming unfair discrimination, breach of contract
and other claims arising out of alleged differences between premiums
charged to Texas policyholders and premiums charged to similarly
situated policyholders in New York and certain other states. Plaintiffs
seek refunds of alleged overcharges, exemplary or additional damages
citing
F-33
<PAGE>
Texas statutory provisions which among other things, permit two times
the amount of actual damage plus additional penalties if the acts
complained of are found to be knowingly committed, and injunctive
relief. Equitable Life has also filed a motion for summary judgment
dismissing the supplemental complaint in its entirety. Plaintiffs also
obtained permission to add another plaintiff to the first amended and
supplemental complaints. Plaintiffs have opposed both motions for
summary judgment and requested that certain issues be found in their
favor. Equitable Life is in the process of replying.
On May 22, 1996, a separate action entitled Bachman v. The Equitable
Life Assurance Society of the United States, was filed in Florida state
court making claims similar to those in the previously reported Golomb
action. The Florida action is asserted on behalf of a proposed class of
Florida issued or renewed policyholders insured after 1983 under
Lifetime Guaranteed Renewable Major Medical Insurance Policies issued by
Equitable Life. The Florida action seeks compensatory and punitive
damages and injunctive relief restricting the methods by which Equitable
Life increases premiums in the future based on various common law
claims. On June 20, 1996, Equitable Life removed the Florida action to
Federal court. Equitable Life has answered the complaint, denying the
material allegations and asserting certain affirmative defenses. On
December 6, 1996, Equitable Life filed a motion for summary judgment and
plaintiff is expected to file its response to that motion shortly.
On November 6, 1996, a proposed class action entitled Fletcher, et al.
v. The Equitable Life Assurance Society of the United States, was filed
in California Superior Court for Fresno County, making substantially the
same allegations concerning premium rates and premium rate increases on
guaranteed renewable policies made in the Bowler action. The complaint
alleges, among other things, that differentials between rates charged
California policyholders and policyholders in New York and certain other
states, and the methods used by Equitable Life to calculate premium
increases, breached the terms of its policies, that Equitable Life
misrepresented and concealed the facts pertaining to such differentials
and methods in violation of California law, and that Equitable Life also
misrepresented that its rate increases were approved by the California
Insurance Department. Plaintiffs seek compensatory damages in an
unspecified amount, rescission, injunctive relief and attorneys' fees.
Equitable Life removed the action to Federal court; plaintiff has moved
to remand the case to state court. Although the outcome of any
litigation cannot be predicted with certainty, particularly in the early
stages of an action, the Company's management believes that the ultimate
resolution of the Golomb, Malvin, Bowler, Bachman and Fletcher
litigations should not have a material adverse effect on the financial
position of the Company. Due to the early stage of such litigations, the
Company's management cannot make an estimate of loss, if any, or predict
whether or not such litigations 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, 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. On June 28, 1996, the court issued a decision and order
dismissing with prejudice plaintiff's causes of action for fraud,
constructive fraud, breach of fiduciary duty, negligence, and unjust
enrichment, and dismissing without prejudice plaintiff's cause of action
under the New York State consumer protection statute. The only remaining
causes of action are for breach of contract and negligent
misrepresentation. Plaintiffs made a motion for reargument with respect
to this order, which was submitted to the court in October 1996. This
motion was denied by the court on December 16, 1996.
F-34
<PAGE>
On May 21, 1996, an action entitled Elton F. Duncan, III v. The
Equitable Life Assurance Society of the United States, was commenced
against Equitable Life in the Civil District Court for the Parish of
Orleans, State of Louisiana. The action is brought by an individual who
purchased a whole life policy. Plaintiff alleges misrepresentations
concerning the extent to which the policy was a proper replacement
policy and the number of years that the annual premium would need to be
paid. Plaintiff purports to represent a class consisting of all persons
who purchased whole life or universal life insurance policies from
Equitable Life from January 1, 1982 to the present. Plaintiff seeks
damages, including punitive damages, in an unspecified amount. On July
26, 1996, an action entitled Michael Bradley v. Equitable Variable Life
Insurance Company, was commenced in New York state court. The action is
brought by the holder of a variable life insurance policy issued by
EVLICO. The plaintiff purports to represent a class consisting of all
persons or entities who purchased one or more life insurance policies
issued by EVLICO from January 1, 1980. The complaint puts at issue
various alleged sales practices and alleges misrepresentations
concerning the extent to which the policy was a proper replacement
policy and the number of years that the annual premium would need to be
paid. Plaintiff seeks damages, including punitive damages, in an
unspecified amount and also seeks injunctive relief prohibiting EVLICO
from canceling policies for failure to make premium payments beyond the
alleged stated number of years that the annual premium would need to be
paid. On September 21, 1996 Equitable Life, EVLICO and EOC made a motion
to have this proceeding moved from Kings County Supreme Court to New
York County for joint trial or consolidation with the Cole action. The
motion was denied by the court on January 9, 1997. On January 10, 1997,
plaintiffs moved for certification of a nationwide class consisting of
all persons or entities who were sold one or more life insurance
products on a "vanishing premium" basis and/or were allegedly induced to
purchase additional policies from EVLICO, using the cash value
accumulated in existing policies, from January 1, 1980 through and
including December 31, 1996. Plaintiffs further moved to have Michael
Bradley designated as the class representative. Discovery regarding
class certification is underway.
On December 12, 1996, an action entitled Robert E. Dillon v. The
Equitable Life Assurance Society of the United States and The Equitable
of Colorado, was commenced in the United States District Court for the
Southern District of Florida. The action is brought by an individual who
purchased a joint whole life policy from EOC. The complaint puts at
issue various alleged sales practices and alleges misrepresentations
concerning the alleged impropriety of replacement policies issued by
Equitable Life and EOC and alleged misrepresentations regarding the
number of years premiums would have to be paid on the defendants'
policies. Plaintiff brings claims for breach of contract, fraud,
negligent misrepresentation, money had and received, unjust enrichment
and imposition of a constructive trust. Plaintiff purports to represent
two classes of persons. The first is a "contract class," consisting of
all persons who purchased whole or universal life insurance policies
from Equitable Life and EOC and from whom Equitable Life and EOC have
sought additional payments beyond the number of years allegedly promised
by Equitable Life and EOC. The second is a "fraud class," consisting of
all persons with an interest in policies issued by Equitable Life and
EOC at any time since October 1, 1986. Plaintiff seeks damages in an
unspecified amount, and also seeks injunctive relief attaching Equitable
Life's and EOC's profits from their alleged sales practices. Equitable
Life's and EOC's time to answer or move with respect to the complaint
has been extended until February 24, 1997. Although the outcome of
litigation cannot be predicted with certainty, particularly in the early
stages of an action, the Company's management believes that the ultimate
resolution of the Cole, Duncan, Bradley and Dillon litigations should
not have a material adverse effect on the financial position of the
Company. Due to the early stages of such litigations, the Company's
management cannot make an estimate of loss, if any, or predict whether
or not any such litigation will have a material adverse effect on the
Company's results of operations in any particular period.
On January 3, 1996, an amended complaint was filed in an action entitled
Frank Franze Jr. and George Busher, individually and on behalf of all
others similarly situated v. The Equitable Life Assurance Society of the
United States, and Equitable Variable Life Insurance Company, No.
94-2036 in the United States District Court for the Southern District of
Florida. The action was brought by two individuals who purchased
variable life insurance policies. The plaintiffs purport to represent a
nationwide class consisting of all persons who purchased variable life
insurance policies from Equitable Life and EVLICO since September 30,
1991. The basic allegation of the amended complaint is that Equitable
Life's and EVLICO's agents were trained not to
F-35
<PAGE>
disclose fully that the product being sold was life insurance.
Plaintiffs allege violations of the Federal securities laws and seek
rescission of the contracts or compensatory damages and attorneys' fees
and expenses. The court denied Equitable Life and EVLICO's motion to
dismiss the amended complaint on September 24, 1996. Equitable Life and
EVLICO have answered the amended complaint, denying the material
allegations and asserting certain affirmative defenses. Currently, the
parties are conducting discovery in connection with plaintiffs' attempt
to certify a class. On January 9, 1997, an action entitled Rosemarie
Chaviano, individually and on behalf of all others similarly situated v.
The Equitable Life Assurance Society of the United States, and Equitable
Variable Life Insurance Company, was filed in Massachusetts state court
making claims similar to those in the Franze action and alleging
violations of the Massachusetts securities laws. The plaintiff purports
to represent all persons in Massachusetts who purchased variable life
insurance contracts from Equitable Life and EVLICO from January 9, 1993
to the present. The Massachusetts action seeks rescission of the
contracts or compensatory damages, attorneys' fees, expenses and
injunctive relief. Although the outcome of any litigation cannot be
predicted with certainty, particularly in the early stages of an action,
the Company's management believes that the ultimate resolution of the
litigations discussed in this paragraph should not have a material
adverse effect on the financial position of the Company. Due to the
early stages of such litigation, the Company's management cannot make an
estimate of loss, if any, or predict whether or not any such litigation
will have a material adverse effect on the Company's results of
operations in any particular period.
Equitable Life recently responded to a subpoena from the U.S. Department
of Labor ("DOL") requesting copies of any third-party appraisals in
Equitable Life's possession relating to the ten largest properties (by
value) in the Prime Property Fund ("PPF"). PPF is an open-end,
commingled real estate separate account of Equitable Life for pension
clients. Equitable Life serves as investment manager in PPF and has
retained EREIM as advisor. In early 1995, the DOL commenced a national
investigation of commingled real estate funds with pension investors,
including PPF. The investigation now appears to be focused principally
on appraisal and valuation procedures in respect of fund properties. The
most recent request from the DOL seems to reflect, at least in part, an
interest in the relationship between the valuations for those properties
reflected in appraisals prepared for local property tax proceedings and
the valuations used by PPF for other purposes. At no time has the DOL
made any specific allegation that Equitable Life or EREIM has acted
improperly and Equitable Life and EREIM believe that any such allegation
would be without foundation. While the outcome of this investigation
cannot be predicted with certainty, in the opinion of management, the
ultimate resolution of this matter should not have a material adverse
effect on the Company's consolidated financial position or results of
operations in any particular period.
Equitable Casualty Insurance Company ("Casualty"), an indirect wholly
owned subsidiary of Equitable Life, is party to an arbitration
proceeding that commenced in August 1995. The proceeding relates to a
dispute among Casualty, Houston General Insurance Company ("Houston
General") and GEICO General Insurance Company ("GEICO General")
regarding the interpretation of a reinsurance agreement. The arbitration
panel issued a final award in favor of Casualty and GEICO General on
June 17, 1996. Casualty and GEICO General moved in the pending Texas
state court action, with Houston General's consent, for an order
confirming the arbitration award and entering judgment dismissing the
action. The motion was granted on January 29, 1997. The parties have
also stipulated to the dismissal without prejudice of a related Texas
Federal court action brought by Houston General against GEICO General
and Equitable Life. In connection with confirmation of the arbitration
award, Houston General paid to Casualty approximately $839,600 in
settlement of certain reimbursement claims by Casualty against Houston
General.
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. 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
F-36
<PAGE>
were not permitted by the Fund's investment objective, and that there
was no shareholder vote to change the investment objective to permit
purchases in such amounts. The Complaint further alleges that the
decline in the value of the Mexican and Argentine securities held by the
Fund caused the Fund's net asset value to decline to the detriment of
the Fund's shareholders. On September 26, 1996, the United States
District Court for the Southern District of New York granted the
defendants' motion to dismiss all counts of the complaint. On October
11, 1996, plaintiffs filed a motion for reconsideration of the court's
decision granting defendants' motion to dismiss the Complaint. On
November 25, 1996, the court denied plaintiffs' motion for
reconsideration. On October 29, 1996, plaintiffs filed a motion for
leave to file an amended complaint. The principal allegations of the
proposed amended complaint are that the Fund did not properly disclose
that it planned to invest in mortgage-backed derivative securities and
that two advertisements used by the Fund misrepresented the risks of
investing in the Fund. Plaintiffs also reiterated allegations in the
Complaint that the Fund failed to hedge against the risks of investing
in foreign securities despite representations that it would do so.
Alliance believes that the allegations in the Complaint are without
merit and intends to vigorously defend against these claims. While the
ultimate outcome of this matter cannot be determined at this time,
management of Alliance does not expect that it will have a material
adverse effect on Alliance's results of operations or financial
condition.
On January 26, 1996, a purported purchaser of certain notes and warrants
to purchase shares of common stock of Rickel Home Centers, Inc.
("Rickel") filed a class action complaint against Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC") and certain other defendants
for unspecified compensatory and punitive damages in the 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 issued
by Rickel in October 1994. The complaint alleges violations of Federal
securities laws and common law fraud against DLJSC, as the underwriter
of the units and as an owner of 7.3% of the common stock of Rickel, Eos
Partners, L.P., and General Electric Capital Corporation, each as owners
of 44.2% of the common stock of Rickel, and members of the Board of
Directors of Rickel, including a DLJSC Managing Director. The complaint
seeks to hold DLJSC liable for alleged misstatements and omissions
contained in the prospectus and registration statement filed in
connection with the offering of the units, alleging that the defendants
knew of financial losses and a decline in value of Rickel in the months
prior to the offering and did not disclose such information. The
complaint also alleges that Rickel failed to pay its semi-annual
interest payment due on the units on December 15, 1995 and that Rickel
filed a voluntary petition for reorganization pursuant to Chapter 11 of
the 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, if any, or predict whether or not such litigation
will have a material adverse effect on DLJ's results of operations in
any particular period.
In October 1995, DLJSC was named as a defendant in a purported class
action filed in a Texas State Court on behalf of the holders of $550.0
million principal amount of subordinated redeemable discount debentures
of National Gypsum Corporation ("NGC") canceled in connection with a
Chapter 11 plan of reorganization for NGC consummated in July 1993. The
named plaintiff in the State Court action also filed an adversary
proceeding in the 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 Court action, which
F-37
<PAGE>
had been removed to the Bankruptcy Court, has been remanded back to the
state court, which remand is being opposed by DLJSC. DLJSC intends to
defend itself vigorously against all of the allegations contained in the
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, if any, or predict whether
or not such litigation will have a material adverse effect on DLJ's
results of operations in any particular period.
In November and December 1995, DLJSC, along with various other parties,
was named as a defendant in a number of purported class actions filed in
the U.S. District Court for the Eastern District of Louisiana. The
complaints allege violations of the Federal securities laws arising out
of a public offering in 1994 of $435.0 million of first mortgage notes
of Harrah's Jazz Company and Harrah's Jazz Finance Corp. The complaints
seek to hold DLJSC liable for various alleged misstatements and
omissions contained in the prospectus dated November 9, 1994. 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, if any, or
predict whether or not such litigation will have a material adverse
effect on DLJ's results of operations in any particular period.
