<PAGE>
Registration No. 333-
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM N-4
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 Depositor)
1290 Avenue of the Americas, New York, New York 10104
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (212) 554-1234
---------
Anthony A. Dreyspool
Vice President and Associate General Counsel
The Equitable Life Assurance Society of the United States
1290 Avenue of the Americas, New York, New York 10104
(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
---------
CALCULATION OF REGISTRATION FEE UNDER
THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Title of Securities Being Amount Being Registered Proposed Maximum Proposed Maximum Amount of Registration
Registered Offering Price per Unit* Aggregate Offering Fee
Price*
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units of Interest
Under Group Annuity
Contract
$70,000,000(1) (1) $70,000,000(1) $24,138.10
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Estimated soley for purpose of determining the registration fee.
(1) The Contract does not provide for a predetermined amount or number of units
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this registration statement.
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>
CROSS REFERENCE SHEET
SHOWING LOCATION OF INFORMATION IN PROSPECTUS
---------------------------------------------
FORM N-4 ITEM PROSPECTUS CAPTION
------------- ------------------
1. Cover Page Cover Page
2. Definitions Not Applicable
3. Synopsis Summary
4. Condensed Financial Condensed Finacial
Information Information
5. General Description of Summmary-Equitable,
Registrant and Insurance The Equity Funds;
Company The Funds; The Real
Estate Fund
6. Deductions and Expenses Deductions and Charges
7. General Description of Summary
Variable Annuity Contracts
8. Annuity Period Distributions & Benefit
Payment Options, Variable
Annuity Benenfits
Prospectus Supplement
9. Death Benefit Distributions & Benefit
Payment Options-Death
Benefits
10. Purchases and Contract Value The Equity Funds-
Investment of
Contributions in the
Equity Funds; The Real
Estate Fund-Investment of
Contributions in the Real
Estate Fund; The Funds-
Investment of
Contributions in the Funds
11. Redemptions Summary-Distributions &
Benefit Payment Options;
distibutions & Benefits
Payment Options
12. Taxes Federal Income Tax
Considerations
13. Legal Proceedings Miscellaneous-Legal
Proceedings
14. Table of Contents of the Table of Contents of the
Statement of Additional Statement of Additional
Information Information
<PAGE>
CROSS REFERENCE SHEET
SHOWING LOCATION OF INFORMATION
IN STATEMENT OF ADDITIONAL INFORMATION
--------------------------------------
STATEMENT OF ADDITIONAL
FORM N-4 ITEM INFORMATION CAPTION
------------- -----------------------
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information Not Applicable
18. Services The Equity funds-
Investment Management of
the Equity Funds; The Real
Estate Fund-Investment
Management of the Real
Estate Fund; The Funds-
Investment Management of
the Funds Investment
Management and Accounting
Fee
19. Purchase of How We Value
Securities Being the Assets of the
Offered Growth Equity, Aggressive
Equity and Balanced Funds;
how We Value the Assets
of the Funds
20. Underwriters Underwriter
21. Calculation of Not Applicable
Performance Data
22. Annuity Payments Provisions of the
ADA Plans-Contributions to
the ADA Retirement Plan;
Contributions to Qualified
Plans; Variable Annuity
Benefits Prospectus
Supplement
23. Financial Statements Financial Statements
<PAGE>
ADA MEMBERS
RETIREMENT PROGRAM
PROSPECTUS
MAY 1, 1997
[ADA RETIREMENT PROGRAM LOGO]
<PAGE>
AMERICAN DENTAL ASSOCIATION
MEMBERS RETIREMENT PROGRAM
PROSPECTUS MAY 1, 1997
- -----------------------------------------------------------------------------
The American Dental Association Members Retirement Program offers you ten
investment options from which to choose. This prospectus describes the seven
Separate Accounts under the group annuity contract issued by THE EQUITABLE
LIFE ASSURANCE SOCIETY OF THE UNITED STATES.
THE PROGRAM
The American Dental Association Members Retirement Program offers ADA members
and other eligible persons the choice of several plans to accumulate
retirement savings for themselves and their employees.
THE INVESTMENT OPTIONS
The Program allows you to choose from ten Investment Options. The Investment
Options are:
Seven Separate Accounts or "Funds": Three Guaranteed Options:
o Growth Equity Fund o 3 year Guaranteed Rate Account
o Aggressive Equity Fund o 5 year Guaranteed Rate Account
o ADA Foreign Fund o Money Market Guarantee Account
o Equity Index Fund
o Real Estate Fund
o Lifecycle Fund--Conservative
o Lifecycle Fund--Moderate
These investment options are summarized on page 2 of this prospectus. The
Aggressive Equity Fund, the ADA Foreign Fund, and the Equity Index Fund each
invest in shares of a corresponding mutual fund, the MFS Emerging Growth
Fund, the Templeton Foreign Fund and the State Street Global Advisors (SSgA)
S&P 500 Index Fund, respectively. We refer to these as the "underlying mutual
funds." The Lifecycle Funds--Conservative and Moderate ("Lifecycle Funds")
each invest in units of a corresponding group trust maintained by State
Street Bank and Trust Company ("State Street"). We refer to these trusts as
the "Lifecycle Fund Group Trusts." The prospectuses for the underlying mutual
funds and our separate prospectus for the Equity Index Fund and Lifecycle
Funds describe the investment objectives, policies and risks of those Funds
and should be read carefully and retained for future reference. Copies of
those prospectuses may be obtained by writing or calling as indicated below.
THIS PROSPECTUS DESCRIBES, IN DETAIL, ALL INVESTMENT OPTIONS EXCEPT THE
EQUITY INDEX FUND AND THE LIFECYCLE FUNDS, WHICH ARE DESCRIBED, IN DETAIL, IN
OUR SEPARATE PROSPECTUS FOR THOSE FUNDS.
This prospectus provides important information you should be aware of before
investing. Additional information is included in the Statement of Additional
Information (the "SAI") dated May 1, 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 55 of this prospectus. To obtain a copy of the SAI free of charge,
complete the SAI request form on page 55 and mail it to us, or call or write:
The Equitable Life Assurance Society of the United States
PO Box 2486 G.P.O.
New York, NY 10116
Calls for current participants: Calls for all others:
1-800-223-5790 1-800-523-1125
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE.
- -----------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
----
SUMMARY OF INVESTMENT OPTIONS...................... 2
SUMMARY OF THE PROGRAM............................. 3
SUMMARY OF FUND EXPENSES........................... 4
CONDENSED FINANCIAL INFORMATION.................... 9
INVESTMENT OPTIONS................................. 12
THE EQUITY FUNDS
The Growth Equity Fund............................ 12
The Aggressive Equity Fund........................ 13
The ADA Foreign Fund.............................. 14
The Equity Index Fund............................. 15
Lifecycle Funds--Conservative and Moderate ...... 16
The Lifecycle Fund Group Trusts................... 16
Lifecycle Fund Group Trust--Conservative ......... 16
Lifecycle Fund Group Trust--Moderate.............. 17
The Underlying Funds.............................. 17
Risks and Investment Techniques--
Equity Funds .................................... 17
How We Calculate the Value of Amounts
Allocated to the Equity Funds.................... 19
THE REAL ESTATE FUND
Real Estate Fund Objectives and Investment
Policies......................................... 21
Special Risks Related to The Real Estate Fund ... 23
Conflicts of Interest Related to Prime Property
Fund.............................................. 23
How We Calculate The Value of Amounts
Allocated to The Real Estate Fund................ 24
THE GUARANTEED OPTIONS
Guaranteed Rate Accounts.......................... 26
Money Market Guarantee Account.................... 27
EQUITABLE LIFE AND THE INVESTMENT MANAGERS
Equitable Life ................................... 29
The Separate Accounts............................. 29
Investment Management of the Equity Funds ....... 30
Investment Management of the Real Estate Fund ... 31
INVESTMENT PERFORMANCE
Measuring the Investment Performance of the
Funds............................................. 32
Unmanaged Market Indices.......................... 32
How Performance Data Are Presented................ 33
Annual Percentage Change in Fund Unit
Values........................................... 33
Average Annual Percentage Change in
Fund Unit Values--Years Ending December 31,
1996.............................................. 34
Cumulative Value Examples......................... 34
How We Calculate Performance Data................. 37
THE PROGRAM
Employers Who May Participate in the
Program.......................................... 38
Choices for the Employer.......................... 38
Summary of the Plans And Trusts................... 38
Information on Joining the Program................ 39
Choosing the Right Plan........................... 39
Getting Started In The Program After
Choosing A Plan.................................. 39
Communicating With Us After you Enroll............ 40
Your Responsibilities As the Employer............. 40
When Transactions Are Effective................... 41
Minimum Investments............................... 41
Making Contributions to the Program............... 41
Our Account Investment Management (AIM) System .. 41
Allocating Contributions Among the
Investment Options............................... 42
Transfers Among the Investment Options............ 42
Distributions From the Investment Options ........ 42
Special Rules For Distributions and Transfers
from the Real Estate Fund........................ 43
When Distributions Are Available to
Participants..................................... 44
Participant Loans................................. 44
Benefit Payment Options........................... 45
Spousal Consent Rules............................. 45
Spousal Consent Requirements ..................... 45
Benefits Payable After the Death of a
Participant...................................... 46
DEDUCTIONS AND CHARGES............................. 47
CHARGES BASED ON AMOUNTS
INVESTED IN THE PROGRAM
Program Expense Charge............................ 47
Administration and Investment Management
Fees............................................. 48
Other Expenses Borne Directly by the Funds ...... 49
PAGE
----
PLAN AND TRANSACTION EXPENSES
ADA Retirement Plan, Prototype
Self-Directed Plan and
Individually-Designed Plan Fees.................. 50
Individual Annuity Charges........................ 50
General Information On Fees And Charges .......... 50
FEDERAL INCOME TAX
CONSIDERATIONS
Adopting the Program............................. 51
Income Taxation of Distributions to Qualified
Plan Participants .............................. 51
Other Tax Consequences........................... 52
MISCELLANEOUS...................................... 53
Table of Contents of Statement of Additional
Information .................................... 55
<PAGE>
SUMMARY OF INVESTMENT OPTIONS
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
EQUITY FUNDS
- ------------------------------------------------------------------------------
THE GROWTH EQUITY FUND (Separate Account No. 4 (Pooled))
Seeks to achieve long-term growth of capital by investing primarily in common
stocks and other equity-type securities of any capitalization but primarily
in securities of large and intermediate-sized companies.
THE AGGRESSIVE EQUITY FUND (Separate Account No. 200)
Seeks to achieve long-term capital growth by investing in shares of the
Massachusetts Financial Services Company ("MFS") Emerging Growth Fund, which
in turn invests primarily in companies that MFS believes are early in their
life cycle but which have the potential to become major enterprises (emerging
growth companies).
THE ADA FOREIGN FUND (Separate Account No. 191)
Invests in shares of the Templeton Foreign Fund, which in turn seeks
long-term capital growth through a flexible policy of investing in common
stocks of companies outside the United States.
THE EQUITY INDEX FUND (Separate Account No. 195)
Invests in shares of the State Street Global Advisors (SSgA) S&P 500 Index
Fund, which in turn seeks to achieve a total return which parallels that of
the Standard and Poor's 500 Composite Stock Price Index by investing in the
stocks in the Index.
THE LIFECYCLE FUND--CONSERVATIVE (Separate Account No. 197)
Invests in units of the Lifecycle Fund Group Trust--Conservative, maintained
by State Street, which in turn invests in units of five underlying collective
funds ("the Underlying Funds") maintained by State Street to provide current
income and a low to moderate growth of capital.
THE LIFECYCLE FUND--MODERATE (Separate Account No. 198)
Invests in units of the Lifecycle Fund Group Trust--Moderate, maintained by
State Street, which in turn invests in units of five Underlying Funds
maintained by State Street to provide growth of capital and a reasonable
level of current income.
- ------------------------------------------------------------------------------
REAL ESTATE FUND
- ------------------------------------------------------------------------------
THE REAL ESTATE FUND (Separate Account No. 30 (Pooled))
Invests primarily in units of our Prime Property Fund, which in turn seeks to
achieve a stable rate of return over an extended period of time by investing
primarily in high-grade, income-producing real property.
There is no assurance that the Funds will achieve their respective
objectives.
- ------------------------------------------------------------------------------
GUARANTEED OPTIONS
- ------------------------------------------------------------------------------
GUARANTEED RATE ACCOUNTS
Contributions to the Guaranteed Rate Accounts will be invested through group
annuity contracts issued by a major insurance company. The Guaranteed Rate
Accounts have maturities of approximately three and five years.
MONEY MARKET GUARANTEE ACCOUNT
The Money Market Guarantee Account is credited with interest which will
approximate the average rate of money market funds considered "domestic
prime," but not less than a minimum rate which we set annually. We guarantee
the contributions and interest credited to this Account.
- -----------------------------------------------------------------------------
No person is authorized by The Equitable Life Assurance Society of the United
States to give any information or make any representations other than those
contained in this prospectus and the SAI, or in other printed or written
material issued by Equitable Life. You should not rely on any other
information or representation.
2
<PAGE>
SUMMARY OF THE PROGRAM
- ------------------------------------------------------------------------------
THE AMERICAN DENTAL ASSOCIATION MEMBERS RETIREMENT PROGRAM
The American Dental Association Members Retirement Program consists of
several types of retirement plans and two retirement plan Trusts, the Master
Trust and the Pooled Trust. Each of the Trusts invests exclusively in the
group annuity contracts described in this prospectus. The purpose of the
Program is to provide members of the American Dental Association (the "ADA")
and their employees with plans to invest, accumulate, and then distribute
funds for retirement. The Program is sponsored by the ADA, and the Trustees
under the Master and Pooled Trusts are the members of the Council on
Insurance of the ADA (the "Trustees"). The Program had 22,113 participants
and $1.1 billion in assets at December 31, 1996.
EQUITABLE LIFE
The Equitable Life Assurance Society of the United States ("Equitable Life")
is a diversified financial services organization serving a variety of
insurance, investment management and investment banking customers. We are one
of the largest life insurance companies in the United States, and have been
in business since 1859. In this prospectus, the terms "we," "our," and "us"
means Equitable Life.
THE INVESTMENT OPTIONS
Ten Investment Options are available under the Program. Seven of the
Investment Options are Separate Accounts, or Funds, consisting of six Equity
Funds and the Real Estate Fund. The Funds operate like mutual funds in many
ways. However, because of exclusionary provisions, the Funds are not subject
to regulation under the Investment Company Act of 1940 ("1940 Act").
The three additional Investment Options are guaranteed options. They include
two Guaranteed Rate Accounts and the Money Market Guarantee Account.
YOUR CHOICE OF RETIREMENT PLANS
As an employer, you can use the Program to adopt our profit-sharing plan
(including 401(k) and SIMPLE 401(k) features) or defined contribution pension
master plan or our self-directed prototype plan. You can also have your own
individually-designed plan and use our Pooled Trust as a funding vehicle. See
The Program for additional information on your choices.
3
<PAGE>
SUMMARY OF FUND EXPENSES
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TRANSACTION EXPENSES
- ------------------------------------------------------------------------------
Transaction expenses are charges you pay when you buy or sell units of the
Funds.
Sales Load None
Deferred Sales Charge None
Surrender Fees None
Transfer or Exchange Fee None
If you annuitize your account, premium taxes and other fees may apply.
- ------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- ------------------------------------------------------------------------------
Operating expenses for the Funds are paid out of each Fund's assets. The
Growth Equity and Real Estate Funds each pay a management fee to us that
varies based on their respective assets. No management fees are paid to us by
the Aggressive Equity Fund, the ADA Foreign Fund, the Equity Index Fund, or
the Lifecycle Funds. The Program expense charge is based partly on the level
of assets under the Program and partly on the number of plans. The
Administration Fee is based on Fund assets. Each Fund also incurs other
expenses for services such as printing, mailing, legal, and similar items.
All of these annual fund operating expenses are reflected in each Fund's unit
value. See How We Determine the Unit Value.
These tables illustrate the effect of the charges which are generally
applicable to the Funds. They do not include other charges which are specific
to the various plans such as enrollment fees or record maintenance and report
fees. See Deductions and Charges. Premium taxes may also be applicable. The
expenses shown are based on average Program assets in each of the Funds
during the year ended December 31, 1996, restated to reflect current
applicable fees.
- ------------------------------------------------------------------------------
GROWTH EQUITY AND REAL ESTATE FUNDS
- ------------------------------------------------------------------------------
INVESTMENT PROGRAM
MANAGEMENT EXPENSE ADMINISTRATION
FEE CHARGE FEE OTHER TOTAL
- -------------- ------------ --------- -------------- ------- -------
Growth Equity 0.22% 0.64% 0.15% 0.08% 1.09%
Real Estate 1.10 0.64 0.25 0.07 2.06%
- ------------------------------------------------------------------------------
AGGRESSIVE EQUITY, ADA FOREIGN AND EQUITY INDEX FUNDS
- ------------------------------------------------------------------------------
The Aggressive Equity Fund, the ADA Foreign Fund and the Equity Index Fund
each invest in shares of an underlying mutual fund. The following table
combines the charges and fees which are deducted from each Fund and the
underlying mutual fund. No transaction charges are incurred by the Funds when
shares of the underlying mutual fund are purchased or redeemed, but annual
mutual fund operating expenses are incurred. For a description of charges and
expenses incurred by the underlying mutual funds see their prospectuses.
4
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PROGRAM
MANAGEMENT EXPENSE ADMINISTRATION OTHER
FEE CHARGE FEE EXPENSES 12B-1 FEE TOTAL
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Equity
Fund None 0.64% 0.15%(2) 0.26%(7) None 1.05%(2)
MFS Emerging
Growth Fund(1) 0.73% None None 0.24% 0.25% 1.22%
TOTAL 0.73% 0.64% 0.15%(2) 0.50%(7) 0.25% 2.27%(2)
- -----------------------------------------------------------------------------------------------
ADA Foreign Fund None 0.64% 0.15%(4) 0.15%(7) None 0.94%(4)
Templeton Foreign
Fund(3) 0.61% None None 0.26% 0.25% 1.12%
TOTAL 0.61% 0.64% 0.15%(4) 0.41%(7) 0.25% 2.06%(4)
- -----------------------------------------------------------------------------------------------
Equity Index Fund None 0.64% 0.15% 0.38%(7) None 1.17%
SSgA S&P 500
Fund(5) 0.00%(6) None None 0.13% 0.05% 0.18%(6)
TOTAL 0.00%(6) 0.64% 0.15% 0.51%(7) 0.05% 1.35%(6)
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Source: MFS Emerging Growth Fund prospectus dated April 1, 1997.
(2) An annual amount of up to 0.25% will be paid to Equitable Life.
Equitable Life has waived the 0.15% Administration fee applicable to
the Aggressive Equity Fund and will use the payment from MFS Fund
Distributors, Inc. to defray administrative expenses associated with
the Program's operations and to fund Program enhancements. The
agreement and waiver are expected to be in effect for an indefinite
period, but these arrangements are subject to termination by either
party upon notice.
(3) Source: Templeton Foreign Fund prospectus dated January 1, 1997.
(4) An amount equal to the 12b-1 fee charged by Templeton will be paid by
Templeton to Equitable Life for services performed by Equitable Life
for Templeton. Equitable Life has waived the 0.15% Administration Fee
applicable to the ADA Foreign Fund and will use the payment from
Templeton to defray administrative expenses associated with the
Program's operations and to fund Program enhancements. The agreement
and waiver are expected to be in effect for an indefinite period, but
these arrangements are subject to termination by either party upon
notice.
(5) Source: SSgA S&P 500 Index Fund Prospectus dated December 29, 1996.
(6) State Street has voluntarily agreed to waive up to the full amount of
its management fee of .10% of average daily net assets to the extent
that total expenses exceed .15% of average daily net assets on an
annual basis. The total operating expenses of the SSgA S&P 500 Index
Fund absent the waiver would be .28% of average daily net assets on an
annual basis. The gross annual management expense before the fee waiver
would be .10% of average daily net assets. This agreement will remain
in effect for the current fiscal year. (See Note 5.) If the waiver
agreement is terminated, the full amount of State Street's management
fee may be assessed and the total Fund expenses may increase.
(7) Includes expenses incurred in connection with the organization of these
Funds. For the Aggressive Equity Fund, organizational expenses were
$110,846 and were charged to the Fund in 1996. Organizational expenses
for the ADA Foreign Fund and the Equity Index Fund were initially paid
by us and we are being reimbursed from the Funds over a five year
period. For the ADA Foreign Fund, the organizational expenses were
$46,110 and were fully reimbursed as of April 1, 1996. For the Equity
Index Fund, organizational expenses were $33,917 and are being
amortized over the period which ends December 31, 1998.
5
<PAGE>
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LIFECYCLE FUNDS
- ------------------------------------------------------------------------------
No transaction charges are incurred by the Lifecycle Funds when units of a
corresponding Lifecycle Fund Group Trust are purchased or redeemed, but
annual operating expenses are incurred by each Lifecycle Fund Group Trust. A
deduction is made from the assets of each Lifecycle Fund Group Trust to
compensate State Street for managing the assets of the Group Trust. State
Street does not receive a fee for managing the assets of the Underlying Funds
in which a Lifecycle Fund Group Trust invests. State Street may receive fees
for managing the assets of other collective investment funds in which the
Funds may be invested on a temporary basis, and for managing the mutual funds
in which assets of the Underlying Funds may be invested. State Street has
agreed to reduce its management fee charged each of the Lifecycle Fund Group
Trusts to offset any management fees State Street receives attributable to
the Group Trusts' investment in such other collective investment funds and
mutual funds.
Other expenses are deducted from the assets of each Lifecycle Fund Group
Trust and Underlying Fund to pay for costs related to services, such as legal
and auditing, provided directly to each Lifecycle Fund Group Trust. State
Street also receives an administration fee deducted from the assets of each
Lifecycle Fund Group Trust to compensate it for providing various
recordkeeping and accounting services to the Group Trust. In addition, other
expenses are deducted from the assets of the Underlying Funds for custodial
services provided to those Funds.
6
<PAGE>
The fees and charges which are deducted from the assets of the Lifecycle
Funds, the Lifecycle Fund Group Trusts and the Underlying Funds are
illustrated in the table below. This table does not reflect other charges
which are specific to the various plans participating in the Program, such as
enrollment, record maintenance and reporting fees. See Plan and Transaction
Expenses.
<TABLE>
<CAPTION>
INVESTMENT PROGRAM
MANAGEMENT EXPENSE ADMINISTRATION OTHER
FEE CHARGE FEE EXPENSES TOTAL
- -------------------------- ------------ --------- -------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Lifecycle Fund -
Conservative None 0.64% 0.15% 1.33%(1) 2.12%
Lifecycle Fund
Group Trust -
Conservative 0.17% None 0.26(2) 0.38%(1&3) 0.81%
Underlying Funds:
S&P 500 Flagship Fund None None None --%(4&5) --%(5)
Russell 2000 Fund None None None 0.06%(4) 0.06%
Daily EAFE Fund None None None 0.19%(4) 0.19%
Daily Government/Corporate
Bond Fund None None None 0.01%(4) 0.01%
Short Term Investment Fund None None None --%(4&5) --%(5)
TOTAL 0.17% 0.64% 0.41% 1.71%(6) 2.93%(6)
- -------------------------- ------------ --------- ------------ ------------ ---------
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT PROGRAM
MANAGEMENT EXPENSE ADMINISTRATION OTHER
FEE CHARGE FEE EXPENSES TOTAL
- -------------------------- ------------ --------- -------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Lifecycle Fund -
Moderate None 0.64% 0.15% 0.28%(1) 1.07%
Lifecycle Fund
Group Trust -
Moderate 0.17% None 0.01%(2) 0.02%(1&3) 0.20%
Underlying Funds:
S&P 500 Flagship Fund None None None --%(4&5) --%(5)
Russell 2000 Fund None None None 0.06%(4) 0.06%
Daily EAFE Fund None None None 0.19%(4) 0.19%
Daily Government/Corporate
Bond Fund None None None 0.01%(4) 0.01%
Short Term Investment Fund None None None --%(4&5) --%(5)
TOTAL 0.17% 0.64% 0.16% 0.30%(6) 1.27%(6)
- -------------------------- ------------ --------- ------------ ------------ ---------
</TABLE>
(1) These include a charge at the annual rate of .03% of the value of the
respective assets in the Lifecycle Funds--Conservative and Moderate to
compensate Equitable Life for additional legal, accounting and other
potential expenses resulting from the inclusion of the Lifecycle Fund
Group Trusts and Underlying Funds maintained by State Street among the
Investment Options described in this prospectus and the SAI. Other
expenses also include costs incurred by Equitable Life and State Street
in connection with the organization of the Lifecycle Funds.
Organizational expenses were initially paid by Equitable Life and State
Street and are being reimbursed from the Lifecycle Funds over a five
year period. Organizational expenses were $150,087 and will be
amortized, pro rata based on the assets of each Fund, over the period
ending June 30, 2000. On December 8, 1995, the Program's balance in the
Balanced Fund (approximately $70 million) was transferred to the
Lifecycle Fund--Moderate. The much larger balance in that Fund results
in a much lower ratio of other expenses to total assets compared to the
corresponding ratio for the Lifecycle Fund--Conservative.
(2) Based on the Lifecycle Fund Group Trusts--Conservative and Moderate
current fixed fee of $11,100 per year, per fund, and average net assets
for 1996.
(3) Based on the Lifecycle Fund Group Trusts--Conservative and Moderate
average net assets for 1996.
(4) Other expenses of the Underlying Funds are based on expenses incurred
by each Fund during 1996.
(5) Less than 0.01%.
(6) These Totals are based upon a weighted average of the Other Expenses
for each Underlying Fund. In calculating the weighted average, expenses
for each Underlying Fund were multiplied by their respective target
percentages within their respective Group Trust. See Investment
Options--The Equity Funds--Lifecycle Funds--Conservative and Moderate
for a description of the targeted percentage weightings of the
Lifecycle Fund Group Trusts--Conservative and Moderate.
7
<PAGE>
- ------------------------------------------------------------------------------
EXAMPLES
- ------------------------------------------------------------------------------
You would pay the following expenses on a $1,000 investment over the time
period indicated for each Fund listed below, assuming a 5% annual rate of
return. The Examples include all annual fund operating expenses listed in the
tables above plus an estimate of average plan and transaction charges over
the time periods indicated for a $1,000 initial investment, assuming the
account is not annuitized. The estimate is computed by aggregating all record
maintenance and report fees and enrollment fees, divided by the average
assets for the same period. See ADA Members Retirement Plan, Prototype
Self-Directed Plan and Individually-designed Plan Fees of this prospectus.
Although the Program has no minimum contribution, the minimum amount that can
be converted to an annuity is $3,500. There are no surrender charges, so the
amounts would be the same, whether you withdraw all or a portion of your
Account Balance.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Growth Equity $11.42 $35.58 $ 61.63 $135.99
Aggressive Equity 23.34 71.88 122.97 262.83
Real Estate 21.23 65.51 112.32 241.43
ADA Foreign 21.23 65.51 112.32 241.43
Equity Index (1) 14.06(1) 43.69(1) 75.47(1) 165.34(1)
Lifecycle--Conservative 29.96 91.63 155.71 327.04
- ---------------------- ---------- ---------- ---------- -----------
Lifecycle--Moderate 13.25 41.21 71.25 156.44
- ---------------------- ---------- ---------- ---------- -----------
</TABLE>
(1) The returns shown reflect the waiver of the .10% investment management
fee by State Street.
The purpose of these tables and examples is to assist you in understanding
the various costs and expenses that will be incurred, either directly or
indirectly, when amounts are invested in the Funds. FUTURE EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN. IN ADDITION, THE 5% RATE OF RETURN IN THE
EXAMPLE IS NOT AN ESTIMATE OR GUARANTEE OF FUTURE PERFORMANCE.
8
<PAGE>
CONDENSED FINANCIAL INFORMATION
- -----------------------------------------------------------------------------
These selected per unit data and ratios for the years ended December 31,
1996, 1995, 1994 and 1993 have been audited by Price Waterhouse LLP,
independent accountants, as stated in their reports included in the SAI. For
years prior to 1993, the condensed financial information was audited by other
independent accountants. The Financial Statements of each of the Funds as
well as the Consolidated Financial Statements of Equitable Life are contained
in the SAI. The report for the Real Estate Fund (Separate Account No. 30
(Pooled)) includes an explanatory paragraph relating to the appraised
valuation of real estate investments. Information is provided for the period
that each Fund has been available under the Program, but not longer than ten
years.
- ------------------------------------------------------------------------------
GROWTH EQUITY FUND: SEPARATE ACCOUNT NO. 4 (POOLED)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------------------------
INCOME AND EXPENSES
------------------------------
NET
YEAR ENDED EXPENSES INCOME
DEC. 31, INCOME (NOTE A) (LOSS)
---------- -------- ---------- --------
<S> <C> <C> <C>
1996 $1.56 (2.87) (1.31)
-------- ---------- --------
1995 $2.10 (2.28) (.18)
-------- ---------- --------
1994 $2.03 (2.03) .00
-------- ---------- --------
1993* $1.97 (1.92) .05
-------- ---------- --------
1992 $1.69 (1.75) (.06)
-------- ---------- --------
1991 $1.50 (1.52) (.02)
-------- ---------- --------
1990 $2.13 (1.16) .97
-------- ---------- --------
1989 $1.88 (1.09) .79
-------- ---------- --------
1988 $1.41 (.84) .57
-------- ---------- --------
1987 $1.35 (.89) .46
-------- ---------- --------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CAPITAL CHANGES OPERATING STATISTICS
--------------------------------------------------- ---------------------------------------------------------
NET
REALIZED
AND NUMBER OF
UNREALIZED NET NET ASSET NET ASSET RATIO OF RATIO OF NET UNITS
GAINS INCREASE VALUE AT VALUE AT OPERATING INCOME OUTSTANDING
(LOSSES) ON (DECREASE) BEGINNING END OF EXPENSES TO (LOSS) TO AT END OF PORTFOLIO
YEAR ENDED INVESTMENTS IN UNIT OF PERIOD PERIOD AVERAGE NET AVERAGE NET PERIOD TURNOVER
DEC. 31, (NOTE B) VALUE (NOTE C) (NOTE D) ASSETS ASSETS (IN 000'S) RATE
---------- ------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 42.22 40.91 240.03 $280.94 1.10% (.50)% 1,435 105%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1995 57.14 56.96 183.07 $240.03 1.07% (.08)% 1,456 108%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1994 (4.23) (4.23) 187.30 $183.07 1.11% .00% 1,441 91%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1993* 29.46 29.51 157.79 $187.30 1.14% .03% 1,431 82%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1992 .92 .86 156.93 $157.79 1.17% (.04)% 1,418 68%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1991 53.07 53.05 103.88 $156.93 1.16% (.02)% 1,350 66%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1990 (14.99) (14.02) 117.90 $103.88 1.10% .92 % 1,295 93%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1989 35.17 35.96 81.94 $117.90 1.07% .78 % 1,399 113%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1988 10.89 11.46 70.48 $ 81.94 1.09% .75 % 1,587 101%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
1987 2.92 3.38 67.10 $ 70.48 1.11% .58 % 1,742 121%
------------- ---------- ----------- ----------- ------------- -------------- ------------- -----------
</TABLE>
NOTES:
* Prior to July 22, 1993, Equitable Capital Management Corporation
(Equitable Capital) served as the investment adviser to the Funds. On
July 22, 1993, Alliance Capital Management L.P. acquired the business
and substantially all of the assets of Equitable Capital and became the
investment adviser to the Funds.
A. Enrollment, annual administration and actuarial and quarterly record
maintenance and report fees are not included above and did not affect
any Unit Values. Defined benefit plan annual administration and
actuarial and quarterly record maintenance and report fees reduced the
number of Fund Units credited to participants; enrollment fees were
generally deducted from contributions to the Program.
B. See Note 2 to Financial Statements of Separate Account No. 4 (Pooled),
which may be found in the SAI.
C. The Program became available beginning on January 1, 1968. The value
for a Growth Equity Fund Unit was established at $10.00 on that date.
D. Income, expenses, gains and losses shown above pertain only to
participants' accumulations attributable to the Program. Other plans
also participate in the Growth Equity Fund and may have operating
results and other supplementary data different from those shown above.
9
<PAGE>
FUND UNIT VALUES
Unit values for the Aggressive Equity Fund (reflecting only the value of
units of Separate Account No. 200), the ADA Foreign Fund, the Equity Index
Fund and the Lifecycle Funds are shown below.
<TABLE>
<CAPTION>
LIFECYCLE LIFECYCLE
AGGRESSIVE ADA EQUITY FUND-- FUND--
UNIT VALUE AS OF: EQUITY FUND FOREIGN FUND INDEX FUND CONSERVATIVE MODERATE
- ----------------- ------------- -------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
December 31, 1996 $48.48 $16.71 $15.91 $11.04 $12.18
- ----------------- ------------- -------------- ------------ --------------- ---------------
December 31, 1995 $42.62 $14.31 $13.12 $10.59 $11.01
- ----------------- ------------- -------------- ------------ --------------- ---------------
December 31, 1994 -- $13.01 $ 9.71 -- --
- ----------------- ------------- -------------- ------------ --------------- ---------------
December 31, 1993 -- $13.08 -- -- --
- ----------------- ------------- -------------- ------------ --------------- ---------------
December 31, 1992 -- $ 9.81 -- -- --
- ----------------- ------------- -------------- ------------ --------------- ---------------
</TABLE>
10
<PAGE>
- ------------------------------------------------------------------------------
REAL ESTATE FUND: Separate Account No. 30 (Pooled)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------
INCOME AND EXPENSES
----------------------------------
NET
INVESTMENT
YEAR ENDED EXPENSES INCOME
DEC. 31, INCOME (NOTE A) (LOSS)
- ------------ -------- ---------- ------------
<S> <C> <C> <C>
1996 $0.09 (.25) (.16)
-------- ---------- ------------
1995 $0.06 (.25) (.19)
-------- ---------- ------------
1994 $0.04 (.24) (.20)
-------- ---------- ------------
1993 $0.01 (.24) (.23)
-------- ---------- ------------
1992 $0.01 (.25) (.24)
-------- ---------- ------------
1991 $0.01 (.26) (.25)
-------- ---------- ------------
1990 $0.02 (.27) (.25)
-------- ---------- ------------
1989 $0.02 (.25) (.23)
-------- ---------- ------------
1988 $0.02 (.24) (.22)
-------- ---------- ------------
1987 $0.04 (.22) (.18)
-------- ---------- ------------
-------- ---------- ------------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CAPITAL CHANGES OPERATING STATISTICS
-------------------------------------------------- ---------------------------------------------------------
NET
REALIZED
AND RATIO OF NET NUMBER OF
UNREALIZED NET UNIT UNIT RATIO OF INVESTMENT UNITS
GAINS INCREASE VALUE AT VALUE AT OPERATING INCOME OR OUTSTANDING PORTFOLIO
(LOSSES) ON (DECREASE) BEGINNING END OF EXPENSES TO (LOSS) TO AT END OF TURNOVER
YEAR ENDED INVESTMENTS IN UNIT OF PERIOD PERIOD AVERAGE NET AVERAGE NET PERIOD RATE
DEC. 31, (NOTE B) VALUE (NOTE C) (NOTE F) ASSETS ASSETS (IN 000'S) (NOTE E)
- ------------ ------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 .95 .79 $10.68 $11.47 2.30% (1.48%) 349 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1995 (.02) (.21) $10.89 $10.68 2.26% (1.67%) 371 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1994 .65 .45 $10.44 $10.89 2.26% (1.87%) 311 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1993 .22 (.01) $10.45 $10.44 2.26% (2.20%) 408 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1992 (.38) (.62) $11.07 $10.45 2.30% (2.25%) 511 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1991 (.84) (1.09) $12.16 $11.07 2.21% (2.10%) 515 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1990 .05 (0.20) $12.36 $12.16 2.14% (1.96%) 530 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1989 1.08 0.85 $11.51 $12.36 2.11% (1.93%) 584 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1988 .89 0.67 $10.84 $11.51 2.12% (1.98%) 787 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
1987 .85 0.67 $10.17 $10.84 2.13% (1.71%) 732 N/A
------------- ---------- ----------- ---------- ------------- -------------- ------------- -----------
(Note D) (Note D)
------------- ---------- ----------- ---------- ------------- -------------- -------------
</TABLE>
- ------------
NOTES:
A. Enrollment and quarterly record maintenance and report fees are not
included above and did not affect Real Estate Fund Unit Values.
Quarterly record maintenance and report fees reduced the number of Real
Estate Fund Units credited to participants; enrollment fees were
generally deducted from contributions to the Program.
B. The change in the value of Separate Account No. 8 units owned by the
Account and any realized gains (losses) from the redemption of such
units are included in net realized and unrealized gain on
investments--see Note 2 to Financial Statements of Separate Account No.
30 (Pooled), which may be found in the SAI.
C. The value for a Real Estate Fund Unit was established at $10.00 on
August 29, 1986, the date on which the Fund commenced operations.
D. Annualized basis.
E. The Real Estate Fund invests solely in units of Equitable's Separate
Account Nos. 2A and 8 (Pooled); thus, there is no applicable portfolio
turnover rate for the Real Estate Fund.
F. The Real Estate Fund Unit Values shown above are based on the year-end
values for Separate Account Nos. 2A and 8. However, the Unit Values
used under the Program for determining Account Balances, processing
transactions and calculating performance (including Account Balances,
transactions and performance effected or reported on December 31) are
based on the last Real Estate Fund Unit Value determined in each
relevant period and, therefore, such Unit Values reflect the values of
Separate Account Nos. 2A and 8 as of dates prior to the last day of
such periods.
Income, expenses, gains and losses shown above pertain only to
participants' accumulations attributable to the Program. Other plans
also participate in Separate Account No. 30 (Pooled) and may have
operating results and other supplementary data different from those
shown above.
11
<PAGE>
INVESTMENT OPTIONS
- ------------------------------------------------------------------------------
Ten INVESTMENT OPTIONS are available under the Program. Seven of the
Investment Options are Funds, the Real Estate Fund and six which we call the
Equity Funds. The six Equity Funds are: the Growth Equity Fund, the
Aggressive Equity Fund, the ADA Foreign Fund, the Equity Index Fund, the
Lifecycle Fund--Conservative and the Lifecycle Fund--Moderate. The three
additional Investment Options are guaranteed options: three and five year
Guaranteed Rate Accounts and the Money Market Guarantee Account. See our
separate prospectus for a detailed description of the Equity Index Fund and
the Lifecycle Funds.
THE EQUITY FUNDS
- ------------------------------------------------------------------------------
Each of the Equity Funds has a different investment objective that it seeks
to achieve by following specific investment policies. We have the right to
change the investment objectives of the Growth Equity Fund, subject to the
approval of the New York State Insurance Department, although we do not
anticipate making such a change. The investment objectives of the Aggressive
Equity, ADA Foreign, Equity Index and the Lifecycle Funds, including the
choice of the corresponding underlying funds, can only be changed by the
Trustees. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVES OF ANY OF THE
FUNDS WILL BE MET. See Risks and Investment Techniques--Equity Funds.
- ------------------------------------------------------------------------------
THE GROWTH EQUITY FUND
- ------------------------------------------------------------------------------
OBJECTIVE. The Growth Equity Fund seeks to achieve long-term growth of
capital by investing in the securities of carefully selected companies we
believe will share in the growth of our nation's economy--and those of other
leading industrialized countries--over a long period. The Growth Equity Fund
invests in securities of companies of any capitalization but is generally
invested primarily in securities of intermediate to large sized companies.
INVESTMENT POLICIES. The Growth Equity Fund invests primarily in common
stocks. Smaller amounts may be invested in other equity-type securities, such
as convertible preferred stocks or convertible debt instruments. The Growth
Equity Fund may use its assets to make non-equity investments. These could
include non-participating and non-convertible preferred stocks, bonds and
debentures. Some non-equity investments may carry certain equity features
such as conversion or exchange rights or warrants for the acquisition of
stocks of the same or different issuers or participation based on revenues,
sales or profits. If, in light of economic conditions and the general level
of stock prices, it appears that the Fund's investment objectives will not be
met by buying equities, non-equity investment may be substantial. The Fund
may invest up to 10% of its total assets in restricted securities.
The Growth Equity Fund may make temporary investments in government
obligations, short-term commercial paper and other money market instruments,
either directly or through our Separate Account No. 2A. While equity
investments will be made primarily in securities of United States companies
or foreign companies doing substantial business here, up to 15% of the value
of the Fund's assets may be invested in the securities of established foreign
companies without substantial business in the United States. See Risks and
Investment Techniques--Equity Funds for more information on restricted
securities, Separate Account No. 2A, securities of medium and smaller sized
companies, foreign securities, investment concentration, money market
investments and convertible securities.
12
<PAGE>
- ------------------------------------------------------------------------------
THE AGGRESSIVE EQUITY FUND
- ------------------------------------------------------------------------------
OBJECTIVE. The Aggressive Equity Fund seeks to achieve long-term growth of
capital by investing in a mutual fund designated by the Trustees, the MFS
Emerging Growth Fund, which will, in turn, invest primarily in companies that
are early in their life cycle but which have the potential to become major
enterprises (emerging growth companies). There is no assurance that this
objective will be met.
INVESTMENT POLICIES. The Aggressive Equity Fund invests 100 percent of its
assets in Class A shares of the MFS Emerging Growth Fund. Prior to December
1, 1995, the Aggressive Equity Fund invested in our Separate Account No. 3
(Pooled).
THE MFS EMERGING GROWTH FUND. The MFS Emerging Growth Fund's investment
objective is to provide long-term growth of capital. Dividend and interest
income from portfolio securities, if any, is incidental to the Fund's
investment objective of long-term growth of capital.
The Fund's policy is to invest primarily (i.e., at least 80% of its assets
under normal circumstances) in common stocks of companies that are early in
their life cycle but which MFS believes have the potential to become major
enterprises (emerging growth companies). MFS believes that such companies
generally would be expected to show earnings growth over time that is well
above the growth rate of the overall economy and the rate of inflation, and
would have the products, technologies, management, market and other
opportunities which are usually necessary to become more widely recognized as
growth companies. Emerging growth companies can be of any size, and the Fund
may invest in larger or more established companies whose rates of earnings
growth are expected to accelerate because of special factors, such as
rejuvenated management, new products, changes in consumer demand, or basic
changes in the economic environment.
The nature of investing in emerging growth companies involves greater risk
than is customarily associated with investments in more established
companies. Emerging growth companies often have limited product lines,
markets or financial resources, and they may be dependent on one-person
management. In addition, there may be less research available on many
promising small and medium sized emerging growth companies, making it more
difficult to find and analyze these companies. The securities of emerging
growth companies may have limited marketability and may be subject to more
abrupt or erratic market movements than securities of larger, more
established growth companies or the market averages in general. Shares of the
Fund, therefore, are subject to greater fluctuation in value than shares of a
conservative equity fund or of a growth fund which invests entirely in proven
growth stocks.
For further information about the MFS Emerging Growth Fund, including risk
factors, see the MFS Emerging Growth Fund's prospectus and Statement of
Additional Information. Participants and employers should carefully read the
prospectus of the MFS Emerging Growth Fund before they allocate contributions
or transfer amounts to the Aggressive Equity Fund.
The MFS Series Trust II ("Trust") was organized as a Massachusetts business
trust and is registered under the 1940 Act as an open-end management
investment company. As a series mutual fund, the Trust issues shares in
different investment portfolios, one of which is the MFS Emerging Growth
Fund, a diversified series of the Trust. The investment adviser of the MFS
Emerging Growth Fund is Massachusetts Financial Services Company.
VOTING RIGHTS. The MFS Emerging Growth Fund does not hold annual meetings of
shareholders. If a meeting of shareholders is held, they may vote on such
matters as election of trustees and any other matters requiring a vote by
shareholders under the 1940 Act. Equitable Life will vote the shares of the
MFS Emerging Growth Fund allocated to the Aggressive Equity Fund in
accordance with instructions
13
<PAGE>
received from employers, participants or trustees, as appropriate, in the
Aggressive Equity Fund. Each employer, participant or trustee, as
appropriate, will be allowed to instruct Equitable Life on how to vote shares
of the MFS Emerging Growth Fund in proportion to their interest in the
Aggressive Equity Fund as of the record date for the shareholders meeting.
Equitable Life will abstain from voting shares as to which no instructions
are received. Employers, participants or trustees will receive periodic
reports relating to the MFS Emerging Growth Fund and proxy materials together
with a voting instruction form, in connection with shareholders meetings. The
costs of soliciting voting instructions from participants will be borne by
us, but we will be reimbursed for such costs from the payments made to us by
MFS Fund Distributors, Inc.
