Registration No. 333-23019
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 | |
Pre-Effective Amendment No. __ |_|
Post-Effective Amendment No. 1 |X|
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. __ |_|
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THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(Exact Name of Registrant)
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
(Name of Insurance Company)
1290 Avenue of the Americas, New York, New York 10104
(Address of Insurance Company's Principal Executive Offices)
Insurance Company's Telephone Number, including Area Code: (212) 554-1234
---------------------------------------
MARY P. BREEN
Vice President
and Associate General Counsel
The Equitable Life Assurance Society of the United States
1290 Avenue of the Americas, New York, New York 10104
(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
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<PAGE>
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective (check
appropriate box):
|_| Immediately upon filing pursuant to paragraph (b) of Rule 485.
|X| On May 1, 1998 pursuant to paragraph (b) of Rule 485.
|_| 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
|_| On (date) pursuant to paragraph (a)(1) of Rule 485.
|_| 75 days after filing pursuant to paragraph (a)(2) of Rule 485.
|_| On (date) pursuant to paragraph (a)(3) of Rule 485.
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date for
previously filed post-effective amendment.
Title of securities being registered:
Units of interest in separate accounts under variable annuity contracts
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<PAGE>
FORM N-3 ITEM PROSPECTUS CAPTION
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CROSS REFERENCE SHEET
SHOWING LOCATION OF INFORMATION IN PROSPECTUS
---------------------------------------------
FORM N-3 ITEM PROSPECTUS CAPTION
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1. Cover Page Cover Page
2. Definitions Part I - RIA Summary
3. Synopsis Part I - RIA Summary
4. Condensed Financial Part I - RIA Summary;
Information Condensed Financial Information
5. General Description Part I - RIA Summary;
of Registrant and Part III - Equitable Life and
Insurance Company Its Funds
6. Management Part II - Charges and Fees - Investment
Management and Financial Accounting Fee
Applicable to the Funds; Part III -
Equitable Life and Its Funds -
Investment Management
7. Deductions and Expenses Part II - Charges and Fees
8. General Description of Part V - Provisions of RIA and
Variable Annuity Contracts Retirement Benefits; Part VIII -
Participant Recordkeeping Services
(Optional)
9. Annuity Period Part V - Provisions of RIA and
Retirement Benefits - Annuity Benefits
10. Death Benefit Not Applicable
11. Purchases and Part III - Equitable Life
Contract Value and Its Funds - Investment Objectives
and Policies; Purchase and Redemption of
Units; How We Determine the Unit Value
12. Redemption Part II - Charges and Fees - Contingent
Withdrawal Charge; Part III - Equitable
Life and Its Funds - Purchase and
Redemption of Units; How We Determine
the Unit Value
13. Taxes Part VII - Tax and ERISA Considerations
14. Legal Proceedings Part VI - Miscellaneous Matters - Legal
Proceedings
15. Table of Contents of SAI Table of Contents
the Statement of
Additional Information
- i -
<PAGE>
CROSS REFERENCE SHEET SHOWING
LOCATION OF INFORMATION IN
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
STATEMENT OF ADDITIONAL
FORM N-3 ITEM INFORMATION CAPTION
------------- -------------------
16. Cover Page Cover Page
17. Table of Contents Table of Contents
18. General Information Part I - Fund Information
and History
19. Investment Objectives Part I - Fund
and Policies Information - Restrictions and
Requirements of the Bond, Balanced,
Common Stock and Aggressive Stock Funds;
Certain Investments of the Bond Fund
20. Management Part II - Management for The Bond,
Balanced, Common Stock and Aggressive
Stock Funds and Equitable Life
21. Investment Advisory Part I - Fund Information -
and Other Services Brokerage Fees and Charges for
Securities Transactions; Part II -
Management for The Bond, Balanced,
Common Stock and Aggressive Stock Fund
and Equitable Life
22. Brokerage Allocation Part I - Fund Information - Brokerage
Fees and Charges for Securities
Transactions
23. Purchase and Pricing Part I - Fund Information -
of Securities Being Offered Summary of Unit Values; How We
Determine the Unit Value
24. Underwriters Part II - Management for The Bond,
Balanced, Common Stock and Aggressive
Stock Funds and Equitable Life
25. Calculation of Yield Not Applicable
Quotations of Money
Market Sub-Accounts
26. Annuity Payments Not Applicable
27. Financial Statements Part III - Financial Statements
- ii -
<PAGE>
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[LOGO](TM) Retirement
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Investment
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Account(R)
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Retirement Investment Account (RIA) is an investment vehicle for the assets of
employee retirement plans (employer plans) that meet the requirements of Section
401(a) of the Internal Revenue Code of 1986, as amended (Code), and whose funds
are maintained by trusts described in Section 501(a) of the Code. In addition,
some of these employer plans meet the requirements of the Employee Retirement
Income Security Act of 1974, as amended (ERISA). RIA is offered under a group
annuity contract issued by THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED
STATES.
Under RIA, employers may choose from the investment options (Investment Options)
listed below. These Investment Options include the Guaranteed Interest Account,
which is part of Equitable's general account and pays interest at guaranteed
fixed rates and twenty five investment funds (Investment Funds) of the separate
accounts noted below.
<TABLE>
<CAPTION>
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Investment Funds
----------------
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Pooled Separate Accounts Separate Account No. 51 Separate Account No. 66
(available in July, 1998)
<S> <C> <C>
o Alliance Bond, Separate Account o Alliance Money Market o T. Rowe Price Equity
No. 13 -- Pooled o Alliance Intermediate Income
o Alliance Balanced, Separate Government Securities o EQ/Putnam Growth &
Account No. 10 -- Pooled o Alliance Quality Bond Income Value
o Alliance Common Stock, o Alliance High Yield o Merrill Lynch Basic Value
Separate Account No. 4 -- Pooled o Alliance Growth & Income Equity
o Alliance Aggressive Stock, o Alliance Equity Index o MFS Research
Separate Account No. 3 -- Pooled o Alliance Global o T. Rowe Price International Stock
o Alliance International o Morgan Stanley Emerging
o Alliance Small Cap Markets Equity
Growth o Warburg Pincus Small
o Alliance Conservative Investors Company Value
o Alliance Growth Investors o MFS Emerging Growth Companies
o EQ/Putnam Balanced
o Merrill Lynch World Strategy
</TABLE>
We invest each Investment Fund of Separate Account No. 51 in Class IA Shares of
a corresponding portfolio (Portfolio) of the Hudson River Trust (HRT). Beginning
in early July, 1998, we will invest each Investment Fund of Separate Account No.
66 in Class IB Shares of a corresponding portfolio (Portfolio) of The EQ
Advisors Trust (EQAT). HRT and EQAT (Trusts) are two mutual funds whose shares
are purchased by the separate accounts of insurance companies. The prospectuses
for HRT and EQAT directly following this prospectus, describe the investment
objectives, policies and risks of the Portfolios. The Investment Funds relating
to EQAT will be available in early July 1998.
Employer plan assets invested in a Fund will fluctuate in value with the
investment performance of that Fund. The Alliance Bond Fund is available only to
employer plans that signed an agreement to invest monies in the Alliance Bond
Fund prior to June 1, 1994.
This prospectus provides important information you should be aware of before
investing. You should read it carefully and retain it for future reference. This
prospectus is not valid unless it is attached to the current prospectuses for
HRT and EQAT, which should also be read carefully and maintained for future
reference. Additional information is included in the Statement of Additional
Information (SAI) dated May 1, 1998 which has been filed with the Securities and
Exchange Commission. The SAI has been incorporated by reference into this
prospectus. A table of contents for the SAI appears at the end of this
prospectus. To obtain a copy of the SAI free of charge, complete the SAI request
form at the back of this prospectus and mail it to us, or call or write:
The Equitable Life Assurance Society of the United States -- RIA Service Office
Attn. SAI Request
200 Plaza Drive
Secaucus, NJ 07094-3689
or call
(800) 967-4560
(201) 583-2302
(Business Days, 9 A.M. to 5 P.M. Eastern time)
or fax
(201) 583-2304, 2305, or 2306
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Keep this prospectus for future reference.
May 1, 1998
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888-1154
Cat. No. 127659
Copyright 1998
The Equitable Life Assurance Society of the United States.
All rights reserved.
<PAGE>
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TABLE OF CONTENTS
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Part I -- RIA Summary Page 3
Equitable Life 3
RIA Terms 3
Participation and Funding Requirements 4
Miscellaneous 4
Investment Options 4
Charges and Fees 4
Cash Available to a Participant under RIA before
Retirement 5
Benefit Payments 5
Fee Tables 5
Condensed Financial Information 10
Investment Policies and Objectives 14
Contributions, Transfers and Withdrawals 16
Loans 16
Communications with Us 16
Part II -- Charges and Fees Page 17
Charges Which Are Reflected in Reductions
in the Unit Value 17
Charges Which Reduce the Number of Units in RIA 18
Part III -- Equitable Life and Its Funds Page 20
Equitable Life 20
About Our Funds 20
Trusts 20
Purchase and Redemption of Units 21
How We Determine the Unit Value 21
Investment Objectives and Policies 21
Alliance Bond Fund 22
Alliance Balanced Fund 23
Alliance Common Stock Fund 24
Alliance Aggressive Stock Fund 25
Investment Management 26
HRT's Manager and Investment Adviser 26
EQAT's Manager 26
EQAT's Investment Advisers 27
Rates of Return 28
Inception Dates and Comparative
Benchmarks 28
Annualized Rates of Return 30
Cumulative Rates of Return 32
Year-by-Year Rates of Return 34
Part IV -- The Guaranteed Interest Account Page 35
General 35
The Guarantees 35
Current and Minimum Interest Rates 35
Classes of Employer Plans 35
Charges and Fees 35
Deferred Payout Provision 36
Illustration of Deferred Payout Provision 37
Part V -- Provisions of RIA and Retirement
Benefits Page 38
Contributions; Frequency and Amount 38
Rollover or Transfer from a Plan 38
Selecting Investment Options 38
Allocation Choices 38
Transfer Provisions 38
Special Rules Applicable to Plans That
May Invest in the Alliance Bond Fund 39
Loan Provision 40
Benefit Payments General 40
Cash Distributions 41
Annuity Benefits 41
Amount of Fixed-Annuity Payments 41
Payment of Annuity 41
Assignment and Alienation 41
Creditors' Claims 41
When We Pay Proceeds 41
Periodic Reports 42
If a Plan Fails to Qualify 42
Modification or Contract Discontinuance/
Termination 42
Part VI -- Miscellaneous Matters Page 43
How We Are Regulated 43
Commissions and Service Fees 43
Year 2000 Progress 43
Copies of the Master Retirement Trust Agreement 43
Fiduciaries 43
Acceptance 44
HRT and EQAT Voting Rights 44
Separate Account Voting Rights 44
Voting Rights of Others 44
Changes in Applicable Law 44
Our Rights 44
Legal Proceedings 44
Experts 44
Where to Get Additional Information 45
Changes in Funding Vehicle 45
Part VII -- Tax and ERISA Considerations Page 46
Tax Aspects of Contributions to a Plan 46
Tax Aspects of Distributions from a Plan 47
Certain Rules Applicable to Plan Loans 49
Impact of Taxes to Equitable Life 50
Certain Rules Applicable to Plans Designed to
Comply with Section 404(c) of ERISA 50
Part VIII -- Participant Recordkeeping
Services (Optional) Page 51
Services Provided 51
Investment Options 51
Fees 51
Enrollment 51
SAI Table of Contents Page 52
SAI Request Form Page 52
2
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PART I -- RIA SUMMARY
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Equitable Life
We are The Equitable Life Assurance Society of the United States. "We," "us" or
"Equitable Life" refers to us. We are a New York stock life insurance company
that has been in business since 1859.
RIA Terms
RIA is an investment program designed for employer plans that qualify for
tax-favored treatment under Section 401(a) of the Code. Eligible employer plans
include defined benefit plans, defined contribution plans or profit-sharing
plans, including 401(k) plans. RIA is composed of two group annuity contracts
(Contracts), a Master Retirement Trust agreement, a participation or
installation agreement, an optional participant recordkeeping services (PRS)
agreement and twenty-six investment options. The trustee of the Master
Retirement Trust has entered into the two Contracts with us to implement RIA.
Currently, The Chase Manhattan Bank, N.A. acts as trustee under the Master
Retirement Trust. The sole responsibility of Chase Manhattan Bank, N.A. is to
serve as a party to the Contracts. It has no responsibility for the
administration of RIA.
The Investment Funds of Separate Account No. 51 are the Alliance Money Market
Fund, Alliance Intermediate Government Securities Fund, Alliance Quality Bond
Fund, Alliance High Yield Fund, Alliance Growth & Income Fund, Alliance Equity
Index Fund, Alliance Global Fund, Alliance International Fund, Alliance Small
Cap Growth Fund, Alliance Conservative Investors Fund and Alliance Growth
Investors Fund. Each invests in corresponding Portfolios of HRT.
The Investment Funds of Separate Account No. 66 are: T. Rowe Price Equity Income
Fund, EQ/Putnam Growth & Income Value Fund, Merrill Lynch Basic Value Equity
Fund, MFS Research Fund, T. Rowe Price International Stock Fund, Morgan Stanley
Emerging Markets Equity Fund, Warburg Pincus Small Company Value Fund, MFS
Emerging Growth Companies Fund, EQ/Putnam Balanced Fund and Merrill Lynch World
Strategy Fund. Each invests in corresponding Portfolios of EQAT.
The other Investment Funds are held in pooled separate accounts as follows:
The Alliance Bond Fund is our Separate Account No. 13 -- Pooled.
The Alliance Balanced Fund is our Separate Account No. 10 -- Pooled.
The Alliance Common Stock Fund is our Separate Account No. 4 -- Pooled.
The Alliance Aggressive Stock Fund is our Separate Account No. 3 -- Pooled.
A participant-directed employer plan is an employer plan that by its terms
permits investment directions by participants for contribution allocations or
transfers of account accumulations among investment options. The provisions of
one of the Contracts govern this plan.
A trustee-directed employer plan permits these same directions to be made only
by the employer, a trustee or any named fiduciary or an authorized delegate of
the plan. The provisions of the other Contract govern this plan. At our sole
discretion, a trustee-directed plan may change its participation basis to a
participant-directed plan.
An employer is an employer, a plan trustee or other named fiduciary, or an
authorized delegate, of the plan. The employer is specified in the RIA adoption
documents.
The plan trustee is generally responsible for instructing us as to the
investment of plan contributions (including allocations and transfers) and
withdrawals, and receives amounts withdrawn from RIA.
A Business Day is any day on which Equitable Life is open and the New York Stock
Exchange is open for trading. We are closed on national business holidays,
Martin Luther King, Jr. Day and the Friday after Thanksgiving. We may also
choose to close on the day immediately preceding or following a national
business holiday or due to emergency conditions. Our Business Day ends at 4:00
p.m. Eastern time.
A Transaction Date is the Business Day we receive a contribution at the RIA
contribution processing office with properly completed and signed allocation
instructions, or a properly completed and signed written or facsimile request
for a financial transaction at the RIA Service Office. (For the addresses, see
the inside back cover of this prospectus.)
An exclusive funding employer plan is one which uses RIA as the exclusive
funding vehicle for the assets of an employer plan. The annual amount of
contributions must be at least $10,000.
Subject to our sole discretion, a partial funding employer plan is one which
uses RIA as a partial investment funding vehicle for an employer plan. The
aggregate amount of contributions in the initial participation year must be at
least $50,000 and the annual aggregate amount of contributions thereafter must
be at least $25,000.
An exclusive funding employer plan may not change its participation basis to
that of a partial funding employer plan,
3
<PAGE>
or vice versa, unless the underwriting and other requirements referred to above
are satisfied and approved by us.
We reserve:
o the right to change these amounts in the future for new sales only; and
o the right to impose higher annual minimums for certain plans.
We will give you advance notice of any such changes.
The employer or plan sponsor, as the case may be, is responsible for determining
whether RIA is a suitable funding vehicle and should carefully read the
prospectus and installation documents before signing a participation or
installation agreement.
Note to participants: This prospectus describes RIA as it is generally available
to employer plans. However, the terms and conditions of the employer's plan
govern which aspects of RIA are available to participants. Therefore, the
employer's plan may be different from the features of RIA described in this
prospectus.
Note to employers: Equitable Life's duties and responsibilities are limited to
those described in this prospectus. Except as explicitly set forth in the PRS
program, we do not provide administrative services in connection with an
employer plan. See Part VIII -- Participant Recordkeeping Services (Optional).
In addition, no Equitable Life Representative or firm operated by an Equitable
Life Representative is authorized to solicit or agree to perform plan
administrative services in his capacity as an Equitable Life Representative. If
an employer or trustee engages an Equitable Life Representative to provide
administrative support services to an employer plan, the employer or trustee
engages that Equitable Life Representative as its representative rather than
Equitable Life's. Equitable Life is not liable to any employer, trustee or
employer plan for any damages arising from or in connection with any plan
administration services performed or agreed to be performed by an Equitable Life
Representative.
Participation and Funding Requirements
You may participate in RIA as either an exclusive funding employer plan or a
partial funding employer plan, subject to our sole discretion and underwriting
standards and on a case-by-case basis.
To enroll in RIA, a partnership, sole proprietor or corporation must adopt the
Master Retirement Trust as part of its employer plan, and the employer must
execute the participation or installation agreement and provide us with certain
plan information. No contributions will be accepted until the Transaction Date
on which we accept the enrollment of the employer plan.
Miscellaneous
This prospectus describes units of interest (Units) in the Funds which are
registered under the Securities Act of 1933 (Registered Units). Pursuant to an
exemption under the Securities Act of 1933, the Units maintained by corporate or
governmental entities (corporate plans) are not Registered Units. In all other
respects, Registered Units are identical to unregistered Units.
Investment Options
There are twenty-six investment options available for employers to fund their
plans. They are listed on page one of this prospectus and include the
twenty-five Intestment Funds and the Guaranteed Interest Account. The
prospectuses for HRT and EQAT directly following this prospectus describe the
investment objectives, policies and risks of the available Portfolios. The
investment objectives and policies of the Alliance Bond Fund, Alliance Balanced
Fund, Alliance Common Stock Fund and Alliance Aggressive Stock Fund are
described in this prospectus under Part III -- Equitable Life and Its Funds and
in the SAI under Part I -- Fund Information. If the Employer or Plan Trustee
does not select all twenty-six Investment Options in the RIA program, your
choices will be limited to the Investment Options selected. If the Plan is
intended to comply with the requirements of ERISA Section 404(c), the Employer
or the Plan Trustee is responsible for making sure that the Investment Options
chosen constitute a broad range of investment choices as required by the
Department of Labor (DOL) Section 404(c) regulations. See "Certain Rules
Applicable to Plans Designed to Comply with Section 404(c) of ERISA" in Part VII
- -- Tax and ERISA Considerations.
Charges and Fees
Investment Management and Financial Accounting Fee for the Alliance Bond,
Alliance Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds. An
investment management and financial accounting fee equal to 0.50% of the assets
in the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance
Aggressive Stock Funds, is reflected in the daily Unit value for each of these
Funds. The Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance
Aggressive Stock Funds incur certain commissions, fees and expenses, including
audit, custody and other expenses, as part of their portfolio transactions and
overall operation of these Funds are reflected in the Unit values.
Separate Account Administrative Charge for the Investment Funds of Separate
Account No. 51. An administrative charge at an annual rate of 0.05% of the
assets is reflected in the daily Unit value for each Investment Fund of Separate
Account No. 51.
HRT and EQAT Charges. Investment advisory fees and other expenses of HRT and
EQAT are charged daily against their assets. These charges are reflected in the
Portfolio's daily share price and in the Unit value for the Investment Funds of
Separate Account No. 51 and Separate Account No. 66.
4
<PAGE>
Ongoing Operations Fee. The Ongoing Operations Fee, which is paid monthly, is
based on a declining scale which starts at a maximum annual rate of 1.25% of the
combined balances of all of the Investment Options in which the employer plan
assets are allocated.