In 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 1997 and the succeeding four years are $113.7 million, $110.6
million, $100.3 million, $72.3 million, $59.3 million and $427.3 million
thereafter. Minimum future sublease rental income on these noncancelable
leases for 1997 and the succeeding four years are $9.8 million, $6.0
million, $4.5 million, $2.4 million, $.8 million and $.1 million
thereafter.
At December 31, 1996, the minimum future rental income on noncancelable
operating leases for wholly owned investments in real estate for 1997
and the succeeding four years are $263.0 million, $242.1 million, $219.8
million, $194.3 million, $174.6 million and $847.1 million thereafter.
F-38
<PAGE>
16) OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Compensation costs................................. $ 647.3 $ 595.9 $ 687.5
Commissions........................................ 329.5 314.3 313.0
Short-term debt interest expense................... 8.0 11.4 19.0
Long-term debt interest expense.................... 137.3 108.1 98.3
Amortization of policy acquisition costs........... 405.2 317.8 313.4
Capitalization of policy acquisition costs......... (391.9) (391.0) (410.9)
Rent expense, net of sub-lease income.............. 113.7 109.3 116.0
Other.............................................. 798.9 710.0 721.4
----------------- ---------------- -----------------
Total.............................................. $ 2,048.0 $ 1,775.8 $ 1,857.7
================= ================ =================
</TABLE>
During 1996, 1995 and 1994, the Company restructured certain operations
in connection with cost reduction programs and recorded pre-tax
provisions of $24.4 million, $32.0 million and $20.4 million,
respectively. The amounts paid during 1996, associated with cost
reduction programs, totaled $17.7 million. At December 31, 1996, the
liabilities associated with cost reduction programs amounted to $44.5
million. The 1996 cost reduction program included restructuring costs
related to the consolidation of insurance operations' service centers.
The 1995 cost reduction program included relocation expenses, including
the accelerated amortization of building improvements associated with
the relocation of the home office. 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. Amortization of DAC included $145.0 million writeoff
of DAC related to DI contracts in the fourth quarter of 1996.
17) INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
Equitable Life is restricted as to the amounts it may pay as dividends
to the Holding Company. Under the New York Insurance Law, the
Superintendent has broad discretion to determine whether the financia1
condition of a stock life insurance company would support the payment of
dividends to its shareholders. For 1996, 1995 and 1994, statutory net
(loss) earnings totaled $(351.1) million, $(352.4) million and $67.5
million, respectively. No amounts are expected to be available for
dividends from Equitable Life to the Holding Company in 1997.
At December 31, 1996, the Insurance Group, in accordance with various
government and state regulations, had $21.9 million of securities
deposited with such government or state agencies.
F-39
<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>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Net change in statutory surplus and capital stock.. $ 56.0 $ 78.1 $ 292.4
Change in asset valuation reserves................. (48.4) 365.7 (285.2)
----------------- ---------------- -----------------
Net change in statutory surplus, capital stock
and asset valuation reserves..................... 7.6 443.8 7.2
Adjustments:
Future policy benefits and policyholders'
account balances............................... (298.5) (66.0) (5.3)
DAC.............................................. (13.3) 73.2 97.5
Deferred Federal income taxes.................... 108.0 (158.1) (58.7)
Valuation of investments......................... 289.8 189.1 45.2
Valuation of investment subsidiary............... (117.7) (188.6) 396.6
Limited risk reinsurance......................... 92.5 416.9 74.9
Contribution from the Holding Company............ - - (300.0)
Issuance of surplus notes........................ - (538.9) -
Postretirement benefits.......................... 28.9 (26.7) 17.1
Other, net....................................... 12.4 115.1 (44.0)
GAAP adjustments of Closed Block................. (9.8) 15.7 (9.5)
GAAP adjustments of discontinued GIC
Segment........................................ (89.6) 37.3 42.8
----------------- ---------------- -----------------
Net Earnings of the Insurance Group................ $ 10.3 $ 312.8 $ 263.8
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Statutory surplus and capital stock................ $ 2,258.9 $ 2,202.9 $ 2,124.8
Asset valuation reserves........................... 1,297.5 1,345.9 980.2
----------------- ---------------- -----------------
Statutory surplus, capital stock and asset
valuation reserves............................... 3,556.4 3,548.8 3,105.0
Adjustments:
Future policy benefits and policyholders'
account balances............................... (1,305.0) (1,006.5) (940.5)
DAC.............................................. 3,104.9 3,075.8 3,219.4
Deferred Federal income taxes.................... (306.1) (452.0) (29.4)
Valuation of investments......................... 286.8 417.7 (794.1)
Valuation of investment subsidiary............... (782.8) (665.1) (476.5)
Limited risk reinsurance......................... (336.5) (429.0) (845.9)
Issuance of surplus notes........................ (539.0) (538.9) -
Postretirement benefits.......................... (314.4) (343.3) (316.6)
Other, net....................................... 126.3 4.4 (79.2)
GAAP adjustments of Closed Block................. 783.7 830.8 740.4
GAAP adjustments of discontinued GIC
Segment........................................ (190.3) (184.6) (221.9)
----------------- ---------------- -----------------
Equity of the Insurance Group...................... $ 4,084.0 $ 4,258.1 $ 3,360.7
================= ================ =================
</TABLE>
F-40
<PAGE>
18) BUSINESS SEGMENT INFORMATION
The Company has two major business segments: Insurance Operations and
Investment Services. Interest expense related to debt not specific to
either business segment is presented as Corporate interest expense.
Information for all periods is presented on a comparable basis.
The Insurance Operations segment offers a variety of traditional,
variable and interest-sensitive life insurance products, disability
income, annuity products, mutual fund and other investment products to
individuals and small groups and administers traditional participating
group annuity contracts with conversion features, generally for
corporate qualified pension plans, and association plans which provide
full service retirement programs for individuals affiliated with
professional and trade associations. This segment includes Separate
Accounts for individual insurance and annuity products.
The Investment Services segment provides investment fund management,
primarily to institutional clients. This segment includes the Company's
equity interest in DLJ and Separate Accounts which provide various
investment options for group clients through pooled or single group
accounts.
Intersegment investment advisory and other fees of approximately $127.5
million, $124.1 million and $135.3 million for 1996, 1995 and 1994,
respectively, are included in total revenues of the Investment Services
segment. These fees, excluding amounts related to the discontinued GIC
Segment of $15.7 million, $14.7 million and $27.4 million for 1996, 1995
and 1994, respectively, are eliminated in consolidation.
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Insurance operations............................... $ 3,742.9 $ 3,614.6 $ 3,507.4
Investment services................................ 1,126.1 949.1 935.2
Consolidation/elimination.......................... (24.5) (34.9) (27.2)
----------------- ---------------- -----------------
Total.............................................. $ 4,844.5 $ 4,528.8 $ 4,415.4
================= ================ =================
Earnings (loss) from continuing operations
before Federal income taxes, minority interest
and cumulative effect of accounting change
Insurance operations............................... $ (36.6) $ 303.1 $ 327.5
Investment services................................ 311.9 224.0 227.9
Consolidation/elimination.......................... .2 (3.1) .3
----------------- ---------------- -----------------
Subtotal..................................... 275.5 524.0 555.7
Corporate interest expense......................... (66.9) (27.9) (114.2)
----------------- ---------------- -----------------
Total.............................................. $ 208.6 $ 496.1 $ 441.5
================= ================ =================
</TABLE>
DECEMBER 31,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
Assets
Insurance operations........... $ 60,464.9 $ 56,720.5
Investment services............ 13,542.5 12,842.9
Consolidation/elimination...... (399.6) (354.4)
---------------- -----------------
Total.......................... $ 73,607.8 $ 69,209.0
================ =================
F-41
<PAGE>
19) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations for 1996 and 1995, are summarized
below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
----------------- ----------------- ------------------ ------------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1996
----
Total Revenues................ $ 1,169.7 $ 1,193.6 $ 1,193.6 $ 1,287.6
================= ================= ================== ==================
Earnings (Loss) from
Continuing Operations
before Cumulative Effect
of Accounting Change........ $ 94.8 $ 87.1 $ 93.2 $ (157.9)
================= ================= ================== ==================
Net Earnings (Loss)........... $ 71.7 $ 87.1 $ 93.2 $ (241.7)
================= ================= ================== ==================
1995
----
Total Revenues................ $ 1,079.1 $ 1,164.0 $ 1,138.8 $ 1,146.9
================= ================= ================== ==================
Net Earnings.................. $ 66.3 $ 101.7 $ 100.2 $ 44.6
================= ================= ================== ==================
</TABLE>
The quarterly results of operations for 1996 and 1995 have been restated
to reflect the Company's accounting change adopted in the fourth quarter
of 1996 for long-duration participating life contracts in accordance
with the provisions prescribed by SFAS No. 120. Net earnings for the
three months ended December 31, 1996 includes a charge of $339.3 million
related to writeoffs of DAC on DI contracts of $94.3 million, reserve
strengthening on DI business of $113.7 million, pension par of $47.5
million and the discontinued GIC Segment of $83.8 million.
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. DLJ restricted stock units
represents forfeitable rights to receive approximately 5.2 million
shares of DLJ common stock through February 2000.
The results of operations of DLJ are accounted for on the equity basis
and are included in commissions, fees and other income in the
consolidated statements of earnings. The Company's carrying value of DLJ
is included in investment in and loans to affiliates in the consolidated
balance sheets.
F-42
<PAGE>
Summarized balance sheets information for DLJ, reconciled to the
Company's carrying value of DLJ, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Assets:
Trading account securities, at market value............................ $ 15,728.1 $ 10,821.3
Securities purchased under resale agreements........................... 20,598.7 18,748.2
Broker-dealer related receivables...................................... 16,525.9 13,023.7
Other assets........................................................... 2,651.0 1,983.3
---------------- -----------------
Total Assets........................................................... $ 55,503.7 $ 44,576.5
================ =================
Liabilities:
Securities sold under repurchase agreements............................ $ 29,378.3 $ 26,744.8
Broker-dealer related payables......................................... 19,409.7 12,915.5
Short-term and long-term debt.......................................... 2,704.5 1,742.0
Other liabilities...................................................... 2,164.0 1,750.5
---------------- -----------------
Total liabilities...................................................... 53,656.5 43,152.8
Cumulative exchangeable preferred stock................................ - 225.0
DLJ's company-obligated mandatorily redeemed preferred
securities of subsidiary trust holding solely debentures of DLJ...... 200.0 -
Total shareholders' equity............................................. 1,647.2 1,198.7
---------------- -----------------
Total Liabilities, Cumulative Exchangeable Preferred Stock and
Shareholders' Equity................................................. $ 55,503.7 $ 44,576.5
================ =================
DLJ's equity as reported............................................... $ 1,647.2 $ 1,198.7
Unamortized cost in excess of net assets acquired in 1985
and other adjustments................................................ 23.9 40.5
The Holding Company's equity ownership in DLJ.......................... (590.2) (499.0)
Minority interest in DLJ............................................... (588.6) (324.3)
---------------- -----------------
The Company's Carrying Value of DLJ.................................... $ 492.3 $ 415.9
================ =================
</TABLE>
Summarized statements of earnings information for DLJ reconciled to the
Company's equity in earnings of DLJ is as follows:
<TABLE>
<CAPTION>
1996 1995
---------------- -----------------
(IN MILLIONS)
<S> <C> <C>
Commission, fees and other income...................................... $ 1,818.2 $ 1,325.9
Net investment income.................................................. 1,074.2 904.1
Dealer, trading and investment gains, net.............................. 598.4 528.6
---------------- -----------------
Total revenues......................................................... 3,490.8 2,758.6
Total expenses including income taxes.................................. 3,199.5 2,579.5
---------------- -----------------
Net earnings........................................................... 291.3 179.1
Dividends on preferred stock........................................... 18.7 19.9
---------------- -----------------
Earnings Applicable to Common Shares................................... $ 272.6 $ 159.2
================ =================
DLJ's earnings applicable to common shares as reported................. $ 272.6 $ 159.2
Amortization of cost in excess of net assets acquired in 1985.......... (3.1) (3.9)
The Holding Company's equity in DLJ's earnings......................... (107.8) (90.4)
Minority interest in DLJ............................................... (73.4) (6.5)
---------------- -----------------
The Company's Equity in DLJ's Earnings................................. $ 88.3 $ 58.4
================ =================
</TABLE>
F-43
<PAGE>
21) ACCOUNTING FOR STOCK-BASED COMPENSATION
The Holding Company sponsors a stock option plan for employees of
Equitable Life. DLJ and Alliance each sponsor their own stock option
plans for certain employees. The Company elected to continue to account
for stock-based compensation using the intrinsic value method prescribed
in APB Opinion No. 25. Had compensation expense of the Company's stock
option incentive plans for options granted after December 31, 1994 been
determined based on the estimated fair value at the grant dates for
awards under those plans, the Company's pro forma net earnings and
earnings per share for 1996 and 1995 would have been as follows:
1996 1995
--------------- ---------------
(IN MILLIONS)
Net Earnings
As Reported......... $ 10.3 $ 312.8
Pro Forma........... $ 3.2 $ 311.3
The fair value of options and units granted after December 31, 1994,
used as a basis for the above pro forma disclosures, was estimated as of
the date of grants using Black-Scholes option pricing models. The option
and unit pricing assumptions for 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
HOLDING COMPANY DLJ ALLIANCE
------------------------- -------------------------- -----------------------------
1996 1995 1996 1995 1996 1995
----------- ----------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dividend yield........... 0.80% 0.96% 1.54% 1.85% 8.0% 8.0%
Expected volatility...... 20.00% 20.00% 25.00% 25.00% 23.00% 23.00%
Risk-free interest rate.. 5.92% 6.83% 6.07% 5.86% 5.80% 6.00%
Expected Life............ 5 YEARS 5 years 5 YEARS 5 years 7.43 YEARS 7.43 years
Weighted fair value
per option granted..... $6.94 $5.90 $9.35 - $2.69 $2.24
</TABLE>
F-44
<PAGE>
A summary of the Holding Company and DLJ stock option plans and
Alliance's Unit option plans are as follows:
<TABLE>
<CAPTION>
HOLDING COMPANY DLJ ALLIANCE
----------------------------- ----------------------------- -----------------------------
Options Options Options
Outstanding Outstanding Outstanding
Weighted Weighted Weighted
Average Average Average
Shares Exercise Shares Exercise Units Exercise
(In Millions) Price (In Millions) Price (In Millions) Price
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of
January 1, 1994........ 6.1 - 3.2
Granted................ .7 - 1.2
Exercised.............. - - (.5)
Forfeited.............. - - (.1)
------------- ------------- -------------
Balance as of
December 31, 1994...... 6.8 - 3.8
Granted................ .4 9.2 1.8
Exercised.............. (.1) - (.5)
Expired................ (.1) - -
Forfeited.............. (.3) - (.3)
------------- ------------- -------------
Balance as of
December 31, 1995...... 6.7 $20.27 9.2 $27.00 4.8 $17.72
Granted................ .7 $24.94 2.1 $32.54 .7 $25.12
Exercised.............. (.1) $19.91 - - (.4) $13.64
Expired................ (.6) $20.21 - - - -
Forfeited.............. - - (.2) $27.00 (.1) $19.32
------------- ------------- -------------
Balance as of
December 31, 1996...... 6.7 $20.79 11.1 $28.06 5.0 $19.07
============= ============= ============= ============= ============= =============
</TABLE>
F-45
<PAGE>
Information with respect to stock and unit options outstanding and
exercisable at December 31, 1996 is as follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------------------------------------- --------------------------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices (In Millions) Life (Years) Price (In Millions) Price
--------------------- ----------------- --------------- ----------------- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
Holding
Company
---------------------
$18.125-$27.75 6.7 7.00 $20.79 3.4 $20.18
================= =============== ================= =================== ================
DLJ
---------------------
$27.00-$33.50 11.1 9.00 $28.06 - -
================= =============== ================= =================== ================
Alliance
---------------------
$ 6.0625-$15.9375 1.3 4.76 $12.97 1.2 $12.58
$16.3125-$19.75 1.1 8.19 $19.13 .2 $18.69
$19.875 -$19.875 1.0 7.36 $19.88 .4 $19.88
$20.75 -$24.375 .9 8.46 $22.05 .3 $21.84
$24.375 -$25.125 .7 9.96 $25.13 - -
----------------- -------------------
$ 6.0625-$25.125 5.0 7.43 $19.07 2.1 $15.84
================= =============== ================= =================== ================
</TABLE>
F-46
<PAGE>
================================================================================
[RIA LOGO]
SEPARATE ACCOUNT UNITS OF INTEREST
UNDER GROUP ANNUITY CONTRACTS
<TABLE>
<S> <C> <C>
o MONEY MARKET FUND o GROWTH & INCOME FUND BLENDED FUNDS:
o INTERMEDIATE GOVERNMENT o EQUITY INDEX FUND o CONSERVATIVE INVESTORS FUND
SECURITIES FUND o COMMON STOCK FUND o BALANCED FUND
o BOND FUND o GLOBAL FUND o GROWTH INVESTORS FUND
o QUALITY BOND FUND o INTERNATIONAL FUND
o HIGH YIELD FUND o AGGRESSIVE STOCK FUND
</TABLE>
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
---------------------------------------------------------
RIA SERVICE OFFICE:
Equitable Life
RIA Service Office
200 Plaza Drive
Secaucus, NJ 07094-3689
Tel.: (800) 967-4560
(201) 583-2302
(9 A.M. to 5 P.M. Eastern time)
Fax: (201) 583-2304, 2305, or 2306
(To obtain pre-recorded Fund unit values, use our toll-free number listed above)
ADDRESS FOR CONTRIBUTIONS ONLY:
Equitable Life
RIA/EPP
P.O. Box 13503
Newark, NJ 07188
EXPRESS MAIL ADDRESS FOR CONTRIBUTIONS ONLY:
First Chicago National Processing Center (FCNPC)
300 Harmon Meadow Boulevard
Att: Box 13503
Secaucus, NJ 07094
================================================================================
<PAGE>
PART C
OTHER INFORMATION
-----------------
Item 28. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements included in Part B.