- ------------------------------------------------------------------------------
THE ADA FOREIGN FUND
- ------------------------------------------------------------------------------
OBJECTIVE. The ADA Foreign Fund invests 100 percent of its assets in shares
of the Templeton Foreign Fund which, in turn, seeks long-term capital growth
through a flexible policy of investing primarily in common stocks of
companies outside the United States. There is no assurance that this
objective will be met.
INVESTMENT POLICIES. The ADA Foreign Fund invests 100 percent of its assets
in shares of the Templeton Foreign Fund. Prior to May 1, 1996, the ADA
Foreign Fund invested approximately 95 percent of its assets in shares of the
Templeton Foreign Fund and the balance in our Separate Account No. 2A.
TEMPLETON FOREIGN FUND. The Templeton Foreign Fund seeks long-term capital
growth through a flexible policy of investing primarily in stocks of
companies outside the United States. The Templeton Foreign Fund may also
invest in preferred stock and certain debt securities, rated or unrated, such
as convertible bonds and bonds selling at a discount. The Templeton Foreign
Fund may for temporary defensive purposes invest without limit in U.S.
Government securities, bank time deposits in the currency of any major
nation, commercial paper and repurchase agreements with banks or
broker-dealers.
The Templeton Foreign Fund is a portfolio of Templeton Funds, Inc., a series
fund which was incorporated under Maryland law in 1977 and is registered
under the 1940 Act as an open-end diversified management investment company.
As a series mutual fund, Templeton Funds, Inc. issues shares in two
investment portfolios, although the Templeton Foreign Fund is the only
Templeton fund available under the ADA program. The Templeton Foreign Fund
had total net assets of $11.8 billion as of December 31, 1996. The investment
manager of the Templeton Foreign Fund is Templeton Global Advisors Limited,
Nassau, Bahamas, a wholly-owned affiliate of Franklin Resources, Inc.
For additional information about the Templeton Foreign Fund, including risk
factors, see the Templeton Foreign Fund's prospectus and Statement of
Additional Information. Free copies of those documents may be obtained by
calling an Equitable Life Account Executive. Participants and employers
should carefully read the prospectus of the Templeton Foreign Fund before
they allocate contributions or transfer amounts to the ADA Foreign Fund.
VOTING RIGHTS. Templeton Funds, Inc. is not required under state law to hold
annual meetings of shareholders and may elect not to do so. If a meeting of
shareholders is held, they may vote on such matters as election of directors
and any other matters requiring a vote by shareholders under the 1940 Act.
Equitable Life will vote the shares of the Templeton Foreign Fund allocated
to the ADA Foreign Fund in accordance with instructions received from
employers, participants or trustees, as the case may be, in the ADA Foreign
Fund. Each participant for whom we maintain records and, in other cases, the
employer or trustee, will be allowed to instruct Equitable Life on how to
vote shares of the Templeton Foreign Fund in proportion to his or her
interest in the ADA Foreign Fund as of the record date for the shareholder
meeting. Equitable Life will abstain from voting shares as to which no
instructions are
14
<PAGE>
received. Participants, employers or trustees, as the case may be, in the ADA
Foreign Fund will receive periodic reports relating to the Templeton Foreign
Fund and proxy material, together with a voting instruction form, in
connection with shareholder meetings. By agreement, the responsibility for
soliciting such voting instructions and the costs of solicitation will be
borne by Templeton Funds, Inc.
- ------------------------------------------------------------------------------
THE EQUITY INDEX FUND
- ------------------------------------------------------------------------------
OBJECTIVE. The Equity Index Fund seeks to achieve a total return which
parallels that of the Standard & Poor's 500 Composite Stock Price Index (the
"S&P 500 Index") by investing in a mutual fund designated by the Trustees,
the SSgA S&P 500 Index Fund (formerly known as "The Seven Seas S&P 500 Index
Fund"). There is no assurance that this objective will be met.
INVESTMENT POLICIES. The Equity Index Fund will invest 100 percent of its
assets in shares of the SSgA S&P 500 Index Fund.
THE SSGA S&P 500 FUND. The SSgA S&P 500 Index Fund's investment objective is
to emulate the total return of the S&P 500 Index. The SSgA S&P 500 Index Fund
seeks to achieve its objective by investing in all 500 stocks in the S&P 500
Index in proportion to their weighting in the S&P 500 Index. To the extent
that all 500 stocks cannot be purchased, the SSgA S&P 500 Index Fund will
purchase a representative sample of the stocks listed in the S&P 500 Index in
proportion to their weightings.
The SSgA Fund was organized as a Massachusetts business trust and is
registered under the 1940 Act as an open-end diversified management
investment company. As a series mutual fund, the SSgA Fund issues shares in
different investment portfolios, one of which is the SSgA S&P 500 Index Fund.
The investment adviser of the SSgA S&P 500 Index Fund is State Street.
"S&P 500" IS A TRADEMARK OF STANDARD & POOR'S CORPORATION THAT HAS BEEN
LICENSED FOR USE BY THE SSGA S&P 500 INDEX FUND. THE SSGA S&P 500 INDEX FUND
IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S
CORPORATION, AND STANDARD & POOR'S CORPORATION MAKES NO REPRESENTATION
REGARDING THE ADVISABILITY OF INVESTING IN THE SSGA S&P 500 INDEX FUND.
The S&P 500 Index is composed of 500 common stocks which are chosen by
Standard & Poor's Corporation to best capture the price performance of a
large cross-section of the United States publicly traded stock market. The
S&P 500 Index is structured to approximate the general distribution of
industries in the United States economy. The inclusion of a stock in the S&P
500 Index in no way implies that Standard & Poor's Corporation believes the
stock to be an attractive investment, nor is Standard & Poor's a sponsor or
in any way affiliated with the SSgA S&P 500 Index Fund or the Equity Index
Fund. The 500 securities, most of which trade on the New York Stock Exchange,
represent approximately 75 percent of the market value of all common stocks.
Each stock in the S&P 500 Index is weighted by its market capitalization.
That is, each security is weighted by its total market value relative to the
total market values of all the securities in the S&P 500 Index. Component
stocks included in the S&P 500 Index are chosen with the aim of achieving a
distribution at the index level representative of the various components of
the United States gross national product and therefore do not represent the
500 largest companies. Aggregate market value and trading activity are also
considered in the selection process. A limited percentage of the S&P 500
Index may include Canadian securities. No other foreign securities are
eligible for inclusion.
For further information about the SSgA S&P 500 Index Fund, including risk
factors, see the SSgA S&P 500 Index Fund's prospectus and the related
Statement of Additional Information. Free additional copies of the SSgA S&P
500 Index Fund's prospectus and copies of the related Statement of Additional
Information may be obtained by calling an Equitable Life Account Executive.
Participants and
15
<PAGE>
employers should carefully read the prospectus of the SSgA S&P 500 Index Fund
before they allocate contributions or transfer amounts to the Equity Index
Fund.
VOTING RIGHTS: The SSgA S&P 500 Index Fund does not hold annual meetings of
shareholders. If a meeting of shareholders is held, they may vote on such
matters as election of trustees and any other matters requiring a vote by
shareholders under the 1940 Act. Equitable Life will vote the shares of the
SSgA S&P 500 Index Fund allocated to the Equity Index Fund in accordance with
instructions received from employers, participants or trustees, as
appropriate, in the Equity Index Fund. Each employer, participant or trustee,
as appropriate, will be allowed to instruct Equitable Life on how to vote
shares of the SSgA S&P 500 Index Fund in proportion to their interest in the
Equity Index Fund as of the record date for the shareholder meeting.
Equitable Life will abstain from voting shares for which no instructions are
received. Employers, participants or trustees will receive periodic reports
about the SSgA S&P 500 Index Fund and proxy materials together with a voting
instruction form, in connection with shareholder meetings. The costs of
soliciting voting instructions from participants will be borne by the SSgA
S&P 500 Index Fund.
- ------------------------------------------------------------------------------
LIFECYCLE FUNDS--CONSERVATIVE AND MODERATE
- ------------------------------------------------------------------------------
Each Lifecycle Fund is a separate account of Equitable Life. Contributions
may be made to the Lifecycle Fund--Conservative and/or the Lifecycle
Fund--Moderate. Each of the Lifecycle Funds invests in a Lifecycle Fund Group
Trust. Each such Group Trust has identical investment objectives and policies
to the Lifecycle Fund to which it relates. In turn each of the Lifecycle Fund
Group Trusts invests in a mix of Underlying Funds.
- ------------------------------------------------------------------------------
THE LIFECYCLE FUND GROUP TRUSTS
- ------------------------------------------------------------------------------
The Lifecycle Funds Group Trusts are collective investment funds maintained
by State Street. Each Lifecycle Fund Group Trust is organized as a common law
trust under Massachusetts law, and, because of exclusionary provisions, is
not subject to regulation under the 1940 Act.
There are two Lifecycle Fund Group Trusts: the Lifecycle Fund Group
Trust-Conservative and the Lifecycle Fund Group Trust-Moderate. State Street
serves as the trustee and investment manager to each of these Group Trusts.
Each of the Lifecycle Fund Group Trusts attempts to achieve its investment
objective by investing in a mix of underlying collective investment funds
(the Underlying Funds) maintained by State Street and offered exclusively to
tax exempt retirement plans.
- ------------------------------------------------------------------------------
LIFECYCLE FUND GROUP TRUST--CONSERVATIVE
- ------------------------------------------------------------------------------
OBJECTIVE. The Lifecycle Fund Group Trust--Conservative seeks to provide
current income and a low to moderate growth of capital. There is no assurance
that this objective will be met.
INVESTMENT POLICIES. The Lifecycle Group Trust--Conservative seeks to achieve
its objective by investing 100% of its assets in units of a mix of Underlying
Funds in accordance with certain target percentage weightings. The table
below shows the mix of Underlying Funds targeted by the Lifecycle Fund Group
Trust--Conservative.
S&P 500 Flagship Fund.................... 15%
Russell 2000 Fund........................ 5%
Daily EAFE Fund.......................... 10%
Daily Government/Corporate Bond Fund .... 50%
Short Term Investment Fund............... 20%
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The target percentages shown above are reviewed annually by the ADA Trustees
and may be revised as recommended, subject to State Street's approval. State
Street, as investment manager of the Lifecycle Fund Group
Trust--Conservative, from time to time makes adjustments in the mix of
Underlying Funds, as needed to maintain, to the extent practicable, the
target percentages in each of the Underlying Funds.
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LIFECYCLE FUND GROUP TRUST--MODERATE
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OBJECTIVE. The Lifecycle Fund Group Trust--Moderate seeks to provide growth
of capital and a reasonable level of current income. There is no assurance
that this objective will be met.
INVESTMENT POLICIES. The Lifecycle Fund Group Trust--Moderate seeks to
achieve its investment objective by investing 100% of its assets in units of
a mix of Underlying Funds in accordance with certain target percentage
weightings. The table below shows the mix of Underlying Funds targeted by the
Lifecycle Fund Group Trust--Moderate.
S&P 500 Flagship Fund.................... 35%
Russell 2000 Fund........................ 10%
Daily EAFE Fund.......................... 15%
Daily Government/Corporate Bond Fund .... 30%
Short Term Investment Fund............... 10%
The target percentages shown above are reviewed annually by the ADA Trustees
and may be revised as recommended, subject to State Street's approval. State
Street, as investment manager of the Lifecycle Fund Group Trust--Moderate,
from time to time makes adjustments in the mix of Underlying Funds as needed
to maintain, to the extent practicable, the target percentages in each of the
Underlying Funds.
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THE UNDERLYING FUNDS
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Like the Lifecycle Fund Group Trusts, the Underlying Funds are collective
investment funds maintained by State Street and offered exclusively to tax
exempt retirement plans. Unlike the Lifecycle Fund Group Trusts, however,
which are available only under the ADA Program, the Underlying Funds may
receive contributions from other tax exempt retirement plans.
For a description of the Underlying Funds in which the Lifecycle Fund Group
Trusts invest, see our separate prospectus for the Lifecycle Funds --
Conservative and Moderate.
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RISKS AND INVESTMENT TECHNIQUES--EQUITY FUNDS
- ------------------------------------------------------------------------------
You should be aware that any investment in securities carries with it a risk
of loss. The investment objective and policies of the Growth Equity Fund may
affect the return of the Fund. Additionally, there are market and financial
risks inherent in any securities investment. By market risks, we mean factors
which do not necessarily relate to a particular issuer but which affect the
way markets, and securities within those markets, perform. We sometimes
describe market risk in terms of volatility, that is, the range and frequency
of market value changes. Market risks include such things as changes in
interest rates, general economic conditions and investor perceptions
regarding the value of debt and equity securities. By financial risks we mean
factors associated with a particular issuer which may affect the price of its
securities, such as its competitive posture, its earnings and its ability to
meet its debt obligations. The risk factors and investment techniques
associated with the Growth Equity Fund are stated below.
See the prospectuses and Statements of Additional Information for the MFS
Emerging Growth Fund, Templeton Foreign Fund and the SSgA S&P 500 Fund for
additional information on the special risks of
17
<PAGE>
investment in these funds through the Aggressive Equity Fund, the ADA Foreign
Fund and the Equity Index Fund, respectively, and see our separate prospectus
for information on the special risks of investing in the Equity Index and
Lifecycle Funds.
FOREIGN SECURITIES. The Growth Equity Fund may make a limited portion of its
investments in the securities of established foreign companies which do not
do substantial business in the United States. For many foreign securities,
there are dollar-denominated American Depository Receipts (ADRs), which are
traded in the United States on exchanges or over-the-counter, and are issued
by domestic banks. The Fund may invest in foreign securities directly and
through ADRs and may hold some foreign securities outside of the US. ADRs do
not lessen the foreign exchange risk inherent in investing in the securities
of foreign issuers. However, by investing in ADRs rather than directly in
foreign issuers' stock, the Fund will avoid currency risks during the
settlement period for either purchases or sales. Foreign investments may
involve risks not present in domestic investments, such as changes in the
political or economic climate of countries in which companies do business.
Foreign securities may be less liquid or subject to greater price volatility
than securities of domestic issuers, and foreign accounting, auditing and
disclosure standards may differ from domestic standards. There may be less
regulation in foreign countries of stock exchanges, brokers, banks, and
listed companies than in the United States. The value of foreign investments
may rise or fall because of changes in currency exchange rates or exchange
controls.
RESTRICTED SECURITIES. The Growth Equity Fund may make investments in
restricted securities. Restricted securities are generally less liquid than
registered securities and market quotations for such securities may not be
readily available. The Fund may not be able to sell restricted securities
except pursuant to registration under applicable Federal and State securities
laws or pursuant to Securities and Exchange Commission rules which limit
their sale to certain purchasers and may require that they be held by the
Funds for a specified period of time prior to resale. Because of these
restrictions, at times the Fund may not be readily able to sell them at fair
market value.
SECURITIES OF MEDIUM AND SMALLER SIZED COMPANIES. In addition to large sized
companies, the Growth Equity Fund may invest in securities of medium and
smaller sized companies. For this purpose the term medium and smaller sized
companies means companies with $500 million to $1.5 billion in
capitalization. Medium and smaller sized companies may be dependent on the
performance of only one or two products. Such companies may be vulnerable to
competition from larger companies with greater resources and to economic
conditions affecting their market sector. Therefore, consistent earnings may
not be as likely in small companies as in large companies. Such companies may
also be more dependent on access to equity markets to raise capital than
larger companies with greater ability to support debt. Small and medium sized
companies may be new, without long business or management histories, and
perceived by the market as unproven. Their securities may be held primarily
by insiders or institutional investors, which may have an impact on
marketability. The price of these stocks may rise and fall more frequently
and to a greater extent than the overall market.
INVESTMENT CONCENTRATION. From time to time, the equity holdings in the
Growth Equity Fund may be concentrated in the securities of a relatively
small number of issuers. In no event will an investment be made for the Fund
in the securities of one issuer if such investment would cause more than 10%
of the book value of the Growth Equity Fund to be invested in the securities
of that issuer, and no investment will be made for the Fund if such
investment would cause more than 40% of the book value of the Fund to be
invested in the securities of four or fewer issuers. This strategy of
investment concentration may increase an investor's risk of loss in the event
of a decline in the value of one of these securities. As of December 31,
1996, 28.6% (of market value) of the Growth Equity Fund was held in the
stocks of four issuers. See Separate Account No. 4 (Pooled) Statement of
Investments and Net Assets in the SAI.
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<PAGE>
MONEY MARKET INVESTMENTS. The Growth Equity Fund may make temporary
investments in government obligations, short-term commercial paper and other
money market instruments. They may buy these directly or acquire units in our
Separate Account No. 2A. We maintain Separate Account No. 2A to provide a
more efficient means for certain of our separate accounts to invest cash
positions on a pooled basis at no additional cost. Separate Account No. 2A
seeks to obtain a high level of current income, preserve its assets and
maintain liquidity. It invests only in short-term securities which mature in
60 days or less from the date of purchase or which are subject to repurchase
agreements requiring repurchase in 60 days or less. In repurchase agreements,
Separate Account No. 2A buys securities from a seller, usually a bank or
brokerage firm, with the understanding that the seller will repurchase the
securities at a higher price at a future date. Such transactions afford an
opportunity for Separate Account No. 2A to earn a fixed rate of return on
available cash at minimal market risk, although the account may be subject to
various delays and risks of loss if the seller is unable to meet its
obligation to repurchase. Units in Separate Account No. 2A are not registered
under the Securities Act of 1933.
The kinds of direct investments the Fund makes in money market instruments
will be payable only in United States dollars and will consist principally of
securities issued or guaranteed by the United States Government or one of its
agencies or instrumentalities, negotiable certificates of deposit, bankers'
acceptances or bank time deposits, repurchase agreements (covering securities
issued or guaranteed by the United States Government or one of its agencies
or instrumentalities, certificates of deposit or bankers' acceptances),
commercial paper that is rated Prime-1 by Moody's Investors Service
("Moodys") or A-1 or A-1 Plus by Standard & Poor's Corporation ("S&P"),
unrated commercial paper, master demand notes or variable amount floating
rate notes of any issuer that has an outstanding issue of unsecured debt that
is currently rated Aa or better by Moody's or AA or better by S&P, and any
debt securities issued or guaranteed by an issuer, which is currently rated
Aa or better by Moody's or AA or better by S&P, with less than one year to
maturity. Such investments may include Eurodollars, certificates of deposit
and commercial paper issued by Schedule B Banks.
CONVERTIBLE SECURITIES. The Growth Equity Fund may invest in convertible
preferred stocks or convertible debt instruments. Convertible securities
contain both debt and equity features. Because of their debt element, they
may provide some protection when stock prices decline. Nevertheless,
convertible securities may lose significant value in periods of extreme
market volatility.
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HOW WE CALCULATE THE VALUE OF AMOUNTS ALLOCATED TO THE EQUITY FUNDS
- ------------------------------------------------------------------------------
CONTRIBUTIONS AND TRANSFERS: PURCHASE OF FUND UNITS. The portion of each
contribution or transfer allocated to an Equity Fund will be used to purchase
Units. Your interest in each Fund is represented by the value of the Units
credited to your Account for that Fund. The number of Units purchased by a
contribution or transfer to a Fund is calculated by dividing the amount
allocated by the Unit Value calculated as of the close of business on the day
we receive your contribution or transfer instruction. The number of Units
credited to your Account will not vary because of any subsequent fluctuation
in the Unit Value, but the value of a Unit fluctuates with the investment
experience of the Fund. In other words, the Unit Value will reflect the
investment income and realized and unrealized capital gains and losses of
that Fund as well as the deductions and charges we make to the Fund.
HOW WE DETERMINE THE UNIT VALUE. We determine the Unit Value for each Equity
Fund at the end of each business day. The Unit Value for each Fund is
calculated by first determining a gross unit value, which reflects only
investment performance, and then adjusting it for Fund expenses to obtain the
Fund Unit Value. We determine the gross unit value by multiplying the gross
unit value for the preceding
19
<PAGE>
business day by the net investment factor for that subsequent business day
(for the Growth Equity Fund we also subtract any audit and custodial fees).
We calculate the net investment factor as follows:
o First, we take the value of the Fund's assets at the close of business on
the preceding business day.
o Next, we add the investment income and capital gains, realized and
unrealized, that are credited to the assets of the Fund during the
business day for which we are calculating the net investment factor.
o Then we subtract the capital losses, realized and unrealized, charged to
the Fund during that business day.
o Finally, we divide this amount by the value of the Fund's assets at the
close of the preceding business day.
The Fund Unit Value is calculated on every business day by multiplying the
Fund Unit Value for the last business day of the previous month by the net
change factor for that business day. The net change factor for each business
day is equal to (a) minus (b) where:
(a) is the gross unit value for that business day divided by the gross unit
value for the last business day of the previous month; and
(b) is the charge to the Fund for that month for the daily accrual of fees
and other expenses times the number of days since the end of the preceding
month.
For information on how we value the assets of the Equity Funds, see the SAI.
The Aggressive Equity Fund's investments in the MFS Emerging Growth Fund, the
ADA Foreign Fund's investment in the Templeton Foreign Fund and the Equity
Index Fund's investment in the SSgA S&P 500 Index Fund will be valued at the
underlying mutual fund's net asset value per share.
The investments made by each of the Lifecycle Funds in units of the
corresponding Lifecycle Fund Group Trust will be valued at the net asset
value of the units of such Lifecycle Fund Group Trust. Investments made by
each Lifecycle Fund Group Trust in the Underlying Funds will be valued at the
Underlying Fund's net asset value per unit. The units of each Underlying Fund
are valued daily. For a more detailed description of how the Underlying Funds
are valued, see our separate prospectus for the Lifecycle Funds --
Conservative and Moderate.
20
<PAGE>
THE REAL ESTATE FUND
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REAL ESTATE FUND OBJECTIVES AND INVESTMENT POLICIES
- ------------------------------------------------------------------------------
OBJECTIVE. The Real Estate Fund, Separate Account No. 30, invests primarily,
though not exclusively, in units of our Separate Account No. 8 (the "Prime
Property Fund"), which in turn invests primarily in real property. The Prime
Property Fund seeks to achieve a stable rate of return over an extended
period of time through rental income and appreciation of real property
values. In addition, the Real Estate Fund seeks to maintain a level of
liquidity consistent with anticipated distributions and transfers. The Real
Estate Fund's liquid assets typically range from 0 to 15% of its total
assets, although the actual level of liquidity will depend on contributions,
distributions and transfers. See Special Risks Related to the Real Estate
Fund. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVES OF THE REAL ESTATE
FUND OR OF PRIME PROPERTY FUND WILL BE MET.
INVESTMENT POLICIES OF PRIME PROPERTY FUND. Prime Property Fund seeks the
acquisition and long-term ownership of high-grade, income-producing real
property. Prime Property Fund seeks to invest in properties that are located
in strong rental markets and have continuous potential for resale. Properties
are located throughout the United States. The distribution of investments by
property type and by location of properties is expected to change from time
to time. For additional information about the distribution of investments,
see Prime Property Fund Investments in the SAI.
In selecting a property for Prime Property Fund, we consider its location,
potential income stream, cost, potential for increasing rental income and
capital appreciation, resale marketability and architectural and other
physical attributes. We also evaluate the risks, including environmental
risks, involved with the property, as well as the probability and potential
impact of changes in the local economy. There are no limits as to how much
Prime Property Fund can invest in any one property. Currently, however, we do
not intend to invest more than 10% of Prime Property Fund's assets in any one
property. Prime Property Fund may invest in construction and mortgage loans
receivable and notes receivable. Mortgages may be accepted as partial
consideration for properties sold.
Prime Property Fund acquires both existing and developmental properties.
Prime Property Fund will also enter into forward commitments, under which it
agrees to purchase a property upon completion of construction or leasing.
Prime Property Fund does not currently expect to invest more than 10% of its
assets in developmental properties.
Prime Property Fund participates in joint ventures, particularly with regard
to large properties. In general, co-venturers will be real estate developers,
and joint ventures with them may involve property development projects. We
seek to form joint ventures with persons and companies who, because of our
experience with them or investigation into their financial condition and
business history, we regard as experienced and financially responsible. Prime
Property Fund may issue construction and mortgage loans on a fixed or
variable rate basis in connection with joint ventures in which it
participates. If Prime Property Fund issues fixed rate loans, it may seek to
stabilize the market value of such loans by engaging in interest rate hedging
transactions, to the extent permitted under applicable regulatory
requirements.
Prime Property Fund may use mortgage financing to acquire properties, may
mortgage properties after acquisition, may acquire properties subject to
mortgages and may enter into joint ventures or other arrangements that
require mortgage financing. There is no limit on mortgage indebtedness with
respect to any one property. Prime Property Fund may also borrow money in
order to acquire new properties or improve existing investments. These
borrowings may have recourse to wholly-owned properties or may be secured by
the general credit of the Fund and thus have recourse to the entire Fund.
During the period
21
<PAGE>
from 1987 through 1996 Prime Property Fund's total borrowings secured by
wholly-owned properties ranged from 10.4% to 22.2% of the total portfolio
value. Properties held by joint ventures may also be mortgaged. For more
information regarding borrowings secured by wholly-owned properties see Prime
Property Fund Investments in the SAI. Prime Property Fund may borrow in order
to provide working capital for repairs and improvements and to meet other
cash flow requirements. Prime Property Fund does not borrow in order to meet
investors' withdrawal requests.
Consistent with Prime Property Fund's investment objectives, it may engage in
transactions and invest in properties other than or in addition to those
described above, including commercial mortgaged backed securities (CMBS) and
shares in real estate investment trusts (REITs).
Prime Property Fund does not seek a specified holding period for the
properties it acquires. Prime Property Fund will buy and sell properties at
any time; in general, however, it seeks to hold properties for long-term
investment.
Most properties are managed by us or our affiliates. At December 31, 1996
independent managing and leasing agents managed properties representing
approximately 21.7% of aggregate appraised values.
INVESTMENT RISKS RELATED TO PRIME PROPERTY FUND. Prime Property Fund is
subject to the risks generally incident to the ownership of real property.
These include the uncertainty of cash flow, the need to meet fixed and other
obligations, shifts in real estate markets in general and in local markets in
particular, adverse changes in economic and social conditions, including
demographic trends, changes in operating expenses, including real estate
taxes, changes in tax, zoning, building, environmental and other laws, losses
due to nonpayment of rent, other uninsured losses and other risks beyond our
control. However, we believe that the large number of properties held in
Prime Property Fund and their geographic and use diversification provide a
measure of protection against these risks.
Investments in developmental properties are subject to additional risks,
which include cost overruns, construction delays, difficulties in finding
suitable tenants and delays in fully renting the property. Joint ventures may
be vulnerable to losses as a result of a joint venturer's financial
difficulties. In addition, the joint venturer may at times have objectives
that are contrary to those of Prime Property Fund. Construction loans may be
vulnerable to losses due to a developer's financial difficulties. In general,
construction loans will not be personal obligations of the borrower, and
Prime Property Fund will look solely to the underlying property in case of
default. Other liens such as mechanics' liens may have priority over Prime
Property Fund's security interest in the property.
INVESTMENT POLICIES RELATED TO LIQUID ASSETS. A portion of the Real Estate
Fund assets may be held in liquid assets. The portion of the Fund for which
liquidity is the investment objective may be invested in units of our
Separate Account No. 2A. See Money Market Investments under Risks and
Investment Techniques--Equity Funds. In addition, the Real Estate Fund may
invest directly in government obligations, short-term commercial paper and
other money market instruments of the types described above. Prime Property
Fund may also invest in these short-term securities directly or through
investment in units of Separate Account No. 2A. The Real Estate Fund seeks to
hold enough liquid assets to provide for expected withdrawals. These holdings
could, however, tend to reduce the investment performance of the Fund as
compared to that of Prime Property Fund or a fund fully invested in real
estate.
22
<PAGE>
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SPECIAL RISKS RELATED TO THE REAL ESTATE FUND
- ------------------------------------------------------------------------------
LIQUIDITY. There is no assurance that the Real Estate Fund will have
sufficient liquidity to make distributions and transfers when requested under
the Program or when required by law. From 1991 to June 1994 the Real Estate
Fund was using substantially all of its available cash flow and liquid assets
to pay participant withdrawal requests, and withdrawals were being delayed in
accordance with the procedures described below. As of the date of this
prospectus, the Real Estate Fund has sufficient liquidity and is paying
participant withdrawals on a current basis.
IN LIGHT OF THE RISKS AND POSSIBLE ILLIQUIDITY OF AN INVESTMENT IN THE REAL
ESTATE FUND, YOU AS AN INDIVIDUAL PARTICIPANT SHOULD CONSIDER LIMITING THE
AMOUNT YOU ALLOCATE TO IT, PARTICULARLY AS YOU NEAR RETIREMENT. In
considering this matter, you should take into account the other assets in
your investment portfolio, both in your plan and elsewhere, and the
distributions you anticipate taking from your plan in the foreseeable future.
If the Real Estate Fund does not have enough liquid assets to pay all
requested withdrawals, it will withdraw some or all of its interest from
Prime Property Fund. We may postpone withdrawals from Prime Property Fund,
however, for such time as we reasonably consider necessary to obtain the
amount to be withdrawn or to protect the interests of other participants in
Prime Property Fund. Withdrawals from Prime Property Fund have been
restricted from time to time. See Procedures for Withdrawals, Distributions
and Transfers--Special Rules for Distributions and Transfers from the Real
Estate Fund in the SAI.
INSURANCE RISKS. We believe that our casualty insurance would provide
adequate compensation for accidental loss of property value. A possible
exception would be loss in California resulting from earthquake; our
insurance against such loss is limited to $130 million per occurrence and
$130 million aggregate annually for all our California properties, including
Prime Property Fund properties. We believe that the amount of earthquake
insurance we carry is reasonable in light of the types of coverage available
at acceptable prices. Prime Property Fund's properties are also covered under
an umbrella liability policy that we believe is adequate for the portfolio in
view of the types of coverage currently available at acceptable prices.
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CONFLICTS OF INTEREST RELATED TO PRIME PROPERTY FUND
- ------------------------------------------------------------------------------
ACQUISITION OF PROPERTIES. Our wholly-owned subsidiary, Equitable Real Estate
Investment Management, Inc. (Equitable Real Estate) is responsible for
advising us as to all our real property acquisitions, management and sales.
See Investment Management of the Real Estate Fund. We and Equitable Real
Estate make acquisitions for ourselves and for our clients, including Prime
Property Fund. Before acquisition, properties are allocated among Prime
Property Fund, our other separate accounts (both pooled and single-client
accounts), our general account, Equitable Real Estate's own account, our
investment advisory account and Equitable Real Estate's advisory accounts.
We seek to allocate properties among the accounts based on the accounts'
investment policies, size, liquidity and diversification requirements,
current availability of funds, current portfolio holdings and annually
established investment goals. Equitable Real Estate's recommendations as to
the allocation of properties are reviewed and approved by the Investment
Committee of our Board of Directors. With limited exceptions, the Investment
Committee has final authority over the acquisition and allocation of
investment properties for all of our accounts.
Two or more of those accounts may share some of those properties. Prime
Property Fund does not now share any properties with any of our other
accounts. It may do so in the future, however. Sharing real estate could give
rise to situations in which our accounts have conflicting interests.
23
<PAGE>
MANAGEMENT OF PROPERTIES. In certain cases, we or our affiliates may manage
some of the properties held in Prime Property Fund. Pursuant to an exemption
issued by the United States Department of Labor, we are permitted to charge
market level fees, including a profit, for on-site management and leasing
services we provide to properties in Prime Property Fund. During 1996,
Equitable Real Estate subsidiaries received payments of $11.8 million for
these types of services.
We may have interests in properties held in our general account or in other
accounts we manage that may be affected by the acquisition, operations or
sale of Prime Property Fund properties.
APPRAISAL OF PROPERTIES. The portfolio value for the Real Estate Fund depends
heavily on the estimated market values of properties held by Prime Property
Fund. Those estimates are based on our periodic reappraisals of the
properties. Our fees will tend to increase as those appraised values
increase. There is no assurance that any of the properties will ultimately be
sold for their appraised values. See How We Calculate the Value of Amounts
Allocated to the Real Estate Fund.
SALE OF PROPERTIES. We may postpone withdrawals from Prime Property Fund
under certain circumstances within our discretion (see Special Risks related
to the Real Estate Fund), which may include a reasonable determination not to
sell properties. Our fees depend on the aggregate value of net assets held in
Prime Property Fund.
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HOW WE CALCULATE THE VALUE OF AMOUNTS ALLOCATED TO THE REAL ESTATE FUND
- ------------------------------------------------------------------------------
CONTRIBUTIONS AND TRANSFERS: PURCHASE OF REAL ESTATE FUND UNITS. The Real
Estate Fund accepts contributions and transfers only one day each month. All
amounts transferred from other Investment Options or contributed directly to
the Real Estate Fund will first be placed in the Money Market Guarantee
Account and designated for investment in the Real Estate Fund. On the next
day on which the Real Estate Fund accepts contributions, the amount
designated for the Real Estate Fund, plus accrued interest, will be used to
purchase Units in the Real Estate Fund. The Real Estate Fund accepts
contributions as of the day its Unit Value is determined. If you wish to
change your mind about contributing to the Real Estate Fund, you may do so
before your contribution is transferred to the Real Estate Fund by sending us
written instructions that the money being held in the Money Market Guarantee
Account is no longer designated for investment in the Real Estate Fund. You
should enclose a transfer form telling us where that money is to be
allocated. We must receive your instructions by the close of business on the
day the transfer is to occur in order for them to be effective. The transfer
date will vary from month to month; therefore, we cannot ensure that your
instructions will be effective unless we receive them by the first day of the
month.
The day on which the Real Estate Fund's Unit Value is determined depends each
month on the day on which the value of Prime Property Fund is known. Prime
Property Fund is valued only once each month, as of the last business day of
the month. However, that value is normally not known until several days later
because financial data must be calculated and reported from properties
located throughout the country. When this process is completed, Units of the
Real Estate Fund are valued. During the period between the end of the month
and the day on which the Real Estate Fund Units are valued, which normally
ranges from five to ten days, the value of Prime Property Fund real estate
assets from the end of the preceding month may change, income will accrue and
expenses will be incurred. As a result, the procedure described above will
tend to favor Real Estate Fund Units being purchased to the extent that there
have been net increases in the value of the underlying net assets between the
end of the month and the date of the valuation. It will have the opposite
effect to the extent of any decreases in the net assets during this period.
LIQUIDATION OF REAL ESTATE FUND UNITS. UNITS IN THE REAL ESTATE FUND MAY BE
LIQUIDATED ONLY AFTER THE END OF EACH CALENDAR QUARTER. The liquidation will
occur after we know the value of Prime Property Fund
24
<PAGE>
for the last day of that quarter and have determined the value of Real Estate
Fund Units, which normally occurs five to ten days into the succeeding month.
If you are taking a distribution or transfer from the Real Estate Fund, the
amount distributed will not reflect any change in the value of Prime Property
Fund assets attributable to the period between the last day of the quarter
and the day your redemption occurs. To the extent that the value increases
during that period, this will tend to disadvantage the person liquidating
Units and to favor the holders of the remaining Units.
HOW WE DETERMINE THE UNIT VALUE. We determine the Unit Value for the Real
Estate Fund once each month, generally as of the close of business on the
first business day after the day the unit value for Prime Property Fund is
known. We first determine the gross unit value, which is equal to (a) plus
(b) plus (c) divided by (d), where
(a) is the aggregate value of all units of Prime Property Fund held by the
Real Estate Fund determined as of the last business day of the preceding
month;
(b) is the aggregate value of all units of Separate Account No. 2A and cash
or cash equivalents held by the Real Estate Fund, determined as of the
close of business on the day the Real Estate Fund Unit Value is known;
(c) is the net value of all other assets and liabilities of the Real Estate
Fund, determined as of the close of business on the day the Real Estate
Fund Unit Value is known; and
(d) is the total number of Real Estate Fund Units outstanding.
To obtain the Real Estate Fund Unit Value, we then adjust this gross unit
value for Fund fees and other expenses at rates equal to 1/12 of the annual
rates. See Deductions and Charges.
Once we determine the Unit Value, it remains constant until set again the
following month. Thus, any transactions that occur between determination
dates (such as the withdrawal of fees) are processed using the Unit Value
determined earlier that month.
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THE GUARANTEED OPTIONS
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Contributions allocated to the Guaranteed Rate Accounts are invested through
and guaranteed by major insurance companies. Contributions allocated to the
Money Market Guarantee Account are backed by amounts held in Separate Account
No. 43 (described below) and are guaranteed by Equitable Life's general
account. The general accounts of Equitable Life and other major insurance
companies support each company's respective insurance and annuity guarantees
as well as their general obligations. The companies' general accounts, as
part of their insurance and annuity operations, are subject to insurance laws
and regulations of all jurisdictions in which they are authorized to do
business. Because of applicable exemptive and exclusionary provisions,
interests in or guaranteed by the general accounts have not been registered
under the Securities Act of 1933 (the "1933 Act") nor are the general
accounts investment companies under the the 1940 Act. Accordingly, neither
the general accounts of Equitable Life or of any other major insurance
company nor any interests therein, are subject to regulation under the 1933
Act or the 1940 Act, and we have been advised that the staff of the
Securities and Exchange Commission has not made a review of the disclosures
which are included in this prospectus for your information and which relate
to the general accounts of Equitable Life and other major insurance companies
and the Guaranteed Options. These disclosures, however, may be subject to
certain generally applicable provisions of the federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
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GUARANTEED RATE ACCOUNTS
- ------------------------------------------------------------------------------
PRINCIPAL MUTUAL LIFE GUARANTEES--NEW GUARANTEED RATE ACCOUNTS. For
approximately a one-year period beginning July 31, 1996, all monies allocated
to the Guaranteed Rate Accounts (GRAs) have been and will be invested through
two group annuity contracts issued to the Trustees by Principal Mutual Life
Insurance Company ("Principal Mutual Life"). These GRAs will remain invested
with Principal Mutual Life through maturity. At the end of the one-year
period the Trustees may renew the arrangement with Principal Mutual Life to
provide the Program GRAs or they may arrange for other carriers to provide
them. Call your Account Executive at that time for further information. All
GRAs opened prior to July 31, 1996 will remain invested through maturity with
the carrier that provided that GRA. Withdrawals, transfers, reallocations on
maturity and benefit distributions from GRAs provided by other carriers are
subject to Equitable Life's receipt of the proceeds of such GRA from such
other carriers.
All references in this prospectus and in the SAI to "The Guaranteed Rate
Accounts" or to a "GRA" or "GRAs" shall be deemed to refer to the GRAs
provided by Principal Mutual Life or any other carrier which previously
provided or may in the future provide Program GRAs, as appropriate.
Principal Mutual Life is an Iowa mutual life insurance company with its Home
Office located at 711 High Street, Des Moines, Iowa 50392. Founded in 1879,
Principal Mutual Life is a Fortune 100 company with assets of approximately
$57 billion held in its general account as of December 31, 1996. Principal
Mutual Life and its subsidiaries had assets under management as of December
31, 1996 of approximately $63 billion.
THE GUARANTEES. Contributions to the GRAs are credited until maturity with
the interest rate in effect on the date of receipt. The rate is expressed as
an effective annual rate, reflecting daily compounding and the deduction of
applicable asset-based fees. See Deductions and Charges. GRAs with maturities
of approximately three and approximately five years are available under the
Program. AMOUNTS ALLOCATED TO A GRA MAY GENERALLY NOT BE REMOVED PRIOR TO
MATURITY. New guaranteed rates are offered each Wednesday and are available
for a seven-day period. Interest accrues from the day after your contribution
26
<PAGE>
or transfer is credited through the maturity date of the GRA, which is either
approximately three or approximately five years from the end of the seven-day
offering period. The amount of your contributions and the interest credited
is guaranteed subject, however, to any penalties applicable upon premature
withdrawal. See Premature Withdrawals and Transfers from a GRA in the SAI for
a description of these penalties and when they apply. You may call the AIM
System to obtain the current GRA rates. For a discussion of maturing GRAs,
see Maturing GRAs in the SAI.
PREMATURE WITHDRAWALS AND TRANSFERS. You may transfer amounts from other
Investment Options to a GRA at the current guaranteed rate at any time. You
may not make transfers from one GRA to another or from a GRA to one of the
other Investment Options except at maturity. Likewise, you may not remove
amounts from a GRA prior to maturity in order to obtain a plan loan, to make
a hardship or in-service withdrawal, to receive benefits from a terminated
plan or to transfer amounts to a new plan. Withdrawals from GRAs may be made
before maturity if you are disabled, you attain age 70 1/2, or you die.
Certain other withdrawals from a GRA prior to maturity are permitted, but may
be subject to a penalty. See Procedures for Withdrawals, Distributions and
Transfers--Premature Withdrawals and Transfers from a GRA in the SAI.
- ------------------------------------------------------------------------------
MONEY MARKET GUARANTEE ACCOUNT
- ------------------------------------------------------------------------------
WE GUARANTEE THE MONEY MARKET GUARANTEE ACCOUNT. We guarantee the amount of
your contributions and the interest credited to the Money Market Guarantee
Account. We maintain Separate Account No. 43 (described below) in connection
with these guarantees. All amounts held in the Money Market Guarantee Account
are credited with the same rate of interest. The rate changes monthly and is
expressed as an effective annual rate, reflecting daily compounding and the
deduction of applicable asset-based fees. The rate will approximate the
average over each calendar year of money market funds considered "domestic
prime," that is, funds with the highest quality investments offered to
investors, plus an amount which approximates the average expenses deducted
from such funds, less .15% and the applicable Program Expense Charge. See
Deductions and Charges. You may call the AIM System to obtain the current
monthly rate. On January 1 each year we set an annual minimum interest rate
for this Account. The minimum guaranteed interest rate for 1997 is 2.5%
(before applicable asset-based fees).
SEPARATE ACCOUNT NO. 43. We will hold assets in Separate Account No. 43
sufficient to pay all principal and accrued interest under the Money Market
Guarantee Account option, less applicable fees, in accordance with provisions
of the New York Insurance Law which govern the operation of Separate Account
No. 43. These provisions generally require that assets held in Separate
Account No. 43 be valued at cost and not at market value. In accordance with
the New York Insurance Law, the assets which we are required to hold in
Separate Account No. 43 attributable to ADA participants will only be
available to Program participants who have allocated amounts to the Money
Market Guarantee Account and may not be used to satisfy obligations that may
arise out of any other business we conduct. We have the right to remove
assets from Separate Account No. 43 that are in excess of those attributable
to the combined account values of all ADA participants.
Your principal and accrued interest under the Money Market Guarantee Account
will not fluctuate with the value of the assets we hold in Separate Account
No. 43 and are guaranteed by us and backed by our general account assets. If
the assets in Separate Account No. 43 prove insufficient to provide for
payment of all principal and accrued interest under the Money Market
Guarantee Account, we will transfer additional assets into Separate Account
No. 43 to make up for any shortfall. Conversely, we may withdraw from
Separate Account No. 43 any excess over the amount needed to provide for
payment of all such principal and accrued interest.
27
<PAGE>
CONTRIBUTIONS. Contributions may be made at any time and will earn the
current rate from the day after the contribution is credited through the end
of the month or, if earlier, the day of transfer or withdrawal. Balances in
the Account at the end of the month automatically begin receiving interest at
the new rate until transferred or withdrawn. We guarantee the amount of your
contributions and the interest credited.
DISTRIBUTIONS, WITHDRAWALS, AND TRANSFERS. Distributions, withdrawals and
transfers may be made at any time permitted under your plan. We do not charge
penalties.
28
<PAGE>
EQUITABLE LIFE AND THE INVESTMENT MANAGERS
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
EQUITABLE LIFE
- ------------------------------------------------------------------------------
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest
life insurance companies in the United States. Equitable Life has been
selling annuities since the turn of the century. Our Home Office is located
at 1290 Avenue of the Americas, New York, New York 10104. We are authorized
to sell life insurance and annuities in all fifty states, the District of
Columbia, Puerto Rico and the Virgin Islands. We maintain local offices
throughout the United States. We are one of the nation's leading pension fund
managers.
Equitable Life is a wholly-owned subsidiary of The Equitable Companies
Incorporated (the "Holding Company"). The largest stockholder of the Holding
Company is AXA-UAP ("AXA"). As of January 1, 1997, AXA beneficially owned
63.8% of the outstanding shares of common stock of the Holding Company
(assuming conversion of the convertible preferred stock held by AXA). Under
its investment arrangements with Equitable Life and the Holding Company, AXA
is able to exercise significant influence over the operations and capital
structure of the Holding Company and its subsidiaries, including Equitable
Life. AXA, a French company, is the holding company for an international
group of insurance and related financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed assets of
approximately $239.8 billion as of December 31, 1996, including third party
assets of approximately $184.8 billion. These assets are primarily managed
for retirement and annuity programs for businesses, tax-exempt organizations
and individuals. This broad customer base includes nearly half the Fortune
100, more than 42,000 small businesses, state and local retirement funds in
more than half the 50 states, approximately 250,000 employees of educational
and non-profit institutions, as well as nearly 500,000 individuals. Millions
of Americans are covered by Equitable Life's annuity, life, health and
pension contracts.