Participant Recordkeeping Services. If the employer elects to enroll in RIA's
PRS program, there is an annual charge of $25 per participant under the employer
plan. The charge is applied on a pro rata basis against the combined balances of
all the Investment Options in which the employer plan assets are invested and is
deducted monthly. See Part VIII -- Participant Recordkeeping Services
(Optional).
Loan Fee. We charge an employer plan a loan fee in an amount equal to 1% of the
loan principal amount on the Transaction Date a loan is made.
Contingent Withdrawal Charge. We impose a contingent withdrawal charge against
withdrawals made from RIA at any time up to and including the ninth anniversary
of the date on which the employer plan began its participation in RIA. The
maximum contingent withdrawal charge is 6% of the employer plan assets
withdrawn. Outstanding loan balances are included in the plan's assets for
purposes of assessing the contingent withdrawal charge. See Part II -- Charges
and Fees -- Contingent Withdrawal Charge.
Fixed Annuity Administrative Charge. If a fixed annuity under RIA is elected by
or on behalf of a participant or by a beneficiary, an administrative charge of
$175 will be deducted from the amount of the employer plan proceeds applied to
purchase the annuity.
Premium Tax Charge. At the time an amount is applied to an annuity distribution
option, we currently deduct a charge based on any applicable state or local
taxes imposed on the transaction. We reserve the right to deduct any such charge
from each contribution or from withdrawals. The current premium tax rate that
might be imposed ranges from 0% to 2.25%. The rate is 1% in Puerto Rico and 5%
in the Virgin Islands.
Direct Billing. Subject to a written agreement between Equitable Life and an
employer, the employer has the option of being billed directly for the Ongoing
Operations Fee and, if applicable, the fee for PRS.
We reserve the right to change certain of the charges and fees discussed above.
However, the investment advisory fees for the Portfolios of HRT and EQAT cannot
be changed without a vote of that Portfolio's shareholders.
Cash Available to a Participant under RIA before Retirement
The amount of any cash payments that may be available to a participant before
retirement will depend on the terms of the employer plan and will be affected by
the charges to the employer plan and investment performance of the Funds.
Certain cash withdrawals by a participant that are permitted under an employer
plan prior to retirement may give rise to tax penalties or other adverse tax
consequences. See Part II -- Charges and Fees, Part V -- Provisions of RIA and
Retirement Benefits and Part VII -- Tax and ERISA Considerations.
Benefit Payments
At retirement, in accordance with the employer plan, a participant can receive
fixed annuity payments funded through our general account, a lump sum payment or
a combination of both. RIA does not offer variable annuity payments. The amount
available for retirement benefits will depend upon the amount invested in the
Guaranteed Interest Account and the Funds and the investment performance of the
Funds, and may be affected by charges to the employer plan. See Part V --
Provisions of RIA and Retirement Benefits.
Disability and death benefits are provided in accordance with the employer plan;
RIA does not have separate disability or death benefit provisions.
We pay benefit distribution payments withdrawn from RIA to the plan trustee of
the employer plan.
Fee Tables
The purpose of these Tables is to assist you in understanding the various costs
and expenses which may affect employer plan balances participating in the Funds.
See Part II -- Charges and Fees and Part V -- Provisions of RIA and Retirement
Benefits for a description of fees for optional PRS, loan fees, annuity purchase
charges and state or local tax charges. If an annuity benefit is elected under
RIA, a $175 annuity benefit charge will be imposed and a charge for any
applicable premium taxes will be deducted from the amount applied to provide an
annuity benefit. The Tables reflect annualized expenses of the Funds including,
for Separate Account Nos. 51 and 66, the corresponding Portfolio. Annualized
expenses for the Funds of Separate Account Nos. 51 and 66 are for the period
ended December 31, 1997.
As explained in Part IV, the Guaranteed Interest Account is not a Fund.
Therefore, the only expenses shown in the Table which apply to the Guaranteed
Interest Account are the "Contingent Withdrawal Charge" and the "Ongoing
Operations Fee." In addition, there is a loan fee charged against the Guaranteed
Interest Account which is equal to 1% of the principal amount of the loan.
Certain expenses and fees shown in these Tables may not apply to your plan. To
determine whether a particular item in a Table applies (and the actual amount,
if any), consult the portion of the prospectus indicated in the notes.
5
<PAGE>
<TABLE>
<CAPTION>
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Pooled Separate Accounts
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Alliance Alliance Alliance Alliance
Bond Balanced Common Aggressive
Fund Fund Stock Fund Stock Fund
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<S> <C> <C> <C> <C>
Participating Plan Transaction Expenses:
Sales Load on Purchases............................................. ---------------------- None --------------------------
Maximum Contingent Withdrawal Charge (as a percentage
of plan balances) (1)............................................. ------------------- 6% Maximum -----------------------
Maximum Annual Ongoing Operations Fee (as a percentage
of plan balances) (2)............................................. ----------------- 1.25% Maximum ----------------------
Separate Account Annual Expenses:
Administrative Charge .............................................. None None None None
Annual Investment Management Fee Including Financial Accounting
Fees (as a percentage of plan balances in each Fund) ............. 0.50% 0.50% 0.50% 0.50%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Separate Account Annual Expenses (3) ....................... 0.50% 0.50% 0.50% 0.50%
- ------------------------------------------------------------------------------------------------------------------------------------
Trust Annual Expenses: ---------------- not applicable ----------------------
====================================================================================================================================
</TABLE>
(1) The contingent withdrawal charge is waived in certain circumstances. The
charge reduces to 2% of the amount withdrawn in the ninth participation
year and cannot be imposed after the ninth anniversary of a plan's
participation in RIA. See Part II -- Charges and Fees -- Contingent
Withdrawal Charge.
(2) The annual Ongoing Operations Fee is applied on a decremental scale,
declining to 0.50% on the portion of plan balances over $1,000,000, except
for plans that adopted RIA before February 9, 1986. See Part II -- Charges
and Fees.
(3) The Total Separate Account Annual Expenses are reflected in the Unit value.
<TABLE>
<CAPTION>
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Investment Funds of Separate Account No. 51
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Alliance
Alliance Intermediate Alliance
Money Market Government Alliance Alliance Growth & Alliance
Securities Quality Bond High Yield Income Equity Index
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<S> <C> <C> <C> <C> <C> <C>
Participating Plan Transaction Expenses:
Sales on Load on Purchases................... ------------------------------------- None --------------------------------------
Maximum Contingent Withdrawal Charge (as a
percentage of plan balances)(1)............ ---------------------------------- 6% Maximum -----------------------------------
Maximum Annual Ongoing Operations Fee (as a
percentage of plan balances) (2)........... --------------------------------- 1.25% Maximum ---------------------------------
Separate Account Annual Expenses:
Administrative Charge (3)(4)................. ------------------------------------- 0.05% -------------------------------------
HRT Annual Expenses:
Investment Advisory Fee (5) ................. 0.35% 0.50% 0.53% 0.60% 0.55% 0.32%
Other Expenses .............................. 0.04% 0.06% 0.05% 0.04% 0.04% 0.04%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Annual Expenses for HRT(4)(5)(6) .... 0.39% 0.56% 0.58% 0.64% 0.59% 0.36%
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
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Alliance Alliance Alliance
Alliance Alliance Small Cap Conservative Growth
Global International Growth Investors Investors
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Participating Plan Transaction Expenses:
Sales on Load on Purchases................... -------------------------------- None --------------------------------
Maximum Contingent Withdrawal Charge (as a
percentage of plan balances)(1)............ ----------------------------- 6% Maximum -----------------------------
Maximum Annual Ongoing Operations Fee (as a
percentage of plan balances) (2)........... --------------------------- 1.25% Maximum ----------------------------
Separate Account Annual Expenses:
Administrative Charge (3)(4)................. -------------------------------- 0.05% -------------------------------
HRT Annual Expenses:
Investment Advisory Fee (5) ................. 0.65% 0.90% 0.90% 0.48% 0.52%
Other Expenses .............................. 0.08% 0.18% 0.05% 0.07% 0.05%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Annual Expenses for HRT(4)(5)(6) .... 0.73% 1.08% 0.95% 0.55% 0.57%
====================================================================================================================================
</TABLE>
See Notes following tables.
6
<PAGE>
<TABLE>
<CAPTION>
Investment Funds of Separate Account No. 66
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam
T. Rowe Price T. Rowe Price Growth & EQ/Putnam
International Equity Income Income Value Balanced MFS Research
Stock Portfolio Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Participating Plan Transaction Expenses:
Sales on Load on Purchases................... --------------------------------- None -----------------------------------
Maximum Contingent Withdrawal Charge (as a
percentage of plan balances)(1)............. ------------------------------- 6% Maximum -------------------------------
Maximum Annual Ongoing Operations Fee (as a
percentage of plan balances) (2)........... ---------------------------- 1.25% Maximum -------------------------------
Separate Account Annual Expenses:
Administrative Charge ....................... --------------------------------- None -----------------------------------
<CAPTION>
EQAT Annual Expenses:
Investment Advisory Fee ....................... 0.75% 0.55% 0.55% 0.55% 0.55%
Rule 12b-1 Fee (7)............................. 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses ................................ 0.20% 0.05% 0.05% 0.10% 0.05%
- ------------------------------------------------------------------------------------------------------------------------------------
Total EQAT Annual Expenses (4)(8) 1.20% 0.85% 0.85% 0.90% 0.85%
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Morgan Stanley Merrill Lynch
Growth Emerging Warburg Pincus World Merrill Lynch
Companies Markets Equity Small Company Strategy Basic Value
Portfolio Portfolio Value Portfolio Portfolio Equity Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Participating Plan Transaction Expenses:
Sales on Load on Purchases................... ---------------------------------- None -----------------------------------
Maximum Contingent Withdrawal Charge (as a
percentage of plan balances)(1)............ ------------------------------- 6% Maximum --------------------------------
Maximum Annual Ongoing Operations Fee (as a
percentage of plan balances) (2)........... ----------------------------- 1.25% Maximum -------------------------------
Separate Account Annual Expenses:
Administrative Charge ....................... ---------------------------------- None -----------------------------------
<CAPTION>
EQAT Annual Expenses:
Investment Advisory Fee ....................... 0.55% 1.15% 0.65% 0.70% 0.55%
Rule 12b-1 Fee (7)............................. 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses ................................ 0.05% 0.35% 0.10% 0.25% 0.05%
- ------------------------------------------------------------------------------------------------------------------------------------
Total EQAT Annual Expenses (4)(8) 0.85% 1.75% 1.00% 1.20% 0.85%
====================================================================================================================================
</TABLE>
Notes:
(1) The contingent withdrawal charge is waived in certain circumstances. The
charge reduces to 2% of the amount withdrawn in the ninth participation
year and cannot be imposed after the ninth anniversary of a plan's
participation in RIA. See Part II -- Charges and Fees -- Contingent
Withdrawal Charge.
(2) The annual ongoing operations fee is applied on a decremental scale,
declining to 0.50% on the portion of plan balances over $1,000,000, except
for plans that adopted RIA before February 9, 1986. See Part II -- Charges
and Fees.
(3) Separate Account expenses are shown as a percentage of each Investment
Fund's average value. We reserve the right to increase the separate account
administrative charge upon 90 days written notice to the employer. See Part
II -- Charges and Fees.
(4) The Separate Account Annual Expenses and HRT or EQAT Annual Expenses are
reflected in the Unit value.
(5) Effective May 1, 1997, a new Investment Advisory Agreement was entered into
between HRT and Alliance Capital Management L.P., HRT's Investment Adviser,
which effected changes in HRT's management fee and expense structure. See
HRT's prospectus for more information.
The table above reflecting HRT's expenses is based on average portfolio net
assets for the year ended December 31, 1997 and has been restated to
reflect (i) the fees that would have been paid to Alliance if the current
advisory agreement had been in effect as of January 1, 1997 and (ii)
estimated accounting expenses for the year ending December 31, 1997.
(6) The investment advisory fee for each HRT Portfolio may vary from year to
year depending upon the average daily net assets of the respective
Portfolio of HRT. The maximum investment advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. The other direct
operating expenses will also fluctuate from year to year depending on
actual expenses. Expenses of HRT are shown as a percentage of each
Portfolio's average net assets. See "HRT Charges to Portfolios" in Part II.
(7) The Class IB shares of EQAT are subject to fees imposed under distribution
plans (herein, the "Rule 12b-1 Plans") adopted by EQAT pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended. The Rule 12b-1
Plans provide that EQAT, on behalf of each Portfolio, may pay annually up
to 0.25% of the average daily net assets of a Portfolio attributable to its
Class IB shares
7
<PAGE>
in respect of activities primarily intended to result in the sale of the
Class IB shares. The 12b-1 fee will not be increased for the life of the
Contracts.
(8) All EQAT Portfolios commenced operations on May 1, 1997 except the Morgan
Stanley Emerging Markets Equity Portfolio, which commenced operations on
August 20, 1997.
The maximum investment management and advisory fees for each EQAT Portfolio
cannot be increased without a vote of that Portfolio's shareholders. The
amounts shown as "Other Expenses" will fluctuate from year to year
depending on actual expenses, however, EQ Financial Consultants, Inc. ("EQ
Financial"), EQAT's manager, has entered into an expense limitation
agreement with respect to each Portfolio, ("Expense Limitation Agreement")
pursuant to which EQ Financial has agreed to waive or limit its fees and
assume other expenses. Under the Expense Limitation Agreement, total annual
operating expenses of each Portfolio (other than interest, taxes, brokerage
commissions, capitalized expenditures, extraordinary expenses and 12b-1
fees) are limited for the respective average daily net assets of each
Portfolio as follows: 0.60% for Merrill Lynch Basic Value Equity, MFS
Research, MFS Emerging Growth Companies, EQ/Putnam Growth & Income Value
and T. Rowe Price Equity Income; 0.65% for EQ/Putnam Balanced; 0.75% for
Warburg Pincus Small Company Value; 0.95% for Merrill Lynch World Strategy
and T. Rowe Price International Stock; and 1.50% for Morgan Stanley
Emerging Markets Equity.
Absent the expense limitation, "Other Expenses" for 1997 on an annualized
basis for each of the Portfolios would have been as follows: 0.80% for
Warburg Pincus Small Company Value; 0.94% for T. Rowe Price Equity Income;
0.95% for EQ/Putnam Growth & Income Value; 0.98% for MFS Research; 1.02%
for MFS Emerging Growth Companies; 1.09% for Merrill Lynch Basic Value
Equity; 1.21% for Morgan Stanley Emerging Markets Equity; 1.56% for T. Rowe
Price International Stock; 1.75% for EQ/Putnam Balanced; and 2.10% for
Merrill Lynch World Strategy.
Each Portfolio may at a later date make a reimbursement to EQ Financial for
any of the management fees waived or limited and other expenses assumed and
paid by EQ Financial pursuant to the Expense Limitation Agreement provided,
that among other things, such Portfolio has reached sufficient size to
permit such reimbursement to be made and provided that the Portfolio's
current annual operating expenses do not exceed the operating expense limit
determined for such Portfolio. See the EQAT prospectus for more
information.
8
<PAGE>
Examples
- --------
The examples below show the expenses that a plan would pay in two hypothetical
situations, assuming a single investment of $1,000 in each Fund listed and a 5%
annual return on assets. For purposes of these examples, the ongoing operations
fee is computed by reference to the actual aggregate annual ongoing operations
fee as a percentage of total assets held under the Contracts invested in
Registered Units. The expenses shown would be lower for corporate plans which
generally have greater total assets. See Note (2) to the Tables on pages 6 and
7. These examples assume that no loan has been taken and do not reflect PRS or
annuity benefit charges or a charge for premium taxes, none of which may apply
to any particular Participant.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
If the entire employer plan balance is If the entire employer plan balance is not
withdrawn at the end of each period shown, withdrawn at the end of each period shown,
the expense would be: the expense would be:
1 Year 3 Years 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HRT
Alliance Money Market 74.95 95.38 116.52 150.73 12.71 39.58 68.49 150.73
Alliance Intermediate Gov't.
Securities 76.62 100.53 125.38 170.33 14.48 45.01 77.75 170.33
Alliance Stable Value 74.56 94.17 114.43 146.07 12.30 38.30 66.30 146.07
Alliance Bond 75.54 97.20 119.65 157.69 13.34 41.50 71.76 157.69
Alliance Quality Bond 76.81 101.14 126.42 172.61 14.69 45.65 78.84 172.61
Alliance High Yield 77.40 102.95 129.52 179.44 15.32 45.57 82.09 179.44
Alliance Growth & Income 76.91 101.44 126.93 173.75 14.80 45.97 79.38 173.75
Alliance Equity Index 74.66 94.47 114.95 147.24 12.40 38.62 66.84 147.24
Alliance Common Stock 75.54 97.20 119.65 157.69 13.34 41.50 71.76 157.69
Alliance Global 78.28 105.67 134.17 189.60 16.26 50.43 86.95 189.60
Alliance International 81.71 116.17 152.08 228.26 19.90 61.52 105.68 228.26
Alliance Aggressive Stock 75.54 97.20 119.65 157.69 13.34 41.50 71.76 157.69
Alliance Small Cap Growth 80.43 112.28 145.46 214.06 18.55 57.41 98.76 214.06
Alliance Conservative
Investors 76.52 100.23 124.86 169.18 14.38 44.70 77.21 169.18
Alliance Balanced 75.54 97.20 119.65 157.69 13.34 41.50 71.76 157.69
Alliance Growth Investors 76.71 100.84 125.90 171.47 14.59 45.33 78.30 171.47
EQAT
T. Rowe Price International
Stock 82.88 119.76 21.15 65.31
T. Rowe Price
Equity Income 79.46 109.28 17.51 54.24
EQ/Putnam Growth &
Income Value 79.46 109.28 17.51 54.24
EQ/Putnam Balanced 79.95 110.78 18.03 55.83
MFS Research 79.46 109.28 17.51 54.24
MFS Emerging Growth
Companies 79.46 109.28 17.51 54.24
Morgan Stanley Emerging
Markets Equity 88.27 136.08 26.88 82.53
Warburg Pincus Small
Company Value 80.92 113.78 19.07 58.99
Merrill Lynch World
Strategy 82.88 119.76 21.15 65.31
Merrill Lynch Basic
Value Equity 79.46 109.28 17.51 54.24
</TABLE>
The examples above should not be considered a representation of past or future
expenses for each Fund. Actual expenses may be greater or less than those shown
above. Similarly, the annual rate of return assumed in the examples is not an
estimate or guarantee of future investment performance.
9
<PAGE>
Condensed Financial Information
The following tables give information about income, expenses and capital changes
of the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance
Aggressive Stock Funds, and Unit values of the Investment Funds of Separate
Account No. 51, attributable to a Registered Unit outstanding for the periods
indicated, along with other supplementary data. Registered Units have been
offered under RIA in the Alliance Bond, Alliance Balanced, Alliance Common Stock
and Alliance Aggressive Stock Funds as of May 1, 1992, January 23, 1985, April
8, 1985 and July 7, 1986, respectively. Registered and Non-Registered Units for
the Investment Funds of Separate Account No. 51 were first offered under RIA on
June 1, 1994. Non-registered Units have been offered under RIA in the Alliance
Bond Fund since 1991, the Alliance Balanced and Alliance Common Stock Funds
since 1983 and the Alliance Aggressive Stock Fund since 1986.
Condensed Financial Information for the Portfolios is contained in the
prospectuses for HRT and EQAT which directly follow this prospectus.
High portfolio turnover rates may result in additional transaction and brokerage
expenses which are reflected in the Unit values.
The selected per unit data and ratios for the years ended December 31, 1997,
1996, 1995, 1994 and 1993 have been audited by Price Waterhouse LLP, independent
accountants, as stated in their report on the Financial Statements contained in
Part III of the SAI. The selected per unit data and ratios for each of the
periods ended prior to December 31, 1993 were audited by other independent
accountants. The financial statements of the separate accounts as well as the
Consolidated Financial Statements of Equitable Life are contained in the SAI.
These tables should be read in conjunction with the Financial Statements.