1. Separate Account Nos. 3 (Pooled), 4 (Pooled), 10 (Pooled) and
13 (Pooled) (The Aggressive Equity, Common Stock, Balanced and
Bond Funds):
- Report of Independent Accountants - Price Waterhouse
2. Separate Account No. 3 (Pooled):
- Statements of Assets and Liabilities, December 31, 1996
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1996
- Portfolio of Investments, December 31, 1996
3. Separate Account No. 4 (Pooled):
- Statements of Assets and Liabilities, December 31, 1996
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1996 and 1995
- Portfolio of Investments, December 31, 1996
4. Separate Account No. 10 (Pooled):
- Statement of Assets and Liabilities December 31, 1996
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1996 and 1995
- Portfolio of Investments, December 31, 1996
5. Separate Account No. 13 (Pooled):
- Statements of Assets and Liabilities, December 31, 1996
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1996 and 1995
- Portfolio of Investments, December 31, 1996
6. Separate Account No. 51 (Pooled)
--------------------------------
- Report of Independent Accountants - Price Waterhouse
- Statement of Assets and Liabilities, December 31, 1996
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1996 and 1995
7. Separate Account Nos. 3 (Pooled), 4 (Pooled), 10 (Pooled) and
13 (Pooled): Notes to Financial Statements
8. Separate Account No. 51 (Pooled):
- Notes to Financial Statements
9. The Equitable Life Assurance Society of the United States:
----------------------------------------------------------
- Report of Independent Accountants - Price Waterhouse
- Consolidated Balance Sheets, as of December 31,1996 and 1995
- Consolidated Statements of Earnings for the Years Ended
December 31, 1996, 1995 and 1994
C-1
<PAGE>
- Consolidated Statements of Shareholder's Equity for the Years
Ended December 31, 1996, 1995 and 1994
- Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994
- Notes to Consolidated Financial Statements
(b) Exhibits.
The following Exhibits are filed herewith:
1. Resolutions of the Board of Directors of The Equitable Life
Assurance Society of the United States ("Equitable")
authorizing the establishment of Separate Account Nos. 3, 4 and
10 and additional similar separate accounts, incorporated by
reference to Registration No. 2-91983 on Form N-3 of
Registrant, filed April 14, 1986.
2. Not Applicable.
3. Not Applicable.
4. (a) Investment Advisory Agreement between Equitable and
Equitable Investment Management Corporation dated
October 31, 1983, incorporated by reference to
Registration No. 2-91983 on Form N-3 of Registrant
filed on April 14, 1986.
(b) Investment Advisory and Management Agreement by and
between Alliance Capital Management L.P., Alliance
Corporate Finance Group Incorporated, an indirect
wholly owned subsidiary of Alliance, and The Equitable
Life Assurance Society of the United States,
previously filed with this Registration Statement No.
33-76028 on March 3, 1994.
(c) Distribution Agreement dated as of January 1, 1995, by
and between The Hudson River Trust and Equico
Securities, Inc., previously filed with this
Registration Statement No. 33-76028 on April 24, 1995.
(d) Sales Agreement, dated as of January 1, 1995, by and
among Equico Securities, Inc., Equitable, and Separate
Account A, Separate Account No. 301 and Separate
Account No. 51, previously filed with this
Registration Statement No. 33-76028 on April 24, 1995.
5. Not Applicable.
6. (a)1 Group Annuity Contract AC 5000 - 83T (No. 15,740)
between Equitable and United States Trust Company of
New York as Trustee under Retirement Investment
Account Master Retirement Trust, incorporated by
reference to Registration No. 2-91983 on Form N-3 of
Registrant filed April 14, 1986.
C-2
<PAGE>
(a)2 Riders 1, 2, 3, 4, 5, 6 and 7 to Group Annuity
Contract AC 5000 - 83T (No. 15,740) between Equitable
and United States Trust Company of New York as Trustee
under Retirement Investment Account Master Retirement
Trust, as executed, incorporated by reference to
Registration No. 2-91983 on Form N-3 of Registrant
filed April 28, 1988.
(a)3 Form of Rider 8 to Group Annuity Contract AC 5000 -
83T (No. 15,740) between Equitable and United States
Trust Company of New York as Trustee under Retirement
Investment Account Master Retirement Trust,
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed February 25, 1992.
(a)4 Form of Rider 9 to Group Annuity Contract AC 5000 -
83T between Equitable and United States Trust Company
of New York as Trustee under Retirement Investment
Account Master Retirement Trust, previously filed with
this Registration Statement No. 33-76028 on March 3,
1994.
(b)1 Group Annuity Contract AC 5000 - 83E (No. 15,739)
between Equitable and United States Trust Company of
New York as Trustee under Retirement Investment
Account Retirement Trust, incorporated by reference to
Registration No. 2-91983 on Form N-3 of Registrant
filed April 14, 1986.
(b)2 Riders l, 2, 3, 4, 5, 6 and 7 to Group Annuity
Contract AC 5000 - 83E (No. 15,739) between Equitable
and United States Trust Company of New York as Trustee
under Retirement Investment Account Retirement Trust,
as executed, incorporated by reference to Registration
No. 2-91983 on Form N-3 of Registrant filed April 14,
1986.
(b)3 Form of Rider 8 to Group Annuity Contract AC 5000 -
83E (No. 15,739) between Equitable and United States
Trust Company of New York, as Trustee under Retirement
Investment Account Master Retirement Trust,
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed February 25, 1992.
(b)4 Form of Rider 9 to Group Annuity Contract AC 5000 -
83E between Equitable and United States Trust Company
of New York, as Trustee under Retirement Investment
Account Master Retirement Trust, previously filed with
this Registration Statement No. 33-76028 on March 3,
1994.
(c)1 Retirement Investment Account Master Retirement Trust
effective as of January 1, 1979, incorporated by
reference to Registration No. 2-91983 on Form N-3 of
Registrant filed April 14, 1986.
(c)2 Amendment to the Retirement Investment Account Master
Retirement Trust effective July 1, 1984,incorporated
by
C-3
<PAGE>
reference to Registration No. 2-91983 on Form N-3 of
Registrant filed April 14, 1986.
(c)3 Revised Retirement Investment Account Master
Retirement Trust effective as of March 1, 1990,
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed April 27, 1990.
(c)4 Form of Restated Retirement Investment Account Master
Retirement Trust as submitted to the Internal Revenue
Service, incorporated by reference to Registration No.
2-91983 on Form N-3 of Registrant filed February 25,
1992.
7. (a) Retirement Investment Account Enrollment Forms -
Including Participation and Enrollment Agreements,
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed April 14, 1986.
(b)(1) Supplementary Agreement to Master Retirement Trust
Participation Agreement, incorporated by reference to
Registration No. 2-91983 on Form N-3 of Registrant
filed April 14, 1986.
(b)(2) Supplementary Agreement B to Master Retirement Trust
Participation Agreement (RIA Loans), incorporated by
reference to Registration No. 2-91983 on Form N-3 of
Registrant filed April 28, 1988.
(b)(3) Form of Supplementary Agreement A to Master
Retirement Trust Participation Agreement (RIA Partial
Funding), as amended, incorporated by reference to
Registration No. 2-91983 on Form N-3 of Registrant
filed April 30, 1991.
(b)(4) Form of Supplementary Agreement to Master Retirement
Trust Participation Agreement (The Bond Account),
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed February 25, 1992.
(c) Basic Installation Information Form, dated May, 1989,
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed April 24, 1992.
(d) RIA Installation Agreement, dated May, 1989,
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed April 24, 1992.
8. (a) Copy of the Restated Charter of Equitable, adopted
August 6, 1992, incorporated by reference to
Registration No. 2-91983 on Form N-3 of Registrant
filed April 21, 1993.
(b) By-Laws of Equitable, as amended through July 22,
1992, incorporated by reference to Registration No.
2-91983 on Form N-3 of Registrant filed April 21,
1993.
C-4
<PAGE>
(c) Copy of the Certificate of Amendment of the Restated
Charter of Equitable, adopted November 18, 1993,
incorporated by reference to Registration No.
033-76028 on Form N-3 of Registrant filed on April 29,
1996.
(d) By-Laws of Equitable, as amended November 21, 1996.
(e) Copy of the Restated Charter of Equitable, as amended
January 1, 1997
9. Not Applicable.
10. Not Applicable.
11. Not Applicable.
12. Opinion and consent of Hope E. Rosenbaum-Werner, Vice President
and Counsel of Equitable.
13. (a) Consent of Price Waterhouse LLP.
(b) Powers of Attorney.
27. Financial Data Schedule.
C-5
<PAGE>
Item 29: Directors and Officers of Equitable.
------------------------------------
Set forth below is information regarding the directors and
principal officers of Equitable. Equitable's address is 1290 Avenue of the
Americas, New York, New York 10104. The business address of the persons whose
names are preceded by an asterisk is that of Equitable.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------ --------------------- ---------------------
<S> <C> <C>
DIRECTORS
- ---------
Claude Bebear Director Chairman and Chief Executive
AXA S.A. Officer, AXA, and various
23, Avenue Matignon positions with AXA affiliated
75008 Paris, France companies; Director, The
Equitable Companies Incorporated
("EQ") and Chairman (February
1996 to present); Director,
Alliance Capital Management
Corporation ("Alliance")
(February 1996 to present),
Donaldson, Lufkin & Jenrette
("DLJ") (February 1996 to
present), and Equitable Real
Estate Investment Management,
Inc. ("Equitable Real Estate")
(March 1996 to present);
(Director of the following
non-AXA affiliated companies:
Schneider S.A., Societe
Generale, SOVAC and
Rhone-Poulenc, S.A.; Member of
Supervisory Board, Compagnie
Financiere de Paribas and Member
of the General Counsel of
Assicurazioni Generali S.p.A.).
Christopher J. Brocksom Director Chief Executive Officer, AXA
AXA Equity & Law Equity & Law Life Assurance
Amersham Road Society ("AXA Equity & Law") and
High Wycombe various directorships and
Bucks HP 13 5 AL, England officerships with AXA Equity & Law
affiliated companies.
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------ --------------------- ---------------------
<S> <C> <C>
Francoise Colloc'h Director Executive Vice President, Culture
AXA S.A. - Management - Communications,
23, Avenue Matignon AXA, and various positions with
75008 Paris, France AXA affiliated companies.
Henri de Castries Director Executive Vice President -
AXA S.A. Financial Services and Life
23, Avenue Matignon Insurance Activities, AXA (1993 to
75008 Paris, France present) and various positions
with AXA affiliated companies;
Director EQ (May 1994 to present)
and Vice Chairman (February 1996
to present); Director, Equitable
Real Estate, DLJ, and Alliance;
(Director, France Telecom).
Joseph L. Dionne Director Chairman and Chief Executive
The McGraw-Hill Companies Officer, The McGraw-Hill
1221 Avenue of the Americas Companies; Director, EQ (Director,
New York, NY 10020 Harris Corporation, Alexander &
Alexander Services, Inc. (1995 to
present), and Ryder System, Inc.
(1995 to present)).