- ------------------------------------------------------------------------------
THE SEPARATE ACCOUNTS
- ------------------------------------------------------------------------------
Each of the seven Funds is a separate account of Equitable Life; we own all
the assets of the separate accounts. A separate account is a separate
investment account which we use to support our group annuity contracts, and
for other purposes permitted by applicable law. We keep the assets of each
separate account segregated from our general account and from any other
separate accounts we may have. Although the assets of the Funds are our
property, our obligation to you under the group annuity contract equals the
value of your accumulation in each Fund.
Income, gains and losses, whether or not realized, from assets invested in
the Funds are credited to or charged against the Fund without regard to our
other income, gains or losses. The portion of each Fund's assets we hold on
your behalf may not be used to satisfy obligations that may arise out of any
other business we conduct. We may, however, transfer amounts owed to us, such
as fees and expenses, to our general account at any time. We may make these
transfers even if the Fund in question does not have sufficient liquidity to
make all withdrawals requested by participants.
The separate accounts which we call the Growth Equity, Aggressive Equity, ADA
Foreign, Equity Index, Lifecycle--Moderate and Lifecycle--Conservative and
Real Estate Funds commenced operations on 1968, 1969, 1992, 1994, 1995, and
1986 respectively. The Aggressive Equity Fund, which was part of Equitable's
Separate Account No. 3, was transferred on December 1, 1995 to Separate
Account No. 200. The Funds are governed by the laws and regulations of the
state of New York, where we are domiciled, and may also be governed by laws
of other states in which we do business. The Aggressive Equity, ADA
29
<PAGE>
Foreign, Equity Index and Lifecycle Funds are used exclusively for the ADA
Members Retirement Program. The Growth Equity and Real Estate Funds are
"pooled" funds that are used to fund benefits under the ADA Program and other
group annuity contracts, agreements, and tax-deferred retirement programs we
administer.
- ------------------------------------------------------------------------------
INVESTMENT MANAGEMENT OF THE EQUITY FUNDS
- ------------------------------------------------------------------------------
We act as investment manager to the Growth Equity Fund. As such, we invest
and reinvest its assets in accordance with the investment policies for the
Fund. We have no investment management responsibility for the Aggressive
Equity, ADA Foreign, Equity Index or Lifecycle Funds. In providing investment
management to the Growth Equity Fund, we have complete discretion over Fund
assets, within the investment policies of the Fund, and currently use the
personnel and facilities of Alliance Capital Management L.P. ("Alliance") for
portfolio management, securities selection and transaction services.
Alliance is a publicly-traded limited partnership which is indirectly
majority-owned by Equitable Life. Equitable Life and Alliance are registered
investment advisers under the Investment Advisers Act of 1940. As of December
31, 1996, Alliance had total assets under management of over $182.7 billion.
Alliance acts as an investment adviser to various separate accounts and
general accounts of Equitable Life and other affiliated insurance companies.
Alliance also provides management and consulting services to mutual funds,
endowment funds, insurance companies, foreign entities, qualified and non-tax
qualified corporate funds, public and private pension and profit-sharing
plans, foundations and tax-exempt organizations. Alliance's main office is
located at 1345 Avenue of the Americas, New York, New York 10105.
The securities held in the Fund must be authorized or approved by the
Investment Committee of our Board of Directors. Subject to the Investment
Committee's broad supervisory authority, our investment officers and managers
have been given discretion as to sales and, within specified limits,
purchases of stocks, other equity securities and certain debt securities.
When an investment opportunity arises that is consistent with the objectives
of more than one account, investment opportunities are allocated among
accounts in an impartial manner based on certain factors such as the
accounts' investment objectives and their then-current investment and cash
positions.
For the Aggressive Equity Fund, we act in accordance with the investment
policies established by the Trustees. The Aggressive Equity Fund is invested
solely in the MFS Emerging Growth Fund, which is managed by Massachusetts
Financial Services Company. See The Aggressive Equity Fund.
For the Equity Index Fund, we act in accordance with the investment policies
established by the Trustees. The Equity Index Fund is invested solely in the
SSgA S&P 500 Index Fund. State Street is the investment advisor of that Fund.
See The Equity Index Fund.
For the ADA Foreign Fund, we act in accordance with the investment policies
established by the Trustees. The ADA Foreign Fund is invested solely in the
Templeton Foreign Fund, which is managed by Templeton Global Advisors Ltd.
See The ADA Foreign Fund.
For the Lifecycle Funds, we act in accordance with the investment policies
established by the Trustees. The Lifecycle Funds--Conservative and Moderate
are invested solely in units of the Lifecycle Fund Group Trusts--Conservative
and Moderate, respectively. State Street is the investment adviser and
Trustee of these Group Trusts and the Underlying Funds. See Lifecycle Funds.
30
<PAGE>
We, together with the Holding Company, own 79.9% of the outstanding common
stock of Donaldson, Lufkin & Jenrette, Inc. (DLJ). A DLJ subsidiary,
Donaldson, Lufkin & Jenrette Securities Corporation, is one of the nation's
largest investment banking and securities firms. Another DLJ subsidiary,
Autranet, Inc., is a securities broker that markets independently originated
research to institutions. Through the Pershing Division of Donaldson, Lufkin
& Jenrette Securities Corporation, DLJ supplies correspondent services,
including order execution, securities clearance and other centralized
financial services, to numerous independent regional securities firms and
banks.
To the extent permitted by law and consistent with the Fund transaction
practices discussed in this prospectus, and subject to the consent of Fund
contractholders, the Growth Equity Fund may engage in securities and other
transactions with the above entities or may invest in shares of the
investment companies with which those entities have affiliations. In 1996,
there were no such transactions through DLJ subsidiaries.
- ------------------------------------------------------------------------------
INVESTMENT MANAGEMENT OF THE REAL ESTATE FUND
- ------------------------------------------------------------------------------
We act as investment manager to the Real Estate Fund and to Prime Property
Fund. In managing the Real Estate Fund and Prime Property Fund, we use the
services of Equitable Real Estate. Equitable Real Estate originates,
analyzes, evaluates and recommends commercial real estate investments for its
clients, then manages and services those investments on an ongoing basis.
Equitable Real Estate provides property management services in connection
with some of the properties held in Prime Property Fund and supervises the
performance of other property managers which it retains. Equitable Real
Estate coordinates related accounting and bookkeeping functions with us.
On April 10, 1997, The Equitable Companies Incorporated and Lend Lease
Corporation Limited announced the signing of a definitive agreement for Lend
Lease to purchase Equitable Real Estate. Lend Lease is a publicly traded,
international property and financial services company based in Sydney,
Australia. Lend Lease plans to merge Equitable Real Estate with the Yarmouth
Group, its U.S. real estate advisory unit. Under terms of the agreement, the
new company, ERE/Yarmouth, will continue to serve as advisor for the real
estate assets of Equitable Life's general account as well as for its real
estate separate accounts including Prime Property Fund and the Real Estate
Fund. The sale is expected to be completed during the second quarter of 1997,
and is contingent on securing all necessary regulatory approvals.
Equitable Real Estate advises us as to the commercial real estate assets of
all our accounts, which at December 31, 1996, represented approximately $24.8
billion in equity real estate and mortgage loan holdings.
31
<PAGE>
INVESTMENT PERFORMANCE
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
MEASURING THE INVESTMENT PERFORMANCE OF THE FUNDS
- ------------------------------------------------------------------------------
We recognize that the performance of the Funds that you invest your
retirement savings in is important to you. The purpose of this discussion is
to give you an overview of how our Funds have performed in the past. OF
COURSE, PAST PERFORMANCE CANNOT BE USED TO PREDICT FUTURE PERFORMANCE.
Fund performance is most often measured by the change in the value of fund
units over time. Unlike typical mutual funds, which usually distribute
earnings annually, separate account funds reinvest all earnings. As described
previously, the unit value calculations for the funds include all earnings,
including dividends and realized and unrealized capital gains. Changes in the
unit values can be expressed in terms of the Fund's annual percentage change,
its average annual change, or its cumulative change over a period of years.
Each of these measurements is valuable on its own. In addition, it is often
helpful to compare the Funds' performance with the results of unmanaged
market indices.
The following tables and graphs provide a historical view of the Funds'
investment performance. The information presented includes performance
results for each Fund, along with data representing unmanaged market indices.
- ------------------------------------------------------------------------------
UNMANAGED MARKET INDICES
- ------------------------------------------------------------------------------
Unmanaged market indices, or "benchmarks," while providing a broader
perspective on relative performance, are only a tool for comparison.
Performance data for the unmanaged market indices do not reflect any
deductions for investment advisory, brokerage or other expenses of the type
typically associated with an actively managed fund. This effectively
overstates the rate of return of the market indices relative to that which
would be available to a typical investor, and limits the usefulness of these
indices in assessing the performance of the Funds. Since the Funds do not
distribute dividends or interest, the market indices have been adjusted to
reflect reinvestment of dividends and interest to provide greater
comparability.
We have presented data for the following unmanaged indices. One or more of
these indices may be appropriate comparative measures of performance for the
Funds.
o STANDARD AND POOR'S 500 INDEX ("S&P 500")--an unmanaged weighted index
of the securities of 500 industrial, transportation, utility and
financial companies widely regarded by investors as representative of
the stock market. This index should not be confused with the performance
of our Equity Index Fund nor that of the SSgA S&P 500 Fund, which seeks
to emulate the results of the S&P 500 Index. See The Equity Funds--The
Equity Index Fund for more information.
o RUSSELL 2000 INDEX ("RUSSELL 2000")--an unmanaged broadly diversified
index maintained by Frank Russell Company consisting of the
approximately 2,000 smallest stocks within the Russell 3000 Index. The
Russell 3000 Index consists of the largest 3,000 publicly traded stocks
of U.S. domiciled corporations and includes large, medium and small
capitalization stocks. As such, the Russell 3000 Index represents
approximately 98 percent of the total market capitalization of all U.S.
stocks that trade on the New York and American Stock Exchanges and in
the NASDAQ over-the-counter market.
o MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX ("EAFE")--an unmanaged
index of the securities of over 1,000 companies traded on the markets of
Europe, Australia, New Zealand and the Far East.
o LEHMAN GOVERNMENT/CORPORATE BOND INDEX ("LEHMAN")--an unmanaged index
widely regarded by investors as representative of the bond market.
o SALOMON BROTHERS 3-MONTH T-BILL INDEX ("SALOMON 3 MO. T-BILL")--an
unmanaged index of direct obligations of the U.S. Treasury which are
issued in maturities between 31 and 90 days.
o CONSUMER PRICE INDEX (URBAN CONSUMERS--NOT SEASONALLY ADJUSTED)
("CPI")--an index of inflation.
32
<PAGE>
- ------------------------------------------------------------------------------
HOW PERFORMANCE DATA ARE PRESENTED
- ------------------------------------------------------------------------------
We have shown Fund performance on several different bases:
o The annual percentage change in Fund Unit Values,
o The average annual percentage change in Fund Unit Values, and
o The total value as of December 31, 1996 of a $10,000 investment made
on January 1, 1987 for the Growth Equity, Aggressive Equity and ADA
Foreign Funds.
o The total value as of December 31, 1996 of a $10,000 investment made
on the respective inception dates of the Equity Index,
Lifecycle-Conservative and Lifecycle-Moderate Funds.
THE FUND PERFORMANCE SHOWN MAY NOT REPRESENT YOUR ACTUAL EXPERIENCE AND IT
DOES NOT REPRESENT THE EFFECT OF THE RECORD MAINTENANCE AND REPORT OR
ENROLLMENT FEES. The annual percentage change in Fund unit values represents
the percentage increase or decrease in unit values from the beginning of one
year to the end of that year. During any year unit values will, of course,
increase or decrease reflecting fluctuations in the securities markets. The
average annual rates of return are time-weighted, assume an investment at the
beginning of each period, and include the reinvestment of investment income.
Historical results are presented for the Funds for the periods during which
the funds were available under the Program. Hypothetical results were
calculated for prior periods. In the case of the Aggressive Equity Fund,
hypothetical performance is shown for years before 1996, because the ADA
Program did not begin to invest in the MFS Emerging Growth Fund until
December 1, 1995. For the Equity Index Fund, no results are presented for
periods prior to 1993, as the SSgA S&P 500 Index Fund began operations during
1992. 1995 performance data for the Lifecycle Funds is shown for the period
when the Funds commenced operations on May 1, 1995 through December 31, 1995.
See How We Calculate Performance Data. The foregoing applies with respect to
the calculation of performance data given in the "Annual Percentage Change in
Unit Values" chart, "Average Annual Percentage Change in Unit Values" chart,
and "Cumulative Value Examples" given below.
ANNUAL PERCENTAGE CHANGE IN FUND UNIT VALUES*
<TABLE>
<CAPTION>
-------- ------------
GROWTH AGGRESSIVE
EQUITY EQUITY
- ------ -------- ------------
<S> <C> <C>
1996 17.0% 13.8%
- ------ -------- ------------
1995 31.1 40.2
- ------ -------- ------------
1994 -2.3 4.0
- ------ -------- ------------
1993 18.7 23.4
- ------ -------- ------------
1992 0.6 10.8
- ------ -------- ------------
1991 51.1 86.4
- ------ -------- ------------
1990 -11.9 -3.3
- ------ -------- ------------
1989 43.9 26.0
- ------ -------- ------------
1988 16.3 7.2
- ------ -------- ------------
1987 5.0 3.9
- ------ -------- ------------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
--------- -------- -------------- ----------- -------- ------- --------- ------- -------- --------- ------
LIFECYCLE LIFECYCLE SALOMON
ADA EQUITY FUND-- FUND-- REAL S&P RUSSELL 3 MO.
FOREIGN INDEX CONSERVATIVE MODERATE ESTATE 500 2000 EAFE LEHMAN T-BILL CPI
- ------ --------- -------- -------------- ----------- -------- ------- --------- ------- -------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 16.8% 21.3% 4.3% 10.6% 0.2% 23.0% 16.5% 6.1% 2.9% 5.3% 3.3%
- ------ --------- -------- -------------- ----------- -------- ------- --------- ------- -------- --------- ------
1995 10.0 35.1 5.9 10.1 4.4 37.5 28.4 11.2 19.2 5.7 2.9
- ------ --------- -------- -------------- ----------- -------- ------- --------- ------- -------- --------- ------
1994 -0.6 0.7 -- -- 3.6 1.3 -1.8 7.8 -3.5 4.2 2.7
- ------ --------- -------- -------------- ----------- -------- ------- --------- ------- -------- --------- ------
1993 33.4 6.4 -- -- -3.2 10.0 18.9 32.6 11.0 3.1 2.7
- ------ --------- -------- -------------- ----------- -------- ------- --------- ------- -------- --------- ------
1992 -0.6 -- -- -- -5.2 7.6 18.4 -12.2 7.6 3.6 2.9
- ------ --------- -------- -------------- ----------- -------- ------- --------- ------- -------- --------- ------
1991 17.3 -- -- -- -8.7 30.5 46.1 12.5 16.1 5.8 3.0
- ------ --------- -------- -------------- ----------- -------- ------- --------- ------- -------- --------- ------
1990 -3.8 -- -- -- 2.0 -3.1 -19.5 -23.2 8.3 7.9 6.2
- ------ --------- -------- -------------- ----------- -------- ------- --------- ------- -------- --------- ------
1989 29.6 -- -- -- 8.1 31.7 16.3 10.8 14.2 8.7 4.6
- ------ --------- -------- -------------- ----------- -------- ------- --------- ------- -------- --------- ------
1988 21.1 -- -- -- 4.9 16.6 24.9 28.6 7.6 6.8 4.4
- ------ --------- -------- -------------- ----------- -------- ------- --------- ------- -------- --------- ------
1987 23.8 -- -- -- 7.6 5.3 -8.8 24.9 2.3 5.9 4.4
- ------ --------- -------- -------------- ----------- -------- ------- --------- ------- -------- --------- ------
</TABLE>
- ------------
* Hypothetical results are shown in italics.
PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE PERFORMANCE. NO PROVISIONS
HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS OR UPON
DISTRIBUTION.
33
<PAGE>
- ------------------------------------------------------------------------------
AVERAGE ANNUAL PERCENTAGE CHANGE IN FUND UNIT VALUES--
YEARS ENDING DECEMBER 31, 1996*
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------- -------- ------------
GROWTH AGGRESSIVE
EQUITY EQUITY
- ---------- -------- ------------
<S> <C> <C>
1 Year 17.0% 13.8%
- ---------- -------- ------------
2 Years 23.9 26.3
- ---------- -------- ------------
3 Years 14.5 18.4
- ---------- -------- ------------
5 Years 12.4 17.8
- ---------- -------- ------------
10 Years 15.4 19.1
- ---------- -------- ------------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
--------- -------- -------------- ----------- -------- ------- --------- ------ -------- --------- ------
LIFECYCLE LIFECYCLE SALOMON
ADA EQUITY FUND-- FUND-- REAL S&P RUSSELL 3 MO.
FOREIGN INDEX CONSERVATIVE MODERATE ESTATE 500 2000 EAFE LEHMAN T-BILL CPI
- ---------- --------- -------- -------------- ----------- -------- ------- --------- ------ -------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year 16.8% 21.3% 4.3% 10.6% 0.2% 23.0% 16.5% 6.1% 2.9% 5.3% 3.3%
- ---------- --------- -------- -------------- ----------- -------- ------- --------- ------ -------- --------- ------
2 Years 13.3 28.0 -- -- 2.3 30.0 22.3 8.6 10.8 5.5 2.9
- ---------- --------- -------- -------------- ----------- -------- ------- --------- ------ -------- --------- ------
3 Years 8.5 18.2 -- -- 2.7 19.7 13.7 8.3 5.8 5.1 2.8
- ---------- --------- -------- -------------- ----------- -------- ------- --------- ------ -------- --------- ------
5 Years 11.1 -- -- -- -0.1 15.2 15.6 8.2 7.2 4.4 2.8
- ---------- --------- -------- -------------- ----------- -------- ------- --------- ------ -------- --------- ------
10 Years 14.0 -- -- -- 1.2 15.3 12.4 8.4 8.4 5.7 3.7
- ---------- --------- -------- -------------- ----------- -------- ------- --------- ------ -------- --------- ------
</TABLE>
- ------------
* Hypothetical results are shown in italics.
- ------------------------------------------------------------------------------
CUMULATIVE VALUE EXAMPLES
- ------------------------------------------------------------------------------
Although historical percentage change data is valuable in evaluating fund
performance, it is often easier to understand the information in more graphic
examples. One approach to this is the use of "mountain charts." Mountain
charts, such as the ones below, illustrate the growth of a hypothetical
investment over time for each of the Funds. Each chart illustrates the growth
through December 31, 1996 of an investment of $10,000 made on January 1,
1987.
The mountain charts for the Equity Index Fund and the Lifecycle Funds
illustrate the growth through December 31, 1996 of an investment of $10,000
made on the inception date of each Fund.
GROWTH OF $10,000 INITIAL INVESTMENT
GROWTH EQUITY FUND
$10,000 INVESTED OVER TEN YEARS
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
[TO COME]
AGGRESSIVE EQUITY FUND
$10,000 INVESTED OVER TEN YEARS*
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
[TO COME]
PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE PERFORMANCE. NO PROVISIONS
HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS OR UPON
DISTRIBUTION.
34
<PAGE>
ADA FOREIGN FUND
$10,000 INVESTED OVER TEN YEARS*
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
[TO COME]
EQUITY INDEX FUND
$10,000 INVESTED SINCE INCEPTION*
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
[TO COME]
LIFECYCLE FUND-CONSERVATIVE
$10,000 INVESTED SINCE INCEPTION
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
[TO COME]
LIFECYCLE FUND-MODERATE
$10,000 INVESTED SINCE INCEPTION
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
[TO COME]
PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE PERFORMANCE. NO PROVISIONS
HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS OR UPON
DISTRIBUTION.
35
<PAGE>
REAL ESTATE FUND
$10,000 INVESTED OVER TEN YEARS
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
[TO COME]
PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE PERFORMANCE. NO PROVISIONS
HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS OR UPON
DISTRIBUTION.
36
<PAGE>
- ------------------------------------------------------------------------------
HOW WE CALCULATE PERFORMANCE DATA
- ------------------------------------------------------------------------------
Growth Equity Fund performance reflects actual historical investment
experience and the deduction of asset-based charges actually incurred by
Separate Account No. 4 (Pooled) under the Program during the periods
indicated.
The Class A shares of the MFS Emerging Growth Fund in which the Aggressive
Equity Fund invests have been offered for sale since 1993, whereas the Class
B shares of the MFS Emerging Growth Fund have been offered since 1986. The
only difference between the two classes of shares is in their respective fee
and expense structures. The Class B shares have generally higher
class-related expenses than the Class A shares. The investments of the two
classes of shares are identical. The Aggressive Equity Fund performance shown
reflects the net performance of the Class A shares since September 13, 1993,
when those shares were first offered for sale. From December 29, 1986, when
Class B shares were first offered, to September 13, 1993, the performance of
those shares is reflected. Because the expenses applicable to the Class B
shares are higher than the expenses applicable to the Class A shares, the
hypothetical performance shown would have been somewhat higher for periods
prior to September 13, 1993 if Class A shares had been available.
In order to create the hypothetical performance, we have applied the Program
expense charge and other expenses actually incurred by the Aggressive Equity
Fund when it participated in Separate Account No. 3 (Pooled) to the
historical investment performance of the MFS Emerging Growth Fund Class A and
Class B shares described above.
The ADA Foreign Fund performance shown reflects the performance of Separate
Account No. 191 for the period beginning March 2, 1992. For periods prior to
March 2, 1992, hypothetical performance is shown. For these hypothetical
calculations we have applied the Program expense charge during those periods
plus .15% in estimated other expenses to the historical investment experience
of the Templeton Foreign Fund.
The Equity Index Fund performance shown reflects the performance of Separate
Account No. 195 for the period beginning February 1, 1994. For periods prior
to February 1, 1994, hypothetical performance is shown, which reflects
performance of the SSgA S&P 500 Index Fund beginning 1993, the first full
year after that Fund began operations. For these hypothetical calculations we
have applied the Program expense charge during those periods plus .15% in
estimated other expenses to the historical investment experience of the SSgA
S&P 500 Index Fund.
The Lifecycle Fund--Conservative and the Lifecycle Fund--Moderate performance
shown reflects the actual performance of Separate Account No. 197 and
Separate Account No. 198, respectively, for the period beginning May 1, 1995
(the date the Funds commenced operations).
The Real Estate Fund performance shown reflects actual historical investment
experience and the deduction of asset-based charges actually incurred by
Separate Account No. 30 (Pooled) under the Program during the periods
indicated.
See Summary of Unit Values for the Equity Funds, and Summary of Unit Values
for the Real Estate Fund in the SAI for a more detailed description of how
the hypothetical Unit Values were calculated.
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THE PROGRAM
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The purpose of this section is to explain the ADA Members Retirement Program
in more detail. Although we have described important aspects of the Program,
you should understand that the provisions of your plan and the Participation
Agreement will define the scope of the Program and its specific terms and
conditions. This section is for employers, and for the purposes of this
section, "you" and "your" refer to you in that role although you may also be
a participant in the plan.
EMPLOYERS WHO MAY PARTICIPATE IN THE PROGRAM
If you are a sole proprietor, a partner or a shareholder in a professional
corporation, your practice, as an employer, can adopt the Program if you or
at least one of your fellow partners or shareholders is a member of:
o the ADA,
o one of its constituent or component societies, or
o an ADA-affiliated organization whose participation in the Program has
been approved by the Council on Insurance of the ADA.
ADA constituent or component societies may also adopt the Program for their
own employees within certain limitations imposed by the Internal Revenue
Code.
CHOICES FOR THE EMPLOYER
The ADA Members Retirement Program gives you a variety of approaches to
choose from. You can:
o Adopt our Master Plan, which gives you options as to types of plans and
plan provisions. The Master Plan uses the Program Investment Options as
the exclusive investment choices.
o Adopt the Self-Directed Prototype plan, which gives additional
flexibility to choose investments, or
o Maintain your own individually-designed plan, but use the Investment
Options as an investment for your plan.
SUMMARY OF THE PLANS AND TRUSTS
THE MASTER PLAN--Under the Master Plan, you will automatically receive a full
range of services from Equitable Life, including your choice of the
Investment Options, plan-level and participant-level record keeping, benefit
payments and tax withholding and reporting.
o The Master Plan is a defined contribution master plan which can be
adopted as a profit sharing plan (including optional 401(k) and SIMPLE
401(k) features), a defined contribution pension plan, or both.
THE SELF-DIRECTED PROTOTYPE PLAN--is a defined contribution prototype plan
which can be used to combine the Program Investment Options with individual
investments such as stocks and bonds. Employers must also adopt the Pooled
Trust and maintain a minimum of $25,000 in the Trust at all times.
THE ADA MEMBERS POOLED TRUST FOR RETIREMENT PLANS--is an investment vehicle
to be used by those who have an individually designed qualified retirement
plan. The Pooled Trust is for investment only and can be used for both
defined benefit and defined contribution plans. We provide participant-level
or plan-level recordkeeping services for plan assets held in the Pooled
Trust.
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INFORMATION ON JOINING THE PROGRAM
Our Retirement Program Specialists are available to answer your questions
about joining the Program. To reach one of our Retirement Program
Specialists, call or write to us at:
By Phone 1-800-523-1125, ext. 2608
From Alaska, 0-201-583-2395, collect
Specialists are available from 9 a.m. to
5 p.m. Eastern Time, Monday through Friday.
By Regular Mail The ADA Members Retirement Program
c/o Equitable Life
Box 2011
Secaucus, New Jersey 07096
By Registered, Certified or The ADA Members Retirement Program
Overnight Mail c/o Equitable Life
200 Plaza Drive, 2-B55
Secaucus, New Jersey 07094
CHOOSING THE RIGHT PLAN
Choosing the right plan depends on your own unique set of circumstances.
Although our Retirement Program Specialists can help explain the Program, you
and your tax advisors must decide which plan is best for you.
GETTING STARTED IN THE PROGRAM AFTER CHOOSING A PLAN
To adopt the Master Plan, you must complete a Participation Agreement. If you
have your own plan and wish to use the Pooled Trust as an investment option,
the trustee of your plan must complete the appropriate Participation
Agreement. Our Retirement Program Specialists can help you complete the
Participation Agreement for review by your tax advisor.
To adopt our prototype self-directed plan, you must complete the prototype
plan adoption agreement and a Participation Agreement for the Pooled Trust.
In addition, you must also arrange separately for plan level accounting and
brokerage services. We provide recordkeeping services only for plan assets
held in the Pooled Trust. You can use any plan recordkeeper of your choice or
you can arrange through us to hire Trust Consultants, Inc. at a special rate.
You can also arrange through us brokerage services from our affiliate,
Pershing Discount Brokerage Services, at special rates or use the services of
any other broker.
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COMMUNICATING WITH US AFTER YOU ENROLL
By Phone
To Reach an Account 1-800-223-5790
Executive: (9 am to 5 pm Eastern
Time, Monday through Friday)
To Reach the Account 1-800-223-5790 (24 Hours)
Investment Management
("AIM") System:
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By Regular Mail (Other than The ADA Members Retirement Program
contribution checks) Box 2486 G.P.O.
New York, New York 10116
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By Registered, Certified or The ADA Members Retirement Program
Overnight Mail c/o Equitable Life
200 Plaza Drive, Second Floor
Secaucus, New Jersey 07094
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For Contribution Checks Only The Association Members Retirement Program
P.O. Box 1599
Newark, New Jersey 07101-9764
YOUR RESPONSIBILITIES AS THE EMPLOYER
Employers adopting the Master Plan are responsible for the plan and its
administration. This includes certain responsibilities relating to the
administration and continued qualification of your plan. See Your
Responsibilities As Employer in the SAI for a list of responsibilities which
you will have if you adopt the Master Plan.
If you have an individually designed plan, you already have these
responsibilities; they are not increased in any way by your adoption of the
Pooled Trust for investment purposes only. It is your responsibility to
determine that the terms of your plan are consistent with the provisions of
the Pooled Trust and our practices described in this prospectus and the SAI.
If you utilize our prototype self-directed plan, you will have
responsibilities as the plan administrator and will also have to appoint a
plan trustee; these responsibilities will be greater than those required by
the adoption of the Master Plan. Again it is also your responsibility to
determine that the terms of your plan are consistent with the provisions of
the Pooled Trust and our practices described in this prospectus and the SAI.
You should consult your legal advisor for an understanding of your legal
responsibilities under the self-directed plan.
We will give you guidance and assistance in the performance of your
responsibilities. The ultimate responsibility, however, rests with you.
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WHEN TRANSACTIONS ARE EFFECTIVE
A business day is any day both we and the New York Stock Exchange are open.
Contributions, transfers, and allocation changes are effective on the
business day they are received. Distribution requests are also effective on
the business day they are received unless, as in the Master Plan, there are
plan provisions to the contrary. However, we may have to delay the processing
of any transaction which is not accompanied by a properly completed form or
which is not mailed to the correct address. An Account Executive will
generally be available to speak with you each business day from 9 a.m. to 5
p.m. Eastern Time. We may, however, close due to emergency conditions.
MINIMUM INVESTMENTS
There is no minimum amount which must be invested if you adopt the Master
Plan, or if you have your own individually-designed plan and use the Pooled
Trust as an investment.
If you adopt our self-directed prototype plan, you must keep at least $25,000
in the Pooled Trust at all times.
MAKING CONTRIBUTIONS TO THE PROGRAM
You should send contribution checks or money orders payable to The ADA
Retirement Trust to the address shown under Communicating With Us After You
Enroll. All contributions must be accompanied by a properly completed
Contribution Remittance form which designates the amount to be allocated to
each participant. Contributions are normally credited on the business day
that we receive them, provided the remittance form is properly completed.
Contributions are only accepted from the employer. Employees may not send
contributions directly to the Program.
The Real Estate Fund will accept contributions only one day a month. Any
amount allocated for investment in the Real Estate Fund will first be placed
in the Money Market Guarantee Account. On the next day on which the Real
Estate Fund accepts contributions, the amount designated for the Fund, plus
any accrued interest, will automatically be transferred to the Real Estate
Fund. For more information see The Real Estate Fund.
OUR ACCOUNT INVESTMENT MANAGEMENT (AIM) SYSTEM
We offer an automated telephone system for participants to transfer between
investment options, obtain account information and change the allocation of
future contributions and maturing GRAs. To use the AIM System, you must have
a Personal Security Code (PSC) number, which you obtain by completing an AIMS
Authorization form.
If you have a touch-tone telephone you may make transfers on the AIM System.
Procedures have been established by Equitable Life for its AIM System that
are considered to be reasonable and are designed to confirm that instructions
communicated by telephone are genuine. Such procedures include requiring
certain personal identification information prior to acting on telephone
instructions and providing written confirmation of instructions communicated
by telephone. If Equitable Life does not employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, we may be
liable for any losses arising out of any action on our part or any failure or
omission to act as a result of our own negligence, lack of good faith or
willful misconduct. In light of the procedures established, Equitable Life
will not be liable for following telephone instructions that we reasonably
believe to be genuine. We may discontinue the telephone transfer service at
any time without notice.
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ALLOCATING CONTRIBUTIONS AMONG THE INVESTMENT OPTIONS
Under the Master Plan, participants make all investment decisions. Under an
individually-designed plan or our self-directed prototype plan, either the
participants or the plan trustees make the investment allocation decisions,
depending on the terms of the plan.
Contributions may be allocated among any number of the Investment Options.
Allocation instructions may be changed at any time, and as often as needed,
by calling the AIM System. New instructions become effective on the business
day we receive them. You may allocate employer contributions in different
percentages than employee contributions. IF WE HAVE NOT RECEIVED VALID
INSTRUCTIONS, WE WILL ALLOCATE YOUR CONTRIBUTIONS TO THE MONEY MARKET
GUARANTEE ACCOUNT.
TRANSFERS AMONG THE INVESTMENT OPTIONS
Participants in the Master Plan may make transfers on a daily basis without
charge. Participants in other plans may make transfers whenever the plan
allows them to do so. We do not charge a fee for transfers. (If an
individually designed plan does not allow transfers by individual
participants, only you as employer or trustee may make a transfer.)
Participants may use the AIM System to transfer amounts among the investment
options. All transfers are made as of the close of business on the day we
receive the authorized instructions, provided we receive the request by 4:00
p.m. Eastern time. Transfer requests received after that time will be
processed as of the close of business on the following business day.
No transfers from the Guaranteed Rate Accounts to other Investment Options
are permitted prior to maturity. Transfers to the Guaranteed Rate Accounts,
and to or from the Money Market Guarantee Account and the Growth Equity Fund,
are permitted at any time. Transfers from the Aggressive Equity Fund, ADA
Foreign Fund, Equity Index Fund and Lifecycle Funds are permitted at any time
except if there is any delay in redemptions from the underlying mutual fund
or, with respect to the Lifecycle Funds, the Lifecycle Fund Group Trusts in
which they invest. See The Equity Funds--The Aggressive Equity Fund, The ADA
Foreign Fund, The Equity Index Fund and The Lifecycle Funds. Transfers to and
from the Real Estate Fund are subject to special rules, which are described
in Special Rules for Distributions and Transfers from the Real Estate Fund
below, and in The Real Estate Fund.
DISTRIBUTIONS FROM THE INVESTMENT OPTIONS
There are two sets of rules that must be kept in mind when considering
distributions or withdrawals from the Program. The first are the rules and
procedures which apply to the Investment Options, exclusive of the provisions
of your plan. These are discussed in this section. The second are the rules
specific to your plan; these are discussed under When Distributions are
Available to Participants.
Amounts in the Equity Funds and the Money Market Guarantee Account are
generally available for distribution at any time, subject to the provisions
of your plan. However, there may be a delay for withdrawals from the
Aggressive Equity Fund, ADA Foreign Fund, Equity Index Fund, and the
Lifecycle Funds if there is any delay in the redemptions from the underlying
mutual fund or, with respect to the Lifecycle Funds, from the Lifecycle Fund
Group Trusts in which they invest. Special rules, which are described below,
apply to distributions from the Real Estate Fund. In addition, withdrawals
generally may not be taken from the Guaranteed Rate Accounts prior to
maturity. See Guaranteed Rate Accounts. Please note that certain plan
distributions may be subject to penalty or excise taxes. See The Program and
Federal Income Tax Considerations for more details.
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Payments or withdrawals out of the Funds and application of proceeds to an
annuity ordinarily will be made promptly upon request in accordance with Plan
provisions. However, we can defer payments, applications and withdrawals from
the Funds for any period during which the New York Stock Exchange is closed
for trading, sales of securities are restricted or determination of the fair
market value of assets of the Funds is not reasonably practicable because of
an emergency. See The Real Estate Fund and The Equity Funds.
SPECIAL RULES FOR DISTRIBUTIONS AND TRANSFERS FROM THE REAL ESTATE FUND
Under the Master Plan, a distribution can be obtained from the Real Estate
Fund only after the amount to be withdrawn has been transferred to another
Investment Option. A distribution of benefits may be made only after you
receive confirmation of the transfer. Participants in an
individually-designed plan or the prototype self-directed plan may receive a
distribution directly from the Real Estate Fund without first having it
transferred to another Investment Option. Distributions of all or a portion
of the balance in the Real Estate Fund directly from the Fund are payable
only in a single sum payment. See Federal Income Tax Considerations and
Procedures for Withdrawals, Distributions and Transfers--Special Rules for
Distributions and Transfers From the Real Estate Fund in the SAI.
All distributions and transfers from the Real Estate Fund are subject to a
minimum wait of one calendar quarter: they are scheduled to be made shortly
after the end of the calendar quarter following the quarter in which we
receive properly completed forms requesting the distribution or transfer. The
amount distributed will be based on the Real Estate Fund's Unit Value as of
the close of business on the date the distribution or transfer is made. See
The Real Estate Fund for more information on how we value and liquidate Real
Estate Fund Units. Withdrawals from the Real Estate Fund must be made in
amounts of at least $1,000 or, if less, your balance in the Real Estate Fund.
The Real Estate Fund may not have enough liquid assets to pay all withdrawals
when requested. If liquid assets are insufficient to pay all requested
withdrawals, withdrawal requests are prioritized according to the nature of
the distribution. Priority 1 consists of all amounts requested because of
death or disability or after age 70 1/2. Priority 2 consists of all other
requests. The Real Estate Fund will pay all Priority 1 distributions to the
extent cash is available or can be obtained through liquidation of the Real
Estate Fund's interest in Prime Property Fund. The Real Estate Fund may also
pay some or all of the scheduled Priority 2 distributions and transfers, but
only if it can liquidate its interest in Prime Property Fund or if we believe
it has enough liquid assets to meet anticipated Priority 1 distributions. In
making this determination, we will consider anticipated future contributions
as well as the amount of cash required for anticipated Priority 1
distributions, expenses and payment of our fees. The Real Estate Fund will
satisfy all scheduled Priority 1 distribution requests before it satisfies
any Priority 2 request, even if the Priority 1 requests were received after
the Priority 2 requests.
See Special Risks Related to the Real Estate Fund in the prospectus and
Procedures for Withdrawals, Distributions and Transfers--Special Rules for
Distributions and Transfers From the Real Estate Fund in the SAI.
IN LIGHT OF THE RISKS AND POSSIBLE ILLIQUIDITY OF AN INVESTMENT IN THE REAL
ESTATE FUND, INDIVIDUAL PARTICIPANTS SHOULD CONSIDER LIMITING THE AMOUNT
ALLOCATED TO IT, PARTICULARLY AS THEY NEAR RETIREMENT. IF YOUR PLAN IS AN
EMPLOYER OR TRUSTEE-DIRECTED PLAN, YOU AS THE EMPLOYER ARE RESPONSIBLE FOR
ENSURING THAT THERE IS SUFFICIENT CASH AVAILABLE TO PAY BENEFITS.
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WHEN DISTRIBUTIONS ARE AVAILABLE TO PARTICIPANTS
In addition to the rules and procedures generally applicable to investments
in the Investment Options under the Program, there are other important rules
regarding the distribution and benefit payment options for each type of plan.
Distributions and benefit payment options under a qualified retirement plan
are subject to extremely complicated legal requirements. Certain plan
distributions may be subject to penalty or excise taxes. A general
explanation of the federal income tax treatment of distributions and benefit
payment options is provided in Federal Income Tax Considerations in both this
prospectus and the SAI. If a participant retires, becomes disabled or
terminates employment, the benefit payment options available should be
discussed with a qualified financial advisor. Our Account Executives can also
be of assistance.
In general, under the Master Plan or our self-directed prototype plan,
participants are eligible for benefits upon retirement, death or disability,
or upon termination of employment with a vested benefit. ("Vested" refers to
the nonforfeitable portion of your benefits under the plan.) Participants in
an individually designed plan are eligible for retirement benefits depending
on the terms of that plan. See Benefit Payment Options and Federal Income Tax
Considerations for more details. For participants who own more than 5% of the
business, benefits must begin no later than April 1 of the year after the
participant reaches age 70 1/2. For all other participants, distribution must
begin by April 1 of the later of the year after attaining age 70 1/2 or
retirement.
Under the Master Plan, self-employed persons may generally not receive a
distribution prior to age 59 1/2, and employees generally may not receive a
distribution prior to a separation from service.
PARTICIPANT LOANS
The Master Plan permits participants to borrow a portion (not to exceed
$50,000) of their vested Account Balance (all plans combined), if the
employer has elected this feature. If the participant is a sole proprietor,
partner who owns more than 10% of the business, or a shareholder-employee of
an S Corporation who owns more than 5% of the business (or a family member as
defined by the IRS), he or she presently may not borrow from his or her
vested Account Balance without first obtaining a prohibited transaction
exemption from the Department of Labor. Participants should consult with
their attorneys or tax advisors regarding the advisability and procedures for
obtaining such an exemption. Loans are also available under our self-directed
prototype plan and under an individually designed plan if the terms of the
plan allow them.
Generally speaking, when a loan is taken, an amount equal to the loan is
transferred out of the Investment Options and is set up as a loan account.
While the loan is outstanding, the participant must pay interest on the loan.
Any principal and interest paid will be added to the participant's loan
account balance and will be taxable on distribution. If you fail to repay the
loan when due, the amount of the unpaid balance may be taxable and subject to
additional penalty taxes. The interest paid on a retirement plan loan may not
be deductible.
Loans from the plan should be applied for through the employer. Loans are
subject to restrictions under federal tax laws and all plans of the employer
are aggregated for purposes of these restrictions. Loan kits containing all
necessary forms, along with an explanation of how interest rates are set, are
available from our Account Executives. PLEASE NOTE THAT PARTICIPANTS MAY NOT
TAKE A LOAN FROM THE REAL ESTATE FUND OR FROM THE GUARANTEED RATE ACCOUNTS
PRIOR TO MATURITY. If a participant is married, written spousal consent will
be required for a loan.
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BENEFIT PAYMENT OPTIONS
We offer a variety of benefit payment options to participants who are
eligible to receive benefits from a plan. However, many self-directed and
individually-designed plans do not allow all of these options, so you should
ask your employer for details on which of these options may be available.
Your plan may allow for one or more of the following forms of distribution to
be selected:
o Qualified Joint and Survivor Annuity
o Lump Sum Payment
o Installment Payments
o Life Annuity
o Life Annuity--Period Certain
o Joint and Survivor Annuity
o Joint and Survivor Annuity--Period Certain
o Cash Refund Annuity
See Types of Benefits in the SAI for detailed information regarding each of
these options, and Procedures for Withdrawals, Distributions and Transfers in
the SAI.
The annuity options may be either fixed or variable except for the Cash
Refund Annuity and the Qualified Joint and Survivor Annuity. Fixed annuities
are available from insurance companies selected by the Trustees, which meet
criteria established by the Trustees from time to time. Upon request, we will
provide fixed annuity rate quotes available from one or more such companies.
Participants may instruct us to withdraw all or part of their account balance
and forward it to the annuity provider selected. Once we have distributed
that amount to the company selected, we will have no further responsibility
to the extent of the distribution. We provide the variable annuity options.
Payments under variable annuity options reflect investment performance of the
Growth Equity Fund. The minimum amount that can be used to purchase any type
of annuity is $3,500. In most cases an annuity administrative charge of $350
will be deducted from the amount used to purchase an annuity from Equitable
Life. Annuities purchased from other providers may also be subject to fees
and charges.
SPOUSAL CONSENT RULES
If a participant is married and has an Account Balance greater than $3,500,
federal law generally requires payment of a Qualified Joint and Survivor
Annuity payable to the participant for life and then to the surviving spouse
for life, unless the participant and spouse have properly waived that form of
payment in advance. If a participant is married, the spouse must consent in
writing before any type of withdrawal can be made.
SPOUSAL CONSENT REQUIREMENTS
Under the Master Plan and the self-directed prototype plan, you may designate
a non-spouse beneficiary any time after the earlier of the first day of the
plan year in which you attain age 35 or the date on which you separate from
service with your employer. If you designate a beneficiary other than your
spouse prior to your reaching age 35, your spouse must consent to the
designation and, upon your reaching age 35, must again give his or her
consent or the designation will lapse. In order for you to make a withdrawal,
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elect a form of benefit other than a Qualified Joint and Survivor Annuity or
designate a non-spouse beneficiary, your spouse must consent to your election
in writing within the 90 day period before your annuity starting date. To
consent, your spouse must sign on the appropriate line on your election of
benefits or beneficiary designation form. Your spouse's signature must be
witnessed by a notary public or plan representative.
If you change your mind, you may revoke your election and elect a qualified
Joint and Survivor Annuity or designate your spouse as beneficiary, simply by
filing the appropriate form. Your spouse's consent is not required for this
revocation.
It is also possible for your spouse to sign a blanket consent form. By
signing this form, your spouse consents not just to a specific beneficiary
or, with respect to the waiver of the Qualified Joint and Survivor Annuity,
the form of distribution, but gives you the right to name any beneficiary, or
if applicable, form of distribution you want. Once you file such a form, you
may change your election whenever you want, even without spousal consent. No
spousal consent to a withdrawal or benefit in a form other than a Qualified
Joint and Survivor Annuity is required under certain self-directed prototype
profit sharing plans that do not offer life annuity benefits.