10
<PAGE>
<TABLE>
<CAPTION>
Separate Account No. 13 -- Pooled (Alliance Bond Fund) of
The Equitable Life Assurance Society of the United States
Income, Expenses and Capital Changes Per Registered Unit Outstanding During the Period Indicated and Other Supplementary Data
(Note F)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
----------------------------------------------------------------- May 1, 1992 -
1997 1996 1995 1994 1993 December 31, 1992
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income................................... $ 3.29 $ 3.09 $ 3.07 $ 2.32 $ 2.18 $0.59
Expenses (Note B)........................ (0.25) (0.25) (0.23) (0.12) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income ................... 3.04 2.84 2.84 2.20 2.18 0.59
Net realized and unrealized gain (loss)
on investments (Note C)............... 0.79 (1.49) 3.72 (2.99) 1.65 2.37
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Alliance
Bond Fund Unit Value.................. 3.83 1.35 6.56 (0.79) 3.83 2.96
Alliance Bond Fund Unit Value (Note A):
Beginning of Period................. 50.26 48.91 42.35 43.14 39.31 36.35
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period....................... $54.09 $ 50.26 $ 48.91 $ 42.35 $ 43.14 $ 39.31
====================================================================================================================================
Ratio of expenses to average net assets
attributable to Units (Note B)........ 0.50% 0.50% 0.50% 0.36% N/A N/A
Ratio of net investment income to average
net assets attributable to Units...... 5.89% 5.81% 6.17% 5.12% 5.17% 6.00% (Note D)
Number of registered Alliance Bond Fund
Units outstanding at end of period.... 2,021 2,698 2,392 1,632 545 288
Portfolio turnover rate (Note E)......... 188% 137% 288% 264% 254% 151%
====================================================================================================================================
</TABLE>
See Notes following tables.
<TABLE>
<CAPTION>
Separate Account No. 10 -- Pooled (Alliance Balanced Fund) of
The Equitable Life Assurance Society of the United States
Income, Expenses and Capital Changes Per Registered Unit Outstanding During the Periods Indicated and Other Supplementary Data
(Note F)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income ..................... $ 4.41 $ 3.60 $ 3.18 $ 2.63 $ 2.67 $ 2.69 $ 2.63 $ 3.08 $ 3.04 $ 2.30
Expenses (Note B) .......... (0.56) (0.50) (0.43) (0.23) -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income ...... 3.85 3.10 2.75 2.40 2.67 2.69 2.63 3.08 3.04 2.30
Net realized and unrealized
gain (loss) on
investments (Note C) ... 10.33 7.66 13.34 (9.48) 7.28 (4.51) 20.34 (3.17) 8.66 3.44
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
Alliance Balanced Fund
Unit Value .............. 14.18 10.76 16.09 (7.08) 9.95 (1.82) 22.97 (0.09) 11.70 5.74
Alliance Balanced Fund
Unit Value (Note A):
Beginning of Period ... 105.62 94.86 78.77 85.85 75.90 77.72 54.75 54.84 43.14 37.40
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period ......... $119.80 $105.62 $ 94.86 $ 78.77 $ 85.85 $ 75.90 $ 77.72 $ 54.75 $ 54.84 $ 43.14
====================================================================================================================================
Ratio of expenses to
average net assets
attributable to Units
(Note B) ................ 0.50% 0.50% 0.50% 0.30% N/A N/A N/A N/A N/A N/A
Ratio of net investment
income to average net
assets attributable to
Units ................... 3.42% 3.13% 3.19% 2.94% 3.31% 3.68% 4.15% 5.78% 6.12% 5.70%
Number of registered
Alliance Balanced Fund
Units outstanding at end
Units of period ......... 38,304 52,080 73,979 86,914 87,242 81,860 80,964 86,377 86,942 67,815
Portfolio turnover
rate (Note E) ........... 165% 177% 170% 107% 102% 90% 114% 199% 175% 172%
====================================================================================================================================
</TABLE>
See Notes following tables.
11
<PAGE>
<TABLE>
<CAPTION>
Separate Account No. 4 -- Pooled (Alliance Common Stock Fund) of
The Equitable Life Assurance Society of the United States
Income, Expenses and Capital Changes Per Registered Unit Outstanding During the Periods Indicated and Other Supplementary Data
(Note F)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income ..................... $ 3.39 $ 2.99 $ 3.98 $ 3.83 $ 3.69 $ 3.13 $ 2.74 $ 3.82 $ 3.42 $ 2.52
Expenses (Note B) .......... (3.11) (2.51) (2.03) (1.00) -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income ...... 0.28 0.48 1.95 2.83 3.69 3.13 2.74 3.82 3.42 2.52
Net realized and unrealized
gain (loss) on investments
(Note C) ................ 144.74 80.65 108.54 (8.98) 56.16 1.86 96.86 (26.92) 62.70 19.19
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
Alliance Common Stock
Fund Unit Value ......... 145.02 81.13 110.49 (6.15) 59.85 4.99 99.60 (23.10) 66.12 21.71
Alliance Common Stock Fund
Unit Value (Note A):
Beginning of Period ... 538.54 457.41 346.92 353.07 293.22 288.23 188.63 211.73 145.61 123.90
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period ......... $683.56 $538.54 $457.41 $346.92 $353.07 $293.22 $288.23 $188.63 $211.73 $145.61
====================================================================================================================================
Ratio of expenses to
average net assets
attributable to Units
(Note B) ................ 0.50% 0.50% 0.50% 0.30% N/A N/A N/A N/A N/A N/A
Ratio of net investment
income to average net
assets attributable to
Units ................... 0.05% 0.10% 0.49% 0.81% 1.17% 1.13% 1.14% 2.02% 1.85% 1.84%
Number of registered
Alliance Common Stock
Fund Units outstanding
at end of period ........ 21,142 24,332 25,937 27,438 24,924 23,331 20,799 18,286 14,129 8,461
Portfolio turnover
rate (Note E) ........... 62% 105% 108% 91% 82% 68% 66% 93% 113% 101%
====================================================================================================================================
</TABLE>
See Notes following tables.
<TABLE>
<CAPTION>
Separate Account No. 3 -- Pooled (Alliance Aggressive Stock Fund) of
The Equitable Life Assurance Society of the United States
Income, Expenses and Capital Changes Per Registered Unit Outstanding During the Periods Indicated and Other Supplementary Data
(Note F)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income ..................... $ 1.08 $ 1.33 $ 0.98 $ 0.71 $ 1.01 $ 1.21 $ 1.06 $ 1.03 $ 1.06 $ 0.60
Expenses (Note B) .......... (1.13) (0.98) (0.75) (0.37) -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income
(loss).................. (0.05) 0.35 0.23 0.34 1.01 1.21 1.06 1.03 1.06 0.60
Net realized and unrealized
gain (loss) on
investments (Note C) ... 25.34 38.04 40.49 (5.81) 17.43 (4.23) 55.15 4.45 17.77 0.35
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
Alliance Aggressive
Stock Fund Unit Value ... 25.29 38.39 40.72 (5.47) 18.44 (3.02) 56.21 5.48 18.83 0.95
Alliance Aggressive Stock
Fund Unit Value (Note A):
Beginning of Period ... 209.06 170.67 129.95 135.42 116.98 120.00 63.79 58.31 39.48 38.53
- ------------------------------------------------------------------------------------------------------------------------------------
End of Period ......... $234.35 $209.06 $170.67 $129.95 $135.42 $116.98 $120.00 $63.79 $58.31 $39.48
====================================================================================================================================
Ratio of expenses to
average net assets
attributable to Units
(Note B) ................ 0.50% 0.50% 0.50% 0.30% N/A N/A N/A N/A N/A N/A
Ratio of net investment
income (loss) to
average net assets
attributable to Units ... (0.02)% 0.18% 0.15% 0.25% 0.82% 1.09% 1.11% 1.72% 2.09% 1.47%
Number of registered
Alliance Aggressive Stock
Fund Units outstanding at
end of period ........... 27,762 26,777 26,043 26,964 23,440 21,917 14,830 8,882 5,519 3,823
Portfolio turnover
rate (Note E) ........... 176% 118% 137% 94% 83% 71% 63% 48% 92% 103%
====================================================================================================================================
</TABLE>
See Notes following tables.
12
<PAGE>
Notes:
A. The values for a Registered Alliance Bond Fund, Alliance Balanced Fund,
Alliance Common Stock Fund and Alliance Aggressive Stock Fund Unit on May
1, 1992, January 23, 1985, April 8, 1985 and July 7, 1986, the first date
on which payments were allocated to purchase Registered Units in each Fund,
were $36.35, $28.07, $84.15 and $44.82, respectively.
B. Certain expenses under RIA are borne directly by employer plans
participating in RIA. Accordingly, those charges and fees discussed under
Part II -- Charges and Fees are not included above and did not affect the
Fund Unit values. Those charges and fees are recovered through an
appropriate reduction in the number of Units credited to each employer plan
participating in the Fund unless the charges and fees are billed directly
to the employer. The dollar amount recovered is included in the expenses in
the Statements of Operations and Changes in Net Assets for each Fund, which
appear in Part III -- Financial Statements of the SAI.
As of June 1, 1994, the Annual Investment Management and Financial
Accounting Fee is deducted from the assets of the Alliance Bond, Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds and is
reflected in the computation of their unit values. If all charges and fees
had been made directly against employer plan assets in the Funds and had
been reflected in the computation of Fund Unit Value, RIA Registered Unit
expenses would have amounted to $ 0.68, $ 1.73, $ 9.33 and $ 3.42 for the
year ended December 31, 1997 on a per Unit basis for the Alliance Bond,
Alliance Balanced, Alliance Common Stock and Alliance Aggressive Stock
Funds, respectively. For the same reporting periods, the ratio of expenses
to average net assets attributable to Registered Units would have been (on
an annualized basis) 1.32%, 1.54%, 1.53% and 1.53% for the Alliance Bond,
Alliance Balanced, Alliance Common Stock and Alliance Aggressive Stock
Funds, respectively.
C. See Note 2 to Financial Statements of Separate Account Nos. 13 (Pooled), 10
(Pooled), 4 (Pooled), 3 (Pooled) and 51 which appear in Part III of the
SAI.
D. Annualized basis.
E. The portfolio turnover rate excludes all short-term U.S. Government
securities and all other securities whose maturities at the time of
acquisition were one year or less. The rate stated is the annual turnover
rate for the entire Separate Account Nos. 13 -- Pooled, 10 -- Pooled, 4 --
Pooled and 3 -- Pooled.
F. Income, expenses, gains and losses shown above pertain only to employer
plans' accumulations attributable to RIA Registered Units. Other plans and
trusts also participate in Separate Account Nos. 13 -- Pooled, 10 --
Pooled, 4 -- Pooled and 3 -- Pooled and may have operating results and
other supplementary data different from those shown above.
<TABLE>
<CAPTION>
Separate Account No. 51 (Pooled) Unit Values
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance
Inter-
Alliance mediate Alliance Alliance Alliance Alliance Alliance
Money Government Quality High Growth Equity Alliance Inter-
Market Securities Bond Yield & Income Index Global national
Fund Fund Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Unit Value as of:
December 31, 1994 ............ $102.65 $ 98.94 $ 99.83 $ 98.99 $ 99.81 $101.71 $ 99.84 $ --
December 31, 1995 ............ $108.49 $112.07 $116.76 $118.64 $123.78 $138.75 $118.56 $104.60
December 31, 1996 ............ $114.22 $116.24 $122.96 $145.72 $148.57 $169.72 $135.81 $114.80
December 31, 1997 ............ $120.35 $124.66 $134.14 $172.55 $188.22 $224.89 $151.41 $111.24
Number of Registered
Units Outstanding
at December 31, 1997 ......... 1,351 783 270 1,414 6,083 7,176 9,726 1,531
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Alliance
Alliance Conser- Alliance
Small Cap vative Growth
Growth Investors Investors
Fund Fund Fund
---- ---- ----
<S> <C> <C> <C>
Unit Value as of:
December 31, 1994 ............ $ -- $ 99.83 $ 99.52
December 31, 1995 ............ $ -- $120.14 $125.70
December 31, 1996 ............ $ -- $126.33 $141.48
December 31, 1997 ............ $114.18 $142.97 $165.12
Number of Registered
Units Outstanding
at December 31, 1997 ......... 2,235 689 8,419
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
Investment Policies and Objectives
The investment objectives and policies of the Alliance Bond, Alliance Balanced,
Alliance Common Stock and Alliance Aggressive Stock Funds are summarized below.
Similarly, the investment objectives and policies of the corresponding
Portfolios of HRT and EQAT are summarized for each of the Investment Funds of
Separate Account Nos. 51 and 66. Investment policies and objectives are
explained in more detail in this prospectus under Part III -- Equitable Life and
Its Funds and in the SAIs under Part I -- Fund Information, and, with respect to
the Portfolios, in the HRT and EQAT prospectuses and SAIs. Investment objectives
and policies can be expected to affect the rate of return for the Fund and the
market and financial risks to which the Fund is subject. There is no assurance
that the objectives described below will be met.
The Alliance Bond Fund invests primarily in publicly traded fixed-income
securities, such as bonds, debentures and notes. Its objective is to achieve
maximum total return, consistent with investment quality, with less volatility
than a long-term bond account. The weighted average duration of the total
portfolio will be between one and five years.
The Alliance Balanced Fund invests primarily in common stocks, other equity-type
instruments, longer-term fixed-income securities, publicly traded debt
securities and short-term money market instruments. Its objective is to achieve
both appreciation of capital and current income.
The Alliance Common Stock Fund invests primarily in common stocks and other
equity-type securities, generally issued by intermediate- and large-sized
companies. Its objective is to achieve long-term capital growth.
The Alliance Aggressive Stock Fund invests primarily in securities of medium-
and smaller-sized companies (with capitalizations generally between $50 million
to $1.5 billion) perceived to have greater growth potential than larger
companies. Its objective is to achieve long-term capital growth, consistent with
investment quality.
Contributions allocated to these Portfolios will fluctuate, and may be worth
more or less than their original value when you redeem your contract or make
withdrawals.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Trust Investment Policy Objective
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Money Market HRT Primarily high-quality short-term money market High level of current income
instruments. while preserving assets and
maintaining liquidity.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Intermediate HRT Primarily debt securities issued or guaranteed High current income consistent
Government by the U.S. Government, its agencies and with relative stability of
Securities instrumentalities. Each investment will have a principal.
final maturity of not more than 10 years or a
duration not exceeding that of a 10-year
Treasury note.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Quality Bond HRT Primarily investment grade fixed-income High current income consistent
securities. with preservation of capital.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance High Yield HRT Primarily a diversified mix of high-yield, High return by maximizing current
fixed-income securities involving greater income and, to the extent consistent
volatility of price and risk of principal with that objective, capital
and income than high-quality fixed-income appreciation.
securities. The medium- and lower-quality debt
securities in which the Portfolio may invest
are known as "junk bonds."
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income HRT Primarily income producing common stocks and High total return through a
securities convertible into common stocks. combination of current income and
capital appreciation.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Equity Index HRT Selected securities in the S&P 500 Index (the Total return performance (before
"Index") which the adviser believes will, in trust expenses and Separate
the aggregate, approximate the performance Account annual expenses) that
results of the Index. approximates the investment
performance of the Index
(including reinvestment of dividends)
at risk level consistent with
that of the Index.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Global HRT Primarily equity securities of non-United Long-term growth of capital.
States as well as United States companies.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance International HRT Primarily equity securities selected Long-term growth of capital.
principally to permit participation in
non-United States companies with prospects for
growth.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Trust Investment Policy Objective
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Small Cap HRT Primarily common stocks and other equity-type Long-term growth of capital
Growth securities issued by smaller-sized companies
with strong growth potential.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Conservative HRT Diversified mix of publicly traded, High total return without, in the
Investors fixed-income and equity securities; asset mix adviser's opinion, undue risk to
and security selection are primarily based upon principal
factors expected to reduce risk. The
Portfolio is generally expected to hold
approximately 70% of its assets in
fixed-income securities and 30% in equity
securities.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Growth HRT Diversified mix of publicly traded, High total return consistent with
Investors fixed-income and equity securities; asset mix the adviser's determination of
and security selection based upon factors reasonable risk
expected to increase possibility of high
long-term return. The Portfolio is
generally expected to hold approximately
70% of its assets in equity securities and
30% in fixed-income securities.
- -------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price EQAT Primarily common stocks of established Long-term growth of capital
International Stock non-United States companies.
- -------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity EQAT Primarily dividend paying common stocks of Substantial dividend income and
Income established companies. also capital appreciation
- -------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & EQAT Primarily common stocks that offer potential Capital growth and, secondarily,
Income Value for capital growth and may, consistent with the current income
Portfolio Portfolio's investment objective, invest in
common stocks that offer potential for current
income.
- -------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Balanced EQAT A well-diversified portfolio of stocks and Balanced investment
bonds that will produce both capital growth and
current income.
- -------------------------------------------------------------------------------------------------------------------------------
MFS Research EQAT A substantial portion of assets invested in Long-term growth of capital and
common stock or securities convertible into future income
common stock of companies believed by the
Adviser to possess better than average
prospects for long-term growth.
- -------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth EQAT Primarily (i.e., at least 80% of its assets Long-term growth of capital
Companies under normal circumstances) in common stocks of
emerging growth companies that the Adviser
believes are early in their life cycle but
which have the potential to become major
enterprises.
- -------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging EQAT Primarily equity securities of emerging market Long-term capital appreciation
Markets Equity country issuers with a focus on those in which
the Adviser believes the economies are
developing strongly and in which the
markets are becoming more sophisticated.
- -------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small EQAT Primarily in a portfolio of equity securities Long-term capital appreciation
Company Value of small capitalization companies (i.e.,
companies having market capitalizations of
$1 billion or less at the time of initial
purchase) that the Adviser considers to be
relatively undervalued.
- -------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch World EQAT Primarily equity and fixed-income securities, High total investment return
Strategy including convertible securities, of U.S. and
foreign issuers.
- -------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic EQAT Primarily equity securities that the Capital appreciation and,
Value Equity Portfolio adviser believes are undervalued and secondarily, income
therefore represent basic investment value.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Contributions, Transfers and Withdrawals
All contributions under an employer plan should be sent to the "contributions
only" address listed at the end of this prospectus. All contributions made by
check must be drawn on a bank in the U.S., cleared through the Federal Reserve
System, in U.S. dollars and made payable to Equitable Life. All checks are
accepted subject to collection. Third party checks endorsed to Equitable Life
are not acceptable forms of payment except in cases of a rollover from a
qualified plan or a trustee check that involves no refund. Equitable Life
reserves the right to reject a payment if an unacceptable form of payment is
received. We will process transactions in accordance with instructions received
from the employer/plan sponsor. We will allocate contributions among and process
withdrawals from one or more investment options by dollar amount. We will
transfer accumulated invested amounts among the investment options in any whole
number percentage or by dollar amount. All transactions are effective as of the
Transaction Date.
Changes in the allocation percentages of contributions made subsequent to the
initial allocation among the Investment Options and transfers of accumulated
invested amounts among the Investment Options may be made subject to our
consent, but when permitted, are made without charge and are not subject to tax
liability. See Part IV -- The Guaranteed Interest Account and Part V --
Provisions of RIA and Retirement Benefits -- Allocation Choices and Transfer
Provisions.
Withdrawals from any Fund for purposes of transfers among Investment Options,
loan transactions (see below) or to provide benefits under RIA are made by the
redemption of Units. In all cases, the value of a Unit changes in accordance
with the investment experience of the Fund. Fund investment performance does not
affect the number of Units owned in a Fund at any one time.
Loans
Plan loans are available in our RIA program to the plan trustees of the employer
plan. We pay the loan amount to the plan trustees of the employer plan. It is
the responsibility of the plan administrator, the plan trustees and/or the
employer, and not Equitable Life, to properly administer any loan made to the
plan participants in accordance with the provisions of the plan and to the
extent allowed by the Code and ERISA. See Part V -- Provisions of RIA and
Retirement Benefits.