William T. Esrey Director Chairman and Chief Executive
Sprint Corporation Officer, Sprint Corporation;
P.O. Box 11315 Director, EQ; (Director, Panhandle
Kansas City, MO 64112 Eastern Corporation, Everen
Capital Corporation (November 1995
to present), and General Mills,
Inc.).
Jean-Rene Fourtou Director Chairman and Chief Executive
Rhone-Poulenc, S.A. Officer Rhone-Poulenc, S.A.;
25, Quai Paul Doumer Director, EQ; (Director, Societe
92408 Courvbevoie Cedex, Generale, Societe Eurosia,
France Schneider S.A. and AXA).
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------ --------------------- ---------------------
<S> <C> <C>
Norman C. Francis Director President, Xavier University of
Xavier University of Louisiana Louisiana (Chairman, Liberty Bank
7325 Palmetto Street and Trust, New Orleans, LA;
New Orleans, LA 70125 Director, First National Bank of
Commerce, New Orleans, LA, Piccadilly
Cafeteria (1995 to present), and
Entergy Corporation).
Donald J. Greene Director Counselor-at-Law; Partner,
LeBoeuf, Lamb, Greene & LeBoeuf, Lamb, Greene & MacRae;
MacRae Director, EQ.
125 West 55th Street
New York, NY 10019-4513
John T. Hartley Director Retired Chairman and Chief
Harris Corporation Executive Officer, Harris
1025 NASA Boulevard Corporation (until July 1995);
Melbourne, FL 32919 Director, EQ; (Director, Harris
Corporation and The McGraw-Hill
Companies).
John H.F. Haskell, Jr. Director Director and Managing Director,
Dillon, Read & Co., Inc. Dillon, Read & Co., Inc.;
535 Madison Avenue Director, EQ; Chairman
New York, NY 10028 Supervisory Board, Dillon Read
(France) Gestion; Director,
Dillon Read Limited; (Director,
Kaydon Corporation).
Mary R. (Nina) Henderson Director President, CPC International,
CPC International, Inc. Inc. (1993 to present).
International Plaza
PO Box 8000
Englewood Cliffs, NJ 07632-9976
W. Edwin Jarmain Director President, Jarmain Group, Inc.;
Jarmain Group, Inc. also an officer or director of
121 King Street West several affiliated companies;
Suite 2525 Chairman, FCA International,
Toronto, Ontario M5H 3T9, Ltd.; Director, EQ, DLJ, Anglo
Canada Canada General Insurance Company,
AXA Insurance (Canada), AXA
Pacific Insurance Company
(formerly Boreal Property and
Casualty Insurance Company);
Alternate Director, The National
Mutual Life Association of
Australasia Limited (1995 to
present) and National Mutual Asia
Limited (1995 to present).
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------ --------------------- ---------------------
<S> <C> <C>
G. Donald Johnston, Jr. Director Retired Chairman and Chief
184-400 Ocean Road Executive Officer JWT Group, Inc.
John's Island and J. Walter Thompson Company;
Vero Beach, FL 32963 (Director, The McGraw-Hill
Companies).
Winthrop Knowlton Director Chairman, Knowlton Brothers, Inc.;
Knowlton Brothers, Inc. President and Chief Executive
530 Fifth Avenue Officer, Knowlton Associates,
New York, NY 10036 Inc.; Director, EQ (Managing
Director, Family Partners & Co.
and Frontier Partners, Inc.;
Director, Bethlehem Steel
Corporation; and Chairman of the
Board, The Jackson Laboratory).
Arthur L. Liman Director Counselor-at-Law; Partner, Paul,
Paul, Weiss, Rifkind, Weiss, Rifkind, Wharton &
Wharton & Garrison Garrison; Director, EQ (Director,
1285 Avenue of the Americas Continental Grain Company).
New York, NY 10019
George T. Lowy Director Counselor-at-Law; Partner,
Cravath, Swaine & Moore Cravath, Swaine & Moore.
825 Eighth Avenue (Director, Eramet (June 1995 to
New York, NY 10019 present)).
Didier Pineau-Valencienne Director Chairman and Chief Executive
Schneider S.A. Officer, Schneider S.A. and
64/70 Avenue Jean-Baptiste Clement various positions with Schneider
92646 Boulogne-Billancourt affiliated companies; Director, EQ
Cedex (February 1996 to present);
France (Director, AXA, CGIP, Compagnie
Industrielle de Paris, Sema Group
plc, and S.I.S.E.; member of
Supervisory Board of Banque
Paribas and European Advisory
Board of Bankers Trust Company).
</TABLE>
C-9
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------ --------------------- ---------------------
<S> <C> <C>
George J. Sella, Jr. Director Retired Chairman, President and
P.O. Box 397 Chief Executive Officer, American
Newton, NJ 07860 Cyanamid Company; Director, EQ
(Director, Bush, Boake, Allen,
Inc., and Union Camp Corporation).
Dave H. Williams Director Chairman and Chief Executive
Alliance Capital Management Officer, Alliance and various
Corporation positions with Alliance affiliated
1345 Avenue of the Americas companies; Director, EQ.
New York, NY 10105
OFFICERS AND DIRECTORS
- ----------------------
James M. Benson Director, President and See Column 2; Prior thereto,
787 Seventh Avenue Chief Executive Officer Director, President, and Chief
New York, New York 10019 Operating Officer (until February
1996); Director and Senior Executive
Vice President, EQ, Chief Operating
Officer (February 1996 to present);
Director, President, and Chief
Operating Officer, EVLICO; Director,
Equitable Distributors, Inc. ("EDI")
(May 1996 to present), Alliance, AXA Re
Life Insurance Company (January 1995 to
present), National Mutual Holdings
Limited (September 1995 to September
1996), and The National Mutual Life
Association of Australasia (September
1995 to September 1996); (Director,
Health Plans, Inc. and Hospital for
Special Surgery (April 1996 to
present).
</TABLE>
C-10
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------ --------------------- ---------------------
<S> <C> <C>
William T. McCaffrey Senior Executive Vice President and See Column 2; Prior thereto,
787 Seventh Avenue Chief Operating Officer and Director Executive Vice President and Chief
New York, New York 10019 Administrative Officer (until
February 1996); Executive Vice
President and Chief Administrative
Officer, EQ; Director, EVLICO, EDI, and
The Equitable Foundation (Director,
Lutheran Cemetery and Innovir
Laboratories).
Joseph J. Melone Chairman of the Board and Director See Column 2; Prior thereto, Chief
787 Seventh Avenue Executive Officer (until February
New York, New York 10019 1996); Director and President, and
Chief Executive Officer (February 1996
to present), EQ, prior thereto, Chief
Operating Officer (until February
1996); Chairman, President, and Chief
Executive Officer, Equitable Investment
Corporation ("EIC") (September 1994 to
present); Chairman and Chief Executive
Officer and Director, EVLICO; Director,
Equitable Capital Management
Corporation ("ECMC"), DLJ, Alliance,
Equitable Real Estate and AXA Equity &
Law (Director, Foster-Wheeler
Corporation and AT&T Capital
Corporation).
OTHER OFFICERS
- --------------
*A. Frank Beaz Senior Vice President See Column 2; prior thereto, Vice
President (until March 1995);
Executive Vice President, EQ
Financial Consultants, Inc.
("EQF") (May 1995 to present).
</TABLE>
C-11
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------ --------------------- ---------------------
<S> <C> <C>
*Leon B. Billis Senior Vice President See Column 2; prior thereto, Vice
President (until November 1994);
Vice President, EVLICO (July 1996
to present).
*Harvey Blitz Senior Vice President and See Column 2; Senior Vice
Deputy Chief Financial Officer President, EQ; Director, The
Equitable of Colorado, Inc.
("Colorado"); Director and Chairman
(September 1995 to present), Frontier
Trust Company ("Frontier"); Director,
EDI (February 1995 to May 1996);
Executive Vice President (November 1996
to present) and Director, EQF; and
Senior Vice President, EquiSource of
New York, Inc. and its subsidiaries
("EquiSource"); Director and Vice
President, EVLICO, (April 1995 to
present).
*Kevin R. Byrne Vice President and Treasurer See Column 2; Vice President and
Treasurer, EQ; Treasurer, EVLICO
and Frontier; Director, Equitable
Realty Assets Corporation
("ERAC"); Vice President and
Treasurer, Equitable Casualty
Insurance Company and EquiSource.
</TABLE>
C-12
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------ --------------------- ---------------------
<S> <C> <C>
Jerry M. de St. Paer Executive Vice President See Column 2; Prior thereto,
787 Seventh Avenue Executive Vice President and Chief
New York, New York 10019 Financial Officer (until February
1996); Senior Executive Vice President
(May 1996 to present) and Chief
Financial Officer, EQ; Director,
EVLICO, DLJ, Equitable Real Estate,
Alliance, National Mutual Asia Limited
(December 1995 to present), and AXA Re
Life Insurance Company (June 1995 to
present); Chairman, President, and
Chief Executive Officer, ECMC and ACMC,
Inc.; Director, Executive Vice
President, and Chief Operating Officer,
EIC; Vice President, Equitable JV
Holding Corp.; Senior Investment
Officer, EVLICO; Member, Advisory
Board, Peter Wodtke (U.K.) and Peter
Wodtke (U.S.) (Director, Economic
Sciences Corporation and Nicos Seimei
Hoken (formerly Equitable Seimei
Hoken)).
*Gordon G. Dinsmore Senior Vice President See Column 2; Executive Vice
President, Equico; Director and
Senior Vice President, EVLICO and
Colorado; Director, FHJV Holdings,
Inc. ("FHJV"), and The Equitable
Foundation.
*Alvin H. Fenichel Senior Vice President and Controller See Column 2; Senior Vice
President and Controller, EQ; Vice
President and Controller (July
1996 to present), EVLICO; Vice
President, Colorado.
</TABLE>
C-13
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------ --------------------- ---------------------
<S> <C> <C>
*Paul J. Flora Senior Vice President and Auditor See Column 2; prior thereto, Vice
President and Auditor (February
1994 to March 1996); Vice
President and Auditor, EQ.
Robert E. Garber Executive Vice President and General See Column 2; prior thereto,
787 Seventh Avenue Counsel Senior Vice President and General
New York, New York 10019 Counsel; Executive Vice President
and General Counsel, EQ.
*Donald R. Kaplan Vice President and Chief Compliance See Column 2; prior thereto, Vice
Officer and Associate General Counsel President and Acting Chief
Compliance Officer (until November
1996).
Michael S. Martin Senior Vice President See Column 2; Chairman, EQF; Vice
787 Seventh Avenue President, Hudson River Trust
New York, New York 10019 ("HRT") (February 1993 to February
1995); Director, Vice President and
Treasurer, EDI (August 1993 to February
1995), also Chairman, President, and
Chief Executive Officer (December 1993
to February 1995); Director, Equitable
Underwriting and Sales Agency
(Bahamas), Ltd. (May 1996 to present)
and Colorado (January 1995 to present).
*Peter D. Noris Executive Vice President and Chief See Column 2; prior thereto, Vice
Investment Officer President/Manager, Insurance
Company Investment Strategies Group,
Salomon Brothers, Inc. (until May
1995); Executive Vice President (May
1995 to present) and Chief Investment
Officer (July 1995 to present), EQ;
Director and Senior Vice President,
EVLICO (June 1995 to present);
Director, Alliance (July 1995 to
present) and Equitable Real Estate
(July 1995 to present).
</TABLE>
C-14
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------------- --------------------- -------------------
<S> <C> <C>
*Anthony C. Pasquale Senior Vice President See Column 2; Director, ERAC, FHJV
(May 1995 to present) and
Equitable Agri-Business, Inc.;
Chairman and President, ERAC (July
1995 to present).
*Pauline Sherman Vice President, Secretary and See Column 2; prior thereto, Vice
Associate General Counsel President and Associate General
Counsel (until September 1995); Vice
President, Secretary and Associate
General Counsel, EQ (September 1995 to
present).
*Samuel B. Shlesinger Senior Vice President See Column 2; Director and Senior
Vice President, EVLICO; Chairman,
President and Chief Executive Officer,
Colorado; Vice President, HRT.
*Richard V. Silver Senior Vice President and Deputy See Column 2; prior thereto,
General Counsel Senior Vice President and
Associate General Counsel (until
November 1996); Vice President and
Chief Compliance Officer (January 1995
to June 1996); Director, EQF, also
President, and Chief Operating Officer
(until January 1995).
Jose Suquet Executive Vice President and Chief See Column 2; Director, EVLICO
787 Seventh Avenue Agency Officer (January 1995 to present).
New York, New York 10019
Stanley B. Tulin Senior Executive Vice President and See Column 2; prior thereto,
787 Seventh Avenue Chief Financial Officer Chairman, Insurance Consulting and
New York, New York 10019 Actuarial Practise, Coopers &
Lybrand (until April 1996);
Executive Vice President, EQ (May
1996 to present).
37189
</TABLE>
C-15
<PAGE>
Item 30. Persons Controlled by or Under Common Control with the Insurance
----------------------------------------------------------------
Company or Registrant
---------------------
Separate Account Nos. 3, 4, 10, 13, and 51 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-UAP. At
January 31, 1997, AXA-UAP beneficially owned approximately 63.9% of the Holding
Company's outstanding common stock plus convertible preferred stock. Under its
investment arrangements with Equitable Life and the Holding Company, AXA-UAP is
able to exercise significant influence over the operations and capital structure
of the Holding Company and its subsidiaries, including Equitable life. AXA-UAP,
a French company, is the holding company for an international group of insurance
and related financial services companies.
C-16
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
The Equitable Companies Incorporated (l991) (Delaware)
Donaldson, Lufkin & Jenrette, Inc. (1993) (Delaware) (44.1%) (See Addendum
B(1) for subsidiaries)
The Equitable Life Assurance Society of the United States (1859) (New York
(a)(b)
The Equitable of Colorado, Inc. (l983) (Colorado)
EVLICO, INC. (1995) (Delaware)
EVLICO East Ridge, Inc. (1995) (California)
GP/EQ Southwest, Inc. (1995) (Texas) (5.885%)
Franconom, Inc. (1985) (Pennsylvania)
Frontier Trust Company (1987) (North Dakota)
Gateway Center Buildings, Garage, and Apartment Hotel, Inc. (inactive)
(pre-l970) (Pennsylvania)
Equitable Deal Flow Fund, L.P.