BENEFITS PAYABLE AFTER THE DEATH OF A PARTICIPANT
If a participant dies before the entire benefit has been paid, the remaining
benefits will be paid to the beneficiary. The law generally requires the
entire benefit to be distributed no more than five years after death. There
are two exceptions--(1) if the benefit is payable to the spouse, the spouse
may elect to receive benefits over his or her life or a fixed period measured
by life expectancy beginning any time up to the date the participant would
have attained age 70 1/2 or, if later, one year after the participant's
death, and (2) a beneficiary who is not the participant's spouse may elect
payments over his or her life or a fixed period measured by life expectancy,
provided payments begin within one year of death. If, at death, a participant
was already receiving benefits, the beneficiary can continue to receive
benefits based on the payment option selected by the participant. To
designate a beneficiary or to change an earlier designation, a participant
must have the employer send us a beneficiary designation form. The spouse
must consent in writing to a designation of any non-spouse beneficiary, as
explained in Procedures for Withdrawals, Distributions and Transfers--Spousal
Consent Requirements in the SAI.
If a participant in the Master Plan dies without designating a beneficiary,
the vested benefit will automatically be paid to the spouse or, if the
participant is not married, to the first surviving class of his or her (a)
children, (b) parents and (c) brothers and sisters. If none of them survive,
the participant's vested benefit will be paid to the participant's estate. If
a participant in our prototype self-directed plan dies without designating a
beneficiary, the vested benefit will automatically be paid to the spouse or,
if the participant is not married, to the first surviving class of his or her
(a) children, (b) grandchildren, (c) parents, (d) brothers and sisters and
(e) nephews and nieces. If none of them survive, the participant's vested
benefit will be paid to the participant's estate.
Under the Master Plan, on the day we receive proof of death, we automatically
transfer the participant's Account Balance in the Equity Funds to the Money
Market Guarantee Account unless the beneficiary gives us other written
instructions. The balance in the Real Estate Fund will be treated as a
Priority 1 distribution and will be scheduled for transfer to the Money
Market Guarantee Account following the last day of the next quarter. See
Special Risks Related to the Real Estate Fund.
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DEDUCTIONS AND CHARGES
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There are two general types of expenses you may incur under the Program. The
first is expenses which are applicable to all amounts invested in the
Program. These include the Program expense charge, investment management,
administration fees, and certain other expenses borne directly by the Funds.
These charges are deducted from the amount invested in the Program regardless
of the type of plan you may have. Generally speaking, these charges are
reflected as reductions in the Unit Values of the Funds or as reductions from
the rates credited to the Guaranteed Options. These charges apply to all
amounts invested in the Program, including amounts being distributed under
installment payout options.
The second type of charge is expenses which vary by the type of plan you have
or which are charged for specific transactions. These are typically stated in
terms of a defined dollar amount. Unless otherwise noted, fees which are set
in fixed dollar amounts are deducted by reducing the number of Units in the
appropriate Funds and the number of dollars in the Guaranteed Options. The
number of Units to be deducted from the Real Estate Fund is based on the last
Unit Value determined prior to the date of deduction. See Condensed Financial
Information and How We Calculate the Value of Amounts Allocated to The Real
Estate Funds. The amount allocable to the three-year or five-year Guaranteed
Rate Account will be taken from your most recent GRA in that Account.
No deductions are made from contributions or withdrawals for sales expenses.
CHARGES BASED ON AMOUNTS INVESTED IN THE PROGRAM
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PROGRAM EXPENSE CHARGE
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We assess the Program expense charge against the combined value of Program
assets in all the Investment Options. The purpose of this charge is to cover
the expenses incurred by Equitable Life and the ADA in connection with the
Program. The Unit Values of the Funds and the interest rates credited to the
Guaranteed Options reflect the deduction of this charge.
Effective May 1, 1997 the amount payable to us and the ADA is based on two
components consisting of (i) a declining percentage of total Program assets
ranging from 0.51% of the first $500 million of such assets to 0.45% of
Program assets over $2 billion, and (ii) a charge per plan enrolled in the
Program, which will be adjusted for inflation. For the 12 months beginning
May 1, 1997, the Program expense charge is 0.630%. In addition, the ADA
assesses a Program expense charge to reimburse it for expenses it incurs in
connection with the Program. This charge is 0.025% of the first $400 million
of Program assets as of January 31 of each year and 0.020% of such assets
over $400 million. Currently, the portion paid to the ADA has been reduced to
0.01% for all asset levels, but the charge could in the future be increased
to the levels set forth in the preceding sentence.
For all Investment Options other than GRAs, the Program expense charge is
calculated based on Program assets on January 31 in each year, and is charged
at a monthly rate of 1/12 of the relevant annual charge. For GRAs, the
Program expense charge is calculated based on Program assets on January 31 of
each year, and is charged at a constant daily rate of 1/365 of the relevant
annual charge until maturity. Subsequent changes in the Program Expense
Charge will not be reflected in the charge against closed GRAs. In addition
to the Program expense charge, an annual investment accounting fee of 0.02%
is charged on all amounts of Program assets invested in GRAs issued after
February 1992. This fee is reflected in the interest rates credited to the
GRAs and is calculated and charged in the same manner as the Program expense
charge.
Our portion of the Program expense charge is applied toward the cost of
maintenance of the Investment Options, promotion of the Program, commissions,
administrative costs, such as enrollment and answering
47
<PAGE>
participant inquiries, and overhead expenses such as salaries, rent, postage,
telephone, travel, legal, actuarial and accounting costs, office equipment
and stationery. The ADA's part of this fee covers developmental and
administrative expenses incurred in connection with the Program. The Trustees
can direct us to raise or lower the ADA's part of this fee to reflect their
expenses in connection with the Program. Currently, this fee has been reduced
to 0.01% for all asset value levels. During 1996 we received $7,203,202 and
the ADA received $114,285 under the Program expense charge then in effect.
- ------------------------------------------------------------------------------
ADMINISTRATION AND INVESTMENT MANAGEMENT FEES
- ------------------------------------------------------------------------------
The computation of the Unit Values applicable for each Fund also reflects the
deduction of charges for administration and investment management.
EQUITY FUNDS. We receive fees for investment management services we provide
for the Growth Equity Fund. We also receive an administration fee from all
the Equity Funds which covers the administrative functions related to the
offering of those Funds. We maintain records for all portfolio transactions
and cash flow control, calculate Unit Values, monitor compliance with the New
York Insurance Law and supervise custody matters for all the Funds.
REAL ESTATE FUND. The investment management fee compensates us for managing
the Real Estate Fund as well as the underlying Prime Property Fund. There is
no additional charge for our management of Prime Property Fund. The services
we provide with respect to the Real Estate Fund include monitoring the Real
Estate Fund's holdings and liquidity. The services we provide with respect to
Prime Property Fund include selecting real properties for purchase and sale,
selecting managers for those properties and, in some cases, managing the
properties ourselves, appraising the properties, accounting for their
receipts and disbursements and servicing any loans issued by Prime Property
Fund. The administration fee is to reimburse us for the additional expenses
involved in administering the Fund.
FEES. The investment management and administration fees are also based on the
Program assets in the Fund at the end of the second month prior to the day on
which the calculation is being made. The fees charged monthly are 1/12 of the
following amounts:
<TABLE>
<CAPTION>
TYPE OF FEE
- ---------------------------------------------------------------------------------------
VALUE OF PROGRAM INVESTMENT
FUND FUND ASSETS MANAGEMENT ADMINISTRATION TOTAL
- --------------------------- ------------------ ------------ -------------- --------
<S> <C> <C> <C> <C> <C>
Growth Equity Fund First $100 million .29% .15% .44%
Over $100 million .20 .15 .35
-------------------------- ------------------ ------------ -------------- --------
Aggressive Equity Fund All amounts -- .15(1) .15(1)
-------------------------- ------------------ ------------ -------------- --------
ADA Foreign Fund All amounts -- .15(2) .15(2)
-------------------------- ------------------ ------------ -------------- --------
Equity Index Fund All amounts -- .15 .15
-------------------------- ------------------ ------------ -------------- --------
Lifecycle
Fund--Conservative All amounts -- .15 .15
-------------------------- ------------------ ------------ -------------- --------
Lifecycle Fund--Moderate All amounts -- .15 .15
-------------------------- ------------------ ------------ -------------- --------
Real Estate Fund First $50 million 1.10 .25 1.35
Next $25 million 1.00 .25 1.25
Over $75 million .95 .25 1.20
-------------------------- ------------------ ------------ -------------- --------
</TABLE>
(1) An annual amount of up to 0.25% of the average daily net assets of the
ADA Program invested in the MFS Emerging Growth Fund is paid to
Equitable Life. Equitable Life has waived the 0.15% Administration fee
applicable to the Aggressive Equity Fund and will use the payment from
MFS Funds Distributors, Inc. to defray administrative expenses
associated with the Program's operations and to fund Program
enhancements. The agreement and waiver are expected to be in effect for
an indefinite period, but these arrangements are subject to termination
by either party upon notice.
(2) Equitable Life has waived the administrative fee for the ADA Foreign
Fund in view of the payment for services rendered it will receive from
Templeton in an amount equal to the 12b-1 fees charged by Templeton to
the Templeton Foreign Fund. The 12b-1 fee charged by Templeton is at
the annual rate not to exceed 0.25% of the Templeton Foreign Fund's
assets. Amounts received by us will be used for administrative expenses
associated with the Program's operations and to fund Program
enhancements. Equitable Life receives a recordkeeping fee of up to $12,
per participant, per year from Templeton.
48
<PAGE>
- ------------------------------------------------------------------------------
OTHER EXPENSES BORNE DIRECTLY BY THE FUNDS
- ------------------------------------------------------------------------------
Certain costs and expenses are charged directly to the Funds. These may
include Securities and Exchange Commission filing fees and certain related
expenses including printing of SEC filings, prospectuses and reports, mailing
costs, custodians' fees, financial accounting costs, outside auditing and
legal expenses, and other costs related to the Program. These are included as
"Other Expenses" in the tables of Annual Fund Operating Expenses and Summary
of Fund Expenses.
The Aggressive Equity, ADA Foreign and Equity Index Funds purchase and sell
shares in the MFS Emerging Growth Fund, Templeton Foreign Fund and SSgA S&P
500 Index Fund, respectively, at net asset value. The net asset value
reflects charges for management, audit, legal, shareholder services, transfer
agent and custodian fees. For a description of charges and expenses assessed
by the MFS Emerging Growth Fund, Templeton Foreign Fund and the SSgA S&P 500
Index Fund, which are indirectly borne by the Funds, please refer to the
prospectuses for each of these funds.
The Lifecycle Funds--Conservative and Moderate purchase and sell units in the
Lifecycle Fund Group Trusts--Conservative and Moderate, respectively, at net
asset value. The net asset value reflects charges for investment management,
audit, legal, custodian and other fees. By agreement with the ADA Trustees,
Equitable Life imposes a charge at the annual rate of .03% of the value of
the respective assets of the Lifecycle Funds--Conservative and Moderate to
compensate it for additional legal, accounting and other potential expenses
resulting from the inclusion of the Lifecycle Fund Group Trusts and
Underlying Funds maintained by State Street among the Investment Options
described in this prospectus. For a description of charges and expenses
assessed by the Lifecycle Fund Group Trusts, which are indirectly borne by
the Lifecycle Funds, please refer to our separate prospectus for those Funds.
PLAN AND TRANSACTION EXPENSES
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
ADA RETIREMENT PLAN, PROTOTYPE SELF-DIRECTED PLAN AND
INDIVIDUALLY-DESIGNED PLAN FEES
- ------------------------------------------------------------------------------
RECORD MAINTENANCE AND REPORT FEE. At the end of each calendar quarter, we
deduct a record maintenance and report fee from each participant's Account
Balance. This fee is:
ADA Members Retirement Plan participants ..... $3 per quarter
Self-Directed Prototype Plan participants .... $3 per quarter
Participants in Pooled-Trust Arrangement ..... $1 per quarter
ENROLLMENT FEE. The employer must pay us a non-refundable enrollment fee of
$25 for each participant enrolling under its plan. If we do not maintain
individual participant records under an individually-designed plan, the
employer is instead charged $25 for each plan or trust. If these charges are
not paid by the employer, the amount may be deducted from subsequent
contributions or from participants' Account Balances.
PROTOTYPE SELF-DIRECTED PLAN FEES. Employers who participate in our prototype
self-directed plan will incur additional fees not payable to us, such as
brokerage and administration fees.
- ------------------------------------------------------------------------------
INDIVIDUAL ANNUITY CHARGES
- ------------------------------------------------------------------------------
ANNUITY ADMINISTRATIVE CHARGE. If a participant elects a variable annuity
payment option, a $350 charge will usually be deducted from the amount used
to purchase the annuity to reimburse us for administrative
49
<PAGE>
expenses associated with processing the application for the annuity and with
issuing each month's annuity payment. Annuities purchased from other
providers may also be subject to fees and charges. See Distributions From the
Investment Options and Benefit Payment Options for details.
PREMIUM TAXES. In certain jurisdictions, amounts used to purchase an annuity
are subject to charges for premium and other applicable taxes (rates
currently range up to 5%). Taxes depend, among other things, on your place of
residence, applicable laws and the form or annuity benefit you select. We
will deduct such charges based on your place of residence at the time the
annuity payments begin.
- ------------------------------------------------------------------------------
GENERAL INFORMATION ON FEES AND CHARGES
- ------------------------------------------------------------------------------
We may change our investment management fees if we give the Trustees 90 days
notice and comply with certain conditions of our group annuity contract with
them. The other fees and charges described above may be changed at any time
by the mutual consent of Equitable Life and the ADA. During 1996 we received
total fees and charges under the Program of $10,298,698.
50
<PAGE>
FEDERAL INCOME TAX CONSIDERATIONS
Current federal income tax rules relating to adoption of the Program and
generally to distributions to participants under qualified retirement plans
are outlined briefly below. The rules relating to contributions are outlined
briefly in the SAI under Provisions of the ADA Plans. For purposes of this
outline we have assumed that you are not a participant in any other qualified
retirement plan. We have not attempted to discuss other current federal
income tax rules that govern participation, vesting, funding or prohibited
transactions, although some information on these subjects appears here and in
the SAI; nor do we discuss the reporting and disclosure or fiduciary
requirements of the Employee Retirement Income Security Act. In addition, we
do not discuss the effect, if any, of state tax laws that may apply. FOR
INFORMATION ON THESE MATTERS, WE SUGGEST THAT YOU CONSULT YOUR TAX ADVISOR.
- ------------------------------------------------------------------------------
ADOPTING THE PROGRAM
- ------------------------------------------------------------------------------
If you adopt an ADA Plan, you will not need IRS approval unless you adopt
certain provisions. We will tell you whether it is desirable for you to
submit your plan to the Internal Revenue Service for approval. If you make
such a submission, you will have to pay an IRS user's fee. The Internal
Revenue Service does not have to approve your adoption of the Pooled Trust.
- ------------------------------------------------------------------------------
INCOME TAXATION OF DISTRIBUTIONS TO QUALIFIED PLAN PARTICIPANTS
- ------------------------------------------------------------------------------
In this section, the word "you" refers to the plan participant.
Amounts distributed to a participant from a qualified plan are generally
subject to federal income tax as ordinary income when benefits are
distributed to you or your beneficiary. Generally speaking, only your
post-tax contributions, if any, are not taxed when distributed.
LUMP SUM DISTRIBUTIONS. If your benefits are distributed to you in a lump sum
after you have participated in the plan for at least five taxable years, you
may be able to use five-year averaging. Under this method, the tax on the
lump sum distribution is calculated separately from taxes on any other income
you may have during the year. The tax is calculated at ordinary income tax
rates in the year of the distribution, but as if it were your only income in
each of five years. The tax payable is the sum of the five years'
calculations. To qualify for five-year averaging, the distribution must
consist of your entire balance in the plan and must be made in one taxable
year of the recipient after you have attained age 59 1/2. Five-year averaging
is available only for one lump sum distribution.
If you were born before 1936, you may elect to have special rules apply to
one lump sum distribution. You may elect either ten-year averaging using 1986
rates or five-year averaging using then current rates. In addition, you may
elect separately to have the portion of your distribution attributable to
pre-1974 contributions taxed at a flat 20% rate.
Effective January 1, 2000, five year averaging on lump sum distributions may
no longer be used.
ELIGIBLE ROLLOVER DISTRIBUTIONS. Many types of distributions from qualified
plans are "eligible rollover distributions" that can be transferred directly
to another qualified plan or individual retirement arrangement ("IRA"), or
rolled over to another plan or IRA within 60 days of the receipt of the
distribution. If a distribution is an "eligible rollover distribution," 20%
mandatory federal income tax withholding will apply unless the distribution
is directly transferred to a qualified plan or IRA. See Eligible Rollover
Distributions and Federal Income Tax Withholding in the SAI for a more
detailed discussion.
51
<PAGE>
ANNUITY OR INSTALLMENT PAYMENTS. Each payment you receive is treated as
ordinary income except where you have a "cost basis" in the benefit. Your
cost basis is equal to the amount of your post-tax employee contributions,
plus any employer contributions you were required to include in gross income
in prior years. A portion of each annuity or installment payment you receive
will be excluded from gross income. If you (and your survivor) continue to
receive payments after your cost basis in the contract has been paid out, all
amounts will be taxable.
IN SERVICE WITHDRAWALS; HARDSHIP WITHDRAWALS. Some plans allow in-service
withdrawals of after-tax contributions. The portion of each in-service
withdrawal attributable to cost basis is received income tax-free. The
portion that is attributable to earnings will be included in your gross
income. Amounts contributed before January 1, 1987 to employer plans which on
May 5, 1986 permitted such withdrawals, are taxable withdrawals only to the
extent that they exceed the amount of your cost basis. Other amounts are
treated as partly a return of cost basis with the remaining portion treated
as earnings. Amounts included in gross income under this rule may also be
subject to the additional 10% penalty tax on premature distributions
described below. In addition, 20% mandatory federal income tax withholding
may also apply.
PREMATURE DISTRIBUTIONS. You may be liable for an additional 10% penalty tax
on all taxable amounts distributed before age 59 1/2 unless the distribution
falls within a specified exception or is rolled over into an IRA or other
qualified plan.
The exceptions to the penalty tax include (a) distributions made on account
of your death or disability, (b) distributions beginning after separation
from service in the form of a life annuity or installments over your life
expectancy (or the joint lives or life expectancies of you and your
beneficiary), (c) distributions due to separation from active service after
age 55 and (d) distributions used to pay deductible medical expenses.
EXCESS DISTRIBUTIONS. There is a 15% excise tax on aggregated distributions
in excess of a threshold amount from qualified plans, IRAs and Section 403(b)
tax deferred annuities (even if those plans were maintained by unrelated
employers).
For distributions to individual participants, this tax is temporarily
suspended for the years 1997, 1998 and 1999.
WITHHOLDING. In almost all cases, 20% mandatory income tax withholding will
apply to all "eligible rollover distributions" that are not directly
transferred to a qualified plan or IRA. If a distribution is not an eligible
rollover distribution, the recipient may elect out of withholding. The rate
of withholding depends on the type of distribution. See Eligible Rollover
Distributions and Federal Income Tax Withholding in the SAI. Under the ADA
Master Retirement Plan, we will withhold the tax and send you the remaining
amount. Under an individually designed plan or our prototype self-directed
plan that uses the Pooled Trust for investment only, we will pay the full
amount of the distribution to the plan's trustee. The trustee is then
responsible for withholding federal income tax upon distributions to you or
your beneficiary.
- ------------------------------------------------------------------------------
OTHER TAX CONSEQUENCES
- ------------------------------------------------------------------------------
Federal estate and gift and state and local estate, inheritance, and other
tax consequences of participation in the Program depend on the residence and
the circumstances of each participant or beneficiary. For complete
information on federal, state, local and other tax considerations, you should
consult a qualified tax advisor.
52
<PAGE>
MISCELLANEOUS
- ------------------------------------------------------------------------------
CHANGE OR DISCONTINUANCE OF THE PROGRAM. The group annuity contract has been
amended from time to time, and may be amended in the future. No future change
can affect annuity benefits in the course of payment. Provided certain
conditions are met, we may terminate the offer of any of the Investment
Options and offer new ones with different terms.
Our contract with the Trustees may be terminated by us or the ADA. If our
contract with the Trustees is terminated, we will not accept any further
contributions or perform recordkeeping functions after the date of
termination. At that time we would make arrangements with the Trustees as to
the disposition of assets in the Investment Options we provide, subject to
the following restrictions (i) transfers and withdrawals of assets allocated
to the Real Estate Fund would continue to be subject to the restrictions
described in this prospectus and in the SAI; (ii) assets allocated to the
Money Market Guarantee Account would be transferred at the direction of the
Trustees in installments over a period of time not to exceed two years;
however, during that time participants would be permitted to transfer amounts
out of the Money Market Guarantee Account to a funding vehicle provided by
another financial institution (other than a money market fund or similar
investment); and (iii) amounts allocated to the Guaranteed Rate Accounts will
be held until maturity. You may be able to continue to invest amounts in the
Investment Options we provide and elect payment of benefits through us if the
Trustees make arrangements with us.
DISQUALIFICATION OF PLAN. If your plan is found not to qualify under the
Internal Revenue Code, we may return the plan's assets to the employer, as
the plan administrator or we may prevent plan participants from investing in
the separate accounts.
REPORTS. We send reports annually to employers showing the aggregate Account
Balances of all participants and information necessary to complete annual IRS
filings.
REGULATION. We are subject to regulation and supervision by the Insurance
Department of the State of New York, which periodically examines our affairs.
We are also subject to the insurance laws and regulations of all
jurisdictions in which we are authorized to do business. This regulation does
not, however, involve any supervision of the investment policies of the Funds
or of the selection of any investments except to determine compliance with
the law of New York. We are required to submit annual statements of our
operations, including financial statements, to the insurance departments of
the various jurisdictions in which we do business for purposes of determining
solvency and compliance with local insurance laws and regulations.
LEGAL PROCEEDINGS. We are engaged in litigation of various kinds which in our
judgment is not of material importance in relation to our total assets. None
of the litigation now in progress is expected to affect any assets of the
Funds.
ADDITIONAL INFORMATION. A registration statement relating to the offering
described in this prospectus has been filed with the Securities and Exchange
Commission under the Securities Act of 1933. Certain portions of the
Registration Statement have been omitted from this prospectus and the SAI
pursuant to the rules and regulations of the Commission. The omitted
information may be obtained by requesting a copy of the registration
statement from the Commission's principal office in Washington, D.C., and
paying the Commission's prescribed fees or by accessing the Securities and
Exchange Commission's Electronic Data Gathering, Analysis, and Retrieval
(EDGAR) System.
53
<PAGE>
EXPERTS. The financial statements as of December 31, 1996 and for each of the
two years in the period then ended for Separate Account Nos. 4, 191, 200, 30
and 8 included in the SAI and the condensed financial information for
Separate Account Nos. 4, 191, 200 and 30 for each of the four years in the
period ended December 31, 1996 included in this prospectus and the financial
statements as of December 31, 1996 and 1995 and for each of the three years
in the period ended December 31, 1996 included in the SAI for Equitable Life
have been so included in reliance upon the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
ACCEPTANCE. The employer or plan sponsor, as the case may be, is solely
responsible for determining whether the Program is a suitable funding vehicle
and should, therefore, carefully read the prospectus and other materials
before entering into a Participation Agreement.
54
<PAGE>
TABLE OF CONTENTS
OF STATEMENT OF ADDITIONAL INFORMATION
PAGE
----
The Contracts................................. SAI-2
Your Responsibilities as Employer............. SAI-2
Procedures for Withdrawals, Distributions and
Transfers.................................... SAI-3
Types of Benefits............................. SAI-8
Provisions of the Master Plan................. SAI-9
Prime Property Fund Investments............... SAI-13
Investment Restrictions Applicable to
the Funds.................................... SAI-16
How We Value the Assets of the Funds ......... SAI-17
Summary of Unit Values for the Funds ......... SAI-19
Growth Equity Fund Transactions............... SAI-21
Investment Management Fee..................... SAI-22
Underwriter................................... SAI-22
Our Management................................ SAI-23
Financial Statements.......................... SAI-25
CLIP AND MAIL TO US TO RECEIVE A
STATEMENT OF ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------
To: The Equitable Life Assurance Society
of the United States
Box 2486 G.P.O.
New York, NY 10116
Please send me a copy of the Statement of Additional Information for the
American Dental Association Members Retirement Program Prospectus dated May
1, 1997.
Name
--------------------------------------------------------------
Address:
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
- ------------------------------------------------------------------------------
Copyright 1997 by The Equitable Life Assurance Society of the United States.
All rights reserved.
55
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT OPTION CHARACTERISTICS
LIFECYCLE
GROWTH AGGRESSIVE ADA FOREIGN EQUITY FUND--
EQUITY FUND EQUITY FUND FUND INDEX FUND CONSERVATIVE
- -------------- ---------------- ----------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Designed for Long term growth Long term growth Long term growth Parallel the Current income
(Objective) of capital of capital of capital total return of and low to
the S&P 500 Index moderate growth
of capital
- -------------- ---------------- ----------------- ----------------- ----------------- ---------------
Invests Common stocks Invests 100% of Invests 100% of Invests 100% of Invests 100% of
Primarily In and other its assets in the its assets in the its assets in the its assets in a
equity-type MFS Emerging Templeton Foreign SSgA S&P 500 mix of
securities Growth Fund which Fund which Index Fund which underlying
generally issued invests in common invests primarily invests in all collective
by large and stocks of small in common stocks 500 stocks in the investment
intermediate- and medium-sized of companies S&P 500 Index in funds
sized companies companies that outside the U.S. proportion to maintained by
are early in their weighting State Street
their life cycle. in the Index
- -------------- ---------------- ----------------- ----------------- ----------------- ---------------
Risk to Average for a Somewhat higher Somewhat higher Somewhat lower Somewhat lower
Principal growth fund than a growth than a growth than the Growth than the
fund fund Equity Fund Lifecycle
Fund--Moderate
- -------------- ---------------- ----------------- ----------------- ----------------- ---------------
Primary Growth Capital Capital Capital Capital Capital
Potential appreciation and appreciation and appreciation and appreciation and appreciation
Through reinvested reinvested reinvested reinvested and reinvested
dividends dividends dividends dividends dividends and
interest
- -------------- ---------------- ----------------- ----------------- ----------------- ---------------
Income No No No No No
Guarantee
- -------------- ---------------- ----------------- ----------------- ----------------- ---------------
Volatility of Somewhat more Highly volatile Generally depends Generally equal Generally lower
Return volatile than on stock, country to the S&P 500 than pure
the S&P 500 and currency Index equity funds,
selections, as but degree may
well as market vary depending
factors on market
conditions
- -------------- ---------------- ----------------- ----------------- ----------------- ---------------
Transfers to Permitted daily Permitted daily Permitted daily Permitted daily Permitted daily
other
Options
- -------------- ---------------- ----------------- ----------------- ----------------- ---------------
Withdrawal No No No No No
Penalties
- -------------- ---------------- ----------------- ----------------- ----------------- ---------------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
INVESTMENT OPTION CHARACTERISTICS
LIFECYCLE MONEY MARKET
FUND-- REAL ESTATE GUARANTEED GUARANTEE
MODERATE FUND RATE ACCOUNTS ACCOUNT
- -------------- ---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Designed for Growth of Stable rate of Principal and Principal and
(Objective) capital and return through interest interest
reasonable level rental income guaranteed-- guaranteed--
of current and appreciation interest rates short term rates
income reflect
maturities
- -------------- ---------------- ---------------- --------------- ----------------
Invests Invests 100% of High-grade, Contributions Contributions
Primarily In its assets in a income-producing credited with credited with
mix of real property fixed rate of current
underlying interest until guaranteed rate
collective the maturity of interest
investment funds date
maintained by
State Street
- -------------- ---------------- ---------------- --------------- ----------------
Risk to Somewhat lower Lower than the Carrier Equitable Life
Principal than a growth Equity Funds providing GRAs guarantees
fund guarantees principal and
principal and interest; also
interest backed by assets
in insulated
separate account
- -------------- ---------------- ---------------- --------------- ----------------
Primary Growth Capital Rental income, Interest income Interest income
Potential appreciation, capital
Through reinvested appreciation and
dividends interest
- -------------- ---------------- ---------------- --------------- ----------------
Income No No Yes--subject to Yes
Guarantee withdrawal
penalties
- -------------- ---------------- ---------------- --------------- ----------------
Volatility of Generally lower Stable and less Carrier Equitable Life
Return than pure equity volatile than providing GRAs guarantees
funds, but the Equity Funds guarantees monthly interest
degree may vary interest rate rate; also
depending on until the backed by assets
market maturity date in insulated
conditions separate account
- -------------- ---------------- ---------------- --------------- ----------------
Transfers to Permitted daily Permitted Permitted only Permitted daily
other quarterly if at maturity
Options cash available
- -------------- ---------------- ---------------- --------------- ----------------
Withdrawal No No Prior to No
Penalties maturity,
withdrawals may
not be
permitted or
may be subject
to a penalty
- -------------- ---------------- ---------------- --------------- ----------------
</TABLE>
The Funds each have different investment objectives and policies that can
affect the returns of each Fund and the market and financial risks to which
each is subject. While we do not intend to change the investment objectives
of the pooled funds, we nevertheless have the right to do so, subject to the
approval of the New York State Insurance Department. The Funds involve a
greater potential for growth but involve risks that are not present with the
Guaranteed Options. There is no assurance that any of the investment
objectives of the Funds will be achieved or that the risk to principal or
volatility of return will be as indicated.
<PAGE>
- -----------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
- -----------------------------------------------------------------------------
MAY 1, 1997
AMERICAN DENTAL ASSOCIATION
MEMBERS RETIREMENT PROGRAM
Separate Account Units of interest under a group annuity contract with THE
EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, 1290 Avenue of the
Americas, New York, New York 10104, which funds the American Dental
Association Members Retirement Program. Toll-free telephone number
1-800-223-5790.
- -----------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the prospectus dated May 1, 1997 for the American
Dental Association Members Retirement Program. THIS SAI RELATES TO ALL
INVESTMENT OPTIONS EXCEPT THE EQUITY INDEX FUND AND LIFECYCLE FUNDS, WHICH
ARE DISCUSSED IN OUR SEPARATE SAI FOR THOSE FUNDS.
A copy of the prospectus to which this Statement of Additional Information
relates is available at no charge by writing to Equitable Life at Box 2486
G.P.O., New York, New York 10116 or by calling our toll-free telephone
number.
The following information is contained primarily in the prospectus:
Investment Objectives and Policies
Investment Advisory Services
Certain of the cross references in this Statement of Additional Information
are contained in the prospectus dated May 1, 1997 to which this Statement of
Additional Information relates.
TABLE OF CONTENTS
PAGE
----
The Contracts....................................... SAI-2
Your Responsibilities as Employer................... SAI-2
Procedures for Withdrawals, Distributions and
Transfers......................................... SAI-3
Pre-Retirement Withdrawals......................... SAI-3
Benefit Distributions.............................. SAI-4
Spousal Consent Requirements....................... SAI-4
Eligible Rollover Distributions and
Federal Income Tax Withholding.................... SAI-5
Premature Withdrawals and Transfers from
a GRA............................................. SAI-5
Maturing GRAs...................................... SAI-6
Special Rules for Distributions and Transfers
from the Real Estate Fund......................... SAI-6
Real Estate Fund Withdrawals from Prime Property
Fund............................................... SAI-7
Types of Benefits................................... SAI-8
Provisions of the Master Plan ...................... SAI-9
Plan Eligibility Requirements...................... SAI-9
Contributions to Qualified Plans................... SAI-10
Contributions to the Master Plan................... SAI-10
Allocation of Contributions........................ SAI-11
The Master Plan and Section 404(c) of ERISA ...... SAI-12
Vesting............................................ SAI-12
Prime Property Fund Investments..................... SAI-13
Holdings of Prime Property Fund..................... SAI-14
Investment Restrictions Applicable to the Funds .... SAI-16
The Growth Equity Fund............................. SAI-16
The Aggressive Equity Fund......................... SAI-16
The ADA Foreign Fund............................... SAI-16
The Equity Index Fund.............................. SAI-16
Lifecycle Funds.................................... SAI-17
The Real Estate Fund............................... SAI-17
How We Value the Assets of the Funds................ SAI-17
Assets Held in Prime Property Fund................. SAI-18
Summary of Unit Values for the Funds................ SAI-19
The Equity Funds ................................. SAI-19
The Real Estate Fund ............................. SAI-20
Prime Property Fund .............................. SAI-20
Growth Equity Fund Transactions..................... SAI-21
Prime Property Fund Transactions.................... SAI-22
Investment Management Fee........................... SAI-22
Underwriter......................................... SAI-22
Our Management...................................... SAI-23
Financial Statements................................ SAI-25
- ------------
Copyright 1997 by The Equitable Life Assurance Society of The United States.
All rights reserved.
<PAGE>
- ------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE PROGRAM
THE CONTRACTS
The Program is primarily funded through a group annuity contract issued to
the Trustees by The Equitable Life Assurance Society of the United States
(Equitable Life). The contract governs the Investment Options that are
provided by Equitable Life under the Program. The Trustees have also entered
into two group annuity contracts with Principal Mutual Life Insurance Company
(Principal Mutual Life) which govern Guaranteed Rate Accounts opened during
the one year period beginning July 31, 1996. The Trustees hold all contracts
for the benefit of employers and participants in the Program.
In addition, the Trustees and Equitable Life have entered into an
administrative services agreement that governs Equitable Life's duties
relating to administrative support, recordkeeping and marketing for the
Program. This agreement would under most circumstances terminate at the same
time as the group annuity contract.
YOUR RESPONSIBILITIES AS EMPLOYER
If you adopt the Master Plan, you as the employer and plan administrator will
have certain responsibilities, including:
o sending us your contributions at the proper time and in the proper
format;
o maintaining all personnel records necessary for administering your
plan;
o determining who is eligible to receive benefits;
o forwarding to us all the forms your employees are required to submit;
o distributing summary plan descriptions and participant annual reports
to your employees and former employees;
o distributing our prospectuses and confirmation notices to your
employees and, in some cases, former employees;
o filing an annual information return for your plan with the Internal
Revenue Service, if required;
o providing us the information with which to run special
non-discrimination tests, if you have a 401(k) plan or your plan
accepts post-tax employee or employer matching contributions;
o determining the amount of all contributions for each participant in the
plan;
o forwarding salary deferral and post-tax employee contributions to us;
o selecting interest rates and monitoring default procedures if you elect
the loan provision in your plan; and
o providing us with written instructions for allocating amounts in the
plan's forfeiture account.
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If you, as an employer, have an individually designed plan, your
responsibilities will not be increased in any way by your adoption of the
Pooled Trust for investment only. If you adopt our self-directed prototype
plan, you will be completely responsible for administering the plan and
complying with all of the reporting and disclosure requirements applicable to
qualified plans, with the assistance of the recordkeeper of your choice.
We will give you guidance and assistance in the performance of your
responsibilities. The ultimate responsibility, however, rests with you. If
you have questions about any of your obligations, you can contact our Account
Executives at 1-800-223-5790 or write to us at Box 2486 G.P.O., New York, New
York 10116.
PROCEDURES FOR WITHDRAWALS, DISTRIBUTIONS AND TRANSFERS
PRE-RETIREMENT WITHDRAWALS. Under the Master Plan, self-employed persons may
generally not receive a distribution prior to age 59 1/2, and employees may
generally not receive a distribution prior to separation from service.
However, if your employer maintains the Master Plan as a profit sharing plan,
you may request distribution of benefits after you reach age 59 1/2 even if
you are still working. If your employer maintains the Master Plan as a 401(k)
plan and you are under age 59 1/2, you may withdraw your own 401(k)
contributions only if you can demonstrate financial hardship within the
meaning of applicable Income Tax Regulations. Each withdrawal must be at
least $1,000 (or, if less, your entire Account Balance or the amount of your
hardship withdrawal under a 401(k) plan). If your employer terminates the
plan, all amounts (subject to GRA restrictions) may be distributed to
participants at that time.
You may withdraw all or part of your Account Balance under the Master Plan
attributable to post-tax employee contributions at any time, subject to any
withdrawal restrictions applicable to the Investment Options, provided that
you withdraw at least $300 at a time (or, if less, your Account Balance
attributable to post-tax employee contributions). See Federal Income Tax
Considerations in the prospectus.
All benefit payments (including withdrawals due to plan terminations) will be
paid in accordance with the rules described below under Benefit
Distributions. All other withdrawals will be effected as of the close of
business on the day we receive the properly completed form.
If you are married, your spouse must consent in writing before you can make
any type of withdrawal. See Spousal Consent Requirements below.
Under the self-directed prototype plan you may receive a distribution upon
attaining normal retirement age as specified in the plan, or upon separation
from service. If your employer maintains the self-directed prototype plan as
a profit sharing plan, an earlier distribution of funds that have accumulated
after two years is available if you incur a financial hardship, as defined in
the plan. In addition, if you are married, your spouse may have to consent in
writing before you can make any type of withdrawal, except for the purchase
of a Qualified Joint and Survivor Annuity. See Spousal Consent Requirements
below.
Under an individually designed plan, the availability of pre-retirement
withdrawals depends on the terms of the plan. We suggest that you ask your
employer what types of withdrawals are available under your plan.
PLEASE NOTE THAT GENERALLY YOU MAY NOT MAKE WITHDRAWALS FROM THE GUARANTEED
RATE ACCOUNTS PRIOR TO MATURITY EVEN IF THE EMPLOYER PLAN PERMITS WITHDRAWALS
PRIOR TO THAT TIME. (SEE PREMATURE WITHDRAWALS AND TRANSFERS FROM A GRA).
TRANSFERS FROM THE ADA FOREIGN FUND, THE EQUITY INDEX FUND, THE AGGRESSIVE
EQUITY FUND AND THE LIFECYCLE FUNDS--CONSERVATIVE AND MODERATE ARE PERMITTED
DAILY EXCEPT UNDER INFREQUENT CIRCUMSTANCES WHEN THEY MAY BE SUBJECT TO A
DELAY. SEE BENEFIT DISTRIBUTIONS BELOW. IN ADDITION, THE REAL ESTATE FUND IS
SUBJECT TO SPECIAL WITHDRAWAL RULES WHICH ARE DESCRIBED UNDER SPECIAL RULES
FOR DISTRIBUTIONS AND TRANSFERS FROM THE REAL ESTATE FUND.
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BENEFIT DISTRIBUTIONS. In order for you to begin receiving benefits under
the Master Plan, your employer must send us your properly completed Election
of Benefits form and, if applicable, Beneficiary Designation form. If we
receive your properly completed forms on or before the 15th of the month,
your benefits will commence as of the close of business on the first business
day of the next month; if your forms arrive after the 15th, your benefits
will commence as of the close of business on the first business day of the
second following month.
Under an individually designed plan and our self-directed prototype plan,
your employer must send us a request for disbursement form. We will send
single sum payments to your plan's trustee as of the close of business on the
day we receive a properly completed form. If you wish to receive annuity
payments, your plan's trustee may purchase a variable annuity contract from
us. Fixed annuities are available from insurance companies selected by the
Trustees. See Types of Benefits. Annuity payments will be paid directly to
you and will commence as of the close of business on the first business day
of the next month if we receive your properly completed forms on or before
the 15th of the month. If we receive your properly completed forms after the
15th, annuity payments will commence as of the close of business on the first
business day of the second following month.
Transfers and withdrawals from the Aggresive Equity Fund, the ADA Foreign
Fund and the Equity Index Fund may be deferred if there is any delay in
redemption of shares of the respective mutual funds in which the Funds
invest. We generally do not expect any delays.
Transfers and withdrawals from the Lifecycle Funds--Conservative and Moderate
may be deferred if there is any delay in redemption of units of the Lifecycle
Fund Group Trusts. We generally do not expect any such delays.
Special rules apply to withdrawals from the Real Estate Fund. See Special
Rules for Distributions and Transfers from the Real Estate Fund.
Please note that we use the value of your vested benefits at the close of
business on the day payment is due to determine the amount of benefits you
receive. We will not, therefore, begin processing your check until the
following business day. You should expect your check to be mailed within five
days after processing begins. Annuity checks can take longer. If you buy a
fixed annuity, your check will come from the company you selected. If you are
withdrawing more than $50,000 and you would like expedited delivery at your
expense, you may request it on your election of benefits form.
Distributions under a qualified retirement plan such as yours are subject to
extremely complicated legal requirements. When you are ready to retire, we
suggest that you discuss the available payment options with your employer or
financial advisor. Our Account Executives can provide you or your employer
with information.
SPOUSAL CONSENT REQUIREMENTS. Under the Master Plan and the self-directed
prototype plan, you may designate a non-spouse beneficiary any time after the
earlier of the first day of the plan year in which you attain age 35 or the
date on which you separate from service with your employer. If you designate
a beneficiary other than your spouse prior to your reaching age 35, your
spouse must consent to the designation and, upon your reaching age 35, must
again give his or her consent or the designation will lapse. In order for you
to make a withdrawal, elect a form of benefit other than a Qualified Joint
and Survivor Annuity or designate a non-spouse beneficiary, your spouse must
consent to your election in writing within the 90 day period before your
annuity starting date. To consent, your spouse must sign on the appropriate
line on your election of benefits or beneficiary designation form. Your
spouse's signature must be witnessed by a notary public or plan
representative.
If you change your mind, you may revoke your election and elect a Qualified
Joint and Survivor Annuity or designate your spouse as beneficiary, simply by
filing the appropriate form. Your spouse's consent is not required for this
revocation.
It is also possible for your spouse to sign a blanket consent form. By
signing this form, your spouse consents not just to a specific beneficiary or
form of distribution, but gives you the right to name any beneficiary or
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form of distribution you want. Once you file such a form, you may change your
election whenever you want, even without spousal consent. No spousal consent
to a withdrawal or benefit in a form other than a Qualified Joint and
Survivor Annuity is required under certain self-directed and individually
designed profit sharing plans that do not offer life annuity benefits.
ELIGIBLE ROLLOVER DISTRIBUTIONS AND FEDERAL INCOME TAX WITHHOLDING. All
"eligible rollover distributions" are subject to mandatory federal income tax
withholding of 20% unless the participant elects to have the distribution
directly rolled over to a qualified plan or individual retirement arrangement
(IRA). An "eligible rollover distribution" is generally any distribution that
is not one of a series of substantially equal periodic payments made (not
less frequently than annually) (1) for the life (or life expectancy) of the
plan participant or the joint lives (or joint life expectancies) of the plan
participant and his or her designated beneficiary, or (2) for a specified
period of 10 years or more. In addition, the following are not subject to
mandatory 20% withholding:
o certain corrective distributions under Internal Revenue Code (Code)
Section 401(k) plans;
o loans that are treated as distributions; and
o a distribution to a beneficiary other than to a surviving spouse or a
current or former spouse under a qualified domestic relations order.
If a distribution is made to a participant's surviving spouse, or to a
current or former spouse under a qualified domestic relations order, the
distribution may be an eligible rollover distribution, subject to mandatory
20% withholding, unless one of the exceptions described above applies.
If a distribution is not an "eligible rollover distribution" income tax will
be withheld from all taxable payments unless the recipient elects not to have
income tax withheld.
PREMATURE WITHDRAWALS AND TRANSFERS FROM A GRA. You may transfer amounts from
other Investment Options to a GRA at any time. Transfers may not be made from
one GRA to another or from a GRA to one of the other Investment Options until
the maturity date of the GRA. Likewise, you may not remove amounts from a GRA
prior to maturity in order to obtain a plan loan or make a hardship or
in-service withdrawal. If your plan's assets are transferred to another
funding vehicle from the Program or if your plan is terminated, we will
continue to hold your money in GRAs until maturity. All such GRAs will be
held in the Pooled Trust under the investment-only arrangement. See The
Program--Summary of the Plans and Trusts in the prospectus.
Withdrawals are not permitted prior to maturity unless they are permitted
under your plan and are Exempt or Qualified, as explained below. Exempt
Withdrawals may be made without penalty at any time. Qualified Withdrawals
are subject to a penalty. No Qualified Withdrawals are permitted from a
five-year GRA during the first two years after the end of its offering
period; this rule does not apply if the amount of the applicable penalty is
less than the interest you have accrued. If you have more than one GRA and
you are taking a partial withdrawal or installments, amounts held in your
most recently purchased three-year or five-year GRA that is available under
the withdrawal rules for Exempt and Qualified Withdrawals will first be used
to make withdrawal or installment payments. Please note that withdrawals,
transfers, reallocations on maturity and benefit distributions from GRAs
provided by a carrier other than Equitable Life are subject to Equitable
Life's receipt of the proceeds of such GRA from such carrier.
Exempt Withdrawal. You may withdraw amounts without penalty from a GRA prior
to its maturity if:
o you are a dentist age 59 1/2 or older and you elect an installment
payout of at least three years or an annuity benefit;
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o you are not a dentist and you attain age 59 1/2 or terminate
employment (including retirement);
o you are disabled;
o you attain age 70 1/2; or
o you die.