Communications with Us
Equitable Life Representatives are available for information and assistance and
can answer questions about RIA. Information and daily Fund Unit values may be
obtained by calling the RIA Service Office, toll-free, at 1-800-967-4560.
Written communications, including requests for contribution allocation changes,
loans, transfers or withdrawals, must be sent directly to us at the RIA Service
Office listed on the inside back cover of this prospectus.
Transaction requests must be made by the authorized person for the employer plan
as shown on our records (referred to herein as the employer, as explained
above), in a written or facsimile form acceptable to us and signed by the
employer. All requests will be effective on the Transaction Date. In certain
cases, transfers may not be effected until approved by us. See Part V --
Provisions of RIA and Retirement Benefits -- Allocation Choices and Transfer
Provisions.
We will honor your properly completed transaction requests received via
facsimile only if we receive a properly completed transaction request form. The
request form must be signed by an individual who the plan trustees have
previously authorized in writing. We are not responsible for determining the
accuracy of a transmission and are not liable for any consequences, including,
but not limited to, investment losses and lost investment gains, resulting from
a faulty or incomplete transmission. If your request form is not properly
completed, we will contact you within 24 hours of our receipt of your facsimile.
We will use our best efforts to acknowledge receipt of a facsimile transmission,
but our failure to acknowledge or a failure in your receipt of such
acknowledgment will not invalidate your transaction request. If you do not
receive acknowledgment of your facsimile within 24 hours, contact the RIA
Service Office at the toll-free 800 number.
16
<PAGE>
- --------------------------------------------------------------------------------
PART II -- CHARGES AND FEES
- --------------------------------------------------------------------------------
There are two general types of expenses you may incur under RIA. The first
includes expenses which are reflected as reductions in the Unit values of the
Funds. These charges apply to all amounts invested in RIA, including amounts
being distributed under installment payout options.
The second type of charge is typically stated in terms of a defined percentage
or dollar amount and is deducted by reducing the number of Units in the
appropriate Funds and the number of dollars in the GIA.
No deductions are made from contributions for sales expenses. We reserve the
right (1) to change from time to time the charges and fees described in this
prospectus upon prior notice to the employer and (2) to establish separate fee
schedules for requested non-routine administrative services and for newly
scheduled services not presently contemplated under the Contracts.
Under Part V -- Provisions of RIA and Retirement Benefits, we discuss a $175
annuity benefit charge and the possible application of a charge for state tax
which may arise if an annuity benefit is elected under RIA. We also discuss the
operation of the Ongoing Operations Fee and the Contingent Withdrawal Charge in
the event a loan is outstanding.
The Ongoing Operations Fee and the Participant Recordkeeping Services Charge,
each described under Charges Which Reduce the Number of Units in RIA, can be
paid either under a direct billing arrangement we have with the employer or by
redeeming the number of Units in each Fund applicable to the employer plan or,
finally, by reducing the amount of proceeds payable under the employer plan.
Charges Which Are Reflected in Reductions in the Unit Value
HRT and EQAT Charges to Portfolios
Investment advisory fees charged daily against the Trusts' assets, direct
operating expenses of the Trusts (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and liability
insurance), and certain investment-related expenses of the Trusts (such as
brokerage commissions and other expenses related to the purchase and sale of
securities) are reflected in each Portfolio's daily share price. The maximum
investment advisory fees paid annually by the Portfolios cannot be increased
without a vote of that Portfolio's shareholders.
Investment advisory fees are established under investment advisory agreements
between HRT and its investment manager, Alliance, and between EQAT, EQ
Financial, as Manager and the EQAT Advisers. All of these fees and expenses are
described more fully in the prospectuses of HRT and EQAT attached hereto. Since
shares are purchased at their net asset value, these fees and expenses are, in
effect, passed on to the Separate Account and are reflected in the Accumulation
Unit Values for the Investment Funds. The maximum investment advisory fees are
as follows:
- --------------------------------------------------------------------------------
Maximum
Investment
Advisory Fee
HRT Portfolio (Annual Rate)
- --------------------------------------------------------------------------------
Alliance Money Market 0.350%
Alliance Intermediate Government Securities 0.500%
Alliance Quality Bond 0.525%
Alliance High Yield 0.600%
Alliance Growth & Income 0.550%
Alliance Equity Index 0.325%
Alliance Global 0.675%
Alliance International 0.900%
Alliance Small Cap Growth 0.900%
Alliance Conservative Investors 0.475%
Alliance Growth Investors 0.550%
- --------------------------------------------------------------------------------
Maximum
Investment
Management and
Advisory Fee
EQAT Portfolio (Annual Rate)
- --------------------------------------------------------------------------------
T. Rowe Price International Stock 0.75%
T. Rowe Price Equity Income 0.55%
EQ/Putnam Growth & Income Value 0.55%
EQ/Putnam Balanced 0.55%
MFS Research 0.55%
MFS Emerging Growth Companies 0.55%
Morgan Stanley Emerging Markets Equity 1.15%
Warburg Pincus Small Company Value 0.65%
Merrill Lynch World Strategy 0.70%
Merrill Lynch Basic Value Equity 0.55%
EQ Financial has entered into expense limitation agreements with EQAT with
respect to each Portfolio, pursuant to which EQ Financial has agreed to waive or
limit its fees and to assume other expenses so that the total annual operating
expenses of each Portfolio (other than interest, taxes, brokerage commissions,
other expenditures which are capitalized in accordance with generally accepted
accounting principles, other extraordinary expenses not incurred in the ordinary
course of each Portfolio's business and amounts pursuant to a plan adopted in
accordance with Rule 12b-1 under the 1940 Act) are limited to certain
17
<PAGE>
amounts. See the EQAT prospectus for details. The Rule 12b-1 Plans provide that
EQAT, on behalf of each Portfolio, may charge annually up to 0.25% of the
average daily net assets of a Portfolio attributable to its Class IB shares in
respect of activities primarily intended to result in the sale of the Class IB
shares. The 12b-1 fee will not be increased for existing employers, trustees or
participants for whom we retain records under the RIA Contract.
We make a daily charge for investment management and financial accounting fees
at an annual rate equal to 0.50% of the assets in the Alliance Bond, Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds that is
reflected in the daily Unit values for the Funds. This is the fee charged for
services as described in Part III -- Equitable Life and Its Funds.
Separate Account Administrative Charge for the Investment Funds of Separate
Account No. 51
We make a daily charge at an annual rate of 0.05% of the assets invested in the
Investment Funds of Separate Account No. 51. The charge is designed to reimburse
us for our costs in providing the administrative services in connection with the
Contracts. See Part III -- Equitable Life and Its Funds.
Charges Which Reduce the Number of Units in RIA
Contingent Withdrawal Charge
We may impose a contingent withdrawal charge (CWC) against withdrawals made from
RIA at any time up to and including the ninth anniversary of the date on which
the employer plan began its participation in RIA. However, a CWC will not be
applied against amounts withdrawn for the purpose of making benefit distribution
payments unless such withdrawals are made (i) on or after the date of
discontinuance of an employer plan's participation in RIA or (ii) as a result of
a full or partial termination, within the meaning of applicable Internal Revenue
Service (IRS) or court interpretations. A CWC will be applied against amounts
withdrawn for purposes of making benefit payments to participants who terminated
employment either voluntarily or involuntarily, but only when such terminations
are attributable to (i) the employer's merger with another company, (ii) the
sale of the employer or (iii) the bankruptcy of the employer which leads to the
full or partial termination of the plan or the discontinuance of the employer
plan's participation in RIA.
Outstanding loan balances are included in the plan's assets for purposes of
assessing the CWC. There is no CWC on transfers between the Investment Options.
However, unless otherwise agreed to in writing by an officer of Equitable Life,
withdrawals from RIA for the purpose of transferring to another investment
option under the employer plan will be subject to the CWC. Withdrawals from RIA
for the purpose of paying plan expenses or the premium on a life insurance
policy, including one held under the employer plan (See Part VI -- Miscellaneous
Matters -- Commissions and Service Fees), are not considered in-service
withdrawals or any other type of benefit distribution and are subject to the
CWC. The amount of any CWC is determined in accordance with the rate schedule
set forth below.
- --------------------------------------------------------------------------------
Withdrawal in
Participation Years Contingent Withdrawal Charge
- --------------------------------------------------------------------------------
1 or 2 6% of Amount Withdrawn
3 or 4 5%
5 or 6 4%
7 or 8 3%
9 2%
10 and later 0%
- --------------------------------------------------------------------------------
Benefit distribution payments are those payments that become payable with
respect to participants under the terms of the employer plan as follows: (1) as
the result of the retirement, death or disability of a participant; (2) as the
result of a participant's separation from service as defined under Section
402(d)(4)(A) of the Code; (3) in connection with a loan transaction, if the loan
is repaid in accordance with its terms; (4) as a minimum distribution pursuant
to Section 401(a)(9) of the Code; (5) as a hardship withdrawal pursuant to
Section 401(k) of the Code; (6) pursuant to a qualified domestic relations order
(QDRO) under Section 414(p) of the Code, but only if the QDRO specifically
requires that the plan administrator withdraw amounts for payment to an
alternate payee; (7) as a result of an in-service withdrawal attributable to the
after-tax contributions of a participant; or (8) as a result of an in-service
withdrawal from a profit-sharing plan after meeting a minimum number of years of
service and/or participation in the plan, and the attainment of a minimum age
specified in the plan. Prior to any withdrawal from RIA for benefit distribution
purposes, Equitable Life reserves the right to receive from the employer and/or
trustees of the plan, evidence satisfactory to it that such benefit distribution
conforms to at least one of the types mentioned above. See Part V -- Provisions
of RIA and Retirement Benefits.
The CWC is designed to recover the unamortized sales and promotion expenses and
initial enrollment expenses.
Ongoing Operations Fee
The Ongoing Operations Fee is based on the combined net balances (including any
outstanding loan balance) of an employer plan in the Investment Options at the
close of business on the last Business Day of each month. The amount of the
Ongoing Operations Fee is determined under the rate schedule that applies to the
employer plan. Except as discussed above, it is paid from the employer plan
balances at the close of business on the last Business Day of the following
month.
Set forth below is the rate schedule for employer plans which adopted RIA after
February 9, 1986. Information concerning the rate schedule for employer plans
that adopted RIA on or before February 9, 1986 is included in the SAI under Part
I -- Fund Information.
18
<PAGE>
- --------------------------------------------------------------------------------
Combined Balance Monthly
of Investment Options Rate
- --------------------------------------------------------------------------------
First $ 150,000 1/12 of 1.25%
Next $ 350,000 1/12 of 1.00%
Next $ 500,000 1/12 of 0.75%
Over $1,000,000 1/12 of 0.50%
- --------------------------------------------------------------------------------
The Ongoing Operations Fee is designed to cover such expenses as Contract
underwriting and issuance for employer plans, employer plan-level recordkeeping,
processing transactions and benefit distributions, administratively maintaining
the Investment Options, commissions, promotion of RIA, administrative costs
(including certain enrollment and other servicing costs), systems development,
legal and technical support, product and financial planning and part of our
general overhead expenses. Administrative costs and overhead expenses include
such items as salaries, rent, postage, telephone, travel, office equipment and
stationery, and legal, actuarial and accounting fees.
Participant Recordkeeping Services Charge
The PRS is an optional service. If this service is elected, we charge a per
participant annual fee of $25. The fee is deducted on a monthly basis at the
rate of $2.08 per participant. The amount of the fee for an employer plan is
determined at the close of business on the last Business Day of each month based
on the number of participants enrolled with us at that time. Except as discussed
above, we charge the amount against the combined balances of each participant in
the Investment Options at the close of business on the last Business Day of the
following month.
The PRS fee covers expenses incurred for establishing and maintaining individual
records, issuing statements and reports for individual employees and employer
plans, and processing individual transactions and benefit distributions. We are
not responsible for reconciling participants' individual account balances with
the entire amount of the employer plan where we do not maintain individual
account balances. See Part VIII -- Participant Recordkeeping Services
(Optional).
Loan Fee
We charge a loan fee in an amount equal to 1% of the loan principal amount on
the Transaction Date the plan loan is made. See Part V -- Provisions of RIA and
Retirement Benefits.
19
<PAGE>
- --------------------------------------------------------------------------------
PART III -- EQUITABLE LIFE AND ITS FUNDS
- --------------------------------------------------------------------------------
Equitable Life
Equitable Life is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest life
insurance companies in the United States. Equitable Life has been selling
annuities since the turn of the century. Our Home Office is located at 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.
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 S.A. (AXA), a French company. As of December 31, 1997, AXA
beneficially owned 58.7% of the outstanding common stock of the Holding Company.
Under its investment arrangements with Equitable Life and the Holding Company,
AXA is able to exercise significant influence over the operations and capital
structure of the Holding Company and its subsidiaries, including Equitable Life.
AXA is the holding company for an international group of insurance and related
financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed approximately
$274.1 billion of assets as of December 31, 1997, including third party assets
of approximately $216.9 billion. We are one of the nation's leading pension fund
managers. These assets are primarily managed for retirement and annuity programs
for businesses, tax-exempt organizations and individuals. This broad customer
base includes nearly half the Fortune 100, more than 42,000 small businesses,
state and local retirement funds in more than half the 50 states, approximately
250,000 employees of educational and nonprofit institutions, as well as nearly
500,000 individuals. Millions of Americans are covered by Equitable Life's
annuity, life and pension contracts.
About Our Funds
We established the Alliance Bond, Alliance Balanced, Alliance Common Stock and
Alliance Aggressive Stock Funds under the Insurance Law of New York State and as
separate investment accounts in 1981, 1979, 1969 and 1969, respectively. Each of
these Funds is a pooled separate investment account used as an investment
vehicle for contributions under tax-favored employee benefit plans participating
in the Fund, including employer plans participating in RIA. The assets of the
Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Aggressive
Stock Funds, consisting of separate portfolios of securities and cash items, are
managed by us through one of our subsidiaries that also manages the Trust.
Because of exclusionary provisions, none of the Funds is subject to regulation
under the Investment Company Act of 1940, as amended (1940 Act).
We established the Alliance Growth Investors, Alliance Conservative Investors
and Alliance Global Funds as Investment Funds of Separate Account No. 51 under
the Insurance Law of New York State in 1993. The Alliance Money Market, Alliance
Intermediate Government Securities, Alliance Quality Bond, Alliance High Yield,
Alliance Growth & Income and Alliance Equity Index Funds were established as
Investment Funds of Separate Account No. 51 in 1994. The Alliance International
Fund was established as an investment fund of Separate Account No. 51 on
September 1, 1995. The Alliance Small Cap Growth Fund was established as an
investment fund of Separate Account No. 51 in early June 1997. The Investment
Funds of Separate Account No. 51 invest in shares of a corresponding Portfolio
of HRT which are actively managed as described in the attached HRT prospectus.
We intend to make the following Investment Funds of Separate Account No. 66
available in early July 1998: T. Rowe Price Equity Income, EQ/Putnam Growth &
Income Value, Merrill Lynch Basic Value Equity, MFS Research, T. Rowe Price
International Stock, Morgan Stanley Emerging Markets Equity, Warburg Pincus
Small Company Value, MFS Emerging Growth Companies, EQ/Putnam Balanced and
Merrill Lynch World Strategy Funds. The Investment Funds of Separate Account No.
66 invest in shares of a corresponding Portfolio of EQAT which are actively
managed as described in the attached EQAT prospectus.
The assets of the Funds are our property; however, the portion of the assets of
the Funds equal to the reserves and other contract liabilities with respect to
the Funds will not be chargeable with liabilities arising out of any other
business we may conduct. Income, gains or losses, whether or not realized, from
assets allocated to the Funds are credited to or charged against the Fund
without regard to our other income, gains or losses.
Trusts
The Trusts are open-end, management investment companies registered under the
1940 Act, more commonly called mutual funds. As a "series" type of mutual fund,
each Trust issues several different series of stock, each of which relates to a
different Portfolio of that Trust. HRT commenced operations in January 1976 with
a predecessor of its Alliance Common Stock Portfolio. EQAT commenced operations
on May 1, 1997. The Trusts do not impose sales charges or "loads" for buying and
selling their shares. All dividends and
20
<PAGE>
other distributions on a Portfolio's shares are reinvested in full and
fractional shares of the Portfolio to which they relate. Each Fund invests in
either Class IA or Class IB shares of a corresponding Portfolio. HRT Portfolios
sell Class IA shares to the Funds and EQAT Portfolios sell Class IB shares to
the Funds. (Class IA shares of the EQAT Portfolios are not offered at this
time.)
All of the Portfolios, except for the Morgan Stanley Emerging Markets Equity
Portfolio and Merrill Lynch World Strategy Portfolio, are diversified for 1940
Act purposes. The Trustees of HRT or EQAT may establish additional Portfolios or
eliminate existing Portfolios at any time. More detailed information about the
Trusts, their investment objectives, policies, restrictions, risks, expenses,
multiple class distribution systems, the Rule 12b-1 distribution plan relating
to Class IB shares and all other aspects of their operations, appears in HRT
prospectus (beginning after this prospectus), EQAT prospectus (beginning after
HRT prospectus), or in their respective Statements of Additional Information,
which are available upon request.
Purchase and Redemption of Units
Amounts allocated to the Funds pursuant to an employer plan, with respect to
contributions submitted and transfers of accumulations from other Investment
Options (and in appropriate circumstances upon repayments of loans), are
invested in Separate Account No. 13 -- Pooled, Separate Account No. 10 --
Pooled, Separate Account No. 4 -- Pooled or Separate Account No. 3 -- Pooled,
respectively, through the purchase of Alliance Bond Fund Units, Alliance
Balanced Fund Units, Alliance Common Stock Fund Units or Alliance Aggressive
Stock Fund Units. Similarly, amounts allocated to the Investment Funds of
Separate Account Nos. 51 and 66 are invested through the purchase of Units in
those Investment Funds. The number of Units of each Fund purchased is equal to
the amount of the payment allocated to that Fund, divided by that Fund's Unit
value determined as of the Transaction Date. See Part I -- Fund Information in
the SAI. The resulting number of Units does not vary because of any subsequent
fluctuation in value, but the Unit values fluctuate to reflect the investment
income, realized and unrealized capital gains and losses of the Funds (or the
Trust's Portfolios), fees and expenses in connection with portfolio
transactions, investment management fees, and the annual operation of the Funds.
Amounts withdrawn from a Fund for the purposes of payments of employer plan
benefits, transfers of accumulations to other Investment Options, loans or
payments of certain charges and fees when due are effected by reducing the
number of Units in the appropriate Fund. The number of Units redeemed for an
employer plan for such purposes is determined by the amount to be withdrawn
divided by the Unit value on the Transaction Date.
How We Determine the Unit Value
The Unit values (rounded to the nearest cent) of the Alliance Bond, Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds were $36.35,
$28.07, $84.15, and $44.82, respectively, on May 1, 1992, January 23, 1985,
April 8, 1985 and July 7, 1986, respectively, the first date on which Registered
Units under the Contracts were purchased in these Funds under RIA. The Unit
values (rounded to the nearest cent) of the Alliance Money Market, Alliance
Intermediate Government Securities, Alliance Quality Bond, Alliance High Yield,
Alliance Growth & Income, Alliance Equity Index, Alliance Global, Alliance
Conservative Investors and Alliance Growth Investors Funds were $10.00 on June
1, 1994, the first date on which Registered Units under the Contracts were
purchased in these Funds. The Unit value (rounded to the nearest cent) of the
Alliance International Fund was $100.00 on September 1, 1995, the first date on
which registered Units under the Contracts were purchased in this Fund. The Unit
value (rounded to the nearest cent) of the Alliance Small Cap Growth Fund was
$100.000 on June 2, 1997, the first date on which Registered Units under the
Contracts were purchased in this Fund. The Separate Account No. 66 Investment
Funds will be available in July 1998.
We calculate Unit values for the Funds at the end of each Business Day. The Unit
value for the Alliance Bond, Alliance Balanced, Alliance Common Stock and
Alliance Aggressive Stock Funds reflect investment performance (including
related expenses) and the investment management and financial accounting fee.