Equitable Managed Assets (Delaware)
EREIM LP Associates (99%)
EML Associates, L.P. (19.8%)
Alliance Capital Management L.P. (2.71% limited partnership interest)
ACMC, Inc. (1991) (Delaware)(s)
Alliance Capital Management L.P. (1988) (Delaware) (49.09% limited
partnership interest)
EVCO, Inc. (1991) (New Jersey)
EVSA, Inc. (1992) (Pennsylvania)
Prime Property Funding, Inc. (1993) (Delaware)
Wil Gro, Inc. (1992) (Pennsylvania)
Equitable Underwriting and Sales Agency (Bahamas) Limited (1993) (Bahamas)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-17
<PAGE>
The Equitable Companies Incorporated (cont.)
Donaldson Lufkin & Jenrette, Inc.
The Equitable Life Assurance Society of the United States (cont.)
Fox Run Inc. (1994) (Massachusetts)
STCS, Inc. (1992) (Delaware)
CCMI Corporation (1994) (Maryland)
FTM Corporation (1994) (Maryland)
HVM Corporation (1994) (Maryland)
Equitable BJVS, Inc. (1992) (California)
Equitable Rowes Wharf, Inc. (1995) (Massachusetts)
GP/EQ Southwest, Inc. (1995) (Texas) (94.132%)
Camelback JVS, Inc. (1995) (Arizona)
ELAS Realty, Inc. (1996) (Delaware)
Equitable Realty Assets Corporation (1983) (Delaware)
100 Federal Street Realty Corporation (Massachusetts)
Equitable Holding Corporation (1985) (Delaware)
EQ Financial Consultants, Inc. (formerly Equico Securities, Inc.) (l97l)
(Delaware) (a) (b)
ELAS Securities Acquisition Corp. (l980) (Delaware)
100 Federal Street Funding Corporation (Massachusetts)
EquiSource of New York, Inc. (1986) (New York) (See Addendum A for
subsidiaries)
Equitable Casualty Insurance Company (l986) (Vermont)
EREIM LP Corp. (1986) (Delaware)
EREIM LP Associates (1%)
EML Associates (.02%)
Six-Pac G.P., Inc. (1990) (Georgia)
Equitable Distributors, Inc. (1988) (Delaware) (a)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-18
<PAGE>
The Equitable Companies Incorporated (cont.)
Donaldson Lufkin & Jenrette, Inc.
The Equitable Life Assurance Society of the United States (cont.)
Equitable Holding Corporation (cont.)
Equitable JVS, Inc. (1988) (Delaware)
Astor/Broadway Acquisition Corp. (1990) (New York)
Astor Times Square Corp. (1990) (New York)
PC Landmark, Inc. (1990) (Texas)
Equitable JVS II, Inc. (1994) (Maryland)
EJSVS, Inc. (1995) (New Jersey)
Donaldson, Lufkin & Jenrette, Inc. (1985 by EIC; 1993 by EQ and
EHC) (Delaware) (36.1%) (See Addendum B(1) for subsidiaries)
JMR Realty Services, Inc. (1994) (Delaware)
Equitable Structured Settlement Corporation (1996) (Delaware)
Equitable Investment Corporation (l97l) (New York)
Stelas North Carolina Limited Partnership (50% limited partnership
interest) (l984)
Equitable JV Holding Corporation (1989) (Delaware)
Alliance Capital Management Corporation (l991) (Delaware) (b) (See
Addendum B(2) for subsidiaries)
Equitable Capital Management Corporation (l985) (Delaware) (b)
Alliance Capital Management L.P. (1988) (Delaware) (14.67% limited
partnership interest)
EQ Services, Inc. (1992) (Delaware)
Equitable Agri-Business, Inc. (1984) Delaware
Equitable Real Estate Investment Management, Inc. (l984) (Delaware) (b)
(See Addendum B(3) for subsidiaries)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-19
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
ADDENDUM A - 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 manufactured by Equitable:
EquiSource of Alabama, Inc. (1986) (Alabama)
EquiSource of Arizona, Inc. (1986) (Arizona)
EquiSource of Arkansas, Inc. (1987) (Arkansas)
EquiSource Insurance Agency of California, Inc. (1987) (California)
EquiSource of Colorado, Inc. (1986) (Colorado)
EquiSource of Delaware, Inc. (1986) (Delaware)
EquiSource of Hawaii, Inc. (1987) (Hawaii)
EquiSource of Maine, Inc. (1987) (Maine)
EquiSource Insurance Agency of Massachusetts, Inc. (1988) (Massachusetts)
EquiSource of Montana, Inc. (1986) (Montana)
EquiSource of Nevada, Inc. (1986) (Nevada)
EquiSource of New Mexico, Inc. (1987) (New Mexico)
EquiSource of Pennsylvania, Inc. (1986) (Pennsylvania)
EquiSource Insurance Agency of Utah, Inc. (1986) (Utah)
EquiSource of Washington, Inc. (1987) (Washington)
EquiSource of Wyoming, Inc. (1986) (Wyoming)
C-20
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
ADDENDUM B - INVESTMENT SUBSIDIARIES
HAVING MORE THAN FIVE SUBSIDIARIES
--------------------------------------------
Donaldson, Lufkin & Jenrette, Inc. has the following subsidiaries, and
approximately 150 other subsidiaries, most of which are special purpose
subsidiaries (the number fluctuates according to business needs):
Donaldson, Lufkin & Jenrette, Securities Corporation (1985) (Delaware)
(a) (b)
Wood, Struthers & Winthrop Management Corp. (1985) (Delaware) (b)
Autranet, Inc. (1985) (Delaware) (a)
DLJ Real Estate, Inc.
DLJ Capital Corporation (b)
DLJ Mortgage Capital, Inc. (1988) (Delaware)
Column Financial, Inc. (1993) (Delaware) (50%)
Alliance Capital Management Corporation (as general partner) (b)has the
following subsidiaries:
Alliance Capital Management L.P. (1988) (Delaware) (b)
Alliance Capital Management Corporation of Delaware, Inc. (Delaware)
Alliance Fund Services, Inc. (Delaware) (a)
Alliance Fund Distributors, Inc. (Delaware) (a)
Alliance Capital Oceanic Corp. (Delaware)
Alliance Capital Management Australia Pty. Ltd. (Australia)
Meiji - Alliance Capital Corp. (Delaware) (50%)
Alliance Capital (Luxembourg) S.A. (99.98%)
Alliance Eastern Europe Inc. (Delaware)
Alliance Barra Research Institute, Inc. (Delaware) (50%)
Alliance Capital Management Canada, Inc. (Canada) (99.99%)
Alliance Capital Management (Brazil) Llda
Alliance Capital Global Derivatives Corp. (Delaware)
Alliance International Fund Services S.A. (Luxembourg)
Alliance Capital Management (India) Ltd. (Delaware)
Alliance Capital Mauritius Ltd.
Alliance Corporate Finance Group, Incorporated (Delaware)
Equitable Capital Diversified Holdings, L.P. I
Equitable Capital Diversified Holdings, L.P. II
Curisitor Alliance L.L.C. (Delaware)
Curisitor Holdings Limited (UK) Alliance Capital Management
(Japan), Inc.
Alliance Capital Management (Asia) Ltd.
Alliance Capital Management (Turkey), Ltd. Cursitor
Alliance Management Limited (UK)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-21
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
ADDENDUM B - (CONT.)
INVESTMENT SUBSIDIARIES
HAVING MORE THAN FIVE SUBSIDIARIES
Equitable Real Estate Investment Management, Inc. (b) has the following
subsidiaries:
Equitable Realty Portfolio Management, Inc. (1984) (Delaware)
EQK Partners (100% general partnership interest)
Compass Management and Leasing Co. (formerly EREIM, Inc.) (1984) (Colorado)
Equitable Real Estate Capital Markets, Inc. (1987) (Delaware)(a)
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)
CJVS, Inc. (1994) (California)
Compass Cayman (1996) (Cayman Islands)
Compass Management and Leasing (UK) Limited
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.
Community Funding, Inc. (1994) (Delaware)
Community Mortgage Fund, L.P. (1994) (Delaware)
Buckhead Strategic Corp., II (1995) (Delaware)
Buckhead Strategic Fund L.P. II
Buckhead Co. I, L.P.
Buckhead Co. II, L.P.
Buckhead Co. III, L.P.
HYDOC, L.L.C.
Headwind Holding Corp.
Buckhead Co. IV, L.P.
Tricon Corp.
Tricon, L.P.
Equitable Real Estate Hyperion Capital Advisors LLC (1995)
(Delaware)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-22
<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 Commerce et France 100% by Societe Beaujon
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%
Axa Belgium Belgium 18.5% by Axa(SA) and 72.5% by Finaxa Belgium
De Kortrijske Verzekering Belgium 99.8%
</TABLE>
C-23
<PAGE>
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
<S> <C> <C>
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 Reaseguros Spain 99.8% owned by Axa Aurora
Axa Vida SA de Seguros y Reaseguros Spain 99.8% owned by Axa Aurora
Axa Gestion de Seguros y Reaseguros Spain 100% owned by Axa Aurora
Axa Assicurazioni Italy 100%
Eurovita Italy 30% owned by Axa Assicurazioni
Axa Equity & Law plc U.K. 99.9%
Axa Equity & Law Life Assurance Society U.K. 100% by Axa Equity & Law plc
Axa Equity & Law International U.K. 100% owned by Axa Equity & Law plc
Axa Equity & Law Levensverzekeringen Netherlands 100% by Axa Equity & Law plc
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 Cy Canada 100% owned by Axa Canada
Axa Pacific Insurance Canada 100% by Boreal Insurance
Boreal Assurances Agricoles Canada 100% by Boreal Insurance
</TABLE>
C-24
<PAGE>
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
<S> <C> <C>
Sime Axa Berhad Malaysia 30%
Axa Sime Investment Holdings Pte Ltd Singapore 50%
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 the USA U.S.A. 100% owned by Equitable Cies Inc.
National Mutual Holdings Ltd Australia 51%
The National Mutual Life Association of Australia 100% owned by National Mutual Holdings Ltd
Australasia Ltd
National Mutual International Pty Ltd 74% owned by National Mutual 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 Management (Global) Ltd Australia 100% owned by National Mutual Holdings Ltd
National Mutual Funds Management North USA 100% owned by National Mutual Funds
America Holdings Inc. Management (Global) Ltd
Australian Casualty & Life Ltd Australia 100% owned by National Mutual Holdings Ltd
National Mutual Health Insurance Pty Ltd Australia 100% owned by National Mutual 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%
Abeille Reassurances France 100% owned by Axa Reassurance
Axa Re Mexico Mexico 100% owned by Axa Reassurance
</TABLE>
C-25
<PAGE>
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
<S> <C> <C>
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 Ltd Korea 50%
Axa Oyak Hayat Sigota Turkey 60%
Oyak Hayat Sigorta Turkey 11%
</TABLE>
C-26
<PAGE>
AXA FINANCIAL BUSINESS
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
<S> <C> <C>
Compagnie Financiere de Paris (C.F.P.) France 96.9%, (100% with the 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 (C.E.C.) France 100% owned by C.F.P.
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 Selectionnes S.P.S. France 99.3% with the Mutuals
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 Partenaires France 100% owned by Axa Asset Management Europe
Axa Asset Management Conseils France 100% owned by Axa Asset Management Europe
Axa Asset Management Distribution France 100% owned by Axa Asset Management Europe
Axa Equity & Law Home Loans U.K. 100% owned by Axa Equity & Law
Axa Equity & Law Commercial Loans U.K. 100% owned by Axa Equity & Law
</TABLE>
C-27
<PAGE>
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
<S> <C> <C>
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 Belgium 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-28
<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 Participations France 100% owned by S.G.C.I.
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.
</TABLE>
C-29
<PAGE>
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
<S> <C> <C>
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
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 Investment U.S.A. 100% owned by ELAS
Quinta do Noval Vinhos S.A. Portugal 99.9% owned by Axa Millesimes
</TABLE>
C-30
<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-31
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
NOTES
-----
1. The year of formation or acquisition and state or country of incorporation
of each affiliate is shown.
2. The chart omits certain relatively inactive special purpose real estate
subsidiaries, partnerships, and joint ventures formed to operate or develop
a single real estate property or a group of related properties, and certain
inactive name-holding corporations.
3. All ownership interests on the chart are 100% common stock ownership except:
(a) The Equitable Companies Incorporated's 44.1% interest in Donaldson,
Lufkin & Jenrette, Inc. and Equitable Holding Corporation's 36.1% interest
in same; (b) as noted for certain partnership interests; (c) Equitable
Life's ACMC, Inc.'s and Equitable Capital Management Corporation's limited
partnership interests in Alliance Capital Management L.P.; (d) as noted for
certain subsidiaries of Alliance Capital Management Corp. of Delaware, Inc.;
(e) Treasurer Robert L. Bennett's 20% interest in Compass Management and
Leasing Co. (formerly EREIM, Inc.); and (f) DLJ Mortgage Capital's and
Equitable Real Estate's respective ownerships, 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 January 1, 1997.
C-32
<PAGE>
Item 31. Number of Contractowners
------------------------
As of January 31, 1997 there were 3,218 owners of qualified and
non-qualified RIA Contracts offered by the registrant.
Item 32. Indemnification
---------------
(a) Indemnification of Principal Underwriter: to the extent
permitted by law of the State of New York and subject to all
applicable requirements thereof, Equitable undertook to
indemnify each of its directors and officers who is made or
threatened to be made a party to any action or proceeding,
whether civil or criminal, by reason of the fact that he,
his testator or intestate, is or was a director or officer
of Equitable.
(b) Undertaking: insofar as indemnification for liability
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
Item 33. Business and Other Connections of Investment Adviser
----------------------------------------------------
The Equitable Life Assurance Society of the United States
("Equitable Life") acts as the investment manager for Separate Account Nos. 3,
4, 10, 13 and 51. In providing these services to the Separate Accounts,
Equitable Life uses the personnel and facilities of Alliance Capital Management
L.P. ("Alliance"), a publicly-traded limited partnership, that is indirectly
majority-owned by Equitable Life, to provide personnel and facilities for
portfolio selection and transaction services. Alliance recommends the securities
investments to be purchased and sold for Separate Account Nos. 3, 4, 10, 13 and
51 and arranges for the execution of portfolio transactions. Alliance
coordinates related accounting and bookkeeping functions with Equitable Life.
Both Equitable Life and Alliance are registered investment advisers under the
Investment Advisers Act of 1940.
Information regarding the directors and principal officers of
Equitable is provided in Item 29 of this Part C and is incorporated herein by
reference.
C-33
<PAGE>
Set forth below is certain information regarding the directors and
principal officers of Alliance Capital Management Corporation. The business
address of the Alliance persons whose names are preceded by an asterisk is 1345
Avenue of the Americas, New York, New York 10105.
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ---------------- ------------- ---------------------
<S> <C> <C>
DIRECTORS
- ---------
*Dave H. Willams Director, Chairman of the Board See Column 2. Director - The
and Chief Executive Officer Equitable Life Assurance Society of
the United States ("Equitable") and
The Equitable Companies
Incorporated ("EQ").