Qualified Withdrawal. You may withdraw amounts with a penalty from a GRA
prior to its maturity if you are a dentist and are taking payment upon
retirement after age 59 1/2 under a distribution option of less than three
years duration. The interest paid to you upon withdrawal will be reduced by
an amount calculated as follows:
(i) the amount by which the three-year GRA rate being offered on the
date of withdrawal exceeds the GRA rate from which the withdrawal
is made, times
(ii) the years and/or fraction of a year until maturity, times
(iii) the amount withdrawn from the GRA.
We will make this calculation based on GRA rates without regard to deductions
for the applicable Program expense charge. If the three-year GRA is not being
offered at the time of withdrawal, the adjustment will be based on then
current rates on U.S. Treasury notes or for a comparable option under the
Program.
Your original contributions will never be reduced by this adjustment. No
adjustment is made if the current three-year GRA rate is equal to or less
than the rate for the GRA from which the Qualified Withdrawal is being made.
A separate adjustment is calculated for each GRA. If the interest accumulated
in one GRA is insufficient to recover the amount calculated under the
formula, the excess may be deducted as necessary from interest accumulated in
other GRAs of the same duration.
EXAMPLE: You contribute $1,000 to a three-year GRA on January 1 with a rate
of 4%. Two years later you make a Qualified Withdrawal. Your GRA balance is
$1,082. The current GRA rate is 6%; (i) 6%-4%=2%, (ii) 2% X 1 year=2%, (iii)
2% X $1,082=$21.64. The withdrawal proceeds would be $1,082-$21.64=$1,060.36.
MATURING GRAS
o Your confirmation notice lists the maturity date for each GRA you hold.
o You may arrange in advance for the reinvestment of your maturing GRAs
by using the Account Investment Management ("AIM") system.
(Instructions must be received at least four days before the GRA
matures.)
o The instructions you give us remain in effect until you change them
(again, at least four days before you want the change to go into
effect).
o You may have different instructions for your GRAs attributable to
employer contributions than for your GRAs attributable to employee
contributions.
o If you have never provided GRA maturity instructions, your maturing
GRAs will be allocated to the Money Market Guarantee Account.
SPECIAL RULES FOR DISTRIBUTIONS AND TRANSFERS FROM THE REAL ESTATE
FUND. PLEASE NOTE THAT AT TIMES OF INSUFFICIENT LIQUIDITY WITHDRAWALS FROM
THE REAL ESTATE FUND AND PRIME PROPERTY FUND COULD BE DELAYED IN
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ACCORDANCE WITH THE PROCEDURES DESCRIBED BELOW. AT THIS TIME THE REAL ESTATE
FUND IS FULFILLING WITHDRAWAL REQUESTS ON A CURRENT BASIS. YOU MAY CALL US TO
RECEIVE CURRENT INFORMATION REGARDING THE STATUS OF REAL ESTATE FUND
WITHDRAWALS. SEE SPECIAL RISKS RELATED TO THE REAL ESTATE FUND IN THE
PROSPECTUS FOR MORE INFORMATION.
There is a minimum wait of one calendar quarter for withdrawals from the Real
Estate Fund. All distributions and transfers from the Real Estate Fund will
be scheduled to be made shortly after the end of the calendar quarter
following the quarter in which we receive properly completed forms. (See The
Real Estate Fund in the prospectus for more information on how we value and
liquidate Real Estate Fund Units.) The amount distributed will be based on
the Real Estate Fund's Unit Value on the date distribution is made.
Withdrawals from the Real Estate Fund must be made in amounts of at least
$1,000 or, if less, your balance in the Real Estate Fund.
IN ADDITION TO THE WAIT OF AT LEAST ONE CALENDAR QUARTER WHICH IS REQUIRED BY
OUR PROCEDURES, IT IS ALSO POSSIBLE THAT THE REAL ESTATE FUND WILL NOT HAVE
ENOUGH CASH TO MAKE ALL WITHDRAWALS AND TRANSFERS WHEN REQUESTED. If at the
end of a calendar quarter the Real Estate Fund does not have enough cash to
pay all scheduled withdrawals, they will be divided into two priority
categories. Priority 1 consists of all amounts requested because of death or
disability or after age 70 1/2. Priority 2 consists of all other requests.
THE REAL ESTATE FUND WILL SATISFY ALL SCHEDULED PRIORITY 1 DISTRIBUTION
REQUESTS BEFORE IT SATISFIES ANY PRIORITY 2 REQUEST, EVEN IF THE PRIORITY 1
REQUESTS WERE RECEIVED AFTER THE PRIORITY 2 REQUESTS. If the Real Estate Fund
does not have enough cash to make all Priority 1 distributions, they will be
paid in the order the requests were received. After the Real Estate Fund has
made all Priority 1 distributions, it will make Priority 2 distributions and
transfers. If the Real Estate Fund does not satisfy all scheduled Priority 2
distributions and transfer requests, they will be paid in the order the
requests were received.
To make Priority 1 distributions, the Real Estate Fund will use substantially
all its liquid assets, keeping only a reserve that we believe is adequate for
anticipated expenses. If possible, the Real Estate Fund will also liquidate
as much of its interest in Prime Property Fund as required. With regard to
Priority 2, we will make distributions and transfers to the extent that funds
are available from cash flow and from liquidation of Prime Property Fund
units. However, we will not make Priority 2 distributions and transfers if
the Real Estate Fund cannot liquidate enough of its interest in Prime
Property Fund and we believe that it would be desirable to maintain liquidity
to meet anticipated Priority 1 distributions.
Requests that remain unpaid will be scheduled for the next quarterly
distribution date. At that time they will be satisfied to the extent
possible, in accordance with their respective priorities and order of
receipt. Please note that if you make a Priority 2 request that is not paid
when scheduled, Priority 1 distributions requested in later quarters may be
paid before your Priority 2 request.
REAL ESTATE FUND WITHDRAWALS FROM PRIME PROPERTY FUND. If the Real Estate
Fund does not have enough liquid assets to pay all requested withdrawals, it
will seek to withdraw some or all of its interest from Prime Property Fund.
We may postpone withdrawals from Prime Property Fund, however, for such time
as we reasonably consider necessary to obtain the amount to be withdrawn or
to protect the interests of other participants in Prime Property Fund. In
making this determination, we consider primarily (i) the availability of cash
to manage Prime Property Fund's property holdings, to meet emergencies and to
meet commitments for property acquisitions and loans, (ii) the time necessary
to dispose of properties and (iii) any adverse impact of proposed property
sales on other participants in Prime Property Fund.
If withdrawal from Prime Property Fund is restricted, any payment from Prime
Property Fund is applied pro rata to the withdrawal requests of all
participants in Prime Property Fund that are eligible for payment on the
withdrawal date, regardless of when those requests were made. Prime Property
Fund withdrawal
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requests not satisfied by a pro rata distribution are deferred until the next
withdrawal date (generally the last business day of the following quarter),
at which time the amount available for distribution will again be applied pro
rata to all pending requests. For purposes of this policy, the Real Estate
Fund is considered a single participant in Prime Property Fund, on par with
each other participant in Prime Property Fund. From the first quarter of 1995
through the third quarter of 1995, Prime Property Fund satisfied all
participant withdrawal requests. As of the fourth quarter of 1995, Prime
Property Fund was unable to satisfy all participant withdrawal requests.
Consequently, withdrawals from Prime Property Fund are being delayed in
accordance with the procedures discussed above. However, since June 1994 the
Real Estate Fund has had sufficient liquidity; and withdrawals have not been
restricted. If the Real Estate Fund experiences periods of insufficient
liquidity withdrawals may be delayed in accordance with the procedures
described above. See Special Rules for Distributions and Transfers from the
Real Estate Fund. There have been other periods when there was insufficent
available cash in Prime Property Fund to meet all withdrawal requests and the
above withdrawal procedures were put into place for all pending Prime
Property Fund withdrawal requests. During these other periods Real Estate
Fund withdrawals were not delayed or restricted in any manner because there
was sufficient liquidity in the Real Estate Fund.
In general, a withdrawal from Prime Property Fund by one or more of its
larger investors could significantly reduce its cash position and increase
the likelihood that the Real Estate Fund would not have cash sufficient to
meet all withdrawal requests. At December 31, 1996 there were 208
participants in Prime Property Fund, none of which held more than 3.6% of
Prime Property Fund.
TYPES OF BENEFITS
Under the Master Plan, and under most self-directed prototype plans, except
as provided below, you may select one or more of the following forms of
distribution once you are eligible to receive benefits. Please see Benefit
Distributions under Procedures for Withdrawals, Distributions and Transfers.
Not all of these distribution forms may be available to you, if your employer
has adopted an individually designed plan or a self-directed prototype profit
sharing plan that does not offer annuity benefits. We suggest you ask your
employer what types of benefits are available under your plan.
Fixed annuities are available from insurance companies selected by the
Trustees, which meet criteria established by the Trustees from time to time.
Fixed annuities are currently not available from Equitable Life. The types of
fixed annuity benefits described below will be available through one or more
of such companies. Upon your request, the companies will provide annuity
benefit information. We will have no further responsibility for the amount
used to purchase the annuity once it has been sent to the insurance company
you select. The cost of a fixed annuity is determined by each insurance
company based on its current annuity purchase rates. The amount of your
monthly annuity benefit will depend on the type of annuity selected, your age
and the age of your beneficiary if you select a joint and survivor annuity.
Your Account Executive has more details regarding the insurance companies
currently providing annuity benefits under the Program.
QUALIFIED JOINT AND SURVIVOR ANNUITY. An annuity providing equal monthly
payments for your life and, after your death, for your surviving spouse's
life. No payments will be made after you and your spouse die, even if you
have received only one payment. THE LAW REQUIRES THAT IF THE VALUE OF YOUR
VESTED BENEFITS EXCEEDS $3,500, YOU MUST RECEIVE A QUALIFIED JOINT AND
SURVIVOR ANNUITY UNLESS YOUR SPOUSE CONSENTS IN WRITING TO A CONTRARY
ELECTION. Please see Spousal Consent Requirements under Procedures for
Withdrawals, Distributions and Transfers for an explanation of the procedures
for electing not to receive a Qualified Joint and Survivor Annuity.
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LUMP SUM PAYMENT. A single payment of all or part of your vested benefits.
If you take a lump sum payment of only part of your balance, it must be at
least $1,000. If you have more than one GRA, amounts held in your most recent
GRA will first be used to make payment. IF YOUR VESTED BENEFIT IS $3,500 OR
LESS, YOU WILL RECEIVE A LUMP SUM PAYMENT OF THE ENTIRE AMOUNT.
PERIODIC INSTALLMENTS. Monthly, quarterly, semi-annual or annual payments
over a period of at least three years, where the initial payment on a monthly
basis is at least $300. You can choose either a time-certain payout, which
provides variable payments over a specified period of time, or a
dollar-certain payout, which provides level payments over a variable period
of time. During the installment period, your remaining Account Balance will
be invested in whatever Options you designate, other than the Real Estate
Fund; each payment will be drawn pro rata from all the Options you have
selected. If you elect installment payments, you may not leave or place any
assets in the Real Estate Fund. If you have more than one GRA, amounts held
in your most recently purchased three-year or five-year GRA will first be
used to make installment payments. If you die before receiving all the
installments, we will make the remaining payments to your beneficiary.
LIFE ANNUITY. An annuity providing monthly payments for your life. No
payments will be made after your death, even if you have received only one
payment.
LIFE ANNUITY--PERIOD CERTAIN. An annuity providing monthly payments for your
life or, if longer, a specified period of time. If you die before the end of
that specified period, payments will continue to your beneficiary until the
end of the period. Subject to legal limitations, you may specify a minimum
payment period of 5, 10, 15 or 20 years; the longer the specified period, the
smaller the monthly payments will be.
JOINT AND SURVIVOR ANNUITY. An annuity providing monthly payments for your
life and that of your beneficiary. You may specify the percentage of the
annuity payment to be made to your beneficiary. Subject to legal limitations,
that percentage may be 100%, 75%, 50%, or any other percentage you specify.
JOINT AND SURVIVOR ANNUITY--PERIOD CERTAIN. An annuity providing monthly
payments for your life and that of your beneficiary or, if longer, a
specified period of time. If you and your beneficiary both die before the end
of the specified period, payments will continue to your contingent
beneficiary until the end of the period. Subject to legal limitations, you
may specify a minimum payment period of 5, 10, 15 or 20 years and the
percentage of the annuity payment to be made to your beneficiary (as noted
above under Joint and Survivor Annuity); the longer the specified period, the
smaller the monthly payments will be.
CASH REFUND ANNUITY. An annuity providing equal monthly payments for your
life with a guarantee that the sum of those payments will be at least equal
to the portion of your vested benefits used to purchase the annuity. If upon
your death the sum of the monthly payments to you is less than that amount,
your beneficiary will receive a lump sum payment of the remaining guaranteed
amount.
Under a Qualified Joint and Survivor Annuity or a Cash Refund Annuity, the
amount of the monthly payments is fixed at retirement and remains level
throughout the distribution period. Under the Life Annuity, Life
Annuity--Period Certain, Joint and Survivor Annuity and Joint and Survivor
Annuity--Period Certain, you may select either fixed or variable payments.
All forms of variable annuity benefits under the Program will be provided by
us. The payments under variable annuity options reflect the investment
performance of the Growth Equity Fund. If you are interested in a variable
annuity, when you are ready to select your benefit please ask our Account
Executives for our variable annuity prospectus supplement.
PROVISIONS OF THE MASTER PLAN
PLAN ELIGIBILITY REQUIREMENTS. Under the Master Plan, the employer specifies
the eligibility requirements for its plan in the Participation Agreement. The
employer may exclude any employee who has not attained a specified age (not
to exceed 21) and completed a specified number of years (not to exceed two)
in each of which he completed 1,000 hours of service. No more than one year
of eligibility service may be required for a 401(k) arrangement.
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The employer may also exclude salaried dentists (those with no ownership
interest in the practice), employees of related employers, leased employees
and certain other types of employees at the employer's election, provided
such exclusion does not cause the Plan to discriminate in favor of "highly
compensated" employees (defined below). The Master Plan provides that a
partner or shareholder may, upon commencement of employment or upon first
becoming eligible to participate in any qualified plan of the employer, make
a one-time irrevocable election not to participate in the plan or to make a
reduced contribution. This election applies to all plans of the employer, now
and in the future, and should be discussed with your tax advisor.
CONTRIBUTIONS TO QUALIFIED PLANS. Current federal income tax rules relating
to contributions under qualified retirement plans are outlined briefly below.
For purposes of this outline we have assumed that you are not a participant
in any other qualified retirement plan.
The employer's contributions to the plan are deductible in the year for which
they are made. As a general rule, employer contributions must generally be
made for any year by the due date (including extensions) for filing the
employer's federal income tax return for that year. However, under Department
of Labor ("DOL") rules, participants' salary deferrals under a 401(k) plan
must be contributed by the employer as soon as practicable after the payroll
period for which the deferral is made, but no later than the 15th business
day of the month following the month in which participant contributions are
withheld or received by the employer.
If the employer contributes more to the plan than is deductible under the
rules described below, the employer may be liable for a 10% penalty tax on
that nondeductible amount and may risk disqualifying the plan.
CONTRIBUTIONS TO THE MASTER PLAN. The employer makes annual contributions to
its plan based on the plan's provisions.
An employer that adopts the Master Plan as a profit sharing plan makes
contributions in discretionary amounts to be determined annually. The
aggregate employer contribution to the plan, including participants' salary
deferrals under a 401(k) arrangement, is limited to 15% of all participants'
compensation for the plan year. For plan purposes, compensation for
self-employed persons does not include deductible plan contributions made on
behalf of the self-employed person.
A 401(k) arrangement is available as part of the profit sharing plan. Under a
401(k) arrangement, employees are permitted to make contributions to the plan
on a pre-tax basis. The maximum amount that may be contributed by highly
compensated employees is limited depending upon the amount that is
contributed by non-highly compensated employees and the amount the employer
designates as a nonforfeitable 401(k) contribution. For 1997, "highly
compensated" employee for this purpose is (a) an owner of more than 5% of the
practice, or (b) anyone with earnings of more than $80,000 from the practice
in 1996. For (b), the employer may elect to include only employees in the
highest paid 20%. In any event, the maximum amount each employee may defer is
limited to $9,500 for 1997 reduced by that employee's salary reduction
contributions to simplified employee pensions (SEPs), employee contributions
to tax deferred (Section 403(b)) annuities, and contributions deductible by
the employee under a trust described under Section 501(c)(18) of the Code.
The maximum amount a participant may defer in a SIMPLE 401(k) plan for 1997
is $6,000.
If the employer adopts the Master Plan as a defined contribution pension
plan, its contribution is equal to the percentage of each participant's
compensation that is specified in the Participation Agreement.
Under either type of plan, compensation in excess of $160,000 in 1997 must be
disregarded in making contributions. Contributions may be integrated with
Social Security which means that contributions with respect to each
participant's compensation in excess of the integration level may exceed
contributions made with respect to compensation below the integration level,
within limits imposed by the Code. Your Account Executive can help you
determine the legally permissible contribution.
SAI-10
<PAGE>
- ------------------------------------------------------------------------------
Contributions on behalf of non-key employees must be at least 3% of
compensation (or, under the profit sharing plan, the percentage contributed
on behalf of key employees, if less than 3%). In 1997, "key employee" means
(a) an owner of one of the ten largest (but more than 1/2%) interests in the
practice with earnings of more than $30,000, or (b) an officer of the
practice with earnings of more than $62,500 or (c) an owner of more than 5%
of the practice, or (d) an owner of more than 1% of the practice with
earnings of more than $150,000. For purposes of (b), no more than 50
employees (or, if less, the greater of three or 10% of the employees) shall
be treated as officers.
Certain plans may also permit participants to make post-tax contributions. We
will maintain a separate account to reflect each participant's post-tax
contributions and the earnings (or losses) thereon. Post-tax contributions
are subject to complex rules under which the maximum amount that may be
contributed by highly compensated employees is limited, depending on the
amount contributed by non-highly compensated employees. BEFORE PERMITTING ANY
HIGHLY-COMPENSATED EMPLOYEE TO MAKE POST-TAX CONTRIBUTIONS, THE EMPLOYER
SHOULD MAKE SURE THAT ALL NON-DISCRIMINATION TESTS HAVE BEEN PASSED. If an
employer employs only "highly compensated" employees (as defined above),
post-tax contributions may not be made to the plan. In addition, the employer
may make matching contributions to certain plans, i.e., contributions which
are based upon the amount of post-tax or pre-tax 401(k) contributions made by
plan participants. Special non-discrimination rules apply to matching
contributions and may limit the amount of matching contributions that may be
made on behalf of highly compensated employees.
Contributions on behalf of each participant are limited to the lesser of
$30,000 and 25% of his earnings (excluding, in the case of self-employed
persons, all deductible plan contributions). The participant's post-tax
contributions are taken into account for purposes of applying this
limitation.
Each participant's Account Balance equals the sum of the amounts accumulated
in each Investment Option. We will maintain separate records of each
participant's interest in each of the Investment Options attributable to
employer contributions, 401(k) non-elective contributions, 401(k) elective
contributions, post-tax employee contributions and employer matching
contributions. Any amounts rolled over from the plan of a previous employer
will also be accounted for separately. Our records will also reflect each
participant's percentage of vesting (see below) in his Account Balance
attributable to employer contributions and employer matching contributions.
The participant will receive an individual confirmation of each transaction
(including the deduction of record maintenance and report fees). The
participant will also receive an annual statement showing his Account Balance
in each Investment Option attributable to each type of contribution. Based on
information supplied by you, we will run the required special
non-discrimination tests (Actual Deferral Percentage and Actual Contribution
Percentage) applicable to 401(k) plans and plans that accept post-tax
employee contributions or employer matching contributions.
Non-discrimination tests do not apply to SIMPLE 401(k) plans, as long as the
employer makes a matching contribution equal to 100% of the amount deferred
by each participant, up to 3% of compensation or a 2% non-elective
contribution to all eligible employees and follows the notification and
filing requirements outlined in the SIMPLE 401(k) model amendment to the
Master Plan.
Elective deferrals to a 401(k) plan are subject to applicable FICA (social
security) and FUTA (unemployment) taxes.
ALLOCATION OF CONTRIBUTIONS. Contributions may be allocated among any number
of the Investment Options. Allocation instructions may be changed at any
time, and as often as needed, by calling the AIM System. New instructions
become effective on the business day we receive them. Employer contributions
SAI-11
<PAGE>
- ------------------------------------------------------------------------------
may be allocated in different percentages than employee contributions. The
allocation percentages elected for employer contributions will automatically
apply to any 401(k) qualified non-elective contributions, qualified matching
contributions and matching contributions. The allocation percentages for
employee contributions will automatically apply to any post-tax employee
contributions and 401(k) salary deferral contributions. IF WE HAVE NOT
RECEIVED VALID INSTRUCTIONS, WE WILL ALLOCATE CONTRIBUTIONS TO THE MONEY
MARKET GUARANTEE ACCOUNT.
The Master Plan and Section 404(c) of ERISA. The Master Plan is a participant
directed individual account plan designed to comply with the requirements of
Section 404(c) of ERISA. Section 404(c) of ERISA, and the related Department
of Labor (DOL) regulation, provide that if a participant or beneficiary
exercises control over the assets in his or her plan account, plan
fiduciaries will not be liable for any loss that is the direct and necessary
result of the participant's or beneficiary's exercise of control. This means
that if the employer plan complies with Section 404(c), participants can make
and are responsible for the results of their own investment decisions.
Section 404(c) plans must, among other things, make a broad range of
investment choices available to participants and beneficiaries and must
provide them with enough information to make informed investment decisions.
The ADA Program provides the broad range of investment choices and
information that are needed in order to meet the requirements of Section
404(c). Our suggested summary plan descriptions, annual reports,
prospectuses, and confirmation notices provide the required investment
information; it is the employer's responsibility, however, to see that this
information is distributed in a timely manner to participants and
beneficiaries. You should read this information carefully before making your
investment decisions.
VESTING. Vesting refers to the nonforfeitable portion of a participant's
Account Balance attributable to employer contributions under the Master Plan.
The participant's Account Balance attributable to 401(k) contributions
(including salary deferral, qualified non-elective and qualified matching
contributions), post-tax employee contributions and to rollover contributions
is nonforfeitable at all times.
A participant will become fully vested in all benefits if still employed at
death, disability, attainment of normal retirement age or upon termination of
the plan. If the participant terminates employment before that time, any
benefits that have not yet become vested under the plan's vesting schedule
will be forfeitable. The normal retirement age is 65 under the Master Plan.
Benefits must vest in accordance with any of the schedules below or one at
least as favorable to participants:
SCHEDULE A SCHEDULE B SCHEDULE C
YEARS OF VESTED VESTED VESTED
SERVICE PERCENTAGE PERCENTAGE PERCENTAGE
- ---------- ------------ ------------ ------------
1 0% 0% 0%
2 100 20 0
3 100 40 100
4 100 60 100
5 100 80 100
6 100 100 100
If the plan requires more than one year of service for participation, it must
use Schedule A or one at least as favorable to participants.
All contributions to a SIMPLE 401(k) plan are 100% vested and not subject to
the vesting schedule above. This does not include employer and matching
contributions made to a plan before amending to a SIMPLE 401(k) plan.
SAI-12
<PAGE>
- ------------------------------------------------------------------------------
PRIME PROPERTY FUND INVESTMENTS
Since typically 90% to 100% of the Real Estate Fund's assets are invested in
Prime Property Fund, we have provided the following information about the
investments of Prime Property Fund.
Prime Property Fund seeks the acquisition and long-term ownership of
high-grade, income-producing real property. Prime Property Fund seeks to
invest in properties that are located in strong rental markets and have
continuous potential for resale. At December 31, 1996, Prime Property Fund
held 158 investments in wholly-owned properties and equities in partnerships
with an aggregate appraised value of $3.2 billion.
Prime Property Fund seeks to diversify its property portfolio by usage and
location. Prime Property Fund's major holdings (in wholly-owned properties
and equities in partnerships) as of December 31, 1996 included:
o 29 retail properties, primarily super-regional shopping centers, with
an aggregate market value of $1650.5 million.
o 40 office properties, with an aggregate market value of $964.5 million.
o 77 industrial properties (primarily warehouses) and research and
development facilities, with an aggregate market value of $406.4
million.
o 5 hotels, with an aggregate market value of $129.6 million.
o 7 other properties, which include any other income-producing properties
not specifically mentioned above, with an aggregate market value of
$36.1 million.
In addition to wholly-owned properties and equities in partnerships, Prime
Property Fund has eight investments in mortgage loans receivable with an
aggregate market value of $300.0 million, or 8.4% of Prime Property Fund's
investments. Prime Property Fund also has one investment in REIT stock with a
market value of $28.9 million or 0.8% of Prime Property Fund's investments.
Mortgages and common stock may be accepted as partial consideration for
properties sold.
BORROWINGS. There is no limit on mortgage indebtedness with respect to any
one property. During the period from 1987 through 1996 Prime Property Fund's
total borrowings secured by wholly-owned properties ranged from 10.4% to
22.2% of the total portfolio value. Properties held by joint ventures may
also be mortgaged. The borrowings on wholly-owned properties held in Prime
Property Fund as of December 31, 1996 are summarized below.
- -----------------------------------------------------------------------------
Summary of Borrowings on Wholly-Owned Properties*--December 31, 1996
Number of mortgages payable............ 8
Number of encumbered properties ...... 16
Outstanding borrowings (millions) ..... $662.8
Borrowings as a percent of total
value................................. 22.2%
- ----------
*Prime Property Fund also held interests in real estate partnerships having
total assets of $1147.6 million and total liabilities of $800 million.
----------------------------------------------------------------------------
SAI-13
<PAGE>
- ------------------------------------------------------------------------------
HOLDINGS OF PRIME PROPERTY FUND
The charts below describe the investments in wholly-owned properties,
partnership equities and mortgage and construction loans receivable of Prime
Property Fund as of December 31, 1996 and for the other periods indicated.
<TABLE>
<CAPTION>
- --------------------------------------------------------------
DISTRIBUTION OF INVESTMENT VALUE BY TYPE AND LOCATION* (BY
PERCENTAGE)--DECEMBER 31, 1996
- --------------------------------------------------------------
SOUTH EAST MID-WEST WEST TOTAL
- -------------- ------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C>
Industrial/R&D 4.0% 2.2% 1.1% 4.3% 11.6%
Office 1.3 16.0 1.1 12.2 30.6
Retail 11.3 14.6 20.7 6.4 53.0
Hotel 1.0 1.7 -- 1.0 3.7
Other 0.1 0.9 -- 0.1 1.1
- -------------- ------- ------- ---------- ------- -------
Total 17.7% 35.4% 22.9% 24.0% 100.0%
- -------------- ------- ------- ---------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
DISTRIBUTION OF INVESTMENTS BY TYPE AND LOCATION* (BY NUMBER
OF INVESTMENTS)--DECEMBER 31, 1996
- ------------------------------------------------------------
SOUTH EAST MID-WEST WEST TOTAL
- -------------- ------- ------ ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Industrial/R&D 29 18 10 20 77
Office 2 25 7 9 43
Retail 7 13 10 3 33
Hotel 1 3 -- 1 5
Other 1 6 1 1 9
- -------------- ------- ------ ---------- ------ -------
Total 40 65 28 34 167
- -------------- ------- ------ ---------- ------ -------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------
DISTRIBUTION OF INVESTMENT VALUE BY LOCATION* (BY
PERCENTAGE)
- -------------------------------------------------------
1996 1995 1994 1993 1992
- ---------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
South 17.7% 18.5% 19.7% 20.0% 20.8%
East 35.4 35.0 31.0 30.9 29.9
Mid-West 22.9 24.0 27.3 27.6 26.6
West 24.0 22.5 22.0 21.5 22.7
- ---------- ------- ------- ------- ------- -------
</TABLE>
- ----------
* Each region comprises the states indicated:
South: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi,
Oklahoma, Tennessee, Texas
East: Connecticut, Delaware, District of Columbia, Kentucky, Maine,
Maryland, Massachusetts, New Hampshire, New Jersey, New York, North
Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia,
West Virginia
Mid-West: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri,
Nebraska, North Dakota, Ohio, South Dakota, Wisconsin
West: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada,
New Mexico, Oregon, Utah, Washington, Wyoming
SAI-14
<PAGE>
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------
DISTRIBUTION OF INVESTMENT VALUE BY PROPERTY TYPE (BY
PERCENTAGE)
- -----------------------------------------------------------
1996 1995 1994 1993 1992
- -------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Industrial/R&D 11.6% 11.0% 10.6% 10.8% 11.4%
Office 30.6 30.1 24.9 25.2 26.8
Retail 53.0 54.4 60.8 60.0 57.6
Hotel 3.7 3.5 3.2 2.9 3.3
Other 1.1 1.0 0.5 1.1 0.9
- -------------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
DISTRIBUTION OF INVESTMENT VALUE BY TYPE OF OWNERSHIP (BY PERCENTAGE)--
DECEMBER 31, 1996
- ---------------------------------------------------------------------------------------
WHOLLY-OWNED EQUITY IN MORTGAGE INVESTMENT
REAL ESTATE* PARTNERSHIPS LOANS RECEIVABLE IN REIT TOTAL
- -------------- -------------- -------------- ---------------- ------------ -------
<S> <C> <C> <C> <C> <C>
Industrial/R&D 11.2% 0.4% --% --% 11.6%
Office 24.8 2.7 3.1 -- 30.6
Retail 46.8 0.2 5.2 0.8 53.0
Hotel 2.4 1.3 -- -- 3.7
Other 0.1 0.9 0.1 -- 1.1
- -------------- -------------- -------------- ---------------- ------------ -------
Total 85.3% 5.5% 8.4% 0.8% 100.0%
- -------------- -------------- -------------- ---------------- ------------ -------
</TABLE>
* Title to wholly-owned properties allocated to Prime Property Fund is
generally held in Equitable Life's name.
<TABLE>
<CAPTION>
- -------------------------------------------------------------
DISTRIBUTION OF INVESTMENTS BY VALUE RANGE*--DECEMBER 31,
1996
- -------------------------------------------------------------
INVESTMENT PERCENTAGE OF
VALUE PERCENTAGE OF NUMBER OF TOTAL NUMBER
(MILLIONS) INVESTMENT VALUE INVESTMENTS OF INVESTMENTS
- ------------ ---------------- ------------- --------------
<S> <C> <C> <C>
Under $2.5 1.2% 33 19.8%
$2.5-$5 3.8 38 22.7
$5-$10 6.6 33 19.7
$10-$20 7.8 19 11.4
$20-$50 25.5 26 15.6
$50-$100 22.0 11 6.6
Over $100 33.1 7 4.2
- ------------ ---------------- ------------- --------------
Total 100.0% 167 100.0%
- ------------ ---------------- ------------- --------------
</TABLE>
* Includes all investments stated at the Fund's ownership share.
SAI-15
<PAGE>
- ------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS APPLICABLE TO THE FUNDS
THE GROWTH EQUITY FUND. The Growth Equity Fund will not:
o trade in foreign exchange (except transactions incidental to the
settlement of purchases or sales of securities);
o make an investment in order to exercise control or management over a
company;
o underwrite the securities of other companies, including purchasing
securities that are restricted under the 1933 Act or rules or
regulations thereunder (restricted securities cannot be sold publicly
until they are registered under the 1933 Act), except as stated below;
o make short sales, except when the Fund has, by reason of ownership of
other securities, the right to obtain securities of equivalent kind and
amount that will be held so long as they are in a short position;
o trade in commodities or commodity contracts; purchase or write puts and
calls (options);
o purchase real estate or mortgages, except as stated below. The Fund may
buy shares of real estate investment trusts listed on stock exchanges
or reported on the National Association of Securities Dealers, Inc.
automated quotation system ("NASDAQ");
o have more than 5% of its assets invested in the securities of any one
registered investment company. A Fund may not own more than 3% of an
investment company's outstanding voting securities. Finally, total
holdings of investment company securities may not exceed 10% of the
value of the Fund's assets;
o purchase any security on margin or borrow money except for short-term
credits necessary for clearance of securities transactions;
o make loans, except loans through the purchase of debt obligations or
through entry into repurchase agreements; or
o invest more than 10% of its total assets in restricted securities, real
estate investments, or portfolio securities not readily marketable.
o make an investment in an industry if that investment would make the
Fund's holding in that industry exceed 25% of its assets. The United
States government, and its agencies and instrumentalities, are not
considered members of any industry.
THE AGGRESSIVE EQUITY FUND. The Aggressive Equity Fund will operate as
discussed in The Equity Funds--The Aggressive Equity Fund in the prospectus,
and will be subject to the investment policies and limitations described
there. The prospectus for the MFS Emerging Growth Fund describes the
investment objective, policies and limitations applicable to the Fund. A free
copy of the MFS Emerging Growth Fund prospectus may be obtained by calling an
Equitable Life Account Executive.
THE ADA FOREIGN FUND. The ADA Foreign Fund will operate as discussed in The
Equity Funds--The ADA Foreign Fund in the prospectus, and will be subject to
the investment policies and limitations described there. The prospectus for
the Templeton Foreign Fund describes the investment objective, policies and
limitations applicable to that Fund. A free copy of the Templeton Foreign
Fund prospectus may be obtained by calling an Equitable Life Account
Executive.
THE EQUITY INDEX FUND. The Equity Index Fund will operate as discussed in The
Equity Funds--The Equity Index Fund in the prospectus, and will be subject to
the investment policies and limitations
SAI-16
<PAGE>
- ------------------------------------------------------------------------------
described there. The prospectus for the SSgA S&P 500 Index Fund describes the
investment objective, policies and limitations applicable to the SSgA S&P 500
Index Fund. A free copy of the SSgA S&P 500 Index Fund prospectus may be
obtained by calling an Equitable Life Account Executive.
LIFECYCLE FUNDS. The Lifecycle Funds will operate as discussed in The Equity
Funds--The Lifecycle Funds in the prospectus, and will be subject to the
investment policies and limitations described there. Our separate prospectus
for the Lifecycle Funds describes the investment objectives, policies and
limitations applicable to the Lifecycle Fund Group Trusts. A free copy of
that prospectus may be obtained by calling an Equitable Life Account
Executive.
THE REAL ESTATE FUND. The Real Estate Fund will operate as discussed in The
Real Estate Fund in the prospectus, and will be subject to the investment
policies and limitations described there.
HOW WE VALUE THE ASSETS OF THE FUNDS
THE GROWTH EQUITY FUND. The assets of the Growth Equity Fund are valued as
follows:
o STOCKS listed on national securities exchanges or traded on the NASDAQ
national market system are valued at the last sale price. If on a
particular day there is no sale, they are valued at the latest
available bid price reported on a composite tape. Other unlisted
securities reported on the NASDAQ system are valued at inside (highest)
quoted bid prices.
o FOREIGN SECURITIES not traded directly, or in ADR form, in the United
States, are valued at the last sale price in the local currency on an
exchange in the country of origin. Foreign currency is converted into
dollars at current exchange rates.
o UNITED STATES TREASURY SECURITIES and other obligations issued or
guaranteed by the United States Government, its agencies or
instrumentalities are valued at representative quoted prices.
o LONG-TERM PUBLICLY TRADED CORPORATE BONDS (i.e., maturing in more than
one year) are valued at prices obtained from a bond pricing service of
a major dealer in bonds when such prices are available; however, in
circumstances where it is deemed appropriate to do so, an
over-the-counter or exchange quotation may be used.
o CONVERTIBLE PREFERRED STOCKS listed on national securities exchanges
are valued at their last sale price or, if there is no sale, at the
latest available bid price.
o CONVERTIBLE BONDS and UNLISTED CONVERTIBLE PREFERRED STOCKS are valued
at bid prices obtained from one or more major dealers in such
securities; where there is a discrepancy between dealers, values may be
adjusted based on recent premium spreads to the underlying common
stock.
o SHORT-TERM DEBT SECURITIES that mature in more than 60 days are valued
at representative quoted prices. Short-term debt securities that mature
in 60 days or less are valued at amortized cost, which approximates
market value. The Growth Equity Fund, as well as the Real Estate Fund,
may also acquire short-term debt securities through units in our
Separate Account No. 2A. These unit values are calculated in the same
way as Fund Units. The assets of Separate Account No. 2A are valued as
described above.
Our investment officers determine in good faith the fair value of securities
and other assets that do not have a readily available market price in
accordance with accepted accounting practices and applicable laws and
regulations.
SAI-17
<PAGE>
- ------------------------------------------------------------------------------
THE AGGRESSIVE EQUITY FUND. The Fund will invest all of its assets in the
MFS Emerging Growth Fund. The asset value of the MFS Emerging Growth Fund is
computed on a daily basis by the MFS Emerging Growth Fund. See the prospectus
of the MFS Emerging Growth Fund for information on valuation methodology.
THE ADA FOREIGN FUND. The Fund will invest all of its assets in shares of the
Templeton Foreign Fund. The asset value of the Templeton Foreign Fund is
computed on a daily basis by the Templeton Foreign Fund. See the prospectus
of the Templeton Foreign Fund for information on valuation methodology.
THE EQUITY INDEX FUND. The Fund will invest all of its assets in the SSgA S&P
500 Index Fund. The asset value of the SSgA S&P 500 Index Fund is computed on
a daily basis by the SSgA S&P 500 Index Fund. See the prospectus of the SSgA
S&P 500 Index Fund for information on valuation methodology.
THE LIFECYCLE FUNDS. The Lifecycle Funds--Conservative and Moderate will
invest all of their assets in the Lifecycle Fund Group Trusts--Conservative
and Moderate, respectively. The Group Trusts, in turn, will invest all of
their assets in the Underlying Funds. See our separate prospectus for the
Lifecycle Funds for information on valuation methodology.
ASSETS HELD IN PRIME PROPERTY FUND. Real properties held by Prime Property
Fund (Equitable's Separate Account No. 8) are valued by staff appraisers in
our field offices or third-party appraisers. Appraised values do not
necessarily represent the prices at which the real estate investments would
sell since sales prices are determined by negotiation between a willing buyer
and seller.
Our appraisers value each Prime Property Fund property prior to acquisition
and at the end of each calendar quarter thereafter. The initial appraisal is
a fully documented appraisal. This appraisal takes into account all relevant
information, including the property's physical attributes, location,
marketability, zoning, expandability, and adaptability to use. The initial
appraisal also involves consideration of values based on the three major
methods of estimating property value:
o the income method, based on the value of the property's projected
income stream;
o the cost method, based on the replacement cost of improvements, less
depreciation, plus land value; and
o the market method, based on the sales prices of similar properties.
Subsequent quarterly appraisals include less documentation but take into
account all relevant information and consist of a physical inspection, a
valuation based on the most relevant of the three above methods, usually the
income method, performance record and an assessment of any relevant market
changes. Interim monthly valuations also take into account physical or
economic changes respecting a property which we believe would have a material
effect on its market value. Quarterly appraisals are prepared primarily by
staff appraisers. Staff appraisals are submitted to one of three designated
third-party appraisal firms which also physically inspect those properties
periodically. These appraisal firms provide Equitable Real Estate with a
written statement of concurrence annually.
Partnership equities are valued at Prime Property Fund's equity in the net
assets of the partnerships in accordance with the valuation procedures
described above.
During the past five years, on average, net proceeds (equal to sales price
minus sales expenses) from sales of properties in which Equitable Life
retains no equity interest were equal to approximately 99.3% of their most
recent quarterly valuation. In some cases, Prime Property Fund has received
purchase money mortgages for a portion of the sales price.
SAI-18
<PAGE>
- ------------------------------------------------------------------------------
Mortgage and construction loans receivable are valued by comparing the loan
rate of interest to market rates for loans of comparable quality and
duration, giving consideration to the value of the underlying security.
See Note B2 to the Financial Statements of Separate Account No. 8 (Prime
Property Fund) in this SAI for more information about the valuation of
investments in Prime Property Fund.
SUMMARY OF UNIT VALUES FOR THE FUNDS
THE EQUITY FUNDS. Set forth below are Unit Values for the Growth Equity,
Aggressive Equity, ADA Foreign and Equity Index Funds, computed to the
nearest cent on the last business day of the periods specified. The value of
a Growth Equity Fund Unit was established at $10.00 on January 1, 1968, the
date the Program first became available. At the close of business on November
30, 1995, the Aggressive Equity Fund's interest in Separate Account No. 3
(Pooled) was transferred to Separate Account No. 200 at the Unit Value then
in effect for Separate Account No. 3 (Pooled). The ADA Foreign Fund Unit
Value was established at $10.00 on March 2, 1992, the date the ADA Foreign
Fund began operations. The Equity Index Fund Unit Value was established at
$10.00 on February 1, 1994, the date the Equity Index Fund began operations.
The Lifecycle Funds' Unit Values were established at $10.00 on May 1, 1995,
the date these Funds began operation. Since the Lifecycle Funds and the
Lifecycle Fund Group Trusts have had no prior operations, Unit Values for the
Lifecycle Funds prior to May 1, 1995 are not provided.
Hypothetical Unit Values for the ADA Foreign Fund for periods prior to March
2, 1992 assume that the Fund's assets are invested 100% in the Templeton
Foreign Fund. Hypothetical Unit Values for the ADA Foreign Fund and for the
Equity Index Fund for periods prior to the availability of those Funds under
the Program were calculated by applying the Program expense charge during
those periods plus .15% in estimated other expenses to the historical
investment experience of the Templeton Foreign Fund for the ADA Foreign Fund,
and to the historical investment experience of the SSgA S&P 500 Index Fund
(from its first full year of operations) for the Equity Index Fund.
Hypothetical Unit Values for the Aggressive Equity Fund were calculated by
applying the Program expense charge and other expenses actually incurred by
the Aggressive Equity Fund during the time it invested in Separate Account
No. 3 (Pooled) to the historical investment performance of the MFS Emerging
Growth Fund Class A and B shares for the corresponding periods.
<TABLE>
<CAPTION>
UNIT VALUES OF THE EQUITY FUNDS*
LIFECYCLE LIFECYCLE
LAST BUSINESS GROWTH AGGRESSIVE ADA FOREIGN EQUITY INDEX FUND- FUND-
DAY OF EQUITY FUND EQUITY FUND (A) FUND (B) FUND (C) CONSERVATIVE MODERATE
- --------------- ------------- --------------- ------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
1987 $ 70.48 $ 8.78 $ 5.57 -- -- --
1988 81.94 9.41 6.75 -- -- --
1989 117.90 11.86 8.74 -- -- --
1990 103.88 11.47 8.41 -- -- --
1991 156.93 21.37 9.86 -- -- --
1992 157.79 23.68 9.81 $ 9.06 -- --
1993 187.30 29.22 13.08 9.64 -- --
1994 183.07 30.40 13.01 9.71 -- --
1995 240.03 42.62 14.31 13.12 $10.59 $11.01
1996 280.94 48.48 16.71 15.91 11.04 12.18
March 1997 272.31 46.55 17.26 16.27 10.96 12.16
</TABLE>
- ----------
* Hypothetical Unit Values are shown in italics.
(a) For periods after December 1, 1995, Unit Values reflect the actual
performance of Separate Account No. 200, for periods prior to such date
Unit Values reflect the share values of the MFS Emerging Growth Fund
Class A shares since September 13, 1993, when those shares were first
offered for sale. From December 31, 1986 to September 13, 1993, the
performance of Class B shares is reflected. The hypothetical
performance shown would have been somewhat higher for the period if
Class A shares had been available.
SAI-19
<PAGE>
- ------------------------------------------------------------------------------
(b) For periods prior to March 2, 1992, Unit Values reflect hypothetical
performance.
(c) For periods prior to February 1, 1994, Unit Values reflect hypothetical
performance.
THE REAL ESTATE FUND. The Real Estate Fund Unit Value was established at
$10.00 on August 29, 1986, the date the Real Estate Fund began operations.
Set forth below are Unit Values for the Real Estate Fund, computed to the
nearest cent on the last business day of the periods specified.
UNIT VALUES OF THE REAL ESTATE FUND
LAST BUSINESS
DAY OF UNIT VALUE*
- --------------- -------------
1987 10.84
1988 11.37
1989 12.29
1990 12.53
1991 11.44
1992 10.85
1993 10.50
1994 10.88
1995 11.36
1996 11.38
March 1997 11.59
- ----------
(*) Unit Values are the actual Unit Values last determined before the date
shown, which determination normally will have been from five to ten
days after the end of the preceding month. Consequently, the Unit
Values may differ from the Unit Values presented in Condensed Financial
Information in the prospectus.
PRIME PROPERTY FUND. Set forth below are the unit values of Prime Property
Fund, computed to the nearest cent on the last business day of the periods
specified. The value of a Prime Property Fund unit was established at
$1,000.00 on August 20, 1973, the date on which it commenced operations. Unit
values are shown without deduction for investment management fees.