The Unit values for the Investment Funds of Separate Account No. 51 reflect
investment performance, the Separate Account Administrative Charge and,
indirectly, HRT expenses. The Unit values of Separate Account No. 66 will
reflect investment performance and indirectly EQAT expenses. For each of the
Funds, we determine the Unit value by multiplying the Unit value for the
preceding Business Day by the "net investment factor" for that subsequent day.
For a description of how the net investment factors are determined, see Part I
- -- Fund Information in the SAI.
When payments are invested in a Fund, the number of Units outstanding
attributable to each Fund is correspondingly increased; and when amounts are
withdrawn from a Fund, the number of Units outstanding attributable to that Fund
is correspondingly decreased. See Part I -- Fund Information in the SAI.
Investment Objectives and Policies
Before deciding whether amounts will be allocated entirely to one of the Funds
or entirely to the Guaranteed Interest Account, or divided among the Investment
Options, the investment objectives and policies should be considered.
Each Fund, or Trust Portfolio in which an Investment Fund of Separate Account
No. 51 and No. 66 is invested, has different investment objectives and policies.
The differ-
21
<PAGE>
ences may affect the return of each Fund, as well as the market and financial
risks of each. By market risks, we mean factors which do not necessarily relate
to a particular issuer but which affect the way markets, and securities within
those markets, perform. We sometimes describe market risk in terms of
volatility, that is, the range and frequency of market value changes. Market
risks include such things as changes in interest rates, general economic
conditions and investor perceptions regarding the value of debt and equity
securities. By financial risks we mean factors associated with a particular
issuer which may affect the price of its securities, such as its competitive
posture, its earnings and its ability to meet its debt obligations. There is no
assurance that the objectives of any of the Funds will be met. All investments
involve risk and there can be no guarantee against loss resulting from an
investment in the Funds.
Set forth below is information regarding the investment objectives and policies
of the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance
Aggressive Stock Funds. Additional information regarding investment restrictions
and requirements with respect to these Funds, is given in the SAI in Part I --
Fund Information. A Statement of Investments of the Alliance Bond, Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds is included
in the financial statements of Separate Account No. 13 -- Pooled, Separate
Account No. 10 -- Pooled, Separate Account No. 4 -- Pooled and Separate Account
No. 3 -- Pooled, respectively, in Part III of the SAI.
Information regarding the investment objectives and policies, as well as
investment restrictions and requirements, with respect to the corresponding HRT
and EQAT Portfolios in which the Investment Funds of Separate Accounts No. 51
and No. 66 are invested, is included in each Trust's prospectus and SAI. A
statement of investments for each of the Portfolios is included in the Trusts'
financial statements in the SAI of each Trust.
Alliance Bond Fund
The Alliance Bond Fund invests primarily in publicly traded fixed-income
securities, such as bonds, debentures and notes. Its objective is to achieve
maximum total return, consistent with investment quality, with less volatility
than a long-term bond account.
The Alliance Bond Fund seeks to achieve its objective by investing primarily in
fixed-income securities including, but not limited to, the following:
obligations issued or guaranteed by the U.S. Government (such as U.S. Treasury
securities), its agencies (such as the Government National Mortgage
Association), or instrumentalities (such as the Federal National Mortgage
Association); corporate debt securities; mortgage pass-through securities;
collateralized mortgage obligations; asset-backed securities; zero coupon bonds;
and equipment trust certificates. All such securities will be investment grade,
i.e., rated within the four highest credit categories by S&P (AAA, AA, A or BBB)
or by Moody's (Aaa, Aa, A or Baa) or, if unrated, will be of comparable
investment quality as determined by our credit analysis. Bonds rated below A by
S&P or Moody's are more susceptible to adverse economic conditions or changing
circumstances than those rated A or higher but are regarded as having an
adequate capacity to pay principal and interest.
The fixed-income securities in which the Alliance Bond Fund invests have
maturities less than or equal to ten years. The weighted average duration of the
total portfolio will be between one and five years. Duration is a principle used
in selecting portfolio securities that indicates a particular fixed-income
security's price volatility. Duration is measured by taking into account all of
the expected payments relating to that security and the time in the future when
each payment will be made and weighting all such times by the present value of
the corresponding payments. The duration of a fixed-income security with
interest payments occurring prior to its maturity is always shorter than its
term to maturity. In addition, given identical maturities, the lower the stated
rate of interest of a fixed-income security, the longer its duration, and,
conversely, the higher the stated rate of interest of a fixed-income security,
the shorter its duration. We believe that the Alliance Bond Fund's policy of
purchasing intermediate duration bonds significantly reduces the volatility of
the Fund's unit price over that of a long-term bond account.
While the Alliance Bond Fund will invest primarily in the types of fixed-income
securities described above, the Alliance Bond Fund may also invest in
high-quality money market securities, which may include obligations of the U.S.
Government, its agencies and instrumentalities; negotiable certificates of
deposit; banker's acceptances or bank time deposits; repurchase agreements;
master demand notes; and other money market instruments of the type described
below for the Alliance Balanced Fund. See Alliance Balanced Fund below. The
Alliance Bond Fund may purchase these money market securities directly or may
acquire units in our Separate Account No. 2A. See Alliance Common Stock Fund in
this section. For temporary or defensive purposes, the Alliance Bond Fund may
invest directly or indirectly in money market securities without limitation.
The Alliance Bond Fund may purchase fixed-income securities and money market
securities having adjustable rates of interest with periodic demand features.
The Alliance Bond Fund may also purchase fixed-income securities and certain
money market securities on a when-issued or delayed delivery basis. The price of
when-issued securities is fixed at the time of commitment, but delivery and
payment for such securities may take place up to 90 days after the date of the
commitment. The securities so purchased are subject to market fluctuation, and
no interest accrues to the purchaser during this period. When-
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issued securities involve a risk of loss if the value of the security declines
prior to the settlement date. For additional information on the instruments in
which the Alliance Bond Fund invests, see Part I -- Fund Information -- Certain
Investments of the Alliance Bond and Alliance Balanced Funds in the SAI.
The Alliance Bond Fund is designed for participants who seek a greater rate of
return than that normally provided by money market investments and less
volatility than that experienced by long-term bond investments. Both the
financial and market risks of an investment in the Alliance Bond Fund are
expected to be less than those for the Alliance Common Stock, Alliance Balanced
and Alliance Aggressive Stock Funds. Nevertheless, the Alliance Bond Fund's unit
price and yield will fluctuate. Interest rate fluctuations will affect the value
of Alliance Bond Fund Units but will not affect the income received from the
Fund's portfolio securities. A decline in prevailing interest rates generally
will increase the value of the securities held by the Alliance Bond Fund, while
an increase in prevailing interest rates usually reduces the value of the
Alliance Bond Fund's portfolio securities.
The portfolio turnover rate for the Alliance Bond Fund cannot be accurately
predicted and may be high.
Alliance Balanced Fund
The Alliance Balanced Fund's investment objective is to achieve both
appreciation of capital and current income by investments in a diversified
portfolio of common stocks, other equity-type securities and longer-term
fixed-income securities, and current income by investments in publicly traded
debt securities and short-term money market instruments. The investment mix is
determined by the Fund manager.
We will vary the portion of the Alliance Balanced Fund's assets invested in each
type of security in accordance with our evaluation of economic conditions, the
general level of common stock prices, anticipated interest rates and other
relevant considerations, including our assessment of the risks associated with
each investment medium. The Fund is subject to the risk that we may incorrectly
predict changes in the relative values of the equity and debt markets.
In general, publicly traded equity securities will comprise the greatest portion
of the Alliance Balanced Fund's assets. At the years ended December 31, 1985
through 1997, the percentage of the Alliance Balanced Fund's assets invested in
equity securities (including equity-type securities such as convertible
preferred stocks or convertible debt instruments) has ranged from 50% to 57%.
The Fund's non-money market debt securities will consist primarily of publicly
traded securities issued or guaranteed by the United States Government or its
agencies or instrumentalities, and corporate fixed-income securities, including,
but not limited to, bank obligations, notes, asset-backed securities, mortgage
pass-through obligations, collateralized mortgage obligations, zero coupon bonds
and preferred stock. The Alliance Balanced Fund may also buy debt securities
with equity features such as conversion or exchange rights, or warrants for the
acquisition of stock or participations, based on revenues, sales or profits. The
Alliance Balanced Fund's non-money market debt securities will be subject to the
same investment quality criteria at the time of purchase, as are described above
for the non-money market investments of the Alliance Bond Fund. The average
maturity of the non-money market debt securities held by the Alliance Balanced
Fund will vary according to market conditions and the state of interest rate
cycles.
The Alliance Balanced Fund may invest in money market securities through our
Separate Account No. 2A or directly. See Alliance Common Stock Fund in this
section. The investments the Alliance Balanced Fund makes in money market
instruments will be payable only in United States dollars and will consist
principally of securities issued or guaranteed by the United States Government
or one of its agencies or instrumentalities, negotiable certificates of deposit,
bankers' acceptances or bank time deposits, repurchase agreements (covering
securities issued or guaranteed by the United States Government or one of its
agencies or instrumentalities, certificates of deposit or bankers' acceptances),
commercial paper that is rated Prime-1 by Moody's Investors Services, Inc.
(Moody's) or A-1 or A-1 Plus by Standard & Poor's Corporation (S&P), unrated
commercial paper, master demand notes or variable amount floating rate notes of
any issuer that has an outstanding issue of unsecured debt that is currently
rated Aa or better by Moody's or AA or better by S&P with less than one year to
maturity. Such investments may include certificates of deposit and time deposits
of London Branches of United States banks (these investments are usually
referred to as Eurodollars) and certificates of deposit and commercial paper
issued by Schedule B Banks (Canadian chartered bond subsidiaries of United
States banks). For additional information concerning the debt instruments in
which the Alliance Balanced Fund may invest, see Part I -- Fund Information --
Certain Investments of the Alliance Bond and Alliance Balanced Funds in the SAI.
Mortgage pass-through securities and certain collateralized mortgage
obligations, asset-backed securities and other debt instruments in which the
Fund may invest, are subject to prepayments prior to their stated maturity. It
is usually not possible to accurately predict the rate at which prepayments will
be made, which rate may be affected, among other things, by changes in generally
prevailing market interest rates. If prepayments occur, the Fund suffers the
risk that it will not be able to reinvest the proceeds at as high a rate of
interest as it had previously been receiving. Also, the Fund will incur a loss
to the extent that prepayments are made for an amount that is less than the
value at which the security was then being
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carried by the Fund. Moreover, securities that may be prepaid tend to increase
in value less during times of declining interest rates, and to decrease in value
more during times of increasing interest rates, than do securities that are not
subject to prepayment.
The Fund may invest up to 10% of its total assets in securities that are not
readily marketable and may invest up to 20% of its total assets in foreign
securities. Certain risks of investment in illiquid or foreign securities are
discussed below under Alliance Common Stock Fund. The Alliance Balanced Fund may
enter into contracts for the purchase or sale of a specific foreign currency at
a future date at a price set at the time of the contract. Generally, such
forward contracts will be for a period of less than three months. The Fund will
enter into such forward contracts for hedging purposes only. These transactions
will include forward purchases or sales of foreign currencies for the purpose of
protecting the dollar value of securities denominated in a foreign currency, or
protecting the dollar equivalent of interest or dividends to be paid on such
securities. Forward contracts are traded in the inter-bank market, and not on
organized commodities or securities exchanges. Accordingly, the Fund is
dependent upon the good faith and creditworthiness of the other party to the
transaction, as evaluated by the Fund's manager.
The Alliance Balanced Fund's investment policies permit hedging transactions,
such as through the use of stock index or interest rate futures. Although the
Alliance Balanced Fund currently has no plans to enter into such transactions,
information about such transactions is included in the SAI under Part I -- Fund
Information -- Certain Investments of the Alliance Bond and Alliance Balanced
Funds.
The Alliance Balanced Fund may enter into forward commitments for the purchase
or sale of securities and may purchase and sell securities on a when-issued or
delayed delivery basis. For more information about these investment techniques
see Part I -- Fund Information -- Certain Investments of the Alliance Bond and
Alliance Balanced Funds in the SAI.
Because the types and proportions of the Alliance Balanced Fund's assets are
expected to change frequently in accordance with market conditions, an annual
portfolio turnover rate cannot be predicted.
Alliance Common Stock Fund
The Alliance Common Stock Fund's investment objective is to achieve long-term
capital growth. We try to achieve this objective by investing in the securities
of carefully selected companies we believe will share in the growth of our
nation's economy -- and those of other leading industrialized countries -- over
a long period. The Alliance Common Stock Fund invests in securities of companies
of any capitalization but is generally invested primarily in securities of
intermediate- to large-size companies.
The Alliance Common Stock Fund invests primarily in common stocks and other
equity-type securities (such as convertible preferred stocks or convertible debt
instruments). The Alliance Common Stock Fund may use its assets to make
non-equity investments. These could include non-participating and
non-convertible preferred stocks, bonds and debentures. Some non-equity
investments may carry certain equity features such as conversion or exchange
rights or warrants for the acquisition of stocks of the same or different
issuers or participations based on revenues, sales or profit. If, in light of
economic conditions and the general level of stock prices, it appears that the
Alliance Common Stock Fund's investment objective will not be met by buying
equities, non-equity investments may be substantial. The Alliance Common Stock
Fund may invest up to 10% of its total assets in securities which are restricted
as to resale under Federal securities law (generally referred to as "restricted
securities").
The Alliance Common Stock Fund may make temporary investments in government
obligations, short-term commercial paper and other money market instruments of
the types purchased by the Alliance Balanced Fund. It may buy these directly or
acquire units in our Separate Account No. 2A. We established Separate Account
No. 2A in 1983 to provide a more efficient means for our separate accounts to
invest cash positions on a pooled basis at no additional cost. Separate Account
No. 2A seeks to obtain a high level of current income, preserve its assets and
maintain liquidity. It invests only in short-term securities which mature in 60
days or less from the date of purchase or which are subject to a repurchase
agreement requiring repurchases in 60 days or less. Units in Separate Account
No. 2A are not registered under the Securities Act of 1933 (1933 Act). Some
amounts may be invested in securities which are restricted as to disposition
under Federal securities law.
While equity investments will be made primarily in securities of U.S. companies
or foreign companies doing substantial business here, a limited portion of the
Alliance Common Stock Fund's investments may be made in the securities of
established foreign companies without substantial business here. The amount of
these investments will not generally exceed 15% of the value of the Alliance
Common Stock Fund's assets. For many foreign securities, there are
dollar-denominated American Depository Receipts (ADRs), which are traded in the
United States on exchanges or over-the-counter, and are issued by domestic
banks. The Alliance Common Stock Fund may invest in foreign securities directly
and through ADRs, and may hold some foreign securities outside the United
States. The Alliance Common Stock Fund intends to invest in foreign securities
only when the potential benefits to the Alliance Common Stock Fund are deemed to
outweigh the risks.
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In addition to the general risks inherent in any equity investment, and the
market and financial risks discussed above, investment in the Alliance Common
Stock Fund is subject to the risk of investment in foreign securities and
restricted securities. Foreign investments may involve risks not present in
domestic investments, such as changes in the political or economic climate of
countries in which portfolio companies do business. Foreign securities may be
less liquid or subject to greater price volatility than securities of domestic
issuers, and foreign accounting, auditing and disclosure standards may differ
from domestic standards. There may be less regulation in foreign countries of
stock exchanges, brokers, banks, and listed companies than in the United States.
The value of foreign investments may rise or fall because of changes in currency
exchange rates or exchange controls. ADRs do not lessen the foreign exchange
risk inherent to investing in the securities of foreign issuers. However, by
investing in ADRs rather than directly in foreign issuers' stock, the Alliance
Common Stock Fund will avoid currency risks during the settlement period for
either purchases or sales. Restricted securities are generally less liquid than
registered securities and market quotations for such securities may not be
readily available. The Alliance Common Stock Fund may not be able to sell
restricted securities except pursuant to registration under applicable Federal
and state securities laws or pursuant to SEC rules which limit their sale to
certain purchasers and may require that they be held by the Alliance Common
Stock Fund for a specified period of time prior to resale. Because of these
restrictions, at times the Alliance Common Stock Fund may not be readily able to
sell them at fair market value. From time to time, the equity holdings in the
Alliance Common Stock Fund may be concentrated in the securities of a relatively
small number of issues. In no event will an investment be made for the Fund in
securities of one issuer if such investment would cause more than 10% of the net
asset value of the Alliance Common Stock Fund to be invested in the securities
of such issuer, and no investment will be made for the Fund if such investment
would cause more than 40% of the net asset value of the Fund to be invested in
the securities of four or fewer issuers. This strategy of investment
concentration may increase an investor's risk of loss in the event of a decline
in the value of one of these securities while it is held in the Alliance Common
Stock Fund. As of December 31, 1997, 26.5% of the Alliance Common Stock Fund's
assets was held in the securities of four issuers. See Portfolio of Investments
in the SAI.
The Alliance Common Stock Fund will generally hold its investments for an
extended period, and the annual portfolio turnover rate will normally be under
125%.
Alliance Aggressive Stock Fund
The Alliance Aggressive Stock Fund seeks to achieve long-term capital growth,
consistent with investment quality. It will attempt to achieve this objective by
investing primarily in securities of medium- and smaller-sized companies (with
capitalizations generally between $50 million to $1.5 billion) which are
perceived to have greater growth potential than larger companies.
Most of the time, the Alliance Aggressive Stock Fund will invest primarily in
common stocks of medium- and smaller-sized companies. It may also invest in
securities not generally considered defined growth stocks, but that may have
unusual value or potential. For example, opportunities for capital growth exist
from time to time in what are believed to be cyclical industries, companies
whose securities are temporarily undervalued, special situations, younger but
not widely known companies and companies doing business in countries whose
economies are expanding. The Alliance Aggressive Stock Fund may invest in
foreign companies without substantial business activities in the United States.
Industry diversification is not an objective of the Alliance Aggressive Stock
Fund and it may at times be less diversified than a traditional equity
portfolio. Some other equity-type investments may also be made. The Alliance
Aggressive Stock Fund may also invest in short-term debt securities such as
corporate notes and the types of temporary money market investments described
above for the Alliance Balanced Fund. The Alliance Aggressive Stock Fund may
invest up to 10% of its total assets in restricted securities. See Alliance
Balanced Fund and Alliance Common Stock Fund in this section.
Medium- and smaller-sized companies may be dependent on only one or two
products. They may be more vulnerable to the competition from larger companies
with greater resources and to economic conditions affecting their market sector.
Therefore, consistent earnings may not be as likely in smaller companies as they
may be in more established companies. Such companies may also be more dependent
on access to equity markets to raise capital than larger companies with ability
to support debt. Small- and intermediate-sized companies may be new, without
long business or management histories, and perceived by the market as unproven.
Their securities may be held primarily by insiders or institutional investors
which may have an impact on marketability. These stocks may rise and fall more
than the overall market.
Foreign and restricted securities in the Alliance Aggressive Stock Fund are
subject to the risks described above for the Alliance Common Stock Fund.
In light of the aggressiveness of its policies and the less diversified nature
of its investments, as participants near retirement, they should periodically
reevaluate the amount allocated to the Alliance Aggressive Stock Fund.
Many investments which we believe would have the greatest growth potential may
involve greater risks than are inherent in the Alliance Common Stock Fund and
the Alliance Balanced Fund.
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In general, the annual portfolio turnover rate of the Alliance Aggressive Stock
Fund is not expected to exceed 150%.
Investment Management
As the investment manager of the Alliance Bond, Alliance Balanced, Alliance
Common Stock and Alliance Aggressive Stock Funds, we invest and reinvest the
assets of these Funds in a manner consistent with the policies described in this
section under Investment Objectives and Policies.
In providing these services to the Alliance Bond, Alliance Balanced, Alliance
Common Stock and Alliance Aggressive Stock Funds, we currently use the personnel
and facilities of our majority-owned subsidiary, Alliance Capital Management
L.P. (Alliance), for portfolio selection and transaction services. Alliance is
also the investment adviser for the Trust.
Alliance is a registered investment adviser under the Investment Advisors Act of
1940 and acts as an investment adviser to various separate accounts and general
accounts of Equitable Life and other affiliated insurance companies.