Luis Javier Bastida Director Chief Financial Officer and a
Banco Bilbao Vizcaya member of the Executive Committee
Gran Via 1 of Banco Bilbao Vizcaya.
Planta 16 48001
Bilbao, Spain
Claude Bebear Director Chairman and Chief Executive
AXA S.A. Officer, AXA, and various positions
23, Avenue Matignon with AXA affiliated companies;
75008 Paris, France Director, EQ and Chairman (February
1996 to present); Director,
Donaldson, Lufkin & Jenrette
("DLJ") (February 1996 to present),
Equitable, and Equitable Real
Estate Investment Management, Inc.
("Equitable Real Estate") (March
1996 to present); (Director of the
following non-AXA affiliated
companies: Schneider S.A., Societe
Generale, SOVAC and
Rhone-Poulenc, S.A.;
</TABLE>
C-34
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ------------------ ------------- ---------------------
<S> <C> <C>
Bebear cont. Member of Supervisory Board,
Compagnie Financiere de Paribas and
Member of the General Counsel of
Assicurazioni Generali S.p.A.
James M. Benson Director Director, President and Chief
The Equitable Life Executive Officer, Equitable; Prior
Assurance Society thereto, President, Chief Operating
of the U.S. Officer and Director, (until
787 Seventh Avenue February 1996); Director and Senior
New York, NY 10019 Vice President, EQ; Director,
President and Chief Operating Officer,
Equitable Variable Life Insurance
Company ("EVLICO"), Director, AXA Re
Life Insurance Company (January 1995
to present), and The National Mutual
Life Association of Australasia
(September 1995 to present),
(Director, Health Plans, Inc.).
*Bruce W. Calvert Director, Vice Chairman, and See Column 2.
Chief Investment Officer
</TABLE>
C-35
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ------------------ ------------- ---------------------
<S> <C> <C>
*John D. Carifa Director, President and Chief See Column 2. Chief Financial
Operating Officer Officer until December, 1994.
Henri de Castries Director Executive Vice President -
AXA Financial Services and Life
23, Avenue Matignon Insurance Activities, AXA and
75008, Paris, France various positions with AXA
affiliated companies; Director, EQ
(May 1994 to present) and Vice
Chairman (February 1996 to present);
Director, Equitable Real Estate, DLJ,
and Equitable; (Director, France
Telecom).
Kevin C. Dolan Director Senior Vice President -
AXA AXA
23, Avenue Matignon
75008, Paris, France
Dennis Duverne Director Senior Vice President,
AXA International Life of AXA.
23, Avenue Matignon
75008, Paris, France
Alfred Harrison Director, Vice Chairman See Column 2.
Alliance Capital
Management L.P.
3600 Piper Jaffray Tower
Minneapolis, MN 55402
</TABLE>
C-36
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ------------------ ------------- ---------------------
<S> <C> <C>
Jean-Pierre Hellebuyck Director Chief Investment Officer - AXA;
AXA - Gestion des Actifs Director - AXA Reassurance France,
40, rue de Colisee AXA Reinsurance UK Plc, AXA
Paris, France 75008 Reinsurance Company, Equity & Law
Plc, Equity & Law Investment
Managers Ltd., Equity & Law
Fondsmanagement GmbH, Europhenix
Management Company and Societe Des
Bourses Francaises.
Benjamin D. Holloway Director Consultant to Tishman/Speyer,
Continental Companies Edward Debartolo and The
3250 Mary Street Continental Companies. Director -
Miami, Florida 33133 Rockefeller Center Properties,
Inc.; Chairman - Duke University
Management Corporation.
</TABLE>
C-37
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ------------------ ------------- ---------------------
<S> <C> <C>
Joseph J. Melone Director Director, President and Chief
The Equitable Life Executive Officer, EQ (February
Assurance Society 1996 to present); prior thereto
of the U.S. February 1996); Chairman of the
787 Seventh Avenue Board and Director - Equitable;
New York, NY 10019 prior thereto, Chief Executive; Officer
(until February 1996); Chairman,
President, and Chief Executive Officer,
Equitable Investment Corporation
(September 1994 to present), Chairman
and Chief Executive Officer and
Director, EVLICO; Director, Equitable
Capital Management Corporation
("ECMC"), DLJ, and Equitable Real
Estate, AXA Equity & Law (Director,
Foster-Wheeler Corporation and AT&T
Capital Corporation).
Peter D. Noris Director Executive Vice President and Chief
The Equitable Life Investment Officer (July 1995 to
Assurance Society present); prior thereto Vice
of the U.S. President Manager, Investment
787 Seventh Avenue Strategies Group, Salomon Brothers,
New York, NY 10019 Inc. (Until May 1995); Director and
Senior Vice President, EVLICO (June
1995 to present); Director, Equitable
Real Estate (July 1995 to present).
</TABLE>
C-38
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ------------------ ------------- ---------------------
<S> <C> <C>
*Frank Savage Director Chairman of Alliance Capital
Management International;
Chairman of ACFG; Chairman of ECMC
Director - Lockheed Corporation,
and ARCO Chemical Corporation.
Jerry M. de St. Paer Director Senior Executive Vice President and
The Equitable Life Chief Financial Officer, Equitable;
Assurance Society prior thereto, Executive Vice
of the U.S. President (until February 1996)
787 Seventh Avenue Executive Vice President and Chief
New York, NY 10019 Financial Officer, EQ; Director,
EVLICO, DLJ, and Equitable Real
Estate; National Mutual Asia Limited
(December 1995 to present), and AXA RE
Life Insurance Company (June 1995 to
present); Director, Chairman,
President, and Chief Executive
Officer, ECMC; Director, and Executive
Vice President, and Chief Operating
Officer, Equitable Investment
Corporation; Vice President, Equitable
JV Holding Corp.; Senior Investment
Officer, EVLICO (April 1995 to
present); Member, Advisory Board,
Peter Wodtke (U.K.) and Peter Wodtke
(U.S.) (Director, Economic Services
Corporation and Nicos Seimei Hoken
(formerly Equitable Seimei Hoken)).
</TABLE>
C-39
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ------------------ ------------- ---------------------
<S> <C> <C>
Madelon DeVoe Talley Director Investment Consultant, Governor,
876 Park Avenue National Association of Securities
New York, NY 10021 Dealers; Vice Chairman, W.P. Carey
& Co.; Director, Corporate Property
Associates.
*Reba White Williams Director Director of Special Projects for
ACMC.
*David R. Brewer Senior Vice President and See Column 2.
General Counsel
*Robert H. Joseph, Jr. Senior Vice President & Chief See Column 2. Prior thereto,
Financial Officer Senior Vice President - Finance
(January 1994 to December 1994);
Senior Vice President and
Controller (until January 1994)
</TABLE>
C-40
<PAGE>
Item 34. Principal Underwriters
----------------------
(a) EQ Financial Consultants, Inc. ("EQF") (formerly Equico
Securities, Inc.), a wholly-owned subsidiary of Equitable,
is the principal underwriter and depositor for its Separate
Account A, Separate Account No. 301, Separate Account I and
Separate Account FP. EQF's principal business address is
1755 Broadway, New York, NY 10019.
(b) See Item 29 of this Part C, which is incorporated herein by
reference.
Item 35. Location of Accounts and Records
--------------------------------
The Equitable Life Assurance Society of the United States
135 West 50th Street
New York, New York 10020
Item 36. Management Services
-------------------
Not applicable.
Item 37. Undertakings
------------
Although this is not an initial registration statement requiring
the undertakings pursuant to Item 37, the Registrant hereby undertakes the
following:
(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 sixteen months old for so long as
payments under the variable annuity contracts may be
accepted;
(b) to include (1) as part of its applications to purchase any
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; and
(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.
13527/AFR_1
13531/AFV_1
13533/AFX_1
C-41
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, the Registrant has duly
caused this registration statement to be signed on its behalf, in the City and
State of New York on this 6th day of March, 1997.
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
(Registrant and Insurance Company)
By: /s/ Maureen K. Wolfson
------------------------------
Maureen K. Wolfson
Vice President
As required by the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the date
indicated:
PRINCIPAL EXECUTIVE OFFICERS:
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
PRINCIPAL FINANCIAL OFFICER:
Stanley B. Tulin Senior Executive Vice President and
Chief Financial Officer
PRINCIPAL ACCOUNTING OFFICER:
/s/ Alvin H. Fenichel Senior Vice President and Controller
- ---------------------
Alvin H. Fenichel
March 6, 1997
<TABLE>
<S> <C> <C>
DIRECTORS:
Claude Bebear Jean-Rene Fourtou Winthrop Knowlton
James M. Benson Norman C. Francis Arthur L. Liman
Christopher J. Brocksom Donald J. Greene George T. Lowy
Francoise Colloc'h John T. Hartley William T. McCaffrey
Henri de Castries John H.F. Haskell, Jr. Joseph J. Melone.
Joseph L. Dionne Mary R. (Nina) Henderson Didier Pineau-Valencienne
William T. Esrey W. Edwin Jarmain George J. Sella, Jr.
G. Donald Johnston, Jr. Dave H. Williams
</TABLE>
By: /s/ Maureen K. Wolfson
------------------------------
Maureen K. Wolfson
Attorney-in-Fact
March 6, 1997
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT NO. TAG VALUE
- ---------- ---------
<S> <C> <C> <C>
8. (d) By-Laws of Equitable, as amended November 21, 1996. EX-99.8d BYLAWS
8. (e) Copy of the Restated Charter of Equitable, as amended EX-99.8e CHARTER
January 1, 1997.
12. Opinion and consent of Hope E. Rosenbaum Werner, Vice President EX-99.12 LEG OPIN
and Counsel of Equitable.
13. (a) Consent of Price Waterhouse. EX-99.13a ACCT CONS
(b) Powers of Attorney. EX-99.13b POW ATTY
27. Financial Data Schedule. EX-27
</TABLE>
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF
THE UNITED STATES
BY-LAWS
-------
As Amended November 21, 1996
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF
THE UNITED STATES
BY-LAWS
-------
Table of Contents
ARTICLE I SHAREHOLDERS................................................ 1
Section 1.1 Annual Meetings............................................ 1
Section 1.2 Notice of Meetings; Waiver................................. 1
Section 1.3 Organization; Procedure.................................... 2
Section 1.4 Action Without a Meeting................................... 2
ARTICLE II BOARD OF DIRECTORS.......................................... 2
Section 2.1 Regular Meetings........................................... 2
Section 2.2 Special Meetings........................................... 2
Section 2.3 Independent Directors; Quorum.............................. 2
Section 2.4 Notice of Meetings......................................... 3
Section 2.5 Newly Created Directorships;
Vacancies................................................ 3
Section 2.6 Presiding Officer.......................................... 3
Section 2.7 Telephone Participation in
Meetings; Action by Consent
Without Meeting.......................................... 3
ARTICLE III COMMITTEES.................................................. 4
Section 3.1 Committees................................................. 4
Section 3.2 Authority of Committees.................................... 5
Section 3.3 Quorum and Manner of Acting................................ 5
Section 3.4 Removal of Members......................................... 6
Section 3.5 Vacancies.................................................. 6
Section 3.6 Subcommittees.............................................. 6
Section 3.7 Alternate Members of Committees............................ 6
Section 3.8 Attendance of Other Directors.............................. 6
<PAGE>
ARTICLE IV OFFICERS.................................................... 6
Section 4.1 Chairman of the Board...................................... 6
Section 4.2 Vice-Chairman of the Board................................. 7
Section 4.3 President.................................................. 7
Section 4.4 Chief Executive Officer.................................... 7
Section 4.5 Secretary.................................................. 7
Section 4.6 Other Officers............................................. 8
ARTICLE V CAPITAL STOCK............................................... 8
Section 5.1 Transfers of Stock;
Registered Shareholders.................................. 8
Section 5.2 Transfer Agent and Registrar............................... 9
ARTICLE VI EXECUTION OF INSTRUMENTS..................................... 9
Section 6.1 Execution of Instruments................................... 9
Section 6.2 Facsimile Signatures of
Former Officers.......................................... 10
Section 6.3 Meaning of Term "Instruments".............................. 10
ARTICLE VII GENERAL..................................................... 10
Section 7.1 Reports of Committees...................................... 10
Section 7.2 Independent Certified
Public Accountants....................................... 10
Section 7.3 Directors' Fees............................................ 10
Section 7.4 Indemnification of Directors,
Officers and Employees................................... 10
Section 7.5 Waiver of Notice........................................... 11
Section 7.6 Company.................................................... 11
ARTICLE VIII AMENDMENT OF BY-LAWS....................................... 11
Section 8.1 Amendment of By-Laws....................................... 11
Section 8.2 Notice of Amendment........................................ 12
<PAGE>
BY-LAWS
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
ARTICLE I
---------
SHAREHOLDERS
------------
Section 1.1. Annual Meetings. The annual meeting of the shareholders of
the Company for the election of Directors and for the transaction of such other
business as properly may come before such meeting shall be held at the principal
office of the Company on the third Wednesday in the month of May at 3:00 P.M.,
local time, or at such other place, within or without the State of New York, or
on such other earlier or later date in April or May or at such other hour as may
be fixed from time to time by resolution of the Board of Directors and set forth
in the notice or waiver of notice of the meeting. [Business Corporation Law
Secs. 602(a), (b)]*
Section 1.2. Notice of Meetings; Waiver. The Secretary or any Assistant
Secretary shall cause written notice of the place, date and hour of each meeting
of the shareholders, and, in the case of a special meeting, the purpose or
purposes for which such meeting is called and by or at whose direction such
notice is being issued, to be given, personally or by first class mail, not
fewer than ten nor more than fifty days before the date of the meeting to each
shareholder of record entitled to vote at such meeting.
No notice of any meeting of shareholders need be given to any
shareholder who submits a signed waiver of notice, in person or by proxy,
whether before or after the meeting or who attends the meeting, in person or by
proxy, without protesting prior to its conclusion the lack of notice of such
meeting. [Business Corporation Law Secs. 605, 606]
- --------
* Citations are to the Business Corporation Law and Insurance Law of the State
of New York, as in effect on [date of adoption], and are inserted for reference
only, and do not constitute a part of the By-Laws.
<PAGE>
Section 1.3. Organization; Procedure. At every meeting of shareholders
the presiding officer shall be the Chairman of the Board or, in the event of his
or her absence or disability, the President or, in his or her absence, any
officer of the Company designated by the shareholders. The order of business and
all other matters of procedure at every meeting of shareholders may be
determined by such presiding officer. The Secretary, or in the event of his or
her absence or disability, an Assistant Secretary or, in his or her absence, an
appointee of the presiding officer, shall act as Secretary of the meeting.