UNIT VALUES OF PRIME PROPERTY FUND
LAST BUSINESS
DAY OF UNIT VALUE
- --------------- ------------
1987 $4,848.46
1988 5,260.89
1989 5,765.73
1990 5,786.40
1991 5,367.19
1992 5,177.99
1993 5,287.69
1994 5,643.72
1995 5,622.21
1996 6,218.96
SAI-20
<PAGE>
- ------------------------------------------------------------------------------
GROWTH EQUITY FUND TRANSACTIONS
The Growth Equity Fund is charged for securities brokers' commissions,
transfer taxes and other fees relating to securities transactions.
Transactions in equity securities for a Fund are executed primarily through
brokers that receive a commission paid by the Fund. The brokers are selected
by Alliance Capital Management L.P. ("Alliance") and Equitable Life. For
1996, 1995 and 1994, the Growth Equity Fund paid $5,682,578, $6,044,623 and
$4,738,796, respectively, in brokerage commissions.
Alliance and Equitable Life seek to obtain the best price and execution of
all orders placed for the portfolios of the funds, considering all the
circumstances. If transactions are executed in the over-the-counter market,
they will deal with the principal market makers, unless more favorable prices
or better execution is otherwise obtainable. There are occasions on which
portfolio transactions for the Funds may be executed as part of concurrent
authorizations to purchase or sell the same security for certain other
accounts or clients advised by Alliance and Equitable Life. These concurrent
authorizations potentially can be either advantageous or disadvantageous to
the Funds. When the concurrent authorizations occur, the objective is to
allocate the executions among the Funds and the other accounts in a fair
manner.
We also consider the amount and quality of securities research services
provided by a broker. Typical research services include general economic
information and analyses and specific information on and analyses of
companies, industries and markets. Factors in evaluating research services
include the diversity of sources used by the broker and the broker's
experience, analytical ability, and professional stature. The receipt of
research services from brokers tends to reduce our expenses in managing the
Funds. This is taken into account when setting the expense charges.
Brokers who provide research services may charge somewhat higher commissions
than those who do not. However, we will select only brokers whose commissions
we believe are reasonable in all the circumstances. Of the brokerage
commissions paid by the Growth Equity Fund during 1996, $5,463,647 was paid
to brokers providing research services on transactions of $3,287,148,404.
We periodically evaluate the services provided by brokers and prepare
internal proposals for allocating among those various brokers business for
all the accounts we manage or advise. That evaluation involves consideration
of the overall capacity of the broker to execute transactions, its financial
condition, its past performance and the value of research services provided
by the broker in servicing the various accounts advised or managed by us. We
have no binding agreements with any firm as to the amount of brokerage
business which the firm may expect to receive for research services or
otherwise. There may, however, be understandings with certain firms that we
will continue to receive services from such firms only if such firms are
allocated a certain amount of brokerage business. We may try to allocate such
amounts of business to such firms to the extent possible in accordance with
the policies described above.
Research information obtained by us may be used in servicing all accounts
under our management, including our general account. Similarly, not all
research provided by a broker or dealer with which the Funds transact
business will necessarily be used in connection with those Funds.
When making securities transactions for Funds that do not involve paying a
brokerage commission (such as the purchase of short-term debt securities), we
seek to obtain prompt execution in an effective manner at the best price.
Subject to this general objective, we may give orders to dealers or
underwriters who provide investment research. None of the Funds will pay a
higher price, however, and the fact that we may benefit from such research is
not considered in setting the expense charges.
In addition to using brokers and dealers to execute portfolio securities
transactions for accounts we manage, we may enter into other types of
business transactions with brokers or dealers. These other transactions will
be unrelated to allocation of the Funds' portfolio transactions.
SAI-21
<PAGE>
- ------------------------------------------------------------------------------
PRIME PROPERTY FUND TRANSACTIONS
Prime Property Fund is charged separately for fees paid to independent
property managers, outside legal expenses, operating expenses, real estate
taxes and insurance premiums. In addition, Prime Property Fund reimburses
Equitable Life for certain direct expenses and pays property management and
leasing fees associated with Equitable Life's management of some properties
held in Prime Property Fund.
INVESTMENT MANAGEMENT FEE
The table below shows the amount we received under the investment management
fee under the Program during each of the last three years. These figures
include charges for financial accounting. See Deductions and Charges in the
prospectus. We no longer receive management fees for the Aggressive Equity,
ADA Foreign and Equity Index Funds.
<TABLE>
<CAPTION>
FUND 1996 1995 1994
- ------------------ ---------- ---------- ----------
<S> <C> <C> <C>
Growth Equity...... $852,622 $585,663 $632,720
Aggressive Equity . -- 193,600 209,181
ADA Foreign........ -- -- 40,815
Equity Index
Fund*............. -- -- --
Real Estate........ 42,470 41,887 39,344
</TABLE>
- ------------
* The Equity Index Fund became available on February 1, 1994. In 1994, we
received $788 in financial accounting fees for this Fund.
UNDERWRITER
EQ Financial Consultants, Inc. ("EQ Financial"), a wholly-owned subsidiary of
Equitable Life, may be deemed to be the principal underwriter of separate
account units under the group annuity contract. EQ Financial is registered
with the SEC as a broker-dealer under the 1934 Act and is a member of the
National Association of Securities Dealers, Inc. EQ Financial's principal
business address is 1755 Broadway, New York, NY 10019. The offering of the
units under the contract is continuous. No underwriting commissions have been
paid during any of the last three fiscal years with respect to units of
interest under the contract. See Deductions and Charges in the prospectus.
SAI-22
<PAGE>
- ------------------------------------------------------------------------------
OUR MANAGEMENT
Equitable Life is managed by a Board of Directors which is elected by its
shareholders. Its directors and certain of its executive officers and their
principal occupations are as follows:
<TABLE>
<CAPTION>
DIRECTORS
NAME PRINCIPAL OCCUPATION
- ----------------------------- ------------------------------------------------------------------------
<S> <C>
Claude Bebear Chairman of the Executive Board, AXA-UAP
Christopher Brocksom Retired Chief Executive Officer, AXA-UAP Equity & Law Life Assurance
Society PLC
Francoise Colloc'h Senior Executive Vice President, Human Resources and Communications,
AXA-UAP
Henri de Castries Senior Executive Vice President, Financial Services and Life Insurance
Activities, AXA-UAP
Joseph L. Dionne Chairman and Chief Executive Officer, The McGraw-Hill Companies
William T. Esrey Chairman and Chief Executive Officer, Sprint Corporation
Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone Poulenc, S.A.
Norman C. Francis President, Xavier University of Louisiana
Donald J. Greene Counselor-at-Law, Partner, Le Boeuf, Lamb, Greene & MacRae
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 Speciality Markets Group of CPC International, Inc.
W. Edwin Jarmain President, Jarmain Group Inc.
G. Donald Johnston, Jr. Retired Chairman and Chief Executive Officer, JWT Group, Inc.
Winthrop Knowlton Chairman, Knowlton Brothers, Inc.
Arthur L. Liman Counselor-at-Law, Partner, Paul, Weiss, Rifkind, Wharton & Garrison
George T. Lowy Counselor-at-Law, Partner, Cravath, Swaine & Moore
Didier Pineau-Valencienne Chairman and Chief Executive Officer, Schneider, S.A.
George J. Sella, Jr. Retired Chairman and Chief Executive Officer, American Cyanamid Company
Dave H. Williams Chairman and Chief Executive Officer, Alliance Capital Management, L.P.
</TABLE>
SAI-23
<PAGE>
- ------------------------------------------------------------------------------
Unless otherwise indicated, the following persons have been involved in the
management of Equitable Life in various executive positions during the last
five years.
<TABLE>
<CAPTION>
OFFICER-DIRECTORS
NAME PRINCIPAL OCCUPATION
- ----------------------- -----------------------------------------------------------------
<S> <C>
William T. McCaffrey Senior Executive Vice President and Chief Operating Officer
Joseph J. Melone Director, President and Chief Executive Officer, The Equitable
Companies Incorporated, Chairman, Chief Executive Officer and
President, Equitable Life
</TABLE>
<TABLE>
<CAPTION>
OTHER OFFICERS*
NAME PRINCIPAL OCCUPATION
- ---------------------- -------------------------------------------------------------------------
<S> <C>
Stanley B. Tulin Senior Executive Vice President and Chief Financial Officer; prior
thereto, Chairman, Insurance Consulting and Actuarial Practice, Coopers &
Lybrand
Robert E. Garber Executive Vice President and General Counsel
Peter D. Noris Executive Vice President and Chief Investment Officer. Prior to May 1995,
Vice President/Manager, Insurance Companies Investment Strategies Group,
Salomon Brothers, Inc. Prior to November 1992, as Principal, Fixed Income
Insurance Group, Morgan Stanley & Company
Jose Suquet Executive Vice President and Chief Agency Officer
Gordon G. Dinsmore Senior Vice President and Chief Valuation Actuary
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
</TABLE>
- ------------
* Current positions listed are with Equitable Life unless otherwise
specified.
SAI-24
<PAGE>
- ------------------------------------------------------------------------------
FINANCIAL STATEMENTS
The financial statements of Equitable Life included in this Statement of
Additional Information should be considered only as bearing upon the ability
of Equitable Life to meet its obligations under the group annuity contract.
They should not be considered as bearing upon the investment experience of
the Funds. The financial statements of Separate Account Nos. 4 (Pooled), 30
(Pooled), 191 and 200 reflect applicable fees, charges and other expenses
under the Program as in effect during the periods covered and they also
reflect the charges against the accounts made in accordance with the terms of
all other contracts participating in the respective separate accounts. The
financial statements of Separate Account No. 8 (Prime Property Fund) reflect
charges against the account made in accordance with the terms of all other
contracts participating in the account; there are no Program fees charged
against Separate Account No. 8.
<TABLE>
<CAPTION>
<S> <C>
SEPARATE ACCOUNT NO. 4 (POOLED):
Reports of Independent Accountants ............................................................... SAI-26
Separate Account No. 4 (Pooled)(The Growth Equity Fund):
Statement of Assets and Liabilities, December 31, 1996 ........................................... SAI-27
Statements of Operations and Changes in Net Assets for the Years Ended December 31, 1996 and 1995 SAI-28
Portfolio of Investments, December 31, 1996 ...................................................... SAI-29
Notes to Financial Statements .................................................................... SAI-34
SEPARATE ACCOUNT NOS. 191 AND 200:
Report of Independent Accountants ................................................................ SAI-37
Separate Account No. 191 (The ADA Foreign Fund):
Statement of Assets and Liabilities, December 31, 1996 ........................................... SAI-38
Statements of Operations and Changes in Net Assets for the Years Ended December 31, 1996 and 1995 SAI-39
Separate Account No. 200 (The Aggressive Equity Fund):
Statement of Assets and Liabilities, December 31, 1996............................................ SAI-40
Statement of Operations and Changes in Net Assets, for the Years Ended December 31, 1996 and 1995 SAI-41
Separate Account Nos. 191 and 200:
Notes to Financial Statements..................................................................... SAI-42
SEPARATE ACCOUNT NO. 30 (POOLED)(THE REAL ESTATE FUND):
Report of Independent Accountants ................................................................ SAI-44
Statements of Assets and Liabilities, December 31, 1996 and 1995 ................................. SAI-45
Statements of Operations and Changes in Net Assets for the Years Ended December 31, 1996 and 1995 SAI-46
Statements of Cash Flows for the Years Ended December 31, 1996 and 1995 .......................... SAI-47
Statement of Investments and Net Assets, December 31, 1996 ....................................... SAI-48
Notes to Financial Statements .................................................................... SAI-49
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND):
Report of Independent Accountants ................................................................ SAI-51
Statement of Independent Appraisers............................................................... SAI-52
Statements of Assets and Liabilities, December 31, 1996 and 1995.................................. SAI-53
Statements of Operations and Changes in Net Assets for the Years Ended December 31, 1996 and 1995 SAI-54
Statements of Cash Flows for the Years Ended December 31, 1996 and 1995 .......................... SAI-55
Notes to Financial Statements .................................................................... SAI-56
Schedule X: Supplementary Income Statement Information, December 31, 1996 and 1995 .............. SAI-65
Schedule XII: Mortgage Loans Receivable on Real Estate, December 31, 1996 and 1995 .............. SAI-66
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES:
Report of Independent Accountants ................................................................ F-1
Consolidated Balance Sheets, 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
</TABLE>
SAI-25
<PAGE>
- ------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States and the
Participants in the American Dental Association Members Retirement Program
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and changes in net assets present fairly, in all material
respects, the financial position of Separate Account No. 4 of The Equitable
Life Assurance Society of the United States ("Equitable Life") at December
31, 1996 and its results of operations and changes in net assets for each of
the two years in the period then ended, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
Equitable Life's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at December 31, 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
SAI-26
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED) (THE GROWTH EQUITY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------
ASSETS:
Investments (Notes 2 and 3):
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.
SAI-27
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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 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.
SAI-28
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------- ------------ ---------------
NUMBER OF VALUE
SHARES (NOTE 3)
- ---------------------------------------------------------- ------------ ---------------
<S> <C> <C>
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
---------------
SAI-29
<PAGE>
- -------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- ---------------------------------------------------------- ------------ ---------------
NUMBER OF VALUE
SHARES (NOTE 3)
- ---------------------------------------------------------- ------------ ---------------
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
---------------
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
---------------
SAI-30
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- ---------------------------------------------------------- ------------ ---------------
NUMBER OF VALUE
SHARES (NOTE 3)
- ---------------------------------------------------------- ------------ ---------------
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
---------------
OIL--SUPPLIES & CONSTRUCTION (8.8%)
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
---------------
SAI-31
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
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 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
---------------
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>
SAI-32
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Concluded)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------ ------------ --------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- ------------------------------------------------------------------------ ------------ --------------
<S> <C> <C>
LONG-TERM DEBT SECURITIES:
TECHNOLOGY
TELECOMMUNICATIONS (0.1%)
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.
SAI-33
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
1. Separate Account No. 4 (Pooled) (the Growth Equity Fund) (the Fund) of
The Equitable Life Assurance Society of the United States (Equitable Life), a
wholly-owned subsidiary of The Equitable Companies Incorporated, was
established in conformity with the New York State Insurance Law. Pursuant to
such law, to the extent provided in the applicable contracts, the net assets
in the Fund 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 Statements of
Assets and Liabilities in Separate Account No. 4 may be transferred to
Equitable Life's General Account.
Interests of retirement and investment plans for Equitable Life employees,
managers, and agents in Separate Account No. 4 aggregated $288,921,270
(11.8%), at December 31, 1996 and $246,531,777 (11.6%), at December 31, 1995,
of the net assets in the Fund.
Equitable Life is the investment manager for the Fund. Alliance Capital
Management L.P. (Alliance) serves as the investment adviser to Equitable Life
with respect to the management of the Fund. Alliance is a publicly-traded
limited partnership which is indirectly majority-owned by Equitable Life.
Equitable Life and Alliance seek to obtain the best price and execution of
all orders placed for the Fund considering all circumstances. In addition to
using brokers and dealers to execute portfolio security transactions for
accounts under their management, Equitable Life and Alliance may also enter
into other types of business and securities transactions with brokers and
dealers, which will be unrelated to allocation of the Fund's portfolio
transactions.
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. Security transactions are recorded on the trade date. Amortized cost of
debt securities consists of cost adjusted, where applicable, for amortization
of premium or accretion of discount. Dividend income is recorded on the
ex-dividend date; interest income (including amortization of premium and
discount on securities using the effective yield method) is accrued daily.
Realized gains and losses on the sale of investments are computed on the
basis of the identified cost of the related investments sold.
Transactions denominated in foreign currencies are recorded at the rate
prevailing at the date of such transactions. Asset and liability accounts
that are denominated in a foreign currency are adjusted to reflect the
current exchange rate at the end of the period. Transaction gains or losses
resulting from changes in the exchange rate during the reporting period or
upon settlement of the foreign currency transactions are reflected under
"Realized and Unrealized Gain (Loss) on Investments" in the Statements of
Operations and Changes in Net Assets.
SAI-34
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
Equitable Life's internal short-term investment account, Separate Account
No. 2A, was established to provide a more flexible and efficient vehicle to
combine and invest temporary cash positions of certain eligible accounts
(Participating Funds) under Equitable Life's management. Separate Account No.
2A invests in debt securities maturing in sixty days or less from the date of
acquisition. At December 31, 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, 5.3%-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. Separate Account No. 2A is valued daily at amortized cost, which
approximates market value.
For 1996 and 1995, investment security transactions, excluding short-term
debt securities, were as follows:
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPARATE ACCOUNT NO. 4
------------------------------
COST OF NET PROCEEDS
PURCHASES OF SALES
- ----------------------------------------------- -------------- --------------
<S> <C> <C>
Stocks and long-term corporate debt securities:
1996.......................................... $2,439,864,229 $2,487,456,851
1995.......................................... 2,037,876,834 2,082,648,235
U.S. Government obligations:
1996.......................................... -- --
1995.......................................... -- --
</TABLE>
----------------------------------------------------------------------------
3. Investment securities are valued as follows:
Stocks listed on national securities exchanges and certain
over-the-counter issues traded on the National Association of Securities
Dealers, Inc. Automated Quotation (NASDAQ) national market system are valued
at the last sale price, or, if no sale, at the latest available bid price.
Foreign securities not traded directly, or in American Depository Receipt
(ADR) form in the United States, are valued at the last sale price in the
local currency on an exchange in the country of origin. Foreign currency is
converted into its U.S. dollar equivalent at current exchange rates.
United States Treasury securities and other obligations issued or
guaranteed by the United States Government, its agencies or instrumentalities
are valued at representative quoted prices.
SAI-35
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Concluded)
Long-term publicly traded corporate bonds are valued at prices obtained
from a bond pricing service of a major dealer in bonds when such prices are
available; however, in circumstances where Equitable Life and Alliance deem
it appropriate to do so, an over-the-counter or exchange quotation may be
used.
Convertible preferred stocks listed on national securities exchanges are
valued at their last sale price or, if there is no sale, at the latest
available bid price.
Convertible bonds and unlisted convertible preferred stocks are valued at
bid prices obtained from one or more major dealers in such securities; where
there is a discrepancy between dealers, values may be adjusted based on
recent premium spreads to the underlying common stock.
Other assets that do not have a readily available market price are valued
at fair value as determined in good faith by Equitable Life's investment
officers.
Separate Account No. 2A is valued daily at amortized cost, which
approximates market value. Short-term debt securities purchased directly by
the Funds which mature in 60 days or less are valued at amortized cost.
Short-term debt securities which mature in more than 60 days are valued at
representative quoted prices.
4. Charges and fees are deducted in accordance with the terms of the
various contracts which participate in the Fund. With respect to the American
Dental Association Members Retirement Program, these expenses consist of
investment management and accounting fees, program expense charge, direct
expenses and record maintenance and report fee. These charges and fees are
paid to Equitable Life by the Fund and are recorded as expenses in the
accompanying Statements of Operations and Changes in Net Assets.
5. No Federal income tax based on net income or realized and unrealized
capital gains was applicable to contracts participating in the Fund for the
two years ended December 31, 1996, by reason of applicable provisions of the
Internal Revenue Code and no Federal income tax payable by Equitable Life for
such years will affect such contracts. Accordingly, no Federal income tax
provision is required.
SAI-36
<PAGE>
- -----------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States and the
Participants in the American Dental Association Members Retirement Program
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and changes in net assets present fairly, in
all material respects, the financial position of Separate Account Nos. 191
and 200 of The Equitable Life Assurance Society of the United States
("Equitable Life") at December 31, 1996 and each of their results of
operations and changes in net assets for the periods indicated, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of Equitable Life's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of shares owned in the underlying mutual funds with the transfer
agent at December 31, 1996, 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
SAI-37
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 191 (THE ADA FOREIGN FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in shares of The Templeton Foreign Fund-at value (cost: $77,899,868)(Notes 2 and 5) $84,256,587
Receivable from Equitable Life's General Account ................................................ 202,901
- ------------------------------------------------------------------------------------------------ -------------
Total assets ................................................................................... 84,459,488
LIABILITIES-Accrued expenses..................................................................... 67,839
- ------------------------------------------------------------------------------------------------ -------------
NET ASSETS....................................................................................... $84,391,649
================================================================================================ =============
</TABLE>
See Notes to Financial Statements.
SAI-38
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 191
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995
- ------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends from The Templeton Foreign Fund ...................................... $ 2,425,135 $ 2,301,415
Interest ....................................................................... 52,105 174,395
- ------------------------------------------------------------------------------- -------------- --------------
Total .......................................................................... 2,477,240 2,475,810
EXPENSES (NOTE 3) .............................................................. (623,729) (598,289)
- ------------------------------------------------------------------------------- -------------- --------------
NET INVESTMENT INCOME .......................................................... 1,853,511 1,877,521
- ------------------------------------------------------------------------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from share transactions .......................................... 1,248,024 2,088,140
Realized gain distribution from The Templeton Foreign Fund ..................... 1,145,990 2,017,814
- ------------------------------------------------------------------------------- -------------- --------------
Net realized gain .............................................................. 2,394,014 4,105,954
- ------------------------------------------------------------------------------- -------------- --------------
Unrealized appreciation (depreciation) of investments:
Beginning of period ........................................................... (1,390,175) (2,127,462)
End of period ................................................................. 6,356,719 (1,390,175)
- ------------------------------------------------------------------------------- -------------- --------------
Change in unrealized appreciation/depreciation ................................. 7,746,894 737,287
- ------------------------------------------------------------------------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS ................................ 10,140,908 4,843,241
- ------------------------------------------------------------------------------- -------------- --------------
Increase in net assets attributable to operations .............................. 11,994,419 6,720,762
- ------------------------------------------------------------------------------- -------------- --------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions .................................................................. 27,931,127 22,185,319
Withdrawals .................................................................... (23,762,781) (32,718,398)
- ------------------------------------------------------------------------------- -------------- --------------
Increase (decrease) in net assets attributable to contributions and withdrawals 4,168,346 (10,533,079)
- ------------------------------------------------------------------------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS .............................................. 16,162,765 (3,812,317)
NET ASSETS--BEGINNING OF YEAR .................................................. 68,228,884 72,041,201
- ------------------------------------------------------------------------------- -------------- --------------
NET ASSETS--END OF YEAR ........................................................ $ 84,391,649 $ 68,228,884
=============================================================================== ============== ==============
</TABLE>
See Notes to Financial Statements.
SAI-39
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 200 (THE AGGRESSIVE EQUITY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in shares of the MFS Emerging Growth Fund-at value (cost:
$100,641,350)
(Notes 2 and 5) .................................................................. $108,737,324
- ---------------------------------------------------------------------------------- --------------
LIABILITIES:
Due to Equitable Life's General Account ........................................... 170,849
Accrued expenses .................................................................. 110,248
- ---------------------------------------------------------------------------------- --------------
Total liabilities ................................................................ 281,097
- ---------------------------------------------------------------------------------- --------------
NET ASSETS ........................................................................ $108,456,227
================================================================================== ==============
</TABLE>
See Notes to Financial Statements.
SAI-40
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 200
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 1, 1995*
YEAR ENDED TO
DECEMBER 31, 1996 DECEMBER 31, 1995
- -------------------------------------------------------------------- ----------------- -----------------
FROM OPERATIONS:
<S> <C> <C>
INVESTMENT INCOME (NOTE 2):
Dividends from the MFS Emerging Growth Fund ......................... $ 648,035 $ --
EXPENSES (NOTE 3) ................................................... (884,165) (56,341)
- -------------------------------------------------------------------- ----------------- -----------------
NET INVESTMENT LOSS ................................................. (236,130) (56,341)
- -------------------------------------------------------------------- ----------------- -----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain (loss) from share transactions ........................ 2,098,886 (18,654)
Realized gain distribution from MFS Emerging Growth Fund ............ 646,276 --
- -------------------------------------------------------------------- ----------------- -----------------
Net realized gain (loss) ............................................ 2,745,162 (18,654)
- -------------------------------------------------------------------- ----------------- -----------------
Unrealized appreciation (depreciation) of investments:
Beginning of period ................................................ (197,902) --
End of period ...................................................... 8,095,974 (197,902)
- -------------------------------------------------------------------- ----------------- -----------------
Change in unrealized appreciation/depreciation of investments ...... 8,293,876 (197,902)
- -------------------------------------------------------------------- ----------------- -----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ............. 11,039,038 (216,556)
- -------------------------------------------------------------------- ----------------- -----------------
Increase (decrease) in net assets attributable to operations ....... 10,802,908 (272,897)
- -------------------------------------------------------------------- ----------------- -----------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions ....................................................... 69,080,229 79,148,659
Withdrawals ......................................................... (48,220,348) (2,082,324)
- -------------------------------------------------------------------- ----------------- -----------------
Increase in net assets attributable to contributions and withdrawals 20,859,881 77,066,335
- -------------------------------------------------------------------- ----------------- -----------------
INCREASE IN NET ASSETS .............................................. 31,662,789 76,793,438
NET ASSETS--BEGINNING OF PERIOD ..................................... 76,793,438 --
- -------------------------------------------------------------------- ----------------- -----------------
NET ASSETS--END OF PERIOD ........................................... $108,456,227 $76,793,438
==================================================================== ================= =================
</TABLE>
* Commencement of operations.
See Notes to Financial Statements.
SAI-41
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NOS. 191 AND 200
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
1. Separate Account Nos. 191 (the ADA Foreign Fund) and 200 (the
Aggressive Equity Fund) (the Funds) of The Equitable Life Assurance Society
of the United States (Equitable Life), a wholly-owned subsidiary of The
Equitable Companies Incorporated, were established in conformity with the New
York State Insurance Law. Pursuant to such law, to the extent provided in the
applicable contracts, the net assets in the Funds are not chargeable with
liabilities arising out of any other business of Equitable Life.
Separate Account No. 200 was established as of the opening of business on
December 1, 1995 and is available only to the American Dental Association
Members Retirement Trust and the American Dental Association Members Pooled
Trust for Retirement Plans (Trusts) sponsored by the American Dental
Association (ADA).
Equitable Life is the investment manager for the Funds.
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Separate Account No. 191 invests 100% of its assets in shares of the
Templeton Foreign Fund, a series of Templeton Funds, Inc., which is
registered under the Investment Company Act of 1940 as an open-end management
investment company. The investment manager of the Templeton Foreign Fund is
Templeton Global Advisors Ltd., an indirect wholly-owned subsidiary of
Franklin Resources, Inc. Prior to May 1, 1996, up to 5% of the ADA Foreign
Fund's assets were invested in units of Equitable's Internal short-term
investment account, Separate Account No. 2A.
The Aggressive Equity Fund invests 100% of its assets in Class A shares of
the MFS Emerging Growth Fund, a series of MFS Series Trust II, which was
organized as a Massachusetts business trust and is registered under the 1940
Act as an open-end management investment company. The investment adviser of
the MFS Emerging Growth Fund is Massachusetts Financial Services. Prior to
December 1, 1995, the Aggressive Equity Fund invested in Equitable Life's
Separate Account No. 3 (Pooled).
2. Realized gains and losses on investments include gains and losses on
redemptions of the underlying fund's shares (determined on the identified
cost basis) and capital gain distributions from the underlying funds.
Dividends and realized gain distributions from underlying funds are recorded
on ex-date.
Investments in the Templeton Foreign and MFS Emerging Growth Funds are
valued at the underlying mutual fund's net asset value per share.
3. Charges and fees relating to the Funds are deducted in accordance with
the terms of the contracts issued by Equitable Life to the Trusts. With
respect to the American Dental Association Members Retirement Program, these
expenses consist of program expense charge, direct expenses and record
maintenance and report fee. These charges and fees are paid to Equitable Life
by the Funds and are recorded as expenses in the accompanying Statements of
Operations and Changes in Net Assets.
4. No Federal income tax based on net income or realized and unrealized
capital gains was applicable to contracts participating in the Funds, by
reason of applicable provisions of the Internal Revenue Code and no Federal
income tax payable by Equitable Life will affect such contracts. Accordingly,
no Federal income tax provision is required.
SAI-42
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NOS. 191 AND 200
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Concluded)
5. The Templeton Foreign Fund and MFS Emerging Growth Fund have provided
Equitable Life with the following unaudited information as of December 31,
1996.
The Templeton Foreign Fund had total assets of $11.8 billion and a net
asset value per share of $10.36. Its asset allocation consisted of 70.1% in
common and preferred shares and convertible issues, 25.4% in liquid
investments and 4.5% in fixed income issues. Its five major industry group
concentrations were as follows: Banking (9.0%), Telecommunications (8.5%),
Forest Products and Paper (6.0%), Utilities-Electrical and Gas (5.7%) and
Energy Sources (5.1%). Geographically, the five major country concentrations
were as follows: United Kingdom (7.6%), Hong Kong (6.8%), Spain (6.3%),
Sweden (5.7%) and France (5.3%).
The MFS Emerging Growth Fund had net assets of $6.1 billion and a net
asset value per share of $30.29. Its asset allocation consisted of 99.0% in
common and preferred shares and convertible issues and 1.0% in liquid
investments. Its five major industry group concentrations were as follows:
Computer Software (25.2%), Special Services (11.0%), Gaming and Lodging
(10.9%), Specialty Stores (8.3%) and Health Maintenance Organization (8.0%).
SAI-43
<PAGE>
- -----------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
The Equitable Life Assurance Society of the United States:
In our opinion, the accompanying statements of assets and liabilities, and
the related statements of operations and changes in net assets and of cash
flows present fairly, in all material respects, the financial position of The
Real Estate Fund (Separate Account No. 30) of The Equitable Life Assurance
Society of the United States (the Account) as of December 31, 1996 and 1995,
and the results of its operations and its cash flows for the years then
ended, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Account's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits 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.
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 the 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
Atlanta, Georgia
February 14, 1997
SAI-44
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 30 (THE REAL ESTATE FUND) (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1996 1995
- ----------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
ASSETS:
Investments (Notes 2 and 3):
Participation in Prime Property Fund, at value, equivalent to 1,146 units at
$6,218.96 for 1996 (cost: $5,467,468) and 1,304 units at $5,622.21 for 1995
(cost: $6,427,542).......................................................... $6,862,952 $7,333,914
Participation in Separate Account No. 2A, at amortized cost which
approximates market value, equivalent to 6,318 units at $255.57 for 1996
and 5,659 units at $241.89 for 1995 ........................................ 1,614,735 1,368,746
Cash.......................................................................... 378 167
- ----------------------------------------------------------------------------- ------------ ------------
Total assets................................................................ 8,478,065 8,702,827
- ----------------------------------------------------------------------------- ------------ ------------
LIABILITIES:
Accrued expenses.............................................................. 21,694 19,240
- ----------------------------------------------------------------------------- ------------ ------------
Total liabilities........................................................... 21,694 19,240
- ----------------------------------------------------------------------------- ------------ ------------
NET ASSETS.................................................................... $8,456,371 $8,683,587
============================================================================= ============ ============
</TABLE>
See Notes to Financial Statements.
SAI-45
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 30 (THE REAL ESTATE FUND) (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995
- ---------------------------------------------------------------------------- ------------- -----------
<S> <C> <C>
FROM OPERATIONS:
Investment Income (Note 2):
Interest Income.............................................................. 70,989 52,821
Expenses (Note 4)............................................................ (174,873) (180,455)
- ---------------------------------------------------------------------------- ------------- -----------
Net Investment Loss.......................................................... (103,884) (127,634)
- ---------------------------------------------------------------------------- ------------- -----------
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Realized gain from redemption of Prime Property Fund units................... 239,926 111,388
- ---------------------------------------------------------------------------- ------------- -----------
Unrealized appreciation (depreciation) of Prime Property Fund Units:
January 1................................................................... 906,373 1,035,953
December 31................................................................. 1,395,484 906,373
- ---------------------------------------------------------------------------- ------------- -----------
Unrealized appreciation (depreciation)....................................... 489,111 (129,580)
- ---------------------------------------------------------------------------- ------------- -----------
Net Realized and Unrealized Gain (Loss) on Investments....................... 729,037 (18,192)
- ---------------------------------------------------------------------------- ------------- -----------
Increase (decrease) in net assets attributable to operations................. 625,153 (145,826)
- ---------------------------------------------------------------------------- ------------- -----------
FROM ALLOCATIONS AND WITHDRAWALS:
Allocations.................................................................. 618,156 874,036
Withdrawals.................................................................. (1,470,525) (932,367)
- ---------------------------------------------------------------------------- ------------- -----------
Increase (decrease) in net assets attributable to allocations and
withdrawals................................................................. (852,369) (58,331)
- ---------------------------------------------------------------------------- ------------- -----------
INCREASE (DECREASE) IN NET ASSETS............................................ (227,216) (204,157)
NET ASSETS--JANUARY 1........................................................ 8,683,587 8,887,744
- ---------------------------------------------------------------------------- ------------- -----------
NET ASSETS--DECEMBER 31...................................................... $ 8,456,371 $8,683,587
============================================================================ ============= ===========
</TABLE>
See Notes to Financial Statements.
SAI-46
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 30 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Cash Flows
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995
- --------------------------------------------------------- ------------- ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net investment loss....................................... $ (103,884) $ (127,634)
- --------------------------------------------------------- ------------- ------------
Adjustments to reconcile net investment loss to net cash flow used In
operating activities:
Increase (decrease) in accrued expenses.................. 2,454 6,528
- --------------------------------------------------------- ------------- ------------
Total adjustments........................................ 2,454 6,528
- --------------------------------------------------------- ------------- ------------
Net cash flow used in operating activities............... (101,430) (121,106)
- --------------------------------------------------------- ------------- ------------
INVESTING ACTIVITIES:
Net proceeds from redemption of Prime Property Fund
units.................................................... 1,200,000 650,000
- --------------------------------------------------------- ------------- ------------
Net cash flow provided by investing activities .......... 1,200,000 650,000
- --------------------------------------------------------- ------------- ------------
FINANCING ACTIVITIES:
Allocations.............................................. 618,155 874,036
Withdrawals.............................................. (1,470,525) (932,367)
- --------------------------------------------------------- ------------- ------------
Net cash flow used in financing activities............... (852,370) (58,331)
- --------------------------------------------------------- ------------- ------------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM
INVESTMENTS.............................................. 246,200 470,563
CASH AND SHORT-TERM INVESTMENTS -JANUARY 1................ 1,368,913 898,350
- --------------------------------------------------------- ------------- ------------
CASH AND SHORT-TERM INVESTMENTS -DECEMBER 31 ............. $ 1,615,113 $1,368,913
========================================================= ============= ============
</TABLE>
Sea Notes to Financial Statements.
SAI-47
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 30 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Investments and Net Assets
December 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INVESTMENTS (NOTES 2 AND 3):
- ------------------------------------------------------------------------------------------------------ ------------
REAL ESTATE INVESTMENTS:
Participation in Prime Property Fund at value, equivalent to 1,146 units at $6,218.96
(cost: $5,467,468)................................................................................... $6,862,952
SHORT-TERM INVESTMENTS:
Participation in Separate Account No. 2A, at amortized cost which approximates market value,
equivalent to 6,318 units at $255.57................................................................. 1,614,735
- ------------------------------------------------------------------------------------------------------ ------------
Total Investments...................................................................................... 8,477,687
- ------------------------------------------------------------------------------------------------------ ------------
Cash Less Liabilities.................................................................................. (21,316)
- ------------------------------------------------------------------------------------------------------ ------------
NET ASSETS............................................................................................. $8,456,371
====================================================================================================== ============
</TABLE>
See Notes to Financial Statements.
SAI-48
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 30 (POOLED) (THE REAL ESTATE FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
1. Separate Account No. 30 (the Account) was established as a separate
account of The Equitable Life Assurance Society of the United States
(Equitable), in conformity with the New York State Insurance Law. Pursuant to
such law, the net assets of the Account are not chargeable with liabilities
arising out of any other business of Equitable. Equitable is the investment
manager for the Account. In managing the Account, Equitable uses the services
of its wholly-owned subsidiary, Equitable Real Estate Investment Management,
Inc. (Management).
2. The Account participates primarily in Equitable's Prime Property Fund
by purchasing or redeeming units on the date Prime Property Fund units are
valued. Prime Property Fund invests in real estate as discussed in the
accompanying financial statements of Prime Property Fund.
The change in value of Prime Property Fund units owned by the Account is
recorded as unrealized appreciation (depreciation). Prime Property Fund's
unit value changes as a result of both investment income and increases and
decreases in investment appreciation. In determining realized gains or losses
from the redemption of Prime Property Fund units, the cost of units sold is
recorded on a first-in, first-out basis.
The Account participates in Equitable's Separate Account No. 2A by
purchasing or redeeming units, depending on the Account's excess cash
availability or need for cash to meet Account liabilities or withdrawals. The
investments of Separate Account No. 2A consist of debt securities which
mature or can be liquidated in sixty days or less from the date of
acquisition. Short-term debt securities may also be purchased directly by the
Account. Interest income is recorded when earned and expenses are recognized
when incurred.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income,
expenses, and unrealized gains (losses) during the reporting period. Actual
results could differ from those estimates.
3. Investments are valued as follows:
The Account's participation in Prime Property Fund is valued as of the
last business day of the month based upon the number of units held and the
unit value of Prime Property Fund. Investments held by Prime Property Fund
are valued as disclosed in Note B2 of the financial statements of Prime
Property Fund which are included in this Statement of Additional Information.
Separate Account No. 2A is primarily valued at amortized cost which
approximates market value.
4. Expense charges are made in accordance with the terms of the contracts
participating in the Account.
5. In the Statements of Cash Flows, the Account considers short-term
investments to be cash equivalents.
6. No federal income tax based on net investment income or realized and
unrealized gains was applicable to contracts participating in the Account by
reason of applicable sections of the Internal Revenue Code, and no federal
income tax payable by Equitable will affect the contracts.
7. The ability of a client to withdraw funds from the Account is subject
to the availability of cash arising from net investment income, allocations
and the redemption of units in Prime Property Fund. To the extent that
withdrawal requests exceed such available cash, Management has uniform
procedures to provide for cash payments. As of December 31, 1996, the Real
Estate Fund is fulfilling withdrawal requests on a current basis.
SAI-49
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 30 (POOLED) (THE REAL ESTATE FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Concluded)
8. These financial statements should be read in conjunction with the
financial statements of Prime Property Fund, which are included in this
Statement of Additional Information.
SAI-50
<PAGE>
- -----------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
The Equitable Life Assurance Society of the United States:
In our opinion, the accompanying statements of assets and liabilities, and
the related statements of operations and changes in net assets and of cash
flows present fairly, in all material respects, the financial position of
Prime Property Fund of The Equitable Life Assurance Society of the United
States (the Account) at December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Account's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits 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.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary financial
information (consisting of Schedule X and Schedule XII) of the Account for
the years ended December 31, 1996 and 1995 included in the Statement of
Additional Information, is presented for purposes of additional analysis and
is not a required part of the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is fairly stated in all
material respects, in relation to the basic financial statements taken as a
whole.
Price Waterhouse LLP
Atlanta, Georgia
February 14, 1997
SAI-51
<PAGE>
- -----------------------------------------------------------------------------
STATEMENT OF INDEPENDENT APPRAISERS
Equitable Real Estate staff appraisers and independent fee appraisers make
quarterly market value estimates of all properties in Prime Property Fund.
During 1996, those appraisals completed by Equitable Real Estate staff were
independently reviewed by L.W. Ellwood Company, Arthur Andersen & Co. and
Landauer Real Estate Counselors. Each company independently reviewed separate
portions of the Equitable valuations so that by year end all properties were
analyzed once by non-Equitable appraisers. Based on our review and analysis,
we concur with the value estimates on properties prepared by Equitable Real
Estate staff as of the calendar quarter during which we conducted our review.
Our appraisal review is part of a comprehensive three-year program which
analyzes Equitable Real Estate staff appraisals including our thorough market
value comparisons and physical inspections of one-third of the properties
during the year. At the end of the three-year cycle, we have subjected all
properties to on-site review.
We have had the full cooperation of Equitable Real Estate with complete
and unrestricted access to all underlying documents including leases,
operation agreements, budgets, and partnership joint venture agreements. We
have, where in our opinion deemed appropriate, independently researched the
market for additional data and performed supplemental analysis to complete
our review.
Our review has been made in conformity with and subject to the Code of
Professional Ethics and Standards of Practice of the Appraisal Institute.
L.W. Ellwood Company (a division of Coopers & Lybrand)
Arthur Andersen & Co.
Landauer Real Estate Counselors
December 31, 1996
SAI-52
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1996 1995
- ----------------------------------------------------------- -------------- --------------
<S> <C> <C>
ASSETS:
Real estate investments at value (Notes B and C):
Properties.................................................. $2,998,070,000 $2,872,220,000
Partnership equities and related mortgage loans receivable . 283,346,967 321,425,207
Mortgage loans receivable................................... 205,700,000 204,700,000
Investment in REIT stock.................................... 28,893,678 --
- ----------------------------------------------------------- -------------- --------------
Total real estate investments at value...................... 3,516,010,645 3,398,345,207
- ----------------------------------------------------------- -------------- --------------
Cash and short-term investments (Notes B and C)............. 159,985,431 78,409,583
Accrued investment income................................... 67,584,995 78,412,412
Prepaid real estate expenses and taxes...................... 5,755,167 6,559,659
Other assets................................................ 11,728,357 12,431,297
- ----------------------------------------------------------- -------------- --------------
Total assets................................................ 3,761,064,595 3,574,158,158
- ----------------------------------------------------------- -------------- --------------
LIABILITIES:
Mortgage loans payable (Note E)............................. 662,823,782 528,809,699
Accrued real estate expenses and taxes...................... 58,161,768 55,529,792
Accrued asset management fees and other liabilities (Note
I).......................................................... 25,754,691 21,494,899
Accrued capital expenditures................................ 29,323,787 20,388,611
- ----------------------------------------------------------- -------------- --------------
Total liabilities........................................... 776,064,028 626,223,001
- ----------------------------------------------------------- -------------- --------------
NET ASSETS.................................................. $2,985,000,567 $2,947,935,157
=========================================================== ============== ==============
</TABLE>
SAI-53
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995
- -------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
INVESTMENT INCOME (NOTES B, C AND D):
Rental income from real estate properties.................................. $ 447,804,985 $ 443,539,829
Income from partnership operations and interest from related mortgage
loans receivable.......................................................... 34,050,731 24,671,070
Interest from mortgage loans receivable.................................... 15,452,692 15,941,696
Interest from short-term investments....................................... 6,747,699 11,147,574
Other...................................................................... 283,384 1,517,993
- -------------------------------------------------------------------------- -------------- --------------
Total...................................................................... 504,339,491 496,818,162
- -------------------------------------------------------------------------- -------------- --------------
EXPENSES (NOTES B AND D):
Real estate operating expenses............................................. 143,651,347 139,640,785
Real estate taxes.......................................................... 47,359,675 55,808,774
Interest on mortgage loans payable (Note E)................................ 37,193,800 35,593,854
Asset management fees (Note I)............................................. 29,536,123 31,427,742
- -------------------------------------------------------------------------- -------------- --------------
Total...................................................................... 257,740,945 262,471,155
- -------------------------------------------------------------------------- -------------- --------------
NET INVESTMENT INCOME...................................................... 246,598,546 234,347,007
- -------------------------------------------------------------------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE B):
Realized gain (loss) from sale of investments:
Net proceeds from sale of investments..................................... 132,942,804 15,730,241
Less: Cost of investments sold............................................ 154,961,171 18,860,705
Less: Realization of unrealized gain (loss) on investments sold .......... (27,584,850) (3,767,906)
- -------------------------------------------------------------------------- -------------- --------------
Net realized gain (loss) from sale of investments......................... 5,566,483 637,442
- -------------------------------------------------------------------------- -------------- --------------
Change in unrealized gain (loss).......................................... 21,865,820 (277,778,822)
- -------------------------------------------------------------------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS..................... 27,432,303 (277,141,380)
- -------------------------------------------------------------------------- -------------- --------------
Increase (decrease) in net assets attributable to investment activities .. 274,030,849 (42,794,373)
- -------------------------------------------------------------------------- -------------- --------------
FROM CLIENT TRANSACTIONS:
Allocations................................................................ 13,034,561 281,104,520
Withdrawals (Note G)....................................................... (250,000,000) (345,950,249)
- -------------------------------------------------------------------------- -------------- --------------
Increase (decrease) in net assets attributable to client transactions .... (236,965,439) (64,845,729)
- -------------------------------------------------------------------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS.......................................... 37,065,410 (107,640,102)
NET ASSETS--JANUARY 1...................................................... 2,947,935,157 3,055,575,259
- -------------------------------------------------------------------------- -------------- --------------
NET ASSETS--DECEMBER 31.................................................... $2,985,000,567 $2,947,935,157
========================================================================== ============== ==============
Unit Value................................................................. $ 6,218.96 $ 5,622.21
Units Outstanding.......................................................... 479,981 524,336
- -------------------------------------------------------------------------- -------------- --------------
</TABLE>
SAI-54
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Cash Flows
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995
- ----------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net investment income......................................................... $ 246,598,546 $ 234,347,007
---------------------------------------------------------------------------- --------------- ---------------
Adjustments to reconcile net investment income to net cash flow provided by
operating activities:
Changes in assets--(increase) decrease:
Accrued investment income.................................................. 4,085,959 (2,748,532)
Prepaid real estate expenses and taxes..................................... 804,492 79,218
Other assets............................................................... 221,086 3,250,279
Changes in liabilities--increase (decrease):
Accrued real estate expenses and taxes..................................... 2,847,555 2,361,760
Accrued asset management fees and other liabilities........................ 4,271,856 2,591,007
---------------------------------------------------------------------------- --------------- ---------------
Total adjustments............................................................ 12,230,948 5,533,732
---------------------------------------------------------------------------- --------------- ---------------
Net Cash Flow Provided by Operating Activities............................... 258,829,494 239,880,739
---------------------------------------------------------------------------- --------------- ---------------
INVESTING ACTIVITIES:
Acquisitions of real estate properties........................................ (45,629,951) (69,581,894)
Additions to real estate properties........................................... (116,554,435) (77,829,327)
Proceeds from real estate properties sold..................................... 93,261,636 15,571,583
Acquisition of mortgage loans receivable...................................... (5,758,608) (28,250,000)
Repayments of mortgage loans receivable....................................... 7,162,038 4,653,293
Proceeds from partnership equities sold and repayments of loans receivable
related to partnership equities.............................................. 19,663,944 8,041,534
Contributions to partnership equities and advances on related loans
receivable.................................................................... (20,706,613) (112,323,092)
Distributions from partnerships less than net cash provided by partnership
operating activities......................................................... (6,222,155) (8,709,865)
---------------------------------------------------------------------------- --------------- ---------------
Net Cash Flow Used in Investing Activities.................................. (74,784,144) (268,427,768)
---------------------------------------------------------------------------- --------------- ---------------
FINANCING ACTIVITIES:
Increase in mortgage loans payable............................................ 135,000,000 110,000,000
Principal payments on mortgage loans payable.................................. (985,917) (3,398,206)
Allocations................................................................... 13,516,415 281,052,568
Withdrawals................................................................... (250,000,000) (345,950,249)
---------------------------------------------------------------------------- --------------- ---------------
Net Cash Flow Provided by (Used in) Financing Activities.................... (102,469,502) 41,704,113
---------------------------------------------------------------------------- --------------- ---------------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS.................... 81,575,848 13,157,084
CASH AND SHORT-TERM INVESTMENTS AT JANUARY 1.................................. 78,409,583 65,252,499
---------------------------------------------------------------------------- --------------- ---------------
CASH AND SHORT-TERM INVESTMENTS AT DECEMBER 31................................ $ 159,985,431 $ 78,409,583
============================================================================ =============== ===============
</TABLE>
SAI-55
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
A: GENERAL
Prime Property Fund (the Account) was established as a separate account of
The Equitable Life Assurance Society of the United States (Equitable) in
conformity with the New York State Insurance Law for the purpose of
acquiring real estate and real estate related investments. Pursuant to
such law, the net assets in the Account are not chargeable with
liabilities arising out of any other business of Equitable. Equitable acts
as investment manager for the Account. In managing the Account, Equitable
uses the services of its wholly-owned subsidiary, Equitable Real Estate
Investment Management, Inc. (Management).