The securities held in the Alliance Bond, Alliance Balanced, Alliance Common
Stock and Alliance Aggressive Stock Funds must be reviewed and approved by the
Investment Committee of our Board of Directors. Subject to the Investment
Committee's broad supervisory authority, our investment officers have been given
discretion as to sales and, within specified limits, purchases of stocks, other
equity securities and certain debt securities. When an investment opportunity
arises that is consistent with the objectives of more than one of these Funds,
investment opportunities are allocated among these Funds in an impartial manner
based on certain factors such as the Funds' investment objectives and their
then-current investment and cash positions.
Our parent, the Holding Company, owns Donaldson, Lufkin & Jenrette, Inc. (DLJ).
A DLJ subsidiary, Donaldson, Lufkin & Jenrette Securities Corporation is one of
the nation's largest investment banking and securities firms. Another DLJ
subsidiary, Autranet, Inc., is a securities broker that markets independently
originated 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 Alliance Bond, Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds transaction
practices discussed in this prospectus and the SAI, these Funds may engage in
securities and other transactions with the above entities or may invest in
shares of the investment companies with which those entities have affiliations.
HRT's Manager and Investment Adviser
HRT is managed and its Portfolios are advised by Alliance Capital Management
L.P. ("Alliance"), which is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940.
In its role as manager of HRT, Alliance has overall responsibility for the
general management and administration of HRT, including selecting the portfolio
managers for HRT's Portfolios, monitoring their investment programs and results,
reviewing brokerage matters, performing fund accounting, overseeing compliance
by HRT with various Federal and state statutes, and carrying out the directives
of its Board of Trustees. With the approval of HRT's Trustees, Alliance may
enter into agreements with other companies to assist with its administrative and
management responsibilities to HRT.
Alliance Capital Management L.P.
Alliance, a leading international investment adviser, provides investment
management and consulting services to mutual funds, endowment funds, insurance
companies, foreign entities, qualified and non-tax qualified corporate funds,
public and private pension and profit-sharing plans, foundations and tax-exempt
organizations.
Alliance is a publicly traded limited partnership incorporated in Delaware. On
December 31, 1997, Alliance was managing approximately $218.7 billion in assets.
Alliance employs 223 investment professionals, including 83 research analysts.
Portfolio managers have average investment experience of more than 14 years.
All of the HRT Portfolios are advised by Alliance. As adviser, Alliance is
responsible for developing the Portfolios' investment programs, making
investment decisions for the Portfolios, placing all orders for the purchase and
sale of those investments and performing certain limited related administrative
functions.
Alliance is an indirect, majority-owned subsidiary of Equitable Life, and its
main office is located at 1345 Avenue of the Americas, New York, New York 10105.
Additional information regarding Alliance is located in the HRT prospectus (page
numbers are preceded by "HRT") which directly follows this prospectus.
EQAT's Manager
EQ Financial Consultants, Inc. ("EQF"), subject to the supervision and direction
of the Trustees of EQAT, has overall responsibility for the general management
and administration of EQAT. EQF is an investment adviser registered under the
Investment Advisers Act of 1940, as amended, and a broker-dealer registered
under the Securities Exchange Act of 1934, as amended ("1934 Act"). EQF
currently furnishes specialized investment advice to other clients, including
individuals, pension and profit-sharing plans, trusts, charitable organizations,
corporations, and other business entities. EQF is a
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Delaware corporation and an indirect, wholly owned subsidiary of Equitable Life.
EQF is responsible for providing management and administrative services to EQAT
and selects the investment advisers for EQAT's Portfolios, monitors EQAT
Advisers' investment programs and results, reviews brokerage matters, oversees
compliance by EQAT with various Federal and state statutes, and carries out the
directives of its Board of Trustees. EQ Financial Consultants, Inc.'s main
office is located at 1290 Avenue of the Americas, New York, NY 10104.
Pursuant to a service agreement, Chase Global Funds Services Company assists EQF
in the performance of its administrative responsibilities to EQAT with other
necessary administrative, fund accounting and compliance services.
EQAT's Investment Advisers
Rowe Price-Fleming International, Inc.; T. Rowe Price Associates, Inc.; Putnam
Investment Management, Inc.; Massachusetts Financial Services Company; Morgan
Stanley Asset Management, Inc.; Warburg Pincus Asset Management, Inc.; and
Merrill Lynch Asset Management, L.P. serve as EQAT Advisers only for their
respective EQAT Portfolios.
Each EQAT Adviser furnishes EQAT's manager, EQF, with an investment program
(updated periodically) for each of its Portfolios, makes investment decisions on
behalf of its EQAT Portfolios, places all orders for the purchase and sale of
investments for the Portfolio's account with brokers or dealers selected by such
Adviser and may perform certain limited related administrative functions.
The assets of each Portfolio are allocated currently among the EQAT Advisers. If
an EQAT Portfolio shall at any time have more than one EQAT Adviser, the
allocation of an EQAT Portfolio's assets among EQAT Advisers may be changed at
any time by EQF.
Massachusetts Financial Services Company
Massachusetts Financial Services Company (MFS) is America's oldest mutual fund
organization, whose assets under management as of December 31, 1997 were
approximately $70.2 billion on behalf of more than 2.7 million investors. MFS
advises MFS Research, a domestic equity portfolio, and MFS Emerging Growth
Companies, an aggressive equity portfolio. MFS is an indirect subsidiary of Sun
Life Assurance Company of Canada and is located at 500 Boylston Street, Boston,
MA 02116.
Merrill Lynch Asset Management L.P.
Founded in 1976, Merrill Lynch Asset Management, L.P. (MLAM) is a dedicated
asset management affiliate of Merrill Lynch & Co., Inc., a financial management
and advisory company with more than a century of experience. As of December 31,
1997, MLAM along with its advisory affiliates held approximately $278 billion in
investment company and other portfolio assets under management. MLAM advises
Merrill Lynch Basic Value Equity, a domestic equity portfolio with a value
approach to investing, and Merrill Lynch World Strategy, a global flexible asset
allocation portfolio that invests in equities and fixed-income securities
worldwide. The company is located at 800 Scudders Mill Road, Plainsboro, NJ
08543.
Morgan Stanley Asset Management Inc.
Morgan Stanley Asset Management Inc. (MSAM), provides a broad range of portfolio
management services to customers in the United States and abroad and serves as
an investment adviser to numerous open-end and closed-end investment management
companies. MSAM, together with its affiliated institutional investment
management companies, had approximately $146 billion in assets under management
and fiduciary care as of December 31, 1997. MSAM advises Morgan Stanley Emerging
Markets Equity, an international equity portfolio. MSAM is a subsidiary of the
recently merged Morgan Stanley, Dean Witter, & Co. and is located at 1221 Avenue
of the Americas, New York, New York 10020.
Putnam Investment Management, Inc.
Putnam Investment Management, Inc. (Putnam) has been managing mutual funds since
1937. As of December 31, 1997, Putnam and its affiliates managed more than $235
billion in assets. Putnam advises EQ/Putnam Growth & Income Value, a domestic
equity portfolio, and EQ/Putnam Balanced, a balanced stock and bond portfolio.
Putnam is an indirect subsidiary of Marsh & McLennan Companies, Inc. and is
located at One Post Office Square, Boston, MA 02109.
T. Rowe Price Associates, Inc. and Rowe Price-Fleming International, Inc.
Founded in 1937, T. Rowe Price provides investment management to both
individuals and institutions. With its affiliates, assets under management were
over $126 billion as of December 31, 1997. T. Rowe Price advises T. Rowe Price
Equity Income, a domestic equity portfolio. The company is located at 100 East
Pratt Street, Baltimore, MD 21202.
Rowe Price-Fleming International, Inc. (Price-Fleming), was founded as a joint
venture between T. Rowe Price and Robert Fleming Holdings, Ltd., a diversified
British investment organization. Price-Fleming's predominately non-U.S. assets
under management were the equivalent of approximately $30 billion as of December
31, 1997. Price-Fleming advises T. Rowe Price International Stock, an
international equity portfolio and is located at 100 East Pratt Street,
Baltimore, MD 21202.
Warburg Pincus Asset Management, Inc.
Warburg Pincus Asset Management, Inc. (WPAM) is a professional investment
advisory firm which provides services to investment companies, employee benefit
plans, endowment funds, foundations and other institutions and individuals.
Assets under management were approxi-
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mately $19.7 billion as of December 31, 1997. WPAM is indirectly controlled by
Warburg, Pincus & Co., a New York partnership, which serves as a holding company
of WPAM. WPAM advises Warburg Pincus Small Company Value, an aggressive equity
portfolio. The company is located at 466 Lexington Avenue, New York, NY 10017.
Additional information regarding each of the companies which serve as an EQAT
Adviser appears in the EQAT prospectus (page numbers are preceded by "EQAT"),
attached at the end of this prospectus.
Rates of Return
In order to show how the performance of the Funds may affect employer balances,
the following tables provide a historical view of investment performance. The
information presented includes performance results for each Fund including, for
the Investment Funds of Separate Account Nos. 51 and 66, performance results
since inception of the corresponding Portfolios, along with the appropriate
benchmarks. These performance results are based on the change in the Unit value
for the periods shown. Note that year-to-date figures are not annualized.
Performance data for the Alliance Bond, Alliance Balanced, Alliance Common Stock
and Alliance Aggressive Stock Funds reflect (i) the investment results of the
Fund since inception and (ii) the investment management and financial accounting
fee. We have recalculated performance prior to June 1, 1994 to reflect the
deduction of this fee even though it did not apply as an asset-based charge.
Performance data for the Investment Funds of Separate Account Nos. 51 and 66
reflect (i) the investment results of the corresponding Portfolios of HRT and
EQAT respectively, from the date of inception of those Portfolios, (ii) the
actual investment advisory fee and direct operating expenses of the relevant
Portfolio and (iii) for Separate Account No. 51, the Separate Account
Administrative Charge (although this latter charge was not an asset-based charge
before the Portfolios were available under RIA). None of the data reflects the
Ongoing Operations Fee, which may be paid by a reduction in the number of Units
credited under an employer plan and applied (for employer plans enrolled in RIA
on or after February 9, 1986) on a decremental scale based on employer plan
balances, or loan fee, annuity benefit charge or charge for premium taxes, which
may not be applicable to any particular Participant. Because rates of return do
not reflect the Ongoing Operations Fee or other charges and fees applicable to
employer plans under RIA, the rate of return for an employer plan would be lower
if such charges and fees were reflected.
For amounts allocated or transferred to a Fund, investment return and principal
will fluctuate and Unit values may be worth more or less than the original cost
when redeemed.
Market indices are not subject to any charges for investment advisory fees
typically associated with a managed portfolio. Comparisons with these
benchmarks, therefore, are of limited use. We include them because they are
widely known and may help you to understand the universe of securities from
which each Fund is likely to select its holdings.
Inception Dates and Comparative Benchmarks
Alliance Money Market: May 11, 1982; Salomon Brothers Three-Month T-Bill Index
(3-Month T-Bill).
Alliance Intermediate Government Securities: April 1, 1991; Lehman Intermediate
Government Bond Index (Lehman Intermediate Government).
Alliance Bond: May 1, 1981; Lehman Intermediate Government/Corporate Bond Index
(Lehman Intermediate GC).
Alliance Quality Bond: October 1, 1993; Lehman Aggregate Bond Index (Lehman
Aggregate).
Alliance High Yield: January 2, 1987; Merrill Lynch High Yield Master Index
(Master High Yield).
Alliance Growth & Income: October 1, 1993; 75% Standard & Poor's 500 Index (S&P
500), and 25% Value Line Convertible Index (75% S&P 500/25% Value Line Conv.).
Alliance Equity Index: March 1, 1994; S&P 500 which includes reinvested
dividends.
Alliance Common Stock: July 1, 1969; Standard & Poor's 500 Index (S&P 500e),
which includes reinvested dividends.
Alliance Global: August 31, 1987; Morgan Stanley Capital International World
Index (MSCI World).
Alliance International: April 3, 1995; Morgan Stanley Capital International
Europe, Australia, Far East Index (MSCI EAFE).
Alliance Aggressive Stock: May 1, 1969; 50% Russell 2000 Small Stock Index and
50% S&P Mid-Cap Total Return (50% Russell 2000/50% S&P Mid-Cap).
Alliance Small Cap Growth: May 1, 1997; 100% Russell 2000 Growth (Russell 2000
Gr.).
Alliance Conservative Investors: October 2, 1989; 70% Lehman Treasury Bond
Composite Index and 30% S&P 500 (70% Lehman Treas./30% S&P 500).
Alliance Balanced: June 25, 1979; 50% S&P 500 and 50% Lehman
Government/Corporate Bond Index (50% S&P 500/50% Lehman Corp.).
Alliance Growth Investors: October 2, 1989; 30% Lehman Government/Corporate Bond
Index and 70% S&P 500 (30% Lehman Treas./70% S&P 500).
T. Rowe Price International Stock: May 1, 1997; Morgan Stanley Capital
International Europe, Australia, Far East Index (MSCI EAFE).
T. Rowe Price Equity Income: May 1, 1997; Standard & Poor's 500 Index (S&P 500).
28
<PAGE>
EQ/Putnam Growth & Income Value: May 1, 1997; Standard & Poor's 500 Index (S&P
500).
EQ/Putnam Balanced: May 1, 1997; 60% Standard & Poor's 500 Index and 40% Lehman
Government/Corporate Bond Index (60% S&P 500/40% Lehman Corp.).
MFS Research: May 1, 1997; Standard & Poor's 500 Index (S&P 500).
MFS Emerging Growth Companies: May 1, 1997; Russell 2000 Index (Russell 2000).
Morgan Stanley Emerging Markets Equity: August 20, 1997; Morgan Stanley Capital
International Emerging Markets Free Price Return Index (MSCI Emerging Markets).
Warburg Pincus Small Company Value: May 1, 1997; Russell 2000 Index (Russell
2000).
Merrill Lynch World Strategy: May 1, 1997; 36% S&P 500/24% MSCI EAFE/21% Salomon
Brothers U.S. Treasury Bond 1 Year+/14% Salomon Brothers World Government Bond
Ex U.S./5% 3-Month U.S. T-Bill (Market Composite) U.S.
Merrill Lynch Basic Value Equity: May 1, 1997; Standard & Poor's 500 Index (S&P
500).
The Lipper Mutual Funds Survey (Lipper) records the performance of over 7,000
mutual funds. According to Lipper Analytical Services, Inc., the data are
presented net of investment management fees, direct operating expenses, and, for
funds with Rule 12b-1 plans, asset-based sales charges. Lipper data provide a
more accurate picture of RIA performance relative to that of other mutual funds
underlying retirement plan products than the market indices.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of return
reflect performance over a stated period of time. Annualized rates of return
represent the annual rate of growth that would have produced the same cumulative
return, if performance had been constant over the entire period.
The performance of the Funds does not represent the actual experience of a
particular participating employer plan; the amount and timing of contributions
affects individual performance, as do Fund expenses. For a discussion of charges
and fees and how they are deducted from a RIA plan, see Part II -- Charges and
Fees.
PAST PERFORMANCE IS NOT A GUARANTEE OR INDICATION OF FUTURE RESULTS. NO
PROVISIONS HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS OR UPON
DISTRIBUTION.
29
<PAGE>
<TABLE>
<CAPTION>
Annualized Rates of Return for Periods Ended December 31, 1997:
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio
Since Inception
1 Year 3 Years 5 Years 10 Years 20 Years Inception Date
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FIXED-INCOME SERIES:
Domestic Fixed Income
ALLIANCE MONEY MARKET 5.37% 5.45% 4.64% 5.73% -- 7.12% 5/11/82
Lipper Money Market 4.90 5.05 4.31 5.40 -- 6.89
3-Month T-Bill 5.23 5.41 4.71 5.61 -- 6.87
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES 7.24 8.01 5.88 -- -- 6.95 4/1/91
Lipper U.S. Government 8.08 8.68 6.00 -- -- 7.19
Lehman Intermediate Government 7.72 8.65 6.39 -- -- 7.47 5/1/81
ALLIANCE BOND 7.62 8.50 6.44 7.96 -- 10.22
Lehman Intermediate GC 7.87 8.98 6.67 8.34 -- 10.58
Lipper Gen. U.S. Govt. 8.84 9.23 6.31 7.91 -- 9.77
ALLIANCE QUALITY BOND 9.09 10.35 -- -- -- 5.75 10/1/93
Lipper Corporate Bond A-Rated 9.17 10.01 -- -- -- 5.82
Lehman Aggregate 9.65 10.42 -- -- -- 6.51
Aggressive Fixed Income
ALLIANCE HIGH YIELD 18.41 20.35 15.83 12.74 -- 11.98 1/2/87
Lipper High Yield 12.96 14.17 11.36 10.66 -- 9.78
Master High Yield 12.83 14.54 11.72 12.09 -- 11.39
EQUITY SERIES:
Domestic Equity
T. ROWE PRICE EQUITY INCOME+ -- -- -- -- -- 22.11 5/1/97
Lipper Equity Income -- -- -- -- -- 21.84
S&P 500 -- -- -- -- -- 22.55
EQ/PUTNAM
GROWTH & INCOME VALUE+ -- -- -- -- -- 16.23 5/1/97
Lipper Growth & Income -- -- -- -- -- 21.37
S&P 500 -- -- -- -- -- 22.55
ALLIANCE GROWTH & INCOME 26.69 23.55 -- -- -- 15.86 10/1/93
Lipper Growth 27.14 26.49 -- -- -- 18.48
25% Value Line Conv./75% S&P 500 29.54 28.62 -- -- -- 20.14
ALLIANCE EQUITY INDEX 32.50 30.28 -- -- -- 23.31 3/1/94
Lipper S&P 500 Index 32.60 30.49 -- -- -- 23.31
S&P 500 33.36 31.15 -- -- -- 23.84
MERRILL LYNCH 5/1/97
BASIC VALUE EQUITY+ -- -- -- -- -- 16.99
Lipper Growth & Income -- -- -- -- -- 21.37
S&P 500 -- -- -- -- -- 22.55
ALLIANCE COMMON STOCK 26.93 25.37 18.28 18.24 17.80% 13.63 7/1/69
Lipper Growth 25.30 25.11 16.47 15.93 15.73 11.13
S&P 500 33.36 31.15 20.27 18.05 16.66 12.55
MFS RESEARCH+ -- -- -- -- -- 16.07 5/1/97
Lipper Growth -- -- -- -- -- 21.59
S&P 500 -- -- -- -- -- 22.55
International Equity
ALLIANCE GLOBAL 11.49 14.89 16.07 13.68 -- 11.64 8/31/87
Lipper Global 13.04 15.20 13.76 11.50 -- 9.10
MSCI World 15.76 16.62 15.34 10.57 -- 8.22
ALLIANCE INTERNATIONAL -3.10 -- -- -- -- 6.11 4/3/95
Lipper International 5.44 -- -- -- -- 9.87
MSCI EAFE 1.78 -- -- -- -- 6.15
T. ROWE PRICE
INTERNATIONAL STOCK+ -- -- -- -- -- -1.49 5/1/97
Lipper International -- -- -- -- -- 3.41
MSCI EAFE -- -- -- -- -- 2.85
MORGAN STANLEY EMERGING MARKETS EQUITY* -- -- -- -- -- -20.16 8/20/97
Lipper Emerging Markets -- -- -- -- -- N/A
MSCI Emerging Markets Free -- -- -- -- -- -21.43
- -----------------------------------------------------------------------------------------------------------------------------------
See footnotes on page 31. This table continues on next page
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Annualized Rates of Return for Periods Ended December 31, 1997 (continued):
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio
Since Inception
1 Year 3 Years 5 Years 10 Years 20 Years Inception Date
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY SERIES (Continued):
Aggressive Equity
ALLIANCE AGGRESSIVE STOCK 12.10% 21.72% 14.75% 19.40% 18.28% 11.14% 5/1/69
Lipper Mid-Cap Growth 19.63 22.51 15.24 16.50 15.60 9.29
50% Russell 2000/50% S&P Mid-Cap 27.31 24.88 17.11 17.74 -- N/A
WARBURG PINCUS
SMALL COMPANY VALUE+ -- -- -- -- -- 19.15 5/1/97
Lipper Small-Cap -- -- -- -- -- 30.28
Russell 2000 Growth -- -- -- -- -- 28.68
ALLIANCE SMALL CAP GROWTH+ -- -- -- -- -- 26.64 5/1/97
Lipper Small-Cap -- -- -- -- -- 30.28
Russell 2000 Growth -- -- -- -- -- 27.66
MFS EMERGING GROWTH COMPANIES+ -- -- -- -- -- 22.42 5/1/97
Lipper Mid-Cap -- -- -- -- -- 26.03
Russell 2000 -- -- -- -- -- 28.68
THE ASSET ALLOCATION SERIES:
ALLIANCE CONSERVATIVE INVESTORS 13.17 12.72 8.73 -- -- 9.48 10/2/89
Lipper Income 18.69 19.44 13.14 -- -- 12.15
70% Lehman Treas./30% S&P 500 16.71 17.18 11.87 -- -- 11.39
EQ/PUTNAM BALANCED+ -- -- -- -- -- 14.38 5/1/97
Lipper Balanced -- -- -- -- -- 14.79
40% Lehman Gov't/Corp./60% S&P 500 -- -- -- -- -- 17.17
ALLIANCE BALANCED 13.42 15.00 9.40 11.99 -- 13.89 6/25/79
Lipper Balanced 19.00 19.44 13.20 12.92 -- 13.74
50% Lehman Gov't Corp./50% S&P 500 21.56 21.68 14.63 21.19 -- 14.49
ALLIANCE GROWTH INVESTORS 16.72 18.39 13.10 -- -- 15.67 10/2/89
Lipper Flexible Portfolio 18.69 19.44 13.14 -- -- 12.15
30% Lehman Gov't/Corp./70% S&P 500 26.28 25.64 17.02 -- -- 14.48
MERRILL LYNCH WORLD STRATEGY+ -- -- -- -- -- 4.70 5/1/97
Lipper Global Flexible Portfolio -- -- -- -- -- 9.56
Market Composite -- -- -- -- -- 10.81
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
*Return for this Fund is unannualized and represents less than 5 months of
performance.