Section 1.4. Action Without a Meeting. Any action required or permitted
to be taken by shareholders may be taken without a meeting on written consent
signed by the holders of all the outstanding shares entitled to vote on such
action. [Business Corporation Law Sec. 615]
ARTICLE II
----------
BOARD OF DIRECTORS
------------------
Section 2.1. Regular Meetings. Regular meetings of the Board of
Directors shall be held at the principal office of the Company on the third
Thursday of each month, except January and August, unless a change in place or
date is ordered by the Board of Directors. The first regular meeting of the
Board of Directors following the annual meeting of the shareholders of the
Company is designated as the Annual Meeting. [Business Corporation Law Sec. 710]
Section 2.2. Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board, the President,
or two directors. [Business Corporation Law Sec. 710]
Section 2.3. Independent Directors; Quorum. Not less than one-third of
the Board of Directors shall be persons who are not officers or employees of the
Company or of any entity controlling, controlled by, or under common control
with the Company and who are not beneficial owners of a controlling interest in
the voting stock of the Company or of any such entity.
A majority of the entire Board of Directors, including at least one
Director who is not an officer or employee of the Company or of any entity
controlling, controlled by, or under common control with the Company and who is
not a beneficial owner of a controlling interest in the voting stock of the
Company
<PAGE>
or of any such entity, shall constitute a quorum for the transaction of business
at any regular or special meeting of the Board of Directors, except as otherwise
prescribed by these By-Laws. Except as otherwise prescribed by law, the Charter
of the Company, or these By-Laws, the vote of a majority of the Directors
present at the time of the vote, if a quorum is present at such time, shall be
the act of the Board of Directors. A majority of the Directors present, whether
or not a quorum is present, may adjourn any meeting from time to time and from
place to place. As used in these By-Laws "entire Board of Directors" means the
total number of directors which the Company would have if there were no
vacancies. [Business Corporation Law Secs. 707, 708; Insurance Law Sec. 1202]
Section 2.4. Notice of Meetings. Notice of a regular meeting of the
Board of Directors need not be given. Notice of a change in the time or place of
a regular meeting of the Board of Directors shall be given to each Director at
least five days in advance thereof in writing and by telephone or telecopy.
Notice of each special meeting of the Board of Directors shall be given to each
Director at least 24 hours prior to the special meeting, personally or by
telephone or telegram or telecopy, and shall state in general terms the purpose
or purposes of the meeting. Any such notice for a regular or special meeting not
specifically required by this Section 2.4 to be given by telephone or telecopy
shall be deemed given to a director when sent by mail, telegram, cablegram or
radiogram addressed to such director at his or her address furnished to the
Secretary. Notice of an adjourned regular or special meeting of the Board of
Directors shall be given if and as determined by a majority of the directors
present at the time of the adjournment, whether or not a quorum is present.
[Business Corporation Law Sec. 711]
Section 2.5. Newly Created Directorships; Vacancies. Any newly created
directorships resulting from an increase in the number of Directors and
vacancies occurring in the Board of Directors for any reasons (including
vacancies resulting from the removal of a Director without cause) shall be
filled by the shareholders of the Company. [Business Corporation Law Sec. 705;
Insurance Law Sec. 4211]
Section 2.6. Presiding Officer. In the absence or inability to act of
the Chairman of the Board at any regular or special meeting of the Board of
Directors, any Vice-Chairman of the Board, or the President, as designated by
the chief executive officer, shall preside at such meeting. In the absence or
inability to act of all of such officers, the Board of Directors shall select
from among their number present a presiding officer.
Section 2.7. Telephone Participation in Meetings; Action by
Consent Without Meeting. Any Director may participate in a meeting of the Board
<PAGE>
or any committee thereof by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time, and such participation shall
constitute presence in person at such meeting; provided that one meeting of the
Board each year shall be held without the use of such conference telephone or
similar communication equipment. When time is of the essence, but not in lieu of
a regularly scheduled meeting of the Board of Directors, any action required or
permitted to be taken by the Board or any committee thereof may be taken without
a meeting if all members of the Board or such committee, as the case may be,
consent in writing to the adoption of a resolution authorizing the action and
such written consents and resolution are filed with the minutes of the Board or
such committee, as the case may be. [Business Corporation Law Sec. 708]
ARTICLE III
-----------
COMMITTEES
----------
Section 3.1. Committees. (a) The Board of Directors, by resolution
adopted by a majority of the entire Board of Directors, may establish from among
its members an Executive Committee of the Board composed of three or more
Directors. Not less than one-third of the members of such committee shall be
persons who are not officers or employees of the Company or of any entity
controlling, controlled by, or under common control with the Company and who are
not beneficial owners of a controlling interest in the voting stock of the
Company or of any such entity.
(b) The Board of Directors, by resolution adopted by a majority of the
entire Board of Directors, shall establish from among its members one or more
committees with authority to discharge the responsibilities enumerated in this
subsection (b). Each such committee shall be composed of three or more Directors
and shall be comprised solely of Directors who are not officers or employees of
the Company or of any entity controlling, controlled by, or under common control
with the Company and who are not beneficial owners of a controlling interest in
the voting stock of the Company or of any such entity. Such committee or
committees shall have responsibility for:
(i) Recommending to the Board of Directors candidates for nomination
for election by the shareholders to the Board of Directors;
<PAGE>
(ii) Evaluating the performance of officers deemed by any such
committee to be principal officers of the Company and recommending their
selection and compensation;
(iii) Recommending the selection of independent certified public
accountants;
(iv) Reviewing the scope and results of the independent audit and of
any internal audit; and
(v) Reviewing the Company's financial condition.
(c) The Board of Directors, by resolution adopted from time to time by
a majority of the entire Board of Directors, may establish from among its
members one or more additional committees of the Board, each composed of five or
more Directors. Not less than one-third of the members of each such committee
shall be persons who are not officers or employees of the Company or of any
entity controlling, controlled by, or under common control with the Company and
who are not beneficial owners of a controlling interest in the voting stock of
the Company or of any such entity. [Business Corporation Law Sec. 712; Insurance
Law Sec. 1202]
Section 3.2. Authority of Committees. Each committee shall have all the
authority of the Board of Directors, to the extent permitted by law and provided
in the resolution creating such committee, provided, however, that no committee
shall have authority as to the following matters:
(a) the submission to shareholders of any action as to which
shareholder approval is required by law;
(b) the filling of vacancies in the Board of Directors or in any
committee thereof;
(c) the fixing of compensation of the Directors for serving on the
Board of Directors or any committee thereof;
(d) the amendment or repeal of the By-Laws, or the adoption of new
By-Laws; or
(e) the amendment or repeal of any resolution of the Board of Directors
unless such resolution of the Board of Directors by its terms provides that
it may be so amended or repealed.
<PAGE>
Section 3.3. Quorum and Manner of Acting. A majority of the total
membership that a committee would have if there were no vacancies (including at
least one Director who is not an officer or employee of the Company or of any
entity controlling, controlled by, or under common control with the Company and
who is not a beneficial owner of a controlling interest in the voting stock of
the Company or of any such entity) shall constitute a quorum for the transaction
of business. The vote of a majority of the members present at the time of the
vote, if a quorum is present at such time, shall be the act of such committee.
Except as otherwise prescribed by these By-Laws or by the Board of Directors,
each committee may elect a chairman from among its members, fix the times and
dates of its meetings, and adopt other rules of procedure.
Section 3.4. Removal of Members. Any member (and any alternate member)
of a committee may be removed by vote of a majority of the entire Board of
Directors.
Section 3.5. Vacancies. Any vacancy occurring in any committee for any
reason may be filled by vote of a majority of the entire Board of Directors.
Section 3.6. Subcommittees. Any committee may appoint one or more
subcommittees from its members. Any such subcommittee may be charged with the
duty of considering and reporting to the appointing committee on any matter
within the responsibility of the committee appointing such subcommittee but
cannot act in place of the appointing committee.
Section 3.7. Alternate Members of Committees. The Board of Directors
may designate, by resolution adopted by a majority of the entire Board of
Directors, one or more directors as alternate members of any committee who may
replace any absent member or members at a meeting of such committee. [Business
Corporation Law Sec. 712]
Section 3.8. Attendance of Other Directors. Except as otherwise
prescribed by the Board of Directors, members of the Board of Directors may
attend any meeting of any committee.
ARTICLE IV
----------
OFFICERS
--------
Section 4.1. Chairman of the Board. The Board of Directors may at a
regular or special meeting elect from among their number a Chairman of the
<PAGE>
Board who shall hold office, at the pleasure of the Board of Directors, until
the next Annual Meeting.
The Chairman of the Board shall preside at all meetings of the Board of
Directors and also shall exercise such powers and perform such duties as may be
delegated or assigned to or required of him or her by these By-Laws or by or
pursuant to authorization of the Board of Directors.
Section 4.2. Vice-Chairman of the Board. The Board of Directors may at
a regular or special meeting elect from among their number one or more
Vice-Chairmen of the Board who shall hold office, at the pleasure of the Board
of Directors, until the next Annual Meeting.
The Vice-Chairmen of the Board shall exercise such powers and perform
such duties as may be delegated or assigned to or required of them by these
By-Laws or by or pursuant to authorization of the Board of Directors or by the
Chairman of the Board.
Section 4.3. President. The Board of Directors shall at a regular or
special meeting elect from among their number a President who shall hold office,
at the pleasure of the Board of Directors, until the next Annual Meeting and
until the election of his or her successor.
The President shall exercise such powers and perform such duties as may
be delegated or assigned to or required of him or her by these By-Laws or by or
pursuant to authorization of the Board of Directors or (if the President is not
the chief executive officer) by the chief executive officer. The President and
Secretary may not be the same person.
Section 4.4. Chief Executive Officer. The Chairman of the Board or the
President shall be the chief executive officer of the Company as the Board of
Directors from time to time shall determine, and the Board of Directors from
time to time may determine who shall act as chief executive officer in the
absence or inability to act of the then incumbent.
Subject to the control of the Board of Directors, and to the extent not
otherwise prescribed by these By-Laws, the chief executive officer shall have
plenary power over all departments, officers, employees, and agents of the
Company, and shall be responsible for the general management and direction of
all the business and affairs of the Company.
<PAGE>
Section 4.5. Secretary. The Board of Directors shall at a regular or
special meeting elect a Secretary who shall hold office, at the pleasure of the
Board of Directors, until the next Annual Meeting and until the election of his
or her successor.
The Secretary shall issue notices of the meetings of the shareholders
and the Board of Directors and its committees, shall keep the minutes of the
meetings of the shareholders and the Board of Directors and its committees and
shall have custody of the Company's corporate seal and records. The Secretary
shall exercise such powers and perform such other duties as relate to the office
of the Secretary, and also such powers and duties as may be delegated or
assigned to or required of him or her by or pursuant to authorization of the
Board of Directors or by the Chairman of the Board or (if the Chairman of the
Board is not the chief executive officer) the chief executive officer.
Section 4.6. Other Officers. The Board of Directors may elect such
other officers as may be deemed necessary for the conduct of the business of the
Company. Each such officer elected by the Board of Directors shall exercise such
powers and perform such duties as may be delegated or assigned to or required of
him or her by the Board of Directors or the chief executive officer, and shall
hold office until the next Annual Meeting, but at any time may be suspended by
the chief executive officer or by the Board of Directors, or removed by the
Board of Directors. [Business Corporation Law Secs. 715, 716]
ARTICLE V
---------
CAPITAL STOCK
-------------
Section 5.1. Transfers of Stock; Registered Shareholders. (a) Shares of
stock of the Company shall be transferable only upon the books of the Company
kept for such purpose upon surrender to the Company or its transfer agent or
agents of a certificate (unless such shares shall be uncertificated shares)
representing shares, duly endorsed or accompanied by appropriate evidence of
succession, assignment or authority to transfer. Within a reasonable time after
the transfer of uncertificated shares, the Company shall send to the registered
owner thereof a written notice containing the information required to be set
forth or stated on certificates.
(b) Except as otherwise prescribed by law, the Board of Directors may
make such rules, regulations and conditions as it may deem expedient concerning
the subscription for, issue, transfer and registration of, shares of stock.
<PAGE>
Except as otherwise prescribed by law, the Company, prior to due presentment for
registration of transfer, may treat the registered owner of shares as the person
exclusively entitled to vote, to receive notifications, and otherwise to
exercise all the rights and powers of an owner. [Business Corporation Law Sec.
508(d), (f); Insurance Law Sec. 4203]
Section 5.2 Transfer Agent and Registrar. The Board of Directors may
appoint one or more transfer agents and one or more registrars, and may require
all certificates representing shares to bear the signature of any such transfer
agents or registrars. The same person may act as transfer agent and registrar
for the Company.
ARTICLE VI
----------
EXECUTION OF INSTRUMENTS
------------------------
Section 6.1. Execution of Instruments. (a) Any one of the following,
namely, the Chairman of the Board, any Vice-Chairman of the Board, the
President, any Vice-President (including a Deputy or Assistant Vice-President or
any other Vice-President designated by a number or a word or words added before
or after the title Vice-President to indicate his or her rank or
responsibilities), the Secretary, or the Treasurer, or any officer, employee or
agent designated by or pursuant to authorization of the Board of Directors or
any committee created under these By-Laws, shall have power in the ordinary
course of business to enter into contracts or execute instruments on behalf of
the Company (other than checks, drafts and other orders drawn on funds of the
Company deposited in its name in banks) and to affix the corporate seal. If any
such instrument is to be executed on behalf of the Company by more than one
person, any two or more of the foregoing or any one or more of the foregoing
with an Assistant Secretary or an Assistant Treasurer shall have power to
execute such instrument and affix the corporate seal.
(b) The signature of any officer may be in facsimile on any such
instrument if it shall also bear the actual signature, or personally inscribed
initials, of an officer, employee or agent empowered by or pursuant to the first
sentence of this Section to execute such instrument, provided that the Board of
Directors or a committee thereof may authorize the issuance of insurance
contracts and annuity contracts on behalf of the Company bearing the facsimile
signature of an officer without the actual signature or personally inscribed
initials of any person.
<PAGE>
(c) All checks, drafts and other orders drawn on funds of the Company
deposited in its name in banks shall be signed only pursuant to authorization of
and in accordance with rules prescribed from time to time by the Board of
Directors or a committee thereof, which rules may permit the use of facsimile
signatures.
Section 6.2. Facsimile Signatures of Former Officers. If any officer
whose facsimile signature has been placed upon any instrument shall have ceased
to be such officer before such instrument is issued, it may be issued with the
same effect as if he or she had been such officer at the time of its issue.