B: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Investment Transactions
Real estate property acquisitions are recorded as of the date of
closing. Mortgage and construction loans receivable and capital
contributions to partnership equities are recorded as of the date funds
are advanced. Purchase money mortgages and common stock investments,
acquired as consideration received for real estate sold, are recorded as
of the closing date of the sales transaction.
Expenditures which extend economic life or represent additional capital
investments benefiting future periods (including tenant improvements and
leasing commissions) are capitalized. For properties under development
or major expansion, carrying costs related to the development or
expansion, principally real estate taxes, interest, and utility costs,
are capitalized prior to substantial completion of tenant improvements
for a maximum period of one year from cessation of major construction
activity. Historical cost depreciation is not recognized on real estate
properties.
Rental income is recognized when due in accordance with the terms of the
respective leases rather than being averaged over the lives of the
leases. Expenses are recognized when incurred. Income from partnership
operations represents the Account's share of partnership income
excluding historical cost depreciation.
The Account determines realized gain (loss) by comparing net proceeds
from the sale of properties to the cost of the properties sold. The
unrealized gain (loss) previously recorded for these properties is then
reversed and reported as realization of unrealized gain (loss) on
investments sold in the Statement of Operations and Changes in Net
Assets.
Mortgage loans payable are stated at the principal amount of obligations
outstanding. Benefits or detriments resulting from a differential in
current mortgage interest rates and contractual mortgage interest rates
are taken into consideration in the appraisal of the related property.
Certain real estate and partnership equity properties may have a market
value that is lower than the outstanding principal amount of the
obligation. If the Account's obligation is limited to the value of the
individual property and if Management intends to limit the Account's
exposure in the property to its existing investment, then the value of
the property is adjusted to equal the outstanding principal amount of
the obligation plus incidental liabilities. Upon transfer of properties
in satisfaction of debt, the Account reclassifies previously recognized
unrealized losses to realized gains and losses.
SAI-56
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
2. Valuation of Investments
The values of real estate investments are estimated in accordance with
the policies and procedures of the Appraisal Institute. Ultimate
realization of the market values is dependent to a great extent on
economic and other conditions that are beyond Management's control (such
as general economic conditions, conditions affecting tenants and other
events occurring in the markets in which individual properties are
located). Further, values may or may not represent the prices at which
the real estate investments would sell since market prices of real
estate investments can only be determined by negotiation between a
willing buyer and seller. Market value considers the financial aspects
of a property, market transactions and the relative yield for an asset
as measured against alternative investments. Although the market values
represent subjective estimates, Management believes that these market
values are reasonable approximations of market prices.
Real Estate Properties and Partnership Equities
The values of real estate properties and partnership equities have been
prepared giving consideration to Income, Cost, and Market Data
Approaches of estimating property value. The Income Approach projects an
income stream for a property (typically 10 years) and discounts this
income plus a reversion (presumed sale) into a present value. Yield
rates and growth assumptions utilized in this approach are derived from
market transactions as well as other financial and demographic data. The
Cost Approach estimates the replacement cost of the building less
depreciation plus the land value. Generally, this approach provides a
check on the Income Approach. The Market Data Approach compares recent
transactions to the appraised property. Adjustments are made for
dissimilarities which typically provide a range of value. Generally, the
Income Approach carries the most weight in the value reconciliation.
The initial valuation of properties allocated to the Account is based on
a fully documented appraisal report. Subsequent values are determined
quarterly from certificates of value which include less documentation
but nevertheless meet all of the requirements of the Appraisal Institute
and are considered appraisals. In these appraisals, a full discounted
cash flow analysis, which is the basis of an Income Approach, is the
primary focus. Interim monthly valuations are determined giving
consideration to material investment transactions. Full appraisal
reports on selected properties are prepared as deemed necessary by
Management.
Appraisals are prepared by Management's valuation staff or third-party
appraisers. Staff appraisals are concurred with and reviewed by one of
three designated third-party appraisal firms which also physically
inspect one-third of the properties every year on a rotating basis.
Since appraisals take into consideration the estimated effect of
physical depreciation, a more meaningful financial statement
presentation is achieved by excluding historical cost depreciation from
net investment income. This presentation does not affect the net assets
or unit value of the Account.
Partnership equities are stated at the Account's equity in the value of
the net assets of the partnerships.
Mortgage Loans Receivable
The value of mortgage loans receivable held in the Account has been
determined by one or more of the
SAI-57
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
following criteria as appropriate: (i) on the basis of estimated market
interest rates for loans of comparable quality and maturity, (ii) by
recognizing the value of equity participations and options to enter into
equity participations contained in certain loan instruments and (iii)
giving consideration to the value of the underlying security.
Common Stock Investments
The value of investment in REIT stock is based on published market
quotations.
Short-Term Investments
Short-term investments are primarily valued at amortized cost, which
approximates market value.
3. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires Management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amount of
income, expenses, and unrealized gains (losses) during the reporting
period. Actual results could differ from those estimates.
4. Reclassifications
Certain reclassifications have been made to the 1995 balances to conform
to the 1996 presentation.
SAI-58
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
C: INVESTMENTS
1. Real Estate Investments
The Account's real estate investments are composed of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
(MILLIONS) (MILLIONS)
- -------------------------- ---------------------- ---------------------
COST VALUE COST VALUE
- -------------------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Properties:
Industrial/R&D........... $ 403.6 $ 393.4 $ 380.0 $ 360.9
Office................... 1,314.2 872.1 1,279.3 788.7
Retail................... 1,786.1 1,645.0 1,731.9 1,642.6
Hotel.................... 104.7 83.3 103.0 76.1
Other.................... 4.1 4.3 4.1 3.9
- -------------------------- ---------- ---------- ---------- ---------
Subtotal................. 3,612.7 2,998.1 3,498.3 2,872.2
- -------------------------- ---------- ---------- ---------- ---------
Partnership equities and related
mortgage loans receivable:
Industrial/R&D........... 18.7 13.0 18.6 13.0
Office................... 165.6 186.7 221.3 214.2
Retail................... 39.5 5.5 56.5 22.7
Hotel.................... 55.6 46.3 50.7 41.3
Other.................... 25.3 31.8 27.0 30.2
- -------------------------- ---------- ---------- ---------- ---------
Subtotal................. 304.7 283.3 374.1 321.4
- -------------------------- ---------- ---------- ---------- ---------
Office................... 10.8 15.5 17.2 21.0
Retail................... 152.3 184.3 153.2 183.7
Other.................... 5.8 5.9 -- --
- -------------------------- ---------- ---------- ---------- ---------
Subtotal................. 168.9 205.7 170.4 204.7
- -------------------------- ---------- ---------- ---------- ---------
Investment in REIT Stock:
Retail................... 24.7 28.9 -- --
- -------------------------- ---------- ---------- ---------- ---------
Subtotal................. 24.7 28.9 -- --
- -------------------------- ---------- ---------- ---------- ---------
Total.................... $4,111.0 $3,516.0 $4,042.8 $3,398.3
- -------------------------- ---------- ---------- ---------- ---------
</TABLE>
SAI-59
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
2. Real Estate Partnership Equities
The Account's equity interests in real estate partnerships and their
respective financial positions at December 31, 1996 and 1995 (based on
market valuations determined for the Account) and results from
operations for the years then ended are summarized as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1996 1995
- ---------------------------------------------------------- -------------- --------------
<S> <C> <C>
Number of interests........................................ 16 18
Ownership positions........................................ 33.3 -75.0% 33.3 -91.2%
Account's equity value (millions).......................... $ 171 $ 197
Notes receivable related to partnership equities
(millions)................................................ $ 18 $ 18
Partnership assets (millions)*............................. $1,148 $1,284
Partnership liabilities (millions)*........................ $ 800 $ 915
Partnership income before depreciation (millions)* ........ $ 36 $ 30
========================================================== ============== ==============
* Stated at 100%
</TABLE>
3. Mortgage Loans Receivable
At December 31, 1996, mortgage loans receivable at a fair value of
$300.0 million of which $94.3 million related to partnership equities,
$170.5 million in other mortgage loans receivable and $35.2 million of
rated commercial mortgage backed securities, had interest rates ranging
from 7.8% to 13.1%. Aggregate annual receipts of mortgage principal due
during the five years following December 31, 1996 and thereafter are as
follows:
<TABLE>
<CAPTION>
- ------------------------------------
YEAR ENDING DECEMBER 31, (MILLIONS)
- ------------------------ ----------
<S> <C>
1997..................... $ 1
1998..................... 1
1999..................... 64
2000..................... 1
2001..................... 38
Thereafter............... 165
- ------------------------ ----------
Total.................... $270
======================== ==========
</TABLE>
4. Short-Term Investments
The Account's short-term investments are composed principally of
participation in Equitable's Separate Account No. 2A. The assets of
Separate Account No. 2A consist of debt securities maturing in sixty
days or less from the date of acquisition. Such debt securities may
include bankers acceptances, certificates of deposit, commercial paper,
and repurchase agreements. Short-term debt securities may also be
purchased directly by the Account.
SAI-60
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
D: INVESTMENT RESTRUCTURINGS
During 1996, one partnership equity and a related mortgage loan receivable
with an aggregate market value of $40.8 million were transferred to real
estate properties. The Account acquired its partner's interest in the
partnership as a result of a foreclosure on a mortgage loan receivable
held by the Account from the partnership. These transactions were recorded
at the investments' existing cost and market value and had no effect on
the net assets or unit value of the Account.
In May 1996, the Account acquired the 8.8% interest of its partner in a
partnership in which the Account previously had held the other 91.2%
interest. Upon acquisition, this investment was transferred to real estate
properties.
E: MORTGAGE LOANS PAYABLE
Mortgage loans payable consist of the following at December 31, 1996:(1)
<TABLE>
<CAPTION>
(MILLIONS)
- ------------------------------------------------------------------------------------------- ----------
<S> <C>
6.633% loan of $209.5 million and a LIBOR plus 0.5% loan of $70.5 million collateralized by
four real estate properties with a market value of $592.7 million. Includes an interest
rate cap agreement which limits the interest rate for the floating rate loan to a maximum
of 11.5%. Maturing July 2003. .............................................................. $280.0
LIBOR plus 1.1% loan collateralized by four real estate properties with a market value of
$363.3 million. Includes an interest rate cap agreement which limits the interest rate to a
maximum of 9.5%. Maturing June 1998. ....................................................... 172.0
LIBOR plus 1.35% loan collateralized by three real estate properties with a market value of
$219.6 million. Maturing October 1997....................................................... 135.0
LIBOR plus 1.45% loan collateralized by a real estate property with a market value of $65.1
million. Maturing July 1997. ............................................................... 35.0
9.0% loan collateralized by a real estate property with a market value of $31.1 million
Maturing June 2011. ........................................................................ 13.8
9.0% loan collateralized by a real estate property with a market value of $17.1 million
Maturing March 2000. ....................................................................... 13.3
9.375% loan collateralized by a real estate property with a market value of $19.5 million
Maturing December 1999. (2)................................................................. 10.1
9.375% loan collateralized by a real estate property with a market value of $4.1 million
Maturing February 2000. .................................................................... 3.6
- ------------------------------------------------------------------------------------------- ----------
Total....................................................................................... $662.8
=========================================================================================== ==========
</TABLE>
(1) Market values shown are as of December 31, 1996.
(2) Represents the Account's 50% interest in a tenancy-in-common property
with a total market value of $39 million and total outstanding debt of
$20.2 million.
SAI-61
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
Scheduled aggregate annual payments of principal on mortgage loans are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, (MILLIONS)
- ------------------------ ----------
<S> <C>
1997..................... $171
1998..................... 173
1999..................... 11
2000..................... 16
2001..................... 1
Thereafter............... 291
- ------------------------ ----------
Total.................... $663
======================== ==========
</TABLE>
F: LEASES
Minimum future rentals to be received on real estate properties, excluding
partnership equities, under noncancelable operating leases in effect as of
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, (MILLIONS)
- ------------------------ ----------
<S> <C>
1997..................... $ 279.7
1998..................... 249.7
1999..................... 215.1
2000..................... 177.2
2001..................... 143.3
Thereafter............... 377.5
- ------------------------ ----------
Total.................... $1,442.5
======================== ==========
</TABLE>
Contingent rentals included in investment income were approximately $8.0
million and $8.6 million in 1996 and 1995, respectively.
G: WITHDRAWALS
The ability of a client to withdraw funds from the Account is subject to
the availability of cash arising from net investment income,
contributions, and the sale of investments in the normal course of
business. To the extent that withdrawal requests exceed such available
cash, Management has uniform procedures to provide for cash payments,
which may be deferred for such period as Management considers necessary to
protect the interests of other clients in the Account or to obtain the
funds to be withdrawn. At December 31, 1996 and 1995, withdrawal requests
exceeded available cash.
H: RELATED PARTY TRANSACTIONS
At December 31, 1996 and 1995, interests of retirement plans for
employees, managers, and agents of Equitable in the Account aggregated
$70.9 million (2.4%) and $64.6 million (2.2%), respectively, of the net
assets of the Account.
SAI-62
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
Management has an exemption from the Department of Labor which allows it
to charge market rate property management and leasing fees for properties
it manages for the Account. All such fees must be approved by an
independent fiduciary. During 1996 and 1995, Management earned $11.8
million and $9.4 million, respectively, in property management and leasing
fees from the Account, and in addition was reimbursed $18.8 million and
$16.0 million, respectively, for payroll expenses for on-site personnel.
I: FEES
Management charges clients in the Account a monthly asset management fee
based on the client's prior month-end net asset value at the annual rates
shown below:
<TABLE>
<CAPTION>
- --------------------------------------
AMOUNT OF FUNDS ANNUAL RATE
- ----------------------- -------------
<S> <C>
First $10 million....... 1.15%
Next $15 million........ 1.00%
Excess over $25
million................ 0.80%
- ----------------------- -------------
</TABLE>
Additional fees may also be charged to clients for certain optional
services provided by Management.
At December 31, 1996 and 1995, the clients' liability to Management for
asset management fees totaled $4.0 million and $4.6 million, respectively.
Account investments in Separate Account No. 2A are not subject to an
additional asset management fee.
J: SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
In the Statements of Cash Flows, the Account considers short-term
investments to be cash equivalents.
Cash payments of interest were $36.8 million and $35.8 million during 1996
and 1995, respectively.
SAI-63
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Concluded)
Non-cash investing and financing activities are summarized as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
1996 1995
(millions) (millions)
- -------------------------------------------------------------------------- -------------- --------------
Conversion of partnership equities and related loans receivable to real
estate properties, at cost................................................ $ 88
- -------------------------------------------------------------------------- -------------- --------------
Refinancing of mortgage loan payable....................................... $ 35 $ 205
- -------------------------------------------------------------------------- -------------- --------------
Conversion of notes receivable related to partnership equity to
contribution of partnership equity........................................ $ 16
- -------------------------------------------------------------------------- -------------- --------------
Investment in REIT stock received as consideration for real estate
property sold............................................................. $ 25
========================================================================== ============== ==============
</TABLE>
K: FEDERAL INCOME TAX
No federal income tax based on net investment income or realized and
unrealized gains was applicable to contracts participating in the Account
by reason of applicable sections of the Internal Revenue Code, and no
federal income tax payable by Equitable will affect the contracts.
L: CONTINGENCIES
In 1995, as part of a national inquiry of commingled real estate funds
with ERISA plan investors, the U.S. Department of Labor (DOL) opened an
investigation of Equitable with respect to the Account's appraisal
procedures. Management has fully cooperated with the DOL and submitted
numerous documents for review. Additionally, members of Management and
representatives of third party appraisal firms have been interviewed by
the DOL. At no time has the DOL made any specific allegation that
Equitable acted improperly, and Management believes 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 Account's financial position or results of
operations.
M: INVESTMENT COMMITMENTS
As of December 31, 1996, the Account proposes to invest an additional $121
million in existing real estate investments.
SAI-64
<PAGE>
- ------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Supplementary Financial Information
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
(IN THOUSANDS)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------
COLUMN B
COLUMN A YEAR ENDED DECEMBER 31,
ITEM 1996 1995
- -------------------------- --------- ---------
<S> <C> <C>
1. Maintenance and
repairs................ $19,398 $17,498
2. Real estate taxes....... $47,360 $55,809
========================== ========= =========
</TABLE>
Maintenance and Repairs is included in Real Estate Operating Expenses.
Other captions not included since such costs and expenses are not applicable
or did not exceed 1% of total revenues.
SAI-65
<PAGE>
- ------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 8 (PRIME PROPERTY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Supplementary Financial Information
SCHEDULE XII -- MORTGAGE LOANS RECEIVABLE ON REAL ESTATE
AS OF DECEMBER 31, 1996
(IN THOUSANDS)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
CARRYING
CURRENT AMOUNT OF
EFFECTIVE FINAL FACE MORTGAGE
INTEREST MATURITY AMOUNT OF AT MARKET
DESCRIPTION RATE DATE PERIODIC PAYMENT TERMS MORTGAGE VALUE
- --------------------------------- -------------- ----------- --------------------------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Mortgage Loans Receivable:
Participating mortgage secured by 8.2% 07/01/03 Monthly payment of interest plus $125,162 $155,000
a shopping center in New Castle participation in property cash flow.
County, DE Loan due at maturity date.
Secured by office, hotel, retail, 8.71% 03/31/99 Quarterly interest only. Loan due at 63,000 63,009
garage and marina facility in maturity date
Boston, MA
Secured by office, hotel, retail, 12% 03/31/02 Monthly interest only to the extent of 31,317 31,317
garage and marina facility in available cash flow. Principal and all
Boston, MA accrued unpaid interest due at
maturity date.
Secured by shopping center in 13.12% 10/22/01 Monthly payment of interest and 22,129 23,700
Danbury, CN $50,000 of principal. Remaining
principal due at maturity date.
Secured by 19 office, industrial 9.5% 05/01/01 Monthly interest only payable at 7%. 16,007 15,500
and retail properties in Principal and all accrued unpaid
Rockville, MD Interest due at maturity date.
Other:
$5,000,OOO-$7,500,O00 (three 7.75%-12.36% 1/95-2/28 20,500 11,500
loans)
- --------------------------------- -------------- ----------- --------------------------------------- ----------- -----------
Total $278,115 $300,026
================================= ============== =========== ======================================= =========== ===========
</TABLE>
- -----------------------------------------------------------------------------
The following is a reconciliation of the carrying amounts of the above loans
at market value for the years ended December 31,1995 and 1994:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995
- --------------------------------------------------------------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Balance--January 1.............................................. $311,333 $191,981
Additions during the year:
Advances/New Loans............................................. 29,304 104,800
Deductions during the year:
Collection of principal and transfers to real estate
properties..................................................... (45,853) (8,353)
lncrease/(decrease) in unrealized gain/(loss) during the year .. 5,242 22,905
lncrease/(decrease) in realized gain/(loss) during the year .... -- --
- --------------------------------------------------------------- ---------- ----------
Balance--December 31........................................... $30O,026 $311,333
=============================================================== ========== ==========
</TABLE>
SAI-66
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
The Equitable Life Assurance Society of the United States
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, of shareholder's equity and of cash flows
present fairly, in all material respects, the financial position of The
Equitable Life Assurance Society of the United States and its subsidiaries
("Equitable Life") at December 31, 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.
Price Waterhouse LLP
New York, New York
February 10
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.
F-6
<PAGE>
Certain reclassifications have been made in the amounts presented for
prior periods to conform these periods with the 1996 presentation.
Closed Block
------------
As of July 22, 1992, Equitable Life established the Closed Block for
the benefit of certain classes of individual participating policies for
which Equitable Life had a dividend scale payable in 1991 and which
were in force on that date. Assets were allocated to the Closed Block
in an amount which, together with anticipated revenues from policies
included in the Closed Block, was reasonably expected to be sufficient
to support such business, including provision for payment of claims,
certain expenses and taxes, and for continuation of dividend scales
payable in 1991, assuming the experience underlying such scales
continues.
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
F-7
<PAGE>
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 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
F-8
<PAGE>
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).
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.
F-9
<PAGE>
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.
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.
F-10
<PAGE>
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.
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
F-11
<PAGE>
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 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>
F-12
<PAGE>
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.
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
F-14
<PAGE>
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.
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>
F-16
<PAGE>
Impaired mortgage loans with no provision for losses are loans where
the fair value of the collateral or the net present value of the
expected future cash flows related to the loan equals or exceeds the
recorded investment. Interest income earned on loans where the
collateral value is used to measure impairment is recorded on a cash
basis. Interest income on loans where the present value method is used
to measure impairment is accrued on the net carrying value amount of
the loan at the interest rate used to discount the cash flows. Changes
in the present value attributable to changes in the amount or timing of
expected cash flows are reported as investment gains or losses.
During 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
F-19
<PAGE>
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, 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.
F-20
<PAGE>
Net unrealized investment gains (losses), included in the consolidated
balance sheets as a component of equity and the changes for the
corresponding years, are summarized as follows:
<TABLE>
<CAPTION>
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-21
<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.
F-22
<PAGE>
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.
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-23
<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
F-24
<PAGE>
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.
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.
F-25
<PAGE>
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>
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>
F-26
<PAGE>
Short-term Debt
---------------
Equitable Life has a $350.0 million bank credit facility available to
fund short-term working capital needs and to facilitate the securities
settlement process. The credit facility consists of two types of
borrowing options with varying interest rates. 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.
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.
F-27
<PAGE>
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>
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>
F-28
<PAGE>
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>
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.
F-29
<PAGE>
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>
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.
F-30
<PAGE>
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.
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>
F-31
<PAGE>
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 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
F-32
<PAGE>
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-33
<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.
F-34
<PAGE>
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.
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
F-33
<PAGE>
(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 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.
F-36
<PAGE>
An action was instituted on April 6, 1995 against Equitable Life and
its wholly owned subsidiary, EOC, in New York state court, entitled
Sidney C. Cole et al. v. The Equitable Life Assurance Society of the
United States and The Equitable of Colorado, Inc., 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.
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
F-37
<PAGE>
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 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
F-38
<PAGE>
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 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
F-39
<PAGE>
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 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
F-40
<PAGE>
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.
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
F-41
<PAGE>
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.
Accounting practices used to prepare statutory financial statements for
regulatory filings of stock life insurance companies differ in certain
instances from GAAP. The New York Insurance Department (the
"Department") recognizes only statutory accounting practices for
determining and reporting the financial condition and results of
operations of an insurance company, for determining its solvency under
the New York Insurance Law, and for determining whether its financial
condition warrants the payment of a dividend to its stockholders. No
consideration is given by the Department to financial statements
prepared in accordance with GAAP in making such determinations. 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 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>
F-42
<PAGE>
<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>
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.
F-43
<PAGE>
<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-44
<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-45
<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>
F-46
<PAGE>
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>
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 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
F-47
<PAGE>
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>
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-48
<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-49
<PAGE>
Supplement dated May 1, 1997 to Prospectus dated May 1, 1997
- -------------------------------------------------------------------------------
MEMBERS RETIREMENT PROGRAMS
funded under contracts with
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
1290 Avenue of the Americas, New York, New York 10104
Toll-Free Telephone 800-223-5790
------------------------------
VARIABLE ANNUITY BENEFITS
------------------------------
This Prospectus Supplement should be read and retained for
future reference by Participants in the Members Retirement
Programs who are
considering variable annuity
payment benefits after
retirement.
This Prospectus Supplement is not authorized for
distribution unless accompanied or preceded by
the Prospectus dated May 1, 1997 for the
appropriate Members Retirement Program.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS: ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- -------------------------------------------------------------------------------
<PAGE>
RETIREMENT BENEFITS
When you become eligible to receive benefits under a Members
Retirement Program, you may select one or more of the following forms of
distribution, which are available in variable or fixed form. The law requires
that if the value of your Account Balance is more than $3,500, you must receive
a Qualified Joint and Survivor Annuity unless your Spouse consents to a
different election.
Life Annuity - an annuity providing monthly payments for your life.
No payments will be made after your death, even if you have received only one
payment.
Life Annuity - Period Certain - an annuity providing monthly
payments for your life or, if longer, a specified period of time. If you die
before the end of that specified period, payments will continue to your
beneficiary until the end of the period. Subject to legal limitations, you may
specify a minimum payment period of 5, 10, 15 or 20 years; the longer the
specified period, the smaller the monthly payments will be.
Joint and Survivor Annuity - Period Certain - an annuity providing
monthly payments for your life and that of your beneficiary or, if longer, a
specified period of time. If you and your beneficiary both die before the end
of the specified period, payments will continue to your contingent beneficiary
until the end of the period. Subject to legal limitations, you may specify a
minimum payment period of 5, 10, 15 or 20 years; the longer the specified
period, the smaller the monthly payments will be.
How Annuity Payments are Made
When your distribution of benefits under an annuity begins, your
Units in the Funds are redeemed. Part or all of the proceeds, plus part or all
of your Account Balance in the General Account Options, may be used to purchase
an annuity. The minimum amount that can be used to purchase any type of annuity
is $3,500. Usually, a $350 charge will be deducted from the amount used to
purchase the annuity to reimburse us for administrative expenses associated
with processing the application and with issuing each month's annuity payment.
Applicable premium taxes will also be deducted.
Annuity payments may be fixed or variable.
FIXED ANNUITY PAYMENTS. Fixed annuity payments are determined from
our annuity rate tables in effect at the time the first annuity
payment is made. The minimum amount of the fixed payments is
determined from tables in our contract with the Trustees, which
show the amount of proceeds necessary to purchase each $1 of
monthly annuity payments (after deduction of any applicable taxes
and the annuity administrative charge). These tables are
- 2 -
<PAGE>
designed to determine the amounts required to pay for the annuity
selected, taking into account our administrative and investment
expenses and mortality and expense risks. The size of your payment
will depend upon the form of annuity chosen, your age and the age
of your beneficiary if you select a joint and survivor annuity. If
our current group annuity rates for payment of proceeds would
produce a larger payment, those rates will apply instead of the
minimums in the contract tables. If we give any group pension
client with a qualified plan a better annuity rate than those
currently available for the Program, we will also make those rates
available to Program participants. The annuity administrative
charge may be greater than $350 in that case. Under our contract
with the Trustees, we may change the tables but not more frequently
than once every five years. Fixed annuity payments will not
fluctuate during the payment period.
VARIABLE ANNUITY PAYMENTS. Variable annuity payments are funded
through our Separate Account No. 4 (Pooled) (the "Fund"), through
the purchase of Annuity Units. The number of Annuity Units
purchased is equal to the amount of the first annuity payment
divided by the Annuity Unit Value for the due date of the first
annuity payment. The amount of the first annuity payment is
determined in the same manner for a variable annuity as it is for a
fixed annuity. The number of Annuity Units stays the same
throughout the payment period for the variable annuity but the
Annuity Unit Value changes to reflect the investment income and the
realized and unrealized capital gains and losses of the Fund, after
adjustment for an assumed base rate of return of 5-3/4%, described
below.
The amounts of variable annuity payments are determined as follows:
Payments normally start as of the first day of the second calendar month
following our receipt of the proper forms. The first two monthly payments are
the same.
Payments after the first two will vary according to the investment
performance of the Fund. Each monthly payment will be calculated by multiplying
the number of Annuity Units credited to you by the Annuity Unit Value for the
first business day of the calendar month before the due date of the payment.
The Annuity Unit Value was set at $1.1553 as of July 1, 1969, the
first day that Separate Account No. 4 (Pooled) was operational. For any month
after that date, it is the Annuity Unit Value for the preceding month
multiplied by the change factor for the current month. The change factor gives
effect to the assumed annual base rate of return of 5-3/4% and to the actual
investment experience of the Fund.
Because of the adjustment for the assumed base rate of return, the
Annuity Unit Value rises and falls depending on whether the actual rate of
investment return is higher or lower than 5-3/4%.
- 3 -
<PAGE>
Illustration of Changes in Annuity Payments. To show how we
determine variable annuity payments from month to month, assume that the amount
you applied to purchase an annuity is enough to fund an annuity with a monthly
payment of $363 and that the Annuity Unit Value for the due date of the first
annuity payment is $1.05. The number of annuity units credited under your
certificate would be 345.71 (363 / 1.05 = 345.71). If the third monthly payment
is due on March 1, and the Annuity Unit Value for February was $1.10, the
annuity payment for March would be the number of units (345.71) times the
Annuity Unit Value ($1.10), or $380.28. If the Annuity Unit Value was $1.00 on
March 1, the annuity payment for April would be 345.71 times $1.00 or $345.71.
Summary of Annuity Unit Values for the Fund
This table shows the Annuity Unit Values with an assumed based rate
of return of 5-3/4%.
<TABLE>
<CAPTION>
First Business Day of Annuity Unit Value
--------------------- ------------------
<S> <C>
October 1987 $4.3934
October 1988 $3.5444
October 1989 $4.8357
October 1990 $3.8569
October 1991 $5.4677
October 1992 $5.1818
October 1993 $6.3886
October 1994 $6.1563
October 1995 $7.4970
October 1996 $8.0828
</TABLE>
THE FUND
The Fund (Separate Account No. 4 (Pooled)) was established pursuant
to the Insurance Law of the State of New York in 1969. It is an investment
account used to fund benefits under group annuity contracts and other
agreements for tax-deferred retirement programs administered by us.
- 4 -
<PAGE>
For a full description of the Fund, its investment policies, the
risks of an investment in the Fund and information relating to the valuation of
Fund assets, see the description of the Fund in our May 1, 1997 prospectus and
the Statement of Additional Information.
INVESTMENT MANAGER
The Manager
We, Equitable Life, act as Investment Manager to the Fund. As such,
we have complete discretion over Fund assets and we invest and reinvest these
assets in accordance with the investment policies described in our May 1, 1997
prospectus and Statement of Additional Information.
We are a New York stock life insurance company with our Home Office
at 1290 Avenue of the Americas, New York, New York 10104. Founded in 1859, we
are one of the largest insurance companies in the United States. Equitable
Life, our sole stockholder Equitable Companies, Inc., and their subsidiaries
managed assets of approximately $239.8 billion as of December 31, 1996,
including third party assets of $184.8 billion.
Investment Management
In providing investment management to the 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.
For a description of Alliance, see our May 1, 1997 Members Retirement Program
prospectus.
Fund Transactions
The Fund is charged for securities brokers commissions, transfer
taxes and other fees relating to securities transactions. Transactions in
equity securities for the Fund are executed primarily through brokers which are
selected by Alliance/Equitable Life and receive commissions paid by the Fund.
For 1996 and 1995, the Fund paid $5,682,578 and $6,044,623, respectively, in
brokerage commissions. For a full description of our policies relating to the
selection of brokers, see the description of the Fund in our May 1, 1997
Statement of Additional Information.
- 5 -
<PAGE>
FINANCIAL STATEMENTS
The financial statements of the Fund reflect applicable fees,
charges and other expenses under the Members Programs as in effect during the
periods covered, as well as the charges against the account made in accordance
with the terms of all other contracts participating in the account.
Separate Account No. 4 (Pooled): Page
Report of Independent Accountants - Price Waterhouse LLP 7
Statement of Assets and Liabilities, 8
December 31, 1996
Statement of Operations and Changes in Net Assets
for the Years Ended December 31, 1996 and 1995 9
Portfolio of Investments
December 31, 1996 10
Notes to Financial Statements 15
- 6 -
<PAGE>
- ------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States and the
Participants in the American Dental Association Members Retirement Program
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and changes in net assets present fairly, in all material
respects, the financial position of Separate Account No. 4 of The Equitable
Life Assurance Society of the United States ("Equitable Life") at December
31, 1996 and its results of operations and changes in net assets for each of
the two years in the period then ended, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
Equitable Life's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at December 31, 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
- 7 -
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED) (THE GROWTH EQUITY FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------
ASSETS:
Investments (Notes 2 and 3):
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.
- 8 -
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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 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.
- 9 -
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------- ------------ ---------------
NUMBER OF VALUE
SHARES (NOTE 3)
- ---------------------------------------------------------- ------------ ---------------
<S> <C> <C>
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
---------------
- 10 -
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- ---------------------------------------------------------- ------------ ---------------
NUMBER OF VALUE
SHARES (NOTE 3)
- ---------------------------------------------------------- ------------ ---------------
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
---------------
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
---------------
- 11 -
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Continued)
- ---------------------------------------------------------- ------------ ---------------
NUMBER OF VALUE
SHARES (NOTE 3)
- ---------------------------------------------------------- ------------ ---------------
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
---------------
OIL--SUPPLIES & CONSTRUCTION (8.8%)
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
---------------
- 12 -
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
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 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
---------------
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>
- 13 -
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1996 (Concluded)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------ ------------ --------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- ------------------------------------------------------------------------ ------------ --------------
<S> <C> <C>
LONG-TERM DEBT SECURITIES:
TECHNOLOGY
TELECOMMUNICATIONS (0.1%)
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.
- 14 -
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
1. Separate Account No. 4 (Pooled) (the Growth Equity Fund) (the Fund) of
The Equitable Life Assurance Society of the United States (Equitable Life), a
wholly-owned subsidiary of The Equitable Companies Incorporated, was
established in conformity with the New York State Insurance Law. Pursuant to
such law, to the extent provided in the applicable contracts, the net assets
in the Fund 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 Statements of
Assets and Liabilities in Separate Account No. 4 may be transferred to
Equitable Life's General Account.
Interests of retirement and investment plans for Equitable Life employees,
managers, and agents in Separate Account No. 4 aggregated $288,921,270
(11.8%), at December 31, 1996 and $246,531,777 (11.6%), at December 31, 1995,
of the net assets in the Fund.
Equitable Life is the investment manager for the Fund. Alliance Capital
Management L.P. (Alliance) serves as the investment adviser to Equitable Life
with respect to the management of the Fund. Alliance is a publicly-traded
limited partnership which is indirectly majority-owned by Equitable Life.
Equitable Life and Alliance seek to obtain the best price and execution of
all orders placed for the Fund considering all circumstances. In addition to
using brokers and dealers to execute portfolio security transactions for
accounts under their management, Equitable Life and Alliance may also enter
into other types of business and securities transactions with brokers and
dealers, which will be unrelated to allocation of the Fund's portfolio
transactions.
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. Security transactions are recorded on the trade date. Amortized cost of
debt securities consists of cost adjusted, where applicable, for amortization
of premium or accretion of discount. Dividend income is recorded on the
ex-dividend date; interest income (including amortization of premium and
discount on securities using the effective yield method) is accrued daily.
Realized gains and losses on the sale of investments are computed on the
basis of the identified cost of the related investments sold.
Transactions denominated in foreign currencies are recorded at the rate
prevailing at the date of such transactions. Asset and liability accounts
that are denominated in a foreign currency are adjusted to reflect the
current exchange rate at the end of the period. Transaction gains or losses
resulting from changes in the exchange rate during the reporting period or
upon settlement of the foreign currency transactions are reflected under
"Realized and Unrealized Gain (Loss) on Investments" in the Statements of
Operations and Changes in Net Assets.
- 15 -
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
Equitable Life's internal short-term investment account, Separate Account
No. 2A, was established to provide a more flexible and efficient vehicle to
combine and invest temporary cash positions of certain eligible accounts
(Participating Funds) under Equitable Life's management. Separate Account No.
2A invests in debt securities maturing in sixty days or less from the date of
acquisition. At December 31, 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, 5.3%-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. Separate Account No. 2A is valued daily at amortized cost, which
approximates market value.
For 1996 and 1995, investment security transactions, excluding short-term
debt securities, were as follows:
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPARATE ACCOUNT NO. 4
------------------------------
COST OF NET PROCEEDS
PURCHASES OF SALES
- ----------------------------------------------- -------------- --------------
<S> <C> <C>
Stocks and long-term corporate debt securities:
1996.......................................... $2,439,864,229 $2,487,456,851
1995.......................................... 2,037,876,834 2,082,648,235
U.S. Government obligations:
1996.......................................... -- --
1995.......................................... -- --
</TABLE>
----------------------------------------------------------------------------
3. Investment securities are valued as follows:
Stocks listed on national securities exchanges and certain
over-the-counter issues traded on the National Association of Securities
Dealers, Inc. Automated Quotation (NASDAQ) national market system are valued
at the last sale price, or, if no sale, at the latest available bid price.
Foreign securities not traded directly, or in American Depository Receipt
(ADR) form in the United States, are valued at the last sale price in the
local currency on an exchange in the country of origin. Foreign currency is
converted into its U.S. dollar equivalent at current exchange rates.
United States Treasury securities and other obligations issued or
guaranteed by the United States Government, its agencies or instrumentalities
are valued at representative quoted prices.
- 16 -
<PAGE>
- -----------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Concluded)
Long-term publicly traded corporate bonds are valued at prices obtained
from a bond pricing service of a major dealer in bonds when such prices are
available; however, in circumstances where Equitable Life and Alliance deem
it appropriate to do so, an over-the-counter or exchange quotation may be
used.
Convertible preferred stocks listed on national securities exchanges are
valued at their last sale price or, if there is no sale, at the latest
available bid price.
Convertible bonds and unlisted convertible preferred stocks are valued at
bid prices obtained from one or more major dealers in such securities; where
there is a discrepancy between dealers, values may be adjusted based on
recent premium spreads to the underlying common stock.
Other assets that do not have a readily available market price are valued
at fair value as determined in good faith by Equitable Life's investment
officers.
Separate Account No. 2A is valued daily at amortized cost, which
approximates market value. Short-term debt securities purchased directly by
the Funds which mature in 60 days or less are valued at amortized cost.
Short-term debt securities which mature in more than 60 days are valued at
representative quoted prices.
4. Charges and fees are deducted in accordance with the terms of the
various contracts which participate in the Fund. With respect to the American
Dental Association Members Retirement Program, these expenses consist of
investment management and accounting fees, program expense charge, direct
expenses and record maintenance and report fee. These charges and fees are
paid to Equitable Life by the Fund and are recorded as expenses in the
accompanying Statements of Operations and Changes in Net Assets.
5. No Federal income tax based on net income or realized and unrealized
capital gains was applicable to contracts participating in the Fund for the
two years ended December 31, 1996, by reason of applicable provisions of the
Internal Revenue Code and no Federal income tax payable by Equitable Life for
such years will affect such contracts. Accordingly, no Federal income tax
provision is required.
- 17 -
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part B.
The following are included in the Statement of Additional
Information relating to the American Dental Association
Program:
1. Separate Account Nos., 4 (Pooled), 191 and 200
(The Growth Equity, ADA Foreign and Aggressive
Equity Accounts):
-Report of Independent Accountants - Price Waterhouse LLP
2. Separate Account No. 4 (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
- Notes to Financial Statements
3. Separate Account No. 191:
- 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
4. Separate Account No. 200:
- Statement of Assets and Liabilities
- Statement of Operations and Changes in Net Assets for
the Years Ended December 31, 1996 and 1995
5. Separate Account Nos. 191 and 200:
- Notes to Audited Financial Statements
6. Separate Account No. 30 (Pooled):
- Report of Independent Accountants - Price Waterhouse LLP
- 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
- Statements of Cash Flows for the Years Ended December 31, 1996 and
1995
- Statement of Investments and Net Assets, December 31, 1996
- Notes to Financial Statements
C-1
<PAGE>
7. Separate Account No. 8 (Prime Property Fund):
- Report of Independent Accountants - Price Waterhouse LLP
- 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
- Statements of Cash Flows for the Years Ended December 31, 1996 and
1995
- Notes to Financial Statements
8. Schedule X:
- Supplementary Income Statement Information, December 31, 1996 and
1995
9. Schedule XII:
- Mortgage Loans Receivable on Real Estate, December 31, 1996 and
1995
10. The Equitable Life Assurance Society of the United States:
- Report of Independent Accountants - Price Waterhouse LLP
- Consolidated Balance Sheets, December 31, 1996 and 1995
- Consolidated Statements of Earnings for the Years Ended December
31, 1996, 1995 and 1994
- Consolidated Statements of 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.
(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 Equitable's Separate Account Nos. 3, 4, 30, 190 and
191, incorporated by reference to Post-Effective Amendment No. 1 on
Form N-3 to Registration Statement 33-46995, filed July 22, 1992.
2. Not Applicable.
3. Not Applicable.
4. Investment Management Agreement by and among (i) the Trustees
of the American Dental Association Members Retirement Trust and
of the American Dental Association Members Pooled Trust for
Retirement Plans, (ii) the Committee of Separate Account No. 191
of The Equitable Life Assurance Society of the United States,
and (iii) The Equitable Life Assurance Society of the United
States in its capacity as insurer and owner of the assets of
Separate Account No. 191 and as an Investment Manager of
Separate Account No. 191 to the extent described therein,
incorporated by reference to Registration No. 33-46995 on Form
N-3 of Registrant, filed April 8, 1992.
5. (a) Buy - Sell Agreement by and among the Trustees of the American
Dental Association Members Retirement Trust and of the American
Dental Association Members Pooled Trust for Retirement Plans,
C-2
<PAGE>
Registration Statement No. 33-91588 on Form N-3
of Registrant, filed on April 28, 1995.
(d) Investment Management Agreement by and among (i)
the Trustees of the American Dental Association
Members Retirement Trust and the American Dental
Association Members Pooled Trust for Retirement
Plans, (ii) the Committee of Separate Account
No. 191 of The Equitable Life Assurance Society
of the United States, and (iii) The Equitable
Life Assurance Society of the United States in
its capacity as insurer and owner of the assets
of Separate Account No. 191 and as an Investment
Manager of Separate Account No. 191 to the
extent described therein, incorporated by
reference to Registration Statement No. 33-46995
on Form N-3 of Registrant, filed on April 8,
1992.