+Return for this Fund is unannualized and represents 8 months of performance.
31
<PAGE>
<TABLE>
<CAPTION>
Cumulative Rates of Return for Periods Ended December 31, 1997:
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio
Since Inception
1 Year 3 Years 5 Years 10 Years 20 Years Inception Date
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FIXED-INCOME SERIES:
Domestic Fixed Income
ALLIANCE MONEY MARKET 5.37% 17.24% 25.48% 74.51% -- 210.22% 5/11/82
Lipper Money Market 4.90 15.84 23.52 69.20 -- 200.21
3-Month T-Bill 5.23 17.13 25.87 72.64 -- 199.34
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES 7.24 25.99 33.10 -- -- 57.38 4/1/91
Lipper U.S. Government 8.08 28.40 33.93 -- -- 59.98
Lehman Intermediate Government 7.72 28.25 36.31 -- -- 62.74
ALLIANCE BOND 7.62 27.72 36.65 115.15 -- 406.60
Lehman Intermediate GC 7.87 29.44 38.10 122.75 -- 435.22 5/1/81
Lipper Gen. U.S. Govt. Funds Avg. 8.84 30.41 35.99 114.75 391.85% 389.63
ALLIANCE QUALITY BOND 9.09 10.35 -- -- -- 26.79 10/1/93
Lipper Corporate Bond A-Rated 9.17 33.20 -- -- -- 27.23
Lehman Aggregate 9.65 34.63 -- -- -- 30.78
Aggressive Fixed Income
ALLIANCE HIGH YIELD 18.41 74.31 108.74 -- -- 247.01 1/2/87
Lipper High Yield 12.96 48.92 71.52 177.35 -- 181.23
Master High Yield 12.83 50.26 74.04 213.08 -- 227.68
EQUITY SERIES:
Domestic Equity
T. ROWE PRICE EQUITY INCOME -- -- -- -- -- 22.11 5/1/97
Lipper Equity Income -- -- -- -- -- 21.84
S&P 500 -- -- -- -- -- 22.55
EQ/PUTNAM
GROWTH & INCOME VALUE -- -- -- -- -- 16.23 5/1/97
Lipper Growth & Income -- -- -- -- -- 21.37
S&P 500 -- -- -- -- -- 22.55
ALLIANCE GROWTH & INCOME 26.69 23.55 -- -- -- 86.90 10/1/93
Lipper Growth 27.14 102.81 -- -- -- 106.17
25% Value Line Conv./75% S&P 500 29.54 112.80 -- -- -- 118.17
ALLIANCE EQUITY INDEX 32.50 121.10 -- -- -- 123.40 3/1/94
Lipper S&P 500 Index Funds 32.60 122.21 -- -- -- 123.31
S&P 500 33.36 125.60 -- -- -- 127.24
MERRILL LYNCH
BASIC VALUE EQUITY -- -- -- -- -- 16.99 5/1/97
Lipper Growth & Income -- -- -- -- -- 21.37
S&P 500 -- -- -- -- -- 22.55
ALLIANCE COMMON STOCK 26.93 97.03 131.47 434.23 2,545.77 3,718.77 7/1/69
Lipper Growth 25.30 97.08 117.56 356.18 2,037.84 2,385.75
S&P 500 33.36 125.60 151.62 425.67 2,080.13 2,814.09
MFS RESEARCH -- -- -- -- -- 16.07 5/1/97
Lipper Growth -- -- -- -- -- 21.59
S&P 500 -- -- -- -- -- 22.55
International Equity
ALLIANCE GLOBAL 11.49 51.66 110.65 -- -- 212.44 8/27/87
Lipper Global 13.04 53.69 92.92 205.52 -- 151.76
MSCI World 15.76 58.59 104.13 173.01 -- 126.45
ALLIANCE INTERNATIONAL -3.10 -- -- -- -- 17.69 4/3/95
Lipper International 5.44 -- -- -- -- 30.12
MSCI EAFE 1.78 -- -- -- -- 17.83
- -----------------------------------------------------------------------------------------------------------------------------------
This table continues on next page
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Cumulative Rates of Return for Periods Ended December 31, 1997(continued):
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio
Since Inception
1 Year 3 Years 5 Years 10 Years 20 Years Inception Date
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY SERIES (Continued):
International Equity
T. ROWE PRICE
INTERNATIONAL STOCK -- -- -- -- -- -1.49% 5/1/97
Lipper International -- -- -- -- -- 3.76
MSCI EAFE -- -- -- -- -- 2.85
MORGAN STANLEY EMERGING MARKETS 8/20/97
EQUITY -- -- -- -- -- -20.16
Lipper Emerging Markets -- -- -- -- -- -19.10
MSCI Emerging Markets Free -- -- -- -- -- -21.43
Aggressive Equity
ALLIANCE AGGRESSIVE STOCK 12.10% 80.34% 100.33% 508.23% 2,770.93% 1,966.57 5/1/69
Lipper Mid-Cap Growth 19.63 84.83 105.11 371.28 2,029.53 1,580.48
50% Russell 2000/50% S&P Mid-Cap 27.31 94.76 120.25 412.08 -- N/A
WARBURG PINCUS
SMALL COMPANY VALUE -- -- -- -- -- 19.15 5/1/97
Lipper Small-Cap -- -- -- -- -- 30.28
Russell 2000 Growth -- -- -- -- -- 28.68
ALLIANCE SMALL CAP GROWTH -- -- -- -- -- 26.64 5/1/97
Lipper Small-Cap -- -- -- -- -- 29.36
Russell 2000 Growth -- -- -- -- -- 27.66
MFS EMERGING GROWTH COMPANIES -- -- -- -- -- 22.42 5/1/97
Lipper Mid-Cap -- -- -- -- -- 26.03
Russell 2000 -- -- -- -- -- 28.68
THE ASSET ALLOCATION SERIES:
ALLIANCE CONSERVATIVE INVESTORS 13.17 43.22 51.98 -- -- 111.03 10/2/89
Lipper Income 18.69 71.00 86.52 -- -- 160.04
70% Lehman Treas./30% S&P 500 16.71 60.91 75.18 -- -- 143.55
EQ/PUTNAM BALANCED -- -- -- -- -- 14.38 5/1/97
Lipper Balanced -- -- -- -- -- 15.83
40% Lehman Gov't/Corp./60% S&P 500 -- -- -- -- -- 17.17
ALLIANCE BALANCED 13.42 52.09 57.09 220.32 -- 1,011.81 6/25/79
Lipper Flexible Portfolio 19.00 70.61 86.33 239.04 1,205.16 1,002.31
50% Lehman Gov't/Corp./70% S&P 500 21.56 80.14 97.96 583.14 -- 1,127.66
ALLIANCE GROWTH INVESTORS 16.72 65.93 85.05 -- -- 232.10 10/2/89
Lipper Flexible Portfolio 18.69 71.00 86.52 -- -- 160.04
30% Lehman Gov't/Corp./70% S&P 500 26.28 98.32 119.42 -- -- 205.24
MERRILL LYNCH WORLD STRATEGY -- -- -- -- -- 4.70 5/1/97
Lipper Global Flexible Portfolio -- -- -- -- -- 9.56
Market Composite -- -- -- -- -- 10.81
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
RIA YEAR-BY-YEAR RATES OF RETURN
- -------------------------------------------------------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 7.27% 9.13% 8.19% 6.13% 3.48% 2.94% 3.96% 5.69% 5.28% 5.37%
ALLIANCE BOND 6.21 13.29 7.82 14.45 6.03 9.21 -2.03 15.48 2.77 7.62
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES -- -- -- 12.03 5.54 10.52 -4.42 13.27 3.72 7.24
ALLIANCE HIGH YIELD 9.68 5.08 -1.15 24.40 12.26 23.08 -2.83 19.86 22.82 18.41
ALLIANCE QUALITY BOND -- -- -- -- -- -0.52 -5.15 16.97 5.31 9.09
ALLIANCE GROWTH & INCOME -- -- -- -- -- -0.27 -0.62 24.01 20.03 26.69
ALLIANCE EQUITY INDEX -- -- -- -- -- -- 1.04 36.41 22.32 32.50
ALLIANCE COMMON STOCK 16.94 44.68 -11.35 52.03 1.22 19.81 -1.94 31.85 17.74 26.93
ALLIANCE GLOBAL 10.83 26.67 -6.11 30.49 -0.56 32.06 5.18 18.78 14.55 11.49
ALLIANCE INTERNATIONAL -- -- -- -- -- -- -- 10.66 9.76 -3.10
ALLIANCE AGGRESSIVE STOCK 1.94 46.97 8.85 87.18 -3.01 15.19 -4.24 31.33 22.50 12.10
ALLIANCE SMALL CAP GROWTH -- -- -- -- -- -- -- -- -- 26.64*
ALLIANCE CONSERVATIVE INVESTORS -- 3.08 6.35 19.79 5.74 10.71 -4.15 20.34 5.16 13.17
ALLIANCE BALANCED 14.78 26.48 -0.65 41.23 -2.83 12.54 -8.43 20.43 11.34 13.42
ALLIANCE GROWTH INVESTORS -- 3.98 10.56 48.84 4.88 15.20 -3.19 26.31 12.55 16.72
- -------------------
* Unannualized
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE>
- --------------------------------------------------------------------------------
PART IV -- THE GUARANTEED INTEREST ACCOUNT
- --------------------------------------------------------------------------------
General
Contributions allocated to the Guaranteed Interest Account become part of our
general account, which supports all of our insurance and annuity guarantees and
our general obligations. Our general account, as part of our insurance and
annuity operations, is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulation of
all jurisdictions in which we are authorized to do business, as discussed in
Part VI -- Miscellaneous Matters. Because of applicable exemptive and
exclusionary provisions, interests in our general account have not been
registered under the Securities Act of 1933 nor is the general account an
investment company under the 1940 Act. Accordingly, neither our general account
nor any interests in our general account are subject to regulation under the
Securities Act of 1933 or 1940 Act, and we have been advised that the staff of
the SEC has not made a review of the information which is included in this
prospectus or in the SAI relating to our general account and the Guaranteed
Interest Account. These disclosures, however, may be subject to certain
generally applicable provisions of the Federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
The Guarantees
The Guaranteed Interest Account provides an investment option in which the value
of the principal will not fluctuate. The amount allocated to the Guaranteed
Interest Account earns interest at the current guaranteed interest rate which is
an annual effective rate. After interest is credited, certain charges and fees
are deducted. The value of an employer plan's investment in the Guaranteed
Interest Account is, at any time, the total contributions allocated to the
Guaranteed Interest Account, plus the interest earned, less (i) employer plan
benefit payments, (ii) other employer plan withdrawals (including loans) and
(iii) charges and fees provided for under the Contracts.
Interest is credited through and allocated on the Transaction Date of any
transfer or withdrawal request. Interest is credited for each day of the month
on the amount maintained for the employer plan at the beginning of the day at a
daily rate equivalent to the guaranteed interest rate applicable to the employer
plan. The annual effective rate does not reflect deductions of fees and
expenses.
Current and Minimum Interest Rates
Except as described below, the "current" rate is the rate of interest that we
actually credit to amounts in the Guaranteed Interest Account for a given
calendar year. Current rates are declared for each class of employer plans
before the beginning of each calendar year. In addition to the current rate, we
declare "minimum" rates for the next two calendar years. The minimum interest
rates will never be lower than 4%. In general, we expect to declare current
rates in any year greater than the previously declared minimum rates for that
year. If the employer plan is permitted to invest in the Bond Fund, we may at
times have the right to declare a lower "current" rate of interest (revised
rate) which will be applicable for the remainder of the calendar year only to
new amounts contributed or transferred by the employer plan to the Guaranteed
Interest Account. See Part V -- Provisions of RIA and Retirement Benefits --
Special Rules Applicable to Plans that May Invest in the Alliance Bond Fund for
circumstances in which a revised rate might be declared. Such revised rate will
reflect market interest rates for money market instruments and other short-term
investments existing at the time any such amount is contributed or transferred
to the Guaranteed Interest Account without regard to any previously declared
minimum rate.
The current rate of interest for 1998, and the 1999 and year 2000 minimum rates
of interest guaranteed for each class, are stated in the proposal documents
submitted to sponsors of prospective RIA employer plans. The establishment of
new classes will not decrease the rates applicable to employer plans already
assigned to a previous class. The effective current rate for 1999 and the
minimum rates effective for calendar years 2000 and 2001 will be declared in
December 1998.
Classes of Employer Plans
We assign an employer plan to a "class" of employer plans upon its participation
in the Master Retirement Trust in order to facilitate the determination of
current and minimum guaranteed rates of interest that are applicable for that
employer plan participating in our Guaranteed Interest Account. The initial
class of employer plans to which an employer plan is assigned will depend on the
adoption effective date.
However, we reserve the right to, at any time during a calendar year, (1) close
a class and begin a new class for employer plans adopting the Master Retirement
Trust during the balance of the calendar year or (2) combine two or more classes
of employer plans. When we begin a new class of employer plans or combine two or
more classes of employer plans we will not decrease the "current" or "minimum"
guaranteed rates of interest for a class once those rates have been declared.
Charges and Fees
The ongoing operations fee, contingent withdrawal charge, loan fee, PRS charge,
annuity benefit charge and the charge for applicable state taxes discussed in
Part II -- Charges and Fees apply to employer plan balances maintained in the
Guaranteed Interest Account. The loan
35
<PAGE>
fee is applied on the Transaction Date that the loan amount is paid out of the
Guaranteed Interest Account.
Deferred Payout Provision
With respect to trustee-directed employer plans which are terminating their RIA
Contract, there is a deferred payout provision. Under that provision, we can
defer payment of the employer plan balance held in the Guaranteed Interest
Account less the contingent withdrawal charge by paying out the balance in six
installments over five years. During the deferred payout period, the balances
upon which we defer payment continue to earn the current interest rate declared
for each year. The ongoing operations fee continues to be deducted monthly from
the balance during the deferred payout period.
When the deferred payout provision is imposed, any trustee-directed employer
plan benefits becoming due during the deferred payout period will not be paid
from the employer plan balance in the Guaranteed Interest Account but, if
sufficient funds are available, would be paid from the new funding vehicle for
the trustee-directed employer plan. Participant-directed employer plans are not
subject to the deferred payout provision.
36
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATION OF DEFERRED PAYOUT PROVISION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Transaction Date End of Year 1 End of Year 2 End of Year 3 End of Year 4 End of Year 5
- ------------------------------------------------------------------------------------------------------------------------------------
Guaranteed Interest Account
Plan Assets
- - Withdrawal Charge
- --------------------
Distribution Amount 1
Dist. Amt. 1 = 1st Payment
- --------------
6
Dist. Amount 1
- - 1st Payment
- --------------
Balance 1 Balance 1
+ Interest
- Operations Fee
-------------------
Distribution Amount 2
Dist. Amt. 2 = 2nd Payment
--------------
5
Dist. Amount 2
- 2nd Payment
--------------
Balance 2 Balance 2
+ Interest
- Operations Fee
-------------------
Distribution Amount 3
Dist. Amt. 3 = 3rd Payment
--------------
4
Dist. Amount 3
- 3rd Payment
--------------
Balance 3 Balance 3
+ Interest
- Operations Fee
-------------------
Distribution Amount 4
Dist. Amt. 4 = 4th Payment
--------------
3
Dist. Amount 4
- 4th Payment
--------------
Balance 4 Balance 4
+ Interest
- Operations Fee
--------------------
Distribution Amount 5
Dist. Amt. 5 = 5th Payment
--------------
2
Dist. Amount 5
- 5th Payment
--------------
Balance 5 Balance 5
+ Interest
- Operations Fee
------------------
Final Distribution
</TABLE>
37
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PART V -- PROVISIONS OF RIA AND RETIREMENT BENEFITS
- --------------------------------------------------------------------------------
Contributions; Frequency and Amount
When RIA is utilized as the exclusive investment funding vehicle for the assets
of an employer plan, the annual aggregate amount of contributions must be at
least $10,000 (exclusive funding employer plan).
In our sole discretion, RIA may also be utilized as a partial investment funding
vehicle for employer plans. In such cases, the aggregate amount of contributions
in the initial participation year must be at least $50,000 and the annual
aggregate amount of contributions thereafter must be at least $25,000 (partial
funding employer plans). There is no required minimum for the amount of each
contribution where employer plan contributions are made on a basis more frequent
than annually. The total amount of contributions under an employer plan is
limited by law. See Part VII -- Tax and ERISA Considerations.
Rollover or Transfer from a Plan
An employer can change the funding of an existing plan to use RIA.
Before making a change, the following should be carefully considered:
o The comparative costs and benefits under existing funding arrangements and
under RIA; and
o The amendments or changes that may have to be made in the plan if funds are
transferred.
To make a rollover or transfer to RIA, funds must be in cash. Therefore, any
assets accumulated under an existing plan will have to be liquidated for cash.
Selecting Investment Options
An employer can elect to fund the employer plan with any number of the
Investment Options available under the Contracts. Generally, for
participant-directed plans, if the employer elects to fund the employer plan by
selecting any of the Alliance Intermediate Government Securities, Alliance
Quality Bond, Alliance High Yield or Alliance Conservative Investors Funds and
intends for the employer plan to comply with the requirements of ERISA Section
404(c), the employer should also select the Alliance Money Market Fund. If the
employer intends for the employer plan to comply with ERISA Section 404(c) and
none of the Alliance Money Market, Alliance Intermediate Government Securities,
Alliance Quality Bond, Alliance High Yield, Alliance Small Cap Growth or
Alliance Conservative Investors Funds are selected, the employer should elect
the Guaranteed Interest Account as a funding option. If the employer selects any
of the Alliance Money Market, Alliance Bond, Alliance Intermediate Government
Securities, Alliance Quality Bond, Alliance High Yield or Alliance Conservative
Investors Funds and the Guaranteed Interest Account, certain restrictions will
apply to transfers out of the Guaranteed Interest Account. The Alliance Bond
Fund is available only to employer plans that signed an Agreement to participate
in that Fund prior to June 1, 1994, and special transfer rules apply for these
employer plans. See Special Rules Applicable to Plans That May Invest in the
Alliance Bond Fund in this section. If the Employer adds any of the Investment
Funds of Separate Account Nos. 51 or 66, the Alliance Bond Fund will no longer
be subject to any transfer restrictions. However, transfers out of the
Guaranteed Interest Account will be subject to certain restrictions. See
Transfer Provisions in this section.
Allocation Choices
Contributions may be allocated to the Investment Options by dollar amounts or in
any whole number percentages that total 100% in accordance with the allocation
instructions on file.
In addition to our rules, allocation changes may be subject to employer plan
provisions which may limit or disallow such movements. Allocation changes may be
made without charge.
Except as provided below in connection with trustee-directed plans, amounts to
be allocated to an Investment Option to effectuate permitted contribution
allocation changes will be effective on the Transaction Date.
For allocations to the Guaranteed Interest Account in connection with
trustee-directed plans, any proposed change in an employer plan's contribution
allocation must be provided to us by written notice at least 60 days before the
effective date of the proposed change.
Transfer Provisions
Transfers of accumulated amounts among the Investment Options will be permitted
at any time and in any amount, subject to the transfer limitations described in
this section. In addition to our rules, transfers among the Investment Options
may be subject to employer plan provisions which may limit or disallow such
movements. Transfers among the Investment Options may be made without charge.
Under certain situations, amounts transferred out of the Guaranteed Interest
Account during the calendar quarter in which the request is made and the three
preceding calendar quarters (transfer period) are subject to a transfer
limitation described in this section.
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Participant-directed employer plans that have elected the PRS: If the employer
elects to fund the employer plan with the Guaranteed Interest Account and the
Alliance Money Market, Alliance Bond, Alliance Intermediate Government
Securities, Alliance Quality Bond, Alliance High Yield or Alliance Conservative
Investors Funds, during any transfer period, the maximum amount that may be
transferred by a participant from the Guaranteed Interest Account is equal to
the greater of: (i) 25% of the amount the participant had in the Guaranteed
Interest Account as of the last calendar day of the prior calendar year and (ii)
the total of all amounts the participant transferred out of the Guaranteed
Interest Account during the prior calendar year. Generally, this means that new
participants will not be able to transfer amounts out of the Guaranteed Interest
Account during the first calendar year of their participation under the
Contract.
If assets have been transferred from another funding vehicle by the Employer,
the participant, for the remainder of that calendar year, may transfer to the
Funds up to 25% of such transferred amount that the participant initially
allocated to the Guaranteed Interest Account.
Participant-directed employer plans that have not elected the PRS: If the
employer elects to fund the employer plan with the Guaranteed Interest Account
and the Alliance Money Market, Alliance Bond, Alliance Intermediate Government
Securities, Alliance Quality Bond, Alliance High Yield or Alliance Conservative
Investors Funds, during any transfer period the maximum amount that may be
transferred from the Guaranteed Interest Account is equal to the greater of: (i)
25% of the amount the employer plan had in the Guaranteed Interest Account as of
the last calendar day of the prior calendar year and (ii) the total of all
amounts the employer plan transferred out of the Guaranteed Interest Account
during the prior calendar year. The employer plan is responsible for monitoring
this transfer limitation.
If assets have been transferred from another funding vehicle by the Employer,
the trustee on behalf of the participant, for the remainder of that calendar
year, may transfer to the Funds up to 25% of such transferred amount that was
initially allocated to the Guaranteed Interest Account.
Trustee-directed plans: Transfers of accumulated amounts among the Investment
Options will be permitted as determined by us in our sole discretion only.
If assets have been transferred from another funding vehicle by the Employer,
the plan trustee, for the remainder of that calendar year may transfer to an
Investment Option up to 25% of such transferred amount that was initially
allocated to the Guaranteed Interest Account.
Special Rules Applicable to Plans That May Invest in the Alliance Bond Fund
The Alliance Bond Fund is available only to Participant-directed employer plans
that signed an agreement to participate in that Fund prior to June 1, 1994.
Special transfer rules, described below, apply to these employer plans when none
of the Investment Funds of Separate Account No. 51 is available (old employer
plans). If the Employer for an old employer plan adds any of the Investment
Funds of Separate Account No. 51, the Alliance Bond Fund will no longer be
subject to any transfer restrictions. However, transfers out the Guaranteed
Interest Account will be subject to certain restrictions. See Transfer
Provisions in this section.
Transfers to the Alliance Bond Fund: Except as described below, a plan
participant in an old employer plan may elect to transfer to the Alliance Bond
Fund any whole percentage up to and including 100% of the amounts arising from
participant-directed contributions that are held on behalf of the plan
participant under any other Investment Option. Requests to transfer amounts to
the Alliance Bond Fund will be processed only if, on the Transaction Date with
respect to such transfer, the current guaranteed interest rate with respect to
the employer plan's Guaranteed Interest Account is higher than the then-current
benchmark treasury rate.
A benchmark treasury rate will be determined on the Business Day coinciding with
or last preceding the 10th day of each month and will be applicable to transfer
requests with Transaction Dates that occur on or after the 16th day of the month
but before the 16th day of the immediately following month. The benchmark
treasury rate will be equal to the Five Year Constant Maturity rate (as
published in Federal Reserve Statistical Release H.15) for the Business Day on
which the rate is determined. The benchmark treasury rate can also be obtained
via a daily tape recording which can be accessed by calling the RIA Service
Office at 1-800-967-4560.
If we receive a request for a transfer of amounts into the Alliance Bond Fund
that would occur on a Transaction Date on which such a transfer is not
permitted, we will not process the transfer and will so notify the Employer
within four Business Days. We will not redirect the transfer to another
Investment Option and will not maintain any record of such request for future
processing.
Transfers from the Alliance Bond Fund: Except as described below, a plan
participant in an old employer plan may elect to transfer any whole percentage
(up to and including 100%) of the amounts held in the Alliance Bond Fund on
behalf of such participant to one, or any combination, of the other Investment
Options.
Restrictions Affecting the Guaranteed Interest Account: We reserve the right to
declare a lower revised interest rate (see Part IV -- The Guaranteed Interest
Account -- Current and Minimum Interest Rates) applicable only to new
contributions and transfers (allocations) being made to the Guaranteed Interest
Account from any Fund available under the employer plan, if all of the following
conditions exist:
39
<PAGE>
- -- on the Transaction Date with respect to the allocation, the aggregate
amount held in the Alliance Bond Fund with respect to all employer plans
comprising Equitable Life's Small Pension book of business is at least 10%
of the aggregate amount then held under all the contracts which fund those
plans;
- -- on the Transaction Date with respect to the allocation, the otherwise
applicable "current" guaranteed interest rate with respect to the employer
plan's Guaranteed Interest Account exceeds the benchmark treasury rate by
at least 0.75%; and
- -- prior allocations to the Guaranteed Interest Account for the employer plan
during that calendar year equal or exceed 110% of the average annual
allocations to the Guaranteed Interest Account for the employer plan during
the three immediately preceding calendar years.
If we declare a revised rate the employer or plan trustee may, by written
notice, withdraw all or part of the amount that would be credited with such
lower revised rate, without deduction of the contingent withdrawal charge. The
investment, for the remainder of the calendar year, of such withdrawn or
returned amounts in a funding vehicle other than RIA shall not be considered a
violation of an employer plan's exclusive funding obligation provided such
amount is contributed to RIA at the beginning of the following calendar year.
Loan Provision
Loans to plan trustees on behalf of participants are permitted in our RIA
program. It is the plan administrator's responsibility to administer the loan
program. See Part VII -- Tax and ERISA Considerations.
The following are important features of the RIA loan provision:
o A loan will be permitted only from the Guaranteed Interest Account. If the
amount requested to be borrowed plus the loan fee and loan reserve we
discuss below is more than the amount available in the Guaranteed Interest
Account for the loan transaction, the employer can move the additional
amounts necessary from one or more Funds to the Guaranteed Interest
Account.
o The plan administrator determines the interest rate, the maximum term and
all other terms and conditions of the loan.
o Repayment of loan principal and interest can be made only to the Guaranteed
Interest Account. The employer must identify the portion of the repayment
amount which is principal and which is interest.
o Upon repayment of a loan amount, any repayment of loan principal and loan
reserve (see below) taken from one or more Funds for loan purposes may be
moved back to a Fund.
o We charge a loan fee in an amount equal to 1% of the loan principal amount
on the Transaction Date a loan is made. The Contingent Withdrawal Charge
will be applied to any unpaid principal, as if the amount had been
withdrawn on the day the principal payment was due. See Part II -- Charges
and Fees.
o The minimum amount of a loan for a participant is $1,000, and the maximum
amount is 90% of the balances in all the Investment Options for a
participant. An employer plan, the Code and the Department of Labor (DOL)
(as described in Part VII -- Tax and ERISA Considerations) may impose
additional conditions or restrictions on loan transactions.
o On the Transaction Date a loan is made, we create a loan reserve account in
the Guaranteed Interest Account in an amount equal to 10% of the loan
amount. The 10% loan reserve is intended to cover (1) the Ongoing
Operations Fee applicable to amounts borrowed, (2) the possibility of our
having to deduct applicable contingent withdrawal charges (see Part II --
Charges and Fees) and (3) the deduction of any other withholdings, if
required. The loan amount will not earn any interest under the Contracts
while the loan is outstanding. The amount of the loan reserve will continue
to earn interest at the Guaranteed Interest Account rate applicable for the
employer plan.
o The Ongoing Operations Fee will apply to the sum of the Investment Option
balances (including the loan reserve) plus any unpaid loan principal. If
the employer plan is terminated or any amount is withdrawn, or if any
withdrawal from RIA results in the reduction of the 10% loan reserve amount
in the Guaranteed Interest Account, during the time a loan is outstanding,
the contingent withdrawal charge will be applied to any principal loan
balances outstanding as well as to any employer plan balances (including
the loan reserve) in the Investment Options. See Part II -- Charges and
Fees.
Benefit Payments General
Subject to the provisions of an employer plan, proceeds for the participant may
be applied to any one of the following benefit choices offered by RIA:
o purchase of one of our annuities;
o lump sum distribution;
o use of part of the proceeds to purchase one of our annuities with the
balance to be paid as a lump sum; or
o permitted cash withdrawal.
The amount used to purchase any one form of annuity under the Contracts, net of
all applicable charges and fees, must be at least $3,500. See Part II -- Charges
and Fees.
We require that the amount of any benefit distribution from an employer plan
that uses RIA as a partial investment
40
<PAGE>
funding vehicle be in proportion to the amount of plan assets held in RIA unless
some other method is specifically agreed upon in writing between Equitable Life
and the trustees of the employer plan.
Cash Distributions
Requests for cash distributions must be made to us on an aggregate as opposed to
a participant-by-participant basis, except for employer plans using the PRS. See
Part VIII -- Participant Recordkeeping Services (Optional). Distribution checks
are made payable to the trustees of the plan. The plan trustees are responsible
for distribution of funds to the participant or other payee and for any
applicable Federal and state income tax withholding and reporting. See Part VII
- -- Tax and ERISA Considerations.
Annuity Benefits
Subject to the provisions of an employer plan, we have available under RIA the
following forms of fixed annuities.
o Life Annuity: An annuity which guarantees a lifetime income to the retired
employee-participant (annuitant) and ends with the last monthly payment
before the annuitant's death. There is no death benefit associated with
this annuity form and it provides the highest monthly amount of any of the
guaranteed life annuity forms. If this form of annuity is selected, it is
possible that only one payment will be made if the annuitant dies after
that payment.
o Life Annuity -- Period Certain: This annuity form guarantees a lifetime
income to the annuitant and, if the annuitant dies during a previously
selected minimum payment period, continuation of payments to a designated
beneficiary for the balance of the period. The minimum period is usually 5,
10, 15 or 20 years.
o Life Annuity -- Refund Certain: This annuity form guarantees a lifetime
income to the annuitant and, if the annuitant dies before the initial
single premium has been recovered, payments will continue to a designated
beneficiary until the single premium has been recovered. If no beneficiary
survives the annuitant, the refund will be paid in one lump sum to the
estate.
o Period Certain Annuity: Instead of guaranteed lifetime income, this annuity
form provides for payments to the annuitant over a specified period,
usually 5, 10, 15 or 20 years, with payments continuing to the designated
beneficiary for the balance of the period if the annuitant dies before the
period expires.
o Qualified Joint and Survivor Life Annuity: This annuity form guarantees
lifetime income to the annuitant, and, after the annuitant's death, the
continuation of income to the surviving spouse. Generally, unless a married
annuitant elects otherwise with the written consent of his spouse, this
will be the form of annuity payment. If this form of annuity is selected,
it is possible that only one payment will be made if both the annuitant and
the spouse die after that payment.
All of the forms outlined above (with the exception of Qualified Joint and
Survivor Life Annuity) are available as either Single or Joint life annuities.
We offer other forms not outlined here. Your Equitable Life Representative can
provide details.
Amount of Fixed-Annuity Payments
Our forms of a fixed annuity provide monthly payments of specified amounts.
Fixed-annuity payments, once begun, will not change. The size of payments will
depend on the form of annuity that is chosen, our annuity rate tables in ef-fect
when the first payment is made, and, in the case of a life income annuity, on
the annuitant's age. The tables in our Contracts show monthly payments for each
$1,000 of proceeds applied under an annuity. If our annuity rates in effect on
the annuitant's retirement date would yield a larger payment, those current
rates will apply instead of the tables. Our annuity rate tables are designed to
determine the amounts required for the annuity benefits elected and for
administrative and investment expenses and mortality and expense risks. Under
our Contracts we can change the annuity rate tables every five years. Such
changes would not affect annuity payments being made.
Payment of Annuity
Amounts in the Funds to be applied to retirement benefits are made available by
the redemption of Units. The proceeds, plus any amounts in the Guaranteed
Interest Account, less a $175 administrative charge and premium tax charge, if
applicable, are applied to purchase the form of distribution selected.
Assignment and Alienation
The employer plan balances and rights under RIA cannot be assigned, sold,
alienated, discounted or pledged as collateral for a loan or other obligation to
any party (this reference to a loan does not apply to a loan discussed in this
section under Loan Provision), except to the extent allowed by law for a
Qualified Domestic Relations Order (QDRO), as that term is defined in the Code.
Creditors' Claims
Proceeds payable under our Contracts cannot be assigned or encumbered by the
payee.
All proceeds under our Contracts will be paid free from the claims of creditors
to the extent allowed by law.
When We Pay Proceeds
Application of proceeds to an annuity and payments or withdrawals out of the
Investment Options ordinarily will be made promptly after the Transaction Date.
However, we can defer payments, applications and withdrawals from the Funds for
any period during which the New York Stock Exchange is closed for trading, sales
of securities are restricted or determination of the fair market value of
41
<PAGE>
assets of the Funds is not reasonably practicable because of an emergency. We
may also defer withdrawals from the Funds for up to 60 days and pay any
withdrawals from the plan in installments in order to protect the interests of
the other contract holders in a Fund.
Periodic Reports
We send the employer a report each quarter that shows transactions in the
Investment Options during the quarter for the employer plan, the number of Units
in the Funds credited to the employer plan, the Unit values and the balances in
all of the Investment Options as of the end of the quarter.
The employer will also receive an annual report and a semiannual report
containing financial statements of the Funds and a list of the Funds' or Trust's
portfolio securities.
The employer automatically receives a confirmation notice following the
processing of a financial Investment Option transaction.
If a Plan Fails to Qualify
If an employer plan fails to maintain its qualification under the Code, we can
terminate the employer plan's participation under RIA. If we terminate the
employer plan's participation under RIA, we will withdraw the employer plan
balances from the Investment Options, less applicable charges and fees and any
outstanding loan balances, and pay the amounts to the trustees of the plan.
Modification or Contract Discontinuance/Termination
The Contracts are group annuity contracts which may be modified between us and
Chase Manhattan Bank, N.A. under the Master Retirement Trust agreement and, by
such agreement, have been amended from time to time. However, no change to the
Contracts can reduce annuities in the course of payment.
The trustee under the Master Retirement Trust agreement at any time upon notice
to us may resign and we may appoint a successor trustee.
We can discontinue offering RIA at any time. Discontinuance of RIA would not
affect annuities in the course of payment, but no further contributions would be
accepted by us. The employer may elect to maintain Investment Options balances
with us to provide annuity benefits in accordance with the terms of the
Contracts. The employer may elect to discontinue the participation of the
employer plan in RIA at any time upon advance written notice to us. We may
elect, upon written notice to the employer, to discontinue the participation of
the employer plan in RIA if (1) the employer fails to comply with any terms of
the Master Retirement Trust, (2) the employer fails to make the required minimum
contributions, (3) as may be agreed upon in writing between Equitable Life and
the employer if the plan fails to maintain minimum amounts of funds invested in
RIA, or (4) the employer fails to comply with any representations and warranties
made by the employer, trustees or employer plan to Equitable Life in connection
with the employer plan's participation in RIA. See Part I -- RIA Summary --
Participation and Funding Requirements.
At any time on or after the participation of the employer in RIA has been
discontinued, we may withdraw the entire amount of the employer plan assets held
in the Investment Options, and pay them to the trustee of the employer plan,
subject to our right to defer payout of amounts held in the Guaranteed Interest
Account, less any applicable charges and fees and outstanding loan balances. See
Part II -- Charges and Fees and Part IV -- The Guaranteed Interest Account.
Reference is made to copies of the Contracts, as amended and modified, which
have been filed as an exhibit to our Registration Statement, as amended from
time to time, and which are incorporated by reference herein.
42
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- --------------------------------------------------------------------------------
PART VI -- MISCELLANEOUS MATTERS
- --------------------------------------------------------------------------------
How We Are Regulated
We are regulated and supervised by the New York State Insurance Department. In
addition, we are subject to the insurance laws and regulations in all
jurisdictions where we are authorized to do business. We submit annual reports
on our operations and finances to insurance officials in these jurisdictions.
The officials review our reports to be sure we are financially sound and that we
are complying with applicable laws and regulations.
The Contracts have been approved by the New York State Insurance Department. Its
regulation and Contract approvals do not involve any supervision of the
investment policies of the Funds or the selection of investments except to
determine compliance with New York insurance laws.
We are also subject to various Federal securities laws and regulations. However,
this does not involve supervision by the SEC of us or of the management or
investment practices or policies of the Funds or the Trust portfolios.
We are registered with the SEC as a broker-dealer under the Securities Exchange
Act of 1934. We are also a member of the National Association of Securities
Dealers, Inc. (NASD). We offer RIA through Equitable Life Representatives who
are licensed by state insurance officials and, where necessary, qualified by the
NASD.
Commissions and Service Fees
Equitable Life Representatives who assist in establishing an employer plan in
RIA and providing necessary services (not including recordkeeping services) are
entitled to receive commissions and service fees from us, which are paid to
Equitable Life Representatives and are not in addition to the fees and charges
we describe under Part II -- Charges and Fees. Any service fees paid to
Equitable Life Representatives are contingent upon their providing service
satisfactory to us.
While the charges and fees we receive from a RIA employer plan initially may be
less than the commissions and service fees paid to Equitable Life
Representatives by us, it is expected that over time those charges and fees will
be adequate to cover all expenses.
Certain retirement plans that use RIA may allow employer plan assets to be used
in part to buy life insurance policies rather than applying all of the
contributions to RIA. Equitable Life Representatives will receive commissions on
any such Equitable Life life insurance policies at standard rates. These
commissions are subject to regulation by state law and are at rates higher than
those applicable to commissions payable for placing an employer plan under RIA.
Year 2000 Progress
We rely upon various computer systems in order to administer RIA and operate the
Investment Options. Some of these systems belong to service providers who are
not affiliated with us.
In 1995, we began addressing the question of whether our computer systems would
recognize the year 2000 before, on or after January 1, 2000, and believe we have
identified those of our systems critical to business operations that