Section 6.3. Meaning of Term "Instruments". As used in this Article VI,
the term "instruments" includes, but is not limited to, contracts and
agreements, checks, drafts and other orders for the payment of money, transfers
of bonds, stocks, notes and other securities, and powers of attorney, deeds,
leases, releases of mortgages, satisfactions and all other instruments entitled
to be recorded in any jurisdiction.
ARTICLE VII
-----------
GENERAL
-------
Section 7.1. Reports of Committees. Reports of any committee charged
with responsibility for supervising or making investments shall be submitted at
the next meeting of the Board of Directors. Reports of other committees of the
Board of Directors shall be submitted at a regular meeting of the Board of
Directors as soon as practicable, unless otherwise directed by the Board of
Directors.
Section 7.2 Independent Certified Public Accountants. The books and
accounts of the Company shall be audited throughout each year by such
independent certified public accountants as shall be selected by the Board of
Directors.
Section 7.3. Directors' Fees. The Directors shall be paid such fees for
their services in any capacity as may have been authorized by the Board of
Directors. No Director who is a salaried officer of the Company shall receive
any fees for serving as a Director of the Company. [Business Corporation Law
Sec. 713(e)]
<PAGE>
Section 7.4. Indemnification of Directors, Officers and Employees. (a)
To the extent permitted by the law of the State of New York and subject to all
applicable requirements thereof:
(i) any person 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,
or his or her testator or intestate, is or was a director, officer or
employee of the Company shall be indemnified by the Company;
(ii) any person 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,
or his or her testator or intestate serves or served any other organization
in any capacity at the request of the Company may be indemnified by the
Company; and
(iii) the related expenses of any such person in any of said categories
may be advanced by the Company.
(b) To the extent permitted by the law of the State of New York, the
Company may provide for further indemnification or advancement of expenses by
resolution of shareholders of the Company or the Board of Directors, by
amendment of these By-Laws, or by agreement. [Business Corporation Law Secs.
721-726; Insurance Law Sec. 1216]
Section 7.5. Waiver of Notice. Notice of any meeting of the Board of
Directors or any committee thereof shall not be required to be given to any
Director who submits a signed waiver of notice whether before or after the
meeting, or who attends the meeting without protesting, prior to or at its
commencement, the lack of notice to him. [Business Corporation Law Sec. 711(c)]
Section 7.6. Company. The term "Company" in these By-Laws means The
Equitable Life Assurance Society of the United States.
ARTICLE VIII
------------
AMENDMENT OF BY-LAWS
--------------------
Section 8.1. Amendment of By-Laws. Subject to Section 1210 of the
Insurance Law of the State of New York, all By-Laws of the Corporation,
<PAGE>
whether adopted by the Board of Directors or the shareholders, shall be subject
to amendment, alteration or repeal, and new By-Laws may be made, either
(a) by the shareholders at any annual or special meeting of
shareholders the notice of which shall have specified or summarized the
proposed amendment, alteration, repeal or new By-Laws, or
(b) by resolution adopted by the Board of Directors at any regular or
special meeting, the notice or waiver of notice of which, unless none is
required hereunder, shall have specified or summarized the proposed
amendment, alteration, repeal or new By-Laws,
provided, however, that the shareholders may at any time provide in the By-Laws
that any specified provision or provisions of the By-Laws may be amended,
altered or repealed only in the manner specified in the foregoing clause (a), in
which event such provision or provisions shall be subject to amendment,
alteration or repeal only in such manner. [Business Corporation Law Sec. 601(a);
Insurance Law Sec. 1210]
Section 8.2. Notice of Amendment. If any By-Law regulating an impending
election of directors is adopted, amended or repealed by the Board of Directors,
there shall be set forth in the notice of the next meeting of shareholders for
the election of directors the By-Law so adopted, amended or repealed, together
with a concise statement of the changes made. [Business Corporation Law Sec. 601
(b).]
RESTATED CHARTER
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
ARTICLE I
The name of the corporation shall continue to be The Equitable Life
Assurance Society of the United States.
ARTICLE II
The principal office of the corporation shall be located in the City of
New York, County of New York, State of New York.
ARTICLE III
(a) The business to be transacted by the corporation shall be the kinds
of insurance business specified in Paragraphs 1, 2 and 3 of Subsection (a) of
Section 1113 of the Insurance Law of the State of New York, as follows:
(1) "Life insurance": every insurance upon the lives of human
beings, and every insurance appertaining thereto, including the
granting of endowment benefits, additional benefits in the event of
death by accident, additional benefits to safeguard the contract from
lapse, accelerated payments of part or all of the death benefit or a
special surrender value upon diagnosis (A) of terminal illness defined
as a life expectancy of twelve months or less, or (B) of a medical
condition requiring extraordinary medical care or treatment regardless
of life expectancy, or provide a special surrender value, upon total
and permanent disability of the insured, and optional modes of
settlement of proceeds. "Life insurance" also includes additional
benefits to safeguard the contract against lapse in the event of
unemployment of the insured. Amounts paid the insurer for life
insurance and proceeds applied under optional modes of settlement or
under dividend options may be allocated by the insurer
<PAGE>
to one or more separate accounts pursuant to section four thousand two
hundred forty of the Insurance Law of the State of New York;
(2) "Annuities": all agreements to make periodical payments for a
period certain or where the making or continuance of all or some of a
series of such payments, or the amount of any such payment, depends
upon the continuance of human life, except payments made under the
authority of paragraph (1) above. Amounts paid the insurer to provide
annuities and proceeds applied under optional modes of settlement or
under dividend options may be allocated by the insurer to one or more
separate accounts pursuant to section four thousand two hundred forty
of the Insurance Law of the State of New York;
(3) "Accident and health insurance": (i) insurance against death
or personal injury by accident or by any specified kind or kinds of
accident and insurance against sickness, ailment or bodily injury,
including insurance providing disability benefits pursuant to article
nine of the workers' compensation law, except as specified in item (ii)
hereof; and (ii) non-cancellable disability insurance, meaning
insurance against disability resulting from sickness, ailment or bodily
injury (but excluding insurance solely against accidental injury) under
any contract which does not give the insurer the option to cancel or
otherwise terminate the contract at or after one year from its
effective date or renewal date;
and any amendments to such paragraphs or provisions in substitution therefor
which may be hereafter adopted; such other kind or kinds of business now or
hereafter authorized by the laws of the State of New York to stock life
insurance companies; and such other kind or kinds of business to the extent
necessarily or properly incidental to the kind or kinds of insurance business
which the corporation is authorized to do.
(b) The corporation shall also have all other rights, powers, and
privileges now or hereafter authorized or granted by the Insurance Law of the
State of New York or any other law or laws of the State of New York to stock
life insurance companies having power to do the kind or kinds of business
hereinabove referred to and any and all other rights, powers, and privileges of
a corporation now or hereafter granted by the laws of the State of New York and
not prohibited to such stock life insurance companies.
- 2 -
<PAGE>
ARTICLE IV
The business of the corporation shall be managed under the direction of
the Board of Directors.
ARTICLE V
(a) The Board of Directors shall consist of not less than 13 (except
for vacancies temporarily unfilled) nor more than 36 Directors, as may be
determined from time to time by a vote of a majority of the entire Board of
Directors. No decrease in the number of Directors shall shorten the term of any
incumbent Director.
(b) The Board of Directors shall have the power to adopt from time to
time such By-Laws, rules and regulations for the governance of the officers,
employees and agents and for the management of the business and affairs of the
corporation, not inconsistent with this Charter and the laws of the State of New
York, as may be expedient, and to amend or repeal such by-laws, rules and
regulations, except as provided in the By-Laws.
(c) Any or all of the Directors may be removed at any time, either for
or without cause, by vote of the shareholders.
(d) No Director shall be personally liable to the corporation or any of
its shareholders for damages for any breach of duty as a Director; provided,
however, that the foregoing provision shall not eliminate or limit (i) the
liability of a Director if a judgment or other final adjudication adverse to him
or her establishes that his or her acts or omissions were in bad faith or
involved intentional misconduct or that he or she personally gained in fact a
financial profit or other advantage to which he or she was not legally entitled,
or were acts or omissions which (a) he or she knew or reasonably should have
known violated the Insurance Law of the State of New York or (b) violated a
specific standard of care imposed on Directors directly, and not by reference,
by a provision of the Insurance Law of the State of New York (or any regulations
promulgated thereunder) or (c) constituted a knowing violation of any other law;
or (ii) the liability of a Director for any act or omission prior to September
21, 1989.
- 3 -
<PAGE>
ARTICLE VI
(a) The Directors of the corporation shall be elected at each annual
meeting of shareholders of the corporation in the manner prescribed by law. The
annual meeting of shareholders shall be held at such place, within or without
the State of New York, and at such time as may be fixed by or under the By-Laws.
At each annual meeting of shareholders, directors shall be elected to hold
office for a term expiring at the next annual meeting of shareholders.
(b) Newly created directorships resulting from an increase in the
number of Directors and vacancies occurring in the Board of Directors shall be
filled by vote of the shareholders.
(c) Each Director shall be at least twenty-one years of age, and at all
times a majority of the Directors shall be citizens and residents of the United
States, and not less than three of the Directors shall be residents of the State
of New York.
(d) The Board of Directors shall elect such officers as are provided
for in the By-Laws at the first meeting of the Board of Directors following each
annual meeting of the shareholders. In the event of the failure to elect
officers at such meeting, officers may be elected at any regular or special
meeting of the Board of Directors. A vacancy in any office may be filled by the
Board of Directors at any regular or special meeting.
ARTICLE VII
The duration of the corporate existence of the corporation shall be
perpetual.
ARTICLE VIII
The amount of the capital of the corporation shall be $2,500,000, and
shall consist of 2,000,000 Common Shares, par value $1.25 per share.
44859-1.DOC
- 4 -
HOPE E. ROSENBAUM-WERNER
Vice President
and Counsel
(212) 314-3909
Fax: (212) 707-7989
[EQUITABLE - MEMBER OF THE GLOBAL AXA GROUP - LOGO]
LAW DEPARTMENT
March 6, 1997
The Equitable Life Assurance Society of the United States
1290 Avenue of the Americas
New York, New York 10104
Dear Sirs:
This opinion is furnished in connection with the Registration Statement on
Form N-3 (Registration Statement) being filed by The Equitable Life Assurance
Society of the United States (Equitable) under the Securities Act of 1933, as
amended (Act), to register separate account units of interest (Units) under
group annuity contracts (Contracts). The Contracts are designed to provide an
investment program for retirement plans and trusts of partnerships and sole
proprietors, among other entities, under Equitable's Retirement Investment
account program. Such plans and trusts will be qualified under Section 401 of
the Internal Revenue Code of 1986, as amended. The securities being registered
are to be offered to partnerships and sole proprietors in the manner described
in the Registration Statement.
I have examined all such corporate records of Equitable and such other
documents and such laws as I consider appropriate as a basis for the opinion
hereinafter expressed. On the basis of such examination, it is my opinion that:
1. Equitable is a corporation duly organized and validly existing under
the laws of the State of New York.
2. The Separate Account has been duly created pursuant to the provisions
of the New York Insurance Law.
3. The assets of the Separate Account are owned by Equitable; Equitable is
not a trustee with respect thereto. Under New York law, the income, gains and
losses, whether or not realized, from assets allocated to the Separate Account
must be credited to or charged against such Separate Account, without regard to
the other income, gains or losses of Equitable.
4. The Contracts provide that the portion of the assets of the Separate
Account equal to the reserves and other contract liabilities with respect to the
Separate account shall not be chargeable with liabilities arising out of any
other business Equitable may conduct.
5. The contracts and the Units issued thereunder have been duly
authorized; and the contracts (including the Units duly issued thereunder) will
constitute validly issued and binding obligations of Equitable in accordance
with their terms.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Hope E. Rosenbaum-Werner
------------------------
Hope E. Rosenbaum-Werner
HERW/jh
49225
THE EQUITABLE LIFE ASSURANCE SOCIETY
1290 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10104
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Registration Statement on Form N-3 (the "Registration
Statement") of our report dated February 10, 1997, relating to the financial
statements of Separate Account Nos. 13, 10, 4, and 3 of The Equitable Life
Assurance Society of the United States, and our report dated February 10, 1997,
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 reference to us under the headings "Condensed Financial
Information" and "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
New York, New York
March 6, 1997
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ Claude Bebear
-----------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ James M. Benson
-------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 30th day of September, 1996
/s/ Christopher J. Brocksom
---------------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 30th day of September, 1996
/s/ Francoise Colloc'h
----------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 20th day of September, 1996
/s/ Henri de Castries
---------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ Joseph L. Dionne
--------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ William T. Esrey
--------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ Jean-Rene Fourtou
---------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ Norman C. Francis
---------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ Donald J. Greene
--------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 18th day of September, 1996
/s/ John T. Hartley
-------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 13th day of September, 1996
/s/ John H.F. Haskell, Jr.
--------------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ W. Edwin Jarmain
--------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ G. Donald Johnston, Jr.
---------------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 30th day of September, 1996
/s/ Winthrop Knowlton
---------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ Arthur L. Liman
-------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ George T. Lowy
------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ William T. McCaffrey
------------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 12th day of September, 1996
/s/ Joseph J. Melone
--------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ Didier Pineau-Valencienne
-----------------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ George J. Sella Jr.
-----------------------
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Gordon G. Dinsmore, Samuel B. Shlesinger, Maureen K. Wolfson, Pauline
Sherman, Donald R. Kaplan, Naomi J. Weinstein, Mildred Oliver and each of them
(with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933, the Securities Exchange Act of 1934 and the
Investment Company Act of 1940 with respect to any insurance or annuity
contracts or other agreements providing for allocation of amounts to Separate
Accounts of the Company, and related units or interests in Separate Accounts:
registration statements on any form or forms under the Securities Act of 1933
and the Investment Company Act of 1940 and annual reports on any form or forms
under the Securities Exchange Act of 1934, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his, her or their substitutes being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of September, 1996
/s/ Dave H. Williams
--------------------
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000727920
<NAME> Sep Acct. No. 13 (RIA)
<SERIES>
<NUMBER> 113
<NAME> The Bond Fund
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000727920
<NAME> Sep Acct. No. 10 (RIA)
<SERIES>
<NUMBER> 110
<NAME> The Balanced Fund
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<PERIOD-TYPE> 12-MOS
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<PERIOD-START> Jan-01-1996
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<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 292,966,697
<INVESTMENTS-AT-VALUE> 317,081,676
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<TOTAL-ASSETS> 319,678,855
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<NAME> Sep Acct. No. 4 (RIA)
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<NAME> The Common Stock Fund
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<NAME> Sep Acct. No. 3 (RIA)
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<NAME> The Aggressive Stock Fund
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