(e) Amended and Restated Investment Management
Agreement dated as of May 1, 1996, by and among
(i) the Trustees of the American Dental
Association Members Retirement Trust for
Retirement Plans, (ii) the Committee of Separate
Account No. 191 of The Equitable Life Assurance
Society of the United States, and (iii) The
Equitable Life Assurance Society of the United
States in its capacity as insurer and owner of
the assets of Separate Account No. 191,
incorporated by reference to Pre-Effective
Amendment No. 1 to Registration Statement No.
333-01301 on Form N-4 of Registrant filed April
30, 1996.
4. (a) Exhibit 6(a)(2) (Group Annuity Contract AC 2100,
as amended and restated effective February 1,
1991 on contract Form No. APC 1,000- 91, among
the Trustees of the American Dental Association
Members Retirement Trust, the American Dental
Association Members Pooled Trust for Retirement
Plans and The Equitable Life Assurance Society
of the United States), incorporated by reference
to Post-Effective Amendment No. 1 on Form N-3 to
Registration Statement 33-40162, filed December
20, 1991.
(b) Rider No. 1 to Group Annuity Contract AC 2100
among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
incorporated by reference to Registration No.
33-46995 on Form N-3 of Registrant, filed April
8, 1992.
(c) Form of Rider No. 2 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
incorporated by reference to Registration No.
33-46995 on Form N-3 of Registrant, filed April
8, 1992.
(d) Rider No. 3 to Group Annuity Contract AC 2100
among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
incorporated by reference to Registration No.
33-75616 on Form N-4 of Registrant, filed April
29, 1994.
(e) Form of Rider No. 4 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement
C-3
<PAGE>
Plans and The Equitable Life Assurance Society
of the United States, incorporated by reference
to Registration No. 33-75616 on Form N-4 of
Registrant, filed April 29, 1994.
(f) Form of Rider No. 5 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
incorporated by reference to Registration No.
33-75616 on Form N-4 of Registrant, on February
27, 1995.
(g) Form of Rider No. 6 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
previously filed with this Registration
Statement No. 33-63113 on September 29, 1995.
(h) Form of Rider No. 7 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
incorporated by reference to Pre-Effective
Amendment No. 1 to Registration Statement No.
33-63113 on Form N-4 of Registrant, filed on
November 21, 1995.
(i) Form of Rider No. 8 to Group Annuity Contract AC
2100 among the Trustees of the American Dental
Association Members Retirement Trust, the
American Dental Association Members Pooled Trust
for Retirement Plans and The Equitable Life
Assurance Society of the United States,
incorporated by reference to Pre-Effective
Amendment No. 1 to Registration Statement No.
333-01301 on Form N-4 of Registrant filed April
30, 1996.
(j) Form of Rider No. 9 to Group Annuity Contract
AC 2100 among the Trustees of the American
Dental Association Members Retirement Trust,
the American Dental Association Members Pooled
Trust for Retirement Plans and The Equitable
Life Assurance Society of the United States.
5. (a) Exhibit 7(a) (Form of Participation Agreement
for the standardized Profit-Sharing Plan under
the ADA Program), incorporated by reference to
Post-Effective Amendment No. 1 on Form N-3 to
Registration Statement on Form S-1 of
Registrant, filed April l6, 1986.
(b) Exhibit 7(b) (Form of Participation Agreement
for the nonstandardized Profit-Sharing Plan
under the ADA Program), incorporated by
reference to Post-Effective Amendment No. 1 on
Form N-3 to Registration Statement on Form S-1
of Registrant, filed April l6, 1986.
(c) Exhibit 7(e) (Copy of Attachment to Profit
Sharing Participation Agreement under the
American Dental Association Members Retirement
Plan), incorporated by reference to Registration
No. 33-21417 on Form N-3 of Registrant, filed
April 26, 1988.
(d) Exhibit 7(e)(2) (Form of Participant Enrollment
Form under the ADA Program), incorporated by
reference to Post-Effective Amendment No. 2 on
Form N-3 to Registration Statement on Form S-1
of Registrant, filed April 2l, l987.
(e) Exhibit 7(v) (Form of Simplified Participation
Agreement for the Profit-Sharing Plan under the
ADA Program, as filed with the Internal
C-4
<PAGE>
Revenue Service), incorporated by reference to
Post-Effective Amendment No. 2 to Registration
No. 33-21417 on Form N-3 of Registrant, filed
April 26, 1989.
(f) Exhibit 7(w) (Form of Non-Standardized
Participation Agreement for the Profit-Sharing
Plan under the ADA Program, as filed with the
Internal Revenue Service), incorporated by
reference to Post- Effective Amendment No. 2 to
Registration No. 33-21417 on Form N-3 of
Registrant, filed April 26, 1989.
(g) Exhibit 7(x) (Form of Standardized Participation
Agreement for the Profit-Sharing Plan under the
ADA Program, as filed with the Internal Revenue
Service), incorporated by reference to
Post-Effective Amendment No. 2 to Registration
No. 33-21417 on Form N-3 of Registrant, filed
April 26, 1989.
6. (a) Copy of the Restated Charter of The Equitable
Life Assurance Society of the United States,
adopted August 6, 1992, incorporated by
reference to Post-Effective Amendment No. 2 to
Registrant No. 33- 46995 on Form N-3 of
Registrant, filed March 2, 1993.
(b) By-Laws of The Equitable Life Assurance Society
of the United States, as amended through July
22, 1992, incorporated by reference to Post-
Effective Amendment No. 2 to Registration No.
33-46995 on Form N-3 of Registrant, filed March
2, 1993.
(c) Certificate of Amendment of the Restated Charter
of The Equitable Life Assurance Society of the
United States, adopted November 18, 1993,
previously filed with this Registration No.
333-01301 on February 29, 1996.
(d) By-Laws of The Equitable Life Assurance Society
of the United States, as amended November 21,
1996.
(e) Copy of the Restated Charter of The Equitable
Life Assurance Society of the United States, as
amended January 1, 1997.
7. Not applicable
8. (a) Exhibit 11(a)(2) (Form of American Dental
Association Members Retirement Plan, as filed
with the Internal Revenue Service), incorporated
by reference to Post-Effective Amendment No. 2
to Registration No. 33-21417 on Form N-3 of
Registrant, filed April 26, 1989.
(b) Exhibit 11(g)(2) (Form of American Dental
Association Members Retirement Trust, as filed
with the Internal Revenue Service), incorporated
by reference to Post-Effective Amendment No. 2
to Registration No. 33-21417 on Form N-3 of
Registrant, filed April 26, 1989.
(c) Exhibit 11(i) (Form of First Amendment to the
American Dental Association Members Retirement
Trust), incorporated by reference to
Post-Effective Amendment No. 1 to Registration
No. 33-40162 on Form N-3 of Registrant, filed
December 20, 1991.
C-5
<PAGE>
(d) Exhibit 11(o) (Copy of Administration Services
Agreement, dated May 1, 1994, among The
Equitable Life Assurance Society of the United
States, the Trustees of the American Dental
Association Members Retirement Trust, and of the
American Dental Association Members Pooled Trust
for Retirement Plans and the Council of
Insurance of the American Dental Association),
incorporated by reference to Registration
Statement No. 33-75614 on Form N-3 of
Registrant, filed February 23, 1994.
(e) Exhibit 11(j) (Copy of American Dental
Association Members Pooled Trust for Retirement
Plans, dated as of January 1, 1984),
incorporated by reference to Post-Effective
Amendment No. 1 to Registration No. 33-40162 on
Form N-3 of Registrant on Form N-3 of
Registrant, filed December 20, 1991.
(f) Exhibit 11(k) (Form of First Amendment to the
American Dental Association Members Pooled Trust
for Retirement Plans, dated as of January 1,
1984), incorporated by reference to
Post-Effective Amendment No. 1 to Registration
No. 33-40162 on Form N-3 of Registrant, filed
December 20, 1991.
9. Opinion and Consent of Anthony A. Dreyspool,
Vice President and Associate General Counsel of
The Equitable Life Assurance Society of the
United States.
10. (a) Consent of Anthony A. Dreyspool (included within
Exhibit 9(a) above).
(b) Consent of Price Waterhouse LLP.
(c) Powers of Attorney.
11. Not applicable.
12. Not applicable.
13. Not applicable.
14. Not Applicable.
27. Financial Data Schedule.
C-6
<PAGE>
Item 25: Directors and Officers of Equitable.
------------------------------------
Set forth below is information regarding the directors and principal
officers of Equitable. Equitable's address is 1290 Avenue of the
Americas, New York, New York 10104. The business address of the
persons whose names are preceded by an asterisk is that of Equitable.
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS EQUITABLE
- ------------------ -------------
DIRECTORS
Claude Bebear Director
AXA-UAP
23, Avenue Matignon
75008 Paris, France
Christopher J. Brocksom Director
AXA Equity & Law
Elbury 9
Weedon Lane
Buckinghamshire HP 6505
England
Francoise Colloc'h Director
AXA-UAP
23, Avenue Matignon
75008 Paris, France
Henri de Castries Director
AXA-UAP
23, Avenue Matignon
75008 Paris, France
Joseph L. Dionne Director
The McGraw-Hill Companies
1221 Avenue of the Americas
New York, NY 10020
William T. Esrey Director
Sprint Corporation
P.O. Box 11315
Kansas City, MO 64112
Jean-Rene Fourtou Director
Rhone-Poulenc S.A.
25 Quai Paul Doumer
92408 Courbevoie Cedex,
France
Norman C. Francis Director
Xavier University of Louisiana
7325 Palmetto Street
New Orleans, LA 70125
C-7
<PAGE>
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS EQUITABLE
- ------------------ -------------
Donald J. Greene Director
LeBouef, Lamb, Greene & MacRae
125 West 55th Street
New York, NY 10019-4513
John T. Hartley Director
Harris Corporation
1025 NASA Boulevard
Melbourne, FL 32919
John H.F. Haskell, Jr. Director
Dillion, Read & Co., Inc.
535 Madison Avenue
New York, NY 10028
Mary R. (Nina) Henderson Director
CPC International, Inc.
International Plaza
P.O. Box 8000
Englewood Cliffs, NJ 07632-9976
W. Edwin Jarmain Director
Jarmain Group Inc.
121 King Street West
Suite 2525
Toronto, Ontario M5H 3T9,
Canada
G. Donald Johnston, Jr. Director
184-400 Ocean Road
John's Island
Vero Beach, FL 32963
Winthrop Knowlton Director
Knowlton Brothers, Inc.
530 Fifth Avenue
New York, NY 10036
Arthur L. Liman Director
Paul, Weiss, Rifkind, Wharton &
Garrison
1285 Avenue of the Americas
New York, NY 10019
George T. Lowy Director
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
C-8
<PAGE>
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS EQUITABLE
- ------------------ -------------
Didier Pineau-Valencienne Director
Schneider S.A.
64-70 Avenue Jean-Baptiste Clement
92646 Boulogne-Billancourt Cedex
France
George J. Sella, Jr. Director
P.O. Box 397
Newton, NJ 07860
Dave H. Williams Director
Alliance Capital Management
Corporation
1345 Avenue of the Americas
New York, NY 10105
OFFICER-DIRECTORS
*James M. Benson President and Director (until 5/1/97)
*William T. McCaffrey Senior Executive Vice President,
Chief Operating Officer and Director
*Joseph J. Melone Chairman of the Board, Chief Executive
Officer and Director; President
(effective 5/1/97)
OTHER OFFICERS
*A. Frank Beaz Senior Vice President
*Leon Billis Senior Vice President
*Harvey Blitz Senior Vice President and Deputy
Chief Financial Officer
*Kevin R. Byrne Vice President and Treasurer
*Jerry M. de St. Paer Executive Vice President
*Gordon G. Dinsmore Senior Vice President
*Alvin H. Fenichel Senior Vice President and
Controller
*Paul J. Flora Senior Vice President and Auditor
C-9
<PAGE>
POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH
BUSINESS ADDRESS EQUITABLE
- ------------------ -------------
*Robert E. Garber Executive Vice President and General
Counsel
*Donald R. Kaplan Vice President and Chief Compliance
Officer and Associate General Counsel
*Michael S. Martin Senior Vice President
*Peter D. Noris Executive Vice President and Chief
Investment Officer
*Anthony C. Pasquale Senior Vice President
*Pauline Sherman Vice President, Secretary and Associate
General Counsel
*Samuel B. Shlesinger Senior Vice President
*Richard V. Silver Senior Vice President and Deputy
General Counsel
*Jose Suquet Executive Vice President and Chief
Agency Officer
*Stanley B. Tulin Senior Executive Vice President
and Chief Financial Officer
C-10
<PAGE>
Item 26. Persons Controlled by or Under Common Control with the Insurance
Company or Registrant
----------------------------------------------------------------
Separate Account Nos. 3, 4, 8, 30, 191 and 200 of The Equitable
Life Assurance Society of the United States (the "Separate Accounts") are
separate accounts of Equitable. Equitable, a New York stock life insurance
company, is a wholly owned subsidiary of The Equitable Companies Incorporated
(the "Holding Company"), a publicly traded company.
The largest stockholder of the Holding Company is AXA-UAP. As of
January 1, 1997, AXA-UAP beneficially owned 63.8% of the outstanding common
stock of the Holding Company (assuming conversion of the convertible preferred
stock held by AXA-UAP). Under its investment arrangements with Equitable Life
and the Holding Company, AXA-UAP is able to exercise significant influence over
the operations and capital structure of the Holding Company and its
subsidiaries, including Equitable Life. AXA-UAP, a French company, is the
holding company for an international group of insurance and related financial
services companies.
C-11
<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-12
<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 Structured Settlement Corporation (1996) (Delaware)
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)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-13
<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 Distributors, Inc. (1988) (Delaware) (a)
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 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-14
<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-15
<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-16
<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-17
<PAGE>
AXA GROUP CHART
The information listed below is dated as of December 31, 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 99%
Axa Assurances Vie France 100% by Axa and Axa Courtage
Vie
Axa Courtage Iard France 99.9% by Axa and Axa
Assurances Iard
Axa Courtage Vie France 99.4% by Axa and Axa
Assurances Iard and Axa
Courtage 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 100% by Axa and Axa Courtage
Vie
Defense Civile France 95%
Societe Francaise d'Assistance France 100% by SFA Holding
Monvoisin Assurances France 99.9% by different companies
and Mutuals
Societe Beaujon France 99.9%
Lor Finance France 99.9%
Jour Finance France 100% by Alpha Assurances Iard
and by Axa Assurances Iard
Compagnie Auxiliaire pour le France 99.8% by Societe Beaujon
Commerce and l'Industrie
C.F.G.A. France 99.96% owned by Mutuals and
Finaxa
Axa Global Risks France 100% owned by Axa and Mutuals
Saint Bernard Diffusion France 94.92% owned by Direct
Assurances Iard
Sogarep France 95%, (100% with Mutuals)
Argovie France 100% by Axiva and SCA Argos
Finargos France 70.5% owned by Axiva
</TABLE>
C-18
<PAGE>
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
<S> <C> <C>
Astral Finance France 99.33% by Axa Courtage Vie
Argos France N.S.
Finaxa Belgium Belgium 100%
Axa Belgium Belgium 26.8% by Axa(SA) and 72.6% by
Finaxa Belgium
De Kortrijske Verzekering Belgium 99.8% by Axa Belgium
Juris Belgium 100% owned by Finaxa Belgium
Finaxa Luxembourg Luxembourg 100%
Axa Assurance IARD Luxembourg Luxembourg 99.9%
Axa Assurance Vie Luxembourg Luxembourg 99.9%
Axa Aurora Spain 50% owned by Axa
Aurora Polar SA de Seguros y Spain 99.4% owned by Axa Aurora
Reaseguros
Axa Vida SA de Seguros y Spain 89.82% owned by Aurora Polar
Reaseguros 5% by Axa
Axa Gestion de Seguros y Spain 99.1% owned by Axa Aurora
Reaseguros
Hilo Direct Seguros Spain 99.9% by Axa Aurora
Axa Assicurazioni Italy 100% owned by Axa
Eurovita Italy 30% owned by Axa
Assicurazioni
Axa Equity & Law plc U.K. 99.9% owned by Axa
Axa Equity & Law Life U.K. 100% by Axa Equity & Law plc
Assurance Society
Axa Equity & Law International U.K. 100% owned by Axa Equity &
Law Life Assurance Society
Axa Leven The 100% by Axa Equity & Law Life
Netherlands Assurance Society
Axa Insurance U.K. 100% owned by Axa
Axa Global Risks U.K. 100% owned by Axa Global
Risks (France)
Axa Canada Canada 100% owned by Axa
Boreal Insurance Canada 100% owned by Gestion
Fracapar
Axa Assurances Inc. Canada 100% owned by Axa Canada
</TABLE>
C-19
<PAGE>
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
<S> <C> <C>
Axa Insurance Inc. Canada 100% owned by Axa Canada and
Axa Assurance Inc.
Anglo Canada General Insurance Canada 100% owned by Axa Canada
Cy
Axa Pacific Insurance Canada 100% by Boreal Insurance
Boreal Assurances Agricoles Canada 100% by Boreal Insurance
Sime Axa Berhad Malaysia 30% owned by Axa and Axa
Reassurance
Axa Sime Investment Holdings Singapore 50%
Pte Ltd
Axa Sime Assurance Hong Kong 100% owned by Axa Sime Invt.
Holdings Pte Ltd
Axa Sime Assurance Singapore 100% owned by Axa Sime Invt
Holdings Pte Ltd
Axa Life Insurance Hong Kong 100%
PT Asuransi Axa Indonesia Indonesia 80%
Equitable Cies Incorp. U.S.A. 60.8% between Axa, 44.69%
Financiere 45, 3.8%,
Lorfinance 7.6% and Axa
Equity & Law Life Association
Society 4.8%
Equitable Life Assurance of U.S.A. 100% owned by Equitable Cies
the USA Inc.
National Mutual Holdings Ltd Australia 51% between Axa, 42.1% and
Axa Equity & Law Life
Assurance Society 8.9%
The National Mutual Life Australia 100% owned by National Mutual
Association of Australasia Ltd Holdings Ltd
National Mutual International Australia 100% owned by National Mutual
Pty Ltd Holdings Ltd
National Mutual (Bermuda) Ltd Australia 100% owned by National Mutual
International Pty Ltd
National Mutual Asia Ltd Australia 55% owned by National Mutual
Holdings Ltd and 20% by
Datura Ltd and 13% by
National Mutual Life
Association of Australasia
Australian Casualty & Life Ltd Australia 100% owned by National Mutual
Holdings Ltd
National Mutual Health Australia 100% owned by National Mutual
Insurance Pty Ltd Holdings Ltd
</TABLE>
C-20
<PAGE>
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
<S> <C> <C>
Axa Reassurance France 100% owned by Axa, Axa
Assurances Iard and Axa
Global Risks
Axa Re Finance France 80% owned by Axa Reassurance
Axa Re Vie France 99.9% owned by Axa
Reassurance
Axa Cessions France 100% by Axa
Axa Re Mexico Mexico 100% owned by Axa Reassurance
Axa Re Asia Singapore 100% owned by Axa Reassurance
Axa Re U.K. Plc U.K. 100% owned by Axa Re U.K.
Holding
Axa Re U.K. Holding U.K. 100% owned by Axa Reassurance
Axa Re U.S.A. U.S.A. 100% owned by Axa America
and Axa Reassurance
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% owned by Axa Reassurance
Axa Life Insurance Japan 100% owned by Axa
Dongbu Axa Life Insurance Co Korea 50% owned by Axa
Ltd
Axa Oyak Hayat Sigota Turkey 60% owned by Axa
Oyak Sigorta Turkey 11% owned by Axa
</TABLE>
C-21
<PAGE>
AXA FINANCIAL BUSINESS
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
<S> <C> <C>
Compagnie Financiere de Paris France 96.9%, (100% with Mutuals)
(C.F.P.)
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 Axa Asset
Management Europe
Compagnie Europeenne de Credit France 100% owned by C.F.P.
(C.E.C.)
Fidei France 20.7% owned by C.F.P. and
10.8% by Axamur
Societe de Placements France 98.58% with Mutuals
Selectionnes S.P.S.
Presence et Initiative France 100% with Mutuals
Vamopar France 100% owned by Societe Beaujon
Financiere Mermoz France 100%
Axa Asset Management Europe France 100%
Axa Asset Management France 100% owned by Axa Asset
Partenaires Management Europe
Axa Asset Management Conseils France 100% owned by Axa Asset
Management Europe
Axa Asset Management France 100% owned by Axa Asset
Distribution Management Europe
Axa Equity & Law Home Loans U.K. 100% owned by Axa Equity &
Law Plc
Axa Equity & Law Commercial U.K. 100% owned by Axa Equity &
Loans Law Plc
</TABLE>
C-22
<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. 44.1% owned by Equitable Cies
Inc. and 36.1% by Equitable
Holding Cies
National Mutual Funds Australia 100% owned by National
Management (Global) Ltd Holdings Ltd
National Mutual Funds USA 100% by National Mutual Funds
Management North America Management (Global) Ltd.
Holding Inc.
Cogefin Luxembourg 100% owned by Axa Belgium
Financiere 45 France 99.8% owned by Axa
Mofipar France 99.76% owned by Axa
ORIA France 100% owned by Axa Millesimes
Axa Oeuvres d'Art France 100% by Mutuals
Axa Cantenac Brown France 100% by Societe Beaujon
Axa Suduiraut France 99.6% owned by Societe
Beaujon
Colisee Acti Finance 2 France 100% owned by Axa Assurances
Iard Mutuelle
</TABLE>
C-23
<PAGE>
AXA REAL ESTATE BUSINESS
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
<S> <C> <C>
C.I.P.M. France 97.8% with 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 Mutuelles
Parigest France 100% by the Mutuals, C.I.P.M.
and Fincosa
Parimmo France 100% by the insurance
companies and Mutuals
S.G.C.I. France 100% by different companies
and Mutuelles
Transaxim France 100% owned by S.G.C.I. and
C.P.P.
Compagnie Parisienne de France 100% owned by S.G.C.I.
Participations
Monte Scopando France 100% owned by C.P.P.
Matipierre France 100% by different companies
Securimmo France 87.12% by different companies
and Mutuals
Paris Orleans France 100% by Axa Courtage Iard
Colisee Bureaux France 100% by different companies
and Mutuals
Colisee Premiere France 100% by different companies
and Mutuals
Colisee Laffitte France 100% by Colisee Bureaux
Foniere 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 Ass Iard
Ahorro Familiar France 42.2% owned by Axa Assurances
Iard
Fonciere du Val d'Oise France 100% owned by C.P.P.
Sodarec France 100% owned by C.P.P.
</TABLE>
C-24
<PAGE>
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
<S> <C> <C>
Centrexpo France 100% owned by C.P.P.
Fonciere de la Vile du Bois France 100% owned by Centrexpo
Colisee Seine France 100% owned by different
companies
Translot France 100% owned by SGCI
S.N.C. Dumont d'Urville France 100% owned by Colisee
Premiere
Colisee Federation France 100% by SGCI
Colisee Saint Georges France 100% by SGCI
Drouot Industrie France 50% by SGCI and 50% by Axamur
Colisee Vauban France 99.6% by Matipierre
Fonciere Colisee France 100% by Matipierre and
different companies
Axa Pierre S.C.I. France 97.6% owned by different
companies and Mutuals
Axa Millesimes France 85.2% owned by AXA and the
Mutuals
Chateau Suduirault France 100% owned by Axa Millesimes
Diznoko Hongrie 95% owned by Axa Millesimes
Compagnie Fonciere Matignon France 100% by different companies
and Mutuals
Equitable Real Estate U.S.A. 100% owned by ELAS
Investment
Quinta do Noval Vinhos S.A. Portugal 99.6% owned by Axa Millesimes
</TABLE>
C-25
<PAGE>
OTHER AXA BUSINESS
<TABLE>
<CAPTION>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
<S> <C> <C>
A.N.F. France 95.4% owned by Finaxa
Lucia France 20.6% owned by Axa Assurances
Iard and 8.6% by Mutuals
Schneider S.A. France 10.4%
</TABLE>
C-26
<PAGE>
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
EQ Advisors Trust
Separate Accounts
6. This chart was last revised on April 1, 1997.
C-27
<PAGE>
Item 27. Number of Contractowners.
As of March 31, 1997 the number of participants in the
American Dental Association Members Program offered by the Registrant was
23,162.
Item 28. Indemnification
(a) Indemnification of Principal Underwriter: to the extent
permitted by law of the State of New York and subject to all
applicable requirements thereof, Equico Securities, Inc.
("Equico") undertook to indemnify each of its directors and
officers who is made or threatened to be made a party to any
action or proceeding, whether civil or criminal, by reason
of the fact that he or she is or was a director or officer
of Equico.
(b) Undertaking: insofar as indemnification for liability
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
Item 29. Principal Underwriters
(a) EQ Financial Consultants, Inc. ("EQ Financial"), a
wholly-owned subsidiary of Equitable is the principal
underwriter for Equitable's Separate Account No. 301,
Separate Account A, Separate Account I and Separate Account
FP. EQ Financial's principal business address is 1755
Broadway, NY, NY 10019.
(b) See Item 25.
(c) Not applicable.
C-28
<PAGE>
Item 30. Location of Accounts and Records
The records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 to 31a-3
promulgated thereunder, with respect to the separate accounts
named in Item 29(a),are maintained by The Equitable Life
Assurance Society of the United States at 135 West 50th
Street, New York, New York 10020.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant hereby undertakes:
(a) to file a post-effective amendment to this
registration statement as frequently as is necessary
to ensure that the audited financial statements in
the registration statement are never more than 16
months old for so long as payments under the
variable annuity contracts may be accepted;
(b) to include either (1) as part of any application to
purchase a contract offered by the prospectus, a
space that an applicant can check to request a
Statement of Additional Information, or (2) a
postcard or similar written communication affixed to
or included in the prospectus that the applicant can
remove to send for a Statement of Additional
Information;
(c) to deliver any Statement of Additional Information
and any financial statements required to be made
available under this Form promptly upon written or
oral request.
(d) Equitable represents that the fees and charges
deducted under the Contract described in this
Registration Statement, in the aggregate, are
reasonable in relation to the services rendered, the
expenses to be incurred, and the risks assumed by
Equitable under the Contract. Equitable bases its
representation on its assessment of all of the facts
and circumstances, including such relevant factors
as: the nature and extent of such services, expenses
and risks, the need for Equitable to earn a profit,
the degree to which the Contract includes innovative
features, and regulatory standards for the grant of
exemptive relief under the Investment Company Act of
1940 used prior to October 1996, including the range
of industry practice.
C-29
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, the Registrant certifies
that it meets the requirements of Securities Act Rule 485(b) for effectiveness
of this Registration Statement and has caused this Registration Statement to be
signed on its behalf, in the City and State of New York, on the 24th day of
April, 1997.
THE EQUITABLE LIFE ASSURANCE SOCIETY OF
THE UNITED STATES
(Registrant)
By: The Equitable Life Assurance
Society of the United States
By: /s/ Naomi J. Weinstein
------------------------------
Naomi J. Weinstein
Vice President
C-30
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, the Depositor certifies
that it meets the requirements of Securities Act Rule 485(b) for effectiveness
of this Registration Statement and has caused this Registration Statement to be
signed on its behalf, in the City and State of New York, on the 24th day of
April, 1997.
THE EQUITABLE LIFE ASSURANCE SOCIETY OF
THE UNITED STATES
(Depositor)
By: /s/ Naomi J. Weinstein
------------------------------------
Naomi J. Weinstein
Vice President
As required by the Securities Act of 1933 this registration
statement has been signed by the following persons in the capacities and on the
date indicated:
PRINCIPAL EXECUTIVE OFFICERS:
Joseph J. Melone Chairman of the Board, Chief Executive
Officer and Director
James M. Benson President and Director
William T. McCaffrey Senior Executive Vice President,
Chief Operating Officer and Director
PRINCIPAL FINANCIAL OFFICER:
Stanley B. Tulin Senior Executive Vice President and
Chief Financial Officer
PRINCIPAL ACCOUNTING OFFICER:
/s/ Alvin H. Fenichel
- -----------------------------
Alvin H. Fenichel Senior Vice President and
April 24, 1997 Controller
DIRECTORS:
Claude Bebear Jean-Rene Fourtou Winthrop Knowlton
James M. Benson Norman C. Francis Arthur L. Liman
Chrisopher Brocksom Donald J. Greene George T. Lowy
Francoise Colloc'h 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
/s/ Naomi J. Weinstein
- -------------------------------
Naomi J. Weinstein
Attorney-in-Fact
April 24, 1997
C-31
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. PAGE NO.
- ----------- --------
4(j) Form of Rider No. 9 to Group Annuity Contract 2100.
6(d) By-Laws of The Equitable Life Assurance Society
of the United States, as amended November 21, 1996.
6(e) Restated Charter of The Equitable Life Assurance
Society of the United States, as amended
January 1, 1997.
9 Opinion and Consent of Anthony A. Dreyspool,
Vice President and Associate General Counsel
of The Equitable Life Assurance Society of
the United States.
10(b) Consent of Price Waterhouse LLP.
10(c) Powers of Attorney.
27 Financial Data Schedule.
C-32
<PAGE>
Attached to and made part of GROUP ANNUITY CONTRACT NO. AC 2100
between
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
and
TRUSTEES OF THE AMERICAN DENTAL ASSOCIATION MEMBERS RETIREMENT TRUST AND OF THE
AMERICAN DENTAL ASSOCIATION MEMBERS POOLED TRUST FOR RETIREMENT PLANS
RIDER NO. 9
IT IS HEREBY AGREED that, effective as May 1, 1997, said Contract is amended as
described below.
1. As of May 1, 1997, the definition of "Employer Plan" is added after the
definition of Employer: "EMPLOYER PLAN - the retirement program of an
Employer which adopts the Plan or an individually designed plan that
has adopted the Pooled Trust."
2. Section 5.1 is amended to read as follows:
5.1 "On each May 1 commencing with May 1, 1997, an annual program
expense charge, consisting of the sum of the components described in
subsections (a) and (b) of this Section 5.1, shall be paid to
Equitable from the Funding Accounts.
(a) A "Percentage Charge" consisting of the sum of the amounts derived
by multiplying the following percentages times the aggregate balance
of the Funding Accounts as of the immediately preceding January 31:
(i) 0.535% of the first $400 million of the aggregate balance;
(ii) 0.530% of the next $100 million of the balance;
(iii) 0.520% of the next $500 million of the balance;
(iv) 0.500% of the next $500 million of the balance;
(v) 0.485% of the next $500 million of the balance; and
(vi) 0.470% of the balance in excess of $2 billion.
Page 1
<PAGE>
(b) An amount equal to the total of a "per plan charge" of (x) $150 for each
Employer Plan which is enrolled in the Program as of January 31 of each
year and (y) $400 for each Employer Plan which enrolled in the Program
during the calendar year ended immediately before such January 31. The per
plan charge will exclude inactive Employer Plans which have no balances in
the Funding Accounts as of that January 31. Commencing January 31, 1998 and
on January 31 of each year thereafter, the per plan charge will be
increased at a rate equal to the increase in the Consumer Price Index (as a
measure of change in consumer prices-among the components are housing
costs, food, transportation and electricity) during the 12 consecutive
month period ending with such December 31, but the per plan charge will
never increase more than 5% pr year. The per plan charge calculated as of
each January 31 will be converted to a basis point charge equal to the
ratio that such charge bears to the aggregate balance of the Funding
Accounts as of such January 31.
The program expense charge will be calculated as of each January 31.
One-twelfth of the program expense charge will be charged to Participants'
account balances on a daily basis during the 12 consecutive months
beginning May 1 of the same calendar year.
In the case of a Funding Account that is not valued every Business Day, a
pro rata portion of the then applicable program expense charge will be
charged to Participants' Accounts in such Funding Account on each Business
Day for which a value is established.
On the date each GRA is opened, Equitable will determine a pro rata portion
of the then applicable program expense charge for amounts held in such GRA,
which shall constitute the program expense charge for said GRA until its
maturity. The net interest rate declared by Equitable on a Fixed Income
Product will reflect the compounded effect of the then applicable program
expense charge.
As soon as practicable after the end of each quarter, Equitable will remit
a portion of the program expense charge to the ADA as reimbursement for its
expenses in connection with its duties with respect to the Plan and Trusts,
calculated as described above but based on the following percentages of the
total amounts held in the Funding Accounts as of the applicable January 31:
(a) 0.025% of the aggregate balances in the Funding Accounts not in excess
of $400 million; and
(b) 0.020% of the aggregate balances in the Funding Accounts in excess of
$400 million.
The ADA's portion of the program expense charge applicable to GRAs shall be
calculated based on the amount Equitable will receive as a program expense
charge with respect to each GRA.
Page 2
<PAGE>
If the ADA determines that its expenses for any year are less or greater
than the amount which equals its portion of the program expense charge, it
may direct Equitable, upon at least 60 days prior written notice, to
decrease or increase the percentages set forth in Subsection (a) of 5.1;
provided, however, that it makes a corresponding decrease or increase in
the portion of the program expense charge that Equitable must remit to the
ADA. No change in the program expense charge made pursuant to this
paragraph shall affect the program expense charge which is applicable to
GRAs which were opened prior to the effective date of the change.
Equitable shall have no responsibility for remitting to the ADA pursuant to
this Section 5.1 amounts Equitable has not received from a Major Insurance
Carrier or Major Bank which is making GRAs available as a Funding Account
pursuant to Article III or Section 4.5.
The parties agree that the program expense charge may be changed as of May
1, 1998 and as of any succeeding May 1.
Sections 7.1 through 7.6 are amended to read as follows:
7.1. A party may terminate this Contract on the last day of any month,
provided written notice of such termination is received by the other party
at least 24 months before the date of termination. No amounts may be
contributed or transferred to any Funding Account on or after the date on
which the termination of this Contract is effective.
7.2 If the Administrative Agreement is terminated for cause, either party
may elect, upon three months' written notice, to terminate this Contract as
of the date of termination of the Administrative Agreement. For purposes of
this Section 7.2, "cause," with respect to Equitable, shall mean (a)
Equitable's willful misconduct, gross negligence or gross and continued
nonfeasance in the performance of its duties under the Administrative
Agreement, (b) a decline in Equitable's insurance claims paying ratings
such that it is both "Baa" or below as rated by Moody's Investors Service
and "BBB" or below as rated by Standard & Poor's Corporation or (c) a
greater than six percent decrease in the number of Employers participating
in the Program, based on Program participation on December 31, 1990, which
is the result of concern about Equitable's financial condition; "cause,"
with respect to the Trustees, shall mean the making available to ADA
members by the ADA or the Trustees of any investment product that is not
made available pursuant to the terms of this Contract and which is marketed
for use in qualified retirement plans. As of the date of termination of the
Administrative Agreement, the fees set forth in Article V shall cease to be
paid to Equitable. If neither party elects to terminate this Contract upon
termination of the Administrative Agreement for cause, (a) the Trustees
shall appoint a successor recordkeeper under the Trusts and shall require
such recordkeeper to comply with Equitable's reasonable administrative
requirements, (b) Equitable shall receive fees from the Funding Accounts it
provides in accordance with its standard fee schedule charged for
investment management and administrative services to group pension clients
receiving
Page 3
<PAGE>
similar investment products and no recordkeeping services and (c) Equitable
shall no longer be responsible for receiving, directing, redirecting or
disbursing any amounts to or from any Funding Account provided by any other
party.
7.3 Following the termination of this Contract, Equitable shall pay the
amounts allocated on behalf of Participants in the Funding Accounts it provides
(in cash in the case of amounts allocated to the Money Market Guarantee and in
cash or marketable assets, or both, in the case of any other Funding Account)
to any person designated in writing by the Trustees (or, if the Trustees make
no such designation, to the Trustees), except that:
(a) Equitable shall not transfer any such amount that is invested in a GRA
provided by Equitable prior to the stated maturity, except as
otherwise provided in this Contract;
(b) Equitable will pay the value of the Trusts' interests in the Real
Estate Fund in cash derived from contributions and transfers to, and
from liquidating assets of, the Real Estate Fund. Equitable may defer
the transfer of all or part of the amounts held for the Trusts in the
Real Estate Fund for such time as Equitable reasonably considers
necessary to obtain the requisite liquidity to pay the amount to be
withdrawn or to protect the interests of other clients in the Real
Estate Fund or in Equitable's Pooled Separate Account No. 8;
(c) Beginning May 1, 1997, if the Trustees terminate this Contract for
cause which is based on the second and third definitions of "cause"
listed in Section 7.2, except as provided in Section 7.5, Equitable
shall transfer amounts held under the Money Market Guarantee in
twenty-one monthly installments beginning on the last Business Day of
the month following the date the termination of this Contract is
effective. The amount of each monthly installment will be determined
as of the date it becomes payable and will be equal to (i) the amount
then held under the Money Market Guarantee, divided by (ii) the number
of installments that have not yet been made (including the current
payment), less (iii) the aggregate amount that has been paid out by
Equitable from the Money Market Guarantee pursuant to Section 7.5
since the date of the last installment; provided, however, that in no
event shall the amount of any monthly installment be less than zero
(in the event the amount under clause "(iii)" above exceeds the
quotient resulting from dividing clause "(i)" by clause "(ii)" above,
such excess shall be added to the amounts referred to in clause
"(iii)" above when determining the amount payable in the next
succeeding installment).
7.4 The parties may agree to terminate the Money Market Guarantee, at any
time, subject to the payout provisions of this Section 7.4. Except as provided
in Section 7.5, if the Administrative Agreement is not then terminated,
Equitable shall transfer amounts held under the Money Market Guarantee in
monthly installments over a period of not more than 24 months
Page 4
<PAGE>
beginning at the end of the month following such agreement. If the
Administrative Agreement is terminated by either party, Equitable will begin
payment of the amounts held under the Money Market Guarantee over a period of
24 months beginning at the end of the month immediately succeeding the
termination date of the Administrative Agreement. The amount of each monthly
installment will be determined as of the date it becomes payable and will be
equal to (i) the amount then held under the Money Market Guarantee divided by
(ii) the number of installments that have not yet been made (including the
current payment), less (iii) the aggregate amount that has been paid out by
Equitable from the Money Market Guarantee pursuant to Section 7.5 since the
date of the last installment; provided, however, that in no event shall the
amount of any monthly installment be less than zero (in the event the amount
under clause "(iii)" above exceeds the quotient resulting from dividing clause
"(i)" by clause "(ii)" above, such excess shall be added to the amounts
referred to in clause "(iii)" above when determining the amount payable in the
next succeeding installment).
7.5 Equitable shall transfer amounts from the Money Market Guarantee
without regard to Section 7.3 and 7.4 as necessary to satisfy Participant
requests for withdrawals, transfers and benefit distributions under the Plan
which are made solely at the direction of the Participant, without any
direction or influence by the Trustees or the ADA (other than objective
announcements regarding general issues relating to the Trusts or the Funding
Accounts or neutral recitations of facts in response to specific Participant
inquiries) and subject to reasonable administrative procedures which Equitable
may institute upon termination of this Contract; provided, however, that
Equitable shall not be required to transfer any amounts pursuant to this
Section if (a) the Participant has requested a transfer to another funding
option (i) which is a Fixed Income Product with a stated maturity of less than
one year or (ii) in which the possible loss of principal amounts invested is
significantly affected by changes in prevailing interest rates (including money
market funds), the investments of which have an average maturity of less than
one year, or (b) the Participant has any amounts (which can be transferred or
reallocated without restriction or penalty) allocated to any funding option (i)
which is a Fixed Income Product with a stated maturity of less than one year or
(ii) in which the possible loss of principal amounts invested is significantly
affected by changes in prevailing interest rates (including money market
funds), the investments of which have an average maturity of less than one
year.
7.6 Equitable shall not be responsible for any amounts which are held by a
Major Insurance Carrier or Major Bank or any other provider of Funding Accounts
pursuant to Article III or Section 4.5.
Page 5
<PAGE>
NEW YORK, NEW YORK
FOR THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES:
By: By:
------------------------------- -------------------------------
Chairman and Chief Executive President and Chief Operating
Officer Officer
By:
------------------------------------
Vice President and Secretary
--------------------------------- ----------------------------------
Assistant Registrar Date of Issue
FOR THE CONTRACTHOLDER: Trustees of the American Dental Association Members
Retirement Trust and of the American Dental Association Members Pooled Trust
for Retirement Plans
, Trustee , Trustee
- ------------------------------ ------------------------------
, Trustee , Trustee
- ------------------------------ ------------------------------
, Trustee , Trustee
- ------------------------------ ------------------------------
, Trustee , Trustee
- ------------------------------ ------------------------------
, Trustee , Trustee
- ------------------------------ ------------------------------
, Trustee , Trustee
- ------------------------------ ------------------------------
, Trustee , Trustee
- ------------------------------ ------------------------------
, Trustee , Trustee
- ------------------------------ ------------------------------
Page 6
<PAGE>
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).]
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF
THE UNITED STATES
RESTATED CHARTER
----------------
As Amended January 1, 1997
<PAGE>
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.
- 4 -
<PAGE>
Exhibit 9
April 24, 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 N-4 Registration
Statement (the "Registration Statement") of The Equitable Life Assurance
Society of the United States ("Equitable") under the Securities Act of 1933, as
amended (the "Act"), relating to separate account units of interest ("Units")
under a group annuity contract issued by Equitable to the Trustees of the
American Dental Association Members Retirement Trust and of the American Dental
Association Members Pooled Trust for Retirement Plans (the "ADA Contract"),
(the separate accounts included in the ADA Contract being referred to herein
collectively as the "Separate Accounts"). The ADA Contract is designed to
provide benefits under retirement plans and trusts adopted by members of the
American Dental Association for themselves and their employees. 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 in the
manner described in the Registration Statement covering up to $ 70,000,000 of
the plan contributions to be received under the ADA Contract.
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 Accounts have been duly authorized and established
by Equitable.
<PAGE>
The Equitable Life Assurance
Society of the United States
April 24, 1997
Page 2
3. Assets allocated to the Separate Accounts are owned by
Equitable; Equitable is not be a trustee with respect thereto.
Pursuant to New York law, the income, gains and losses, whether or
not realized, from assets allocated to a Separate Account must be
credited to or charged against such Account, without regard to the
other income, gains or losses of Equitable.
4. The ADA Contract provides that the portion of the assets of the
Separate Accounts equal to the reserves and other contract
liabilities with respect to the Separate Accounts shall not be
chargeable with liabilities arising out of any other business
Equitable may conduct.
5. The ADA Contract and the Units issued thereunder have been duly
authorized; and the ADA Contract (including the Units duly issued
thereunder) constitutes a validly issued and binding obligation of
Equitable in accordance with its terms.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Yours very truly,
/s/ Anthony A. Dreyspool
--------------------------------
<PAGE>
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-4 (the "Registration
Statement") of our reports dated February 10, 1997 relating to the financial
statements of Separate Account Nos. 4, 191 and 200 of The Equitable Life
Assurance Society of the United States for the year ended December 31, 1996,
and our report dated February 10, 1997 relating to the consolidated financial
statements of The Equitable Life Assurance Society of the United States for
the year ended December 31, 1996, which reports appear in such Statement of
Additional Information, and to the incorporation by reference of our reports
into the Prospectus which constitutes part of this Registration Statement. We
also consent to the use in the Prospectus Supplement constituting part of this
Registration Statement or our report dated February 10, 1997 relating to the
financial statements of Separate Account No. 4 of The Equitable Life
Assurance Society of the United States for the year ended December 31, 1996,
which report appears in such Prospectus Supplement. We also consent to the
references to us under the headings "Condensed Financial Information" and
"Experts" in the Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
New York, New York
April 24, 1997
<PAGE>
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-4 (the "Registration
Statement") or our reports dated February 14, 1997 relating to the financial
statements of Separate Account Nos. 8 and 30 of The Equitable Life Assurance
Society of the United States for the year ended December 31, 1996, 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 references to us
under the headings "Condensed Financial Information" and "Experts" in the
Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Atlanta, Georgia
April 24, 1997
<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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 24th day of February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 6th day of February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/s/ Christopher 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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/s/ Jean-Rene Foutou
<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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 11th day of February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 11th day of February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 3rd day of February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 February, 1997
/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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 3rd day of February, 1997
/s/ Dave H. Williams
<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, Donald R. Kaplan, Pauline
Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred
Oliver, Jerome S. Golden and Dennis D. Witte 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 28th day of February, 1997
/s/ Stanley B. Tulin
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> Sep Acct. No. 4 (ADA)
<S> <C>
<PERIOD-TYPE> 12-MOS
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<PERIOD-START> JAN-01-1996
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> Sep. Acct. No. 191 (ADA)
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> Sep Acct. No. 200 (ADA)
<S> <C>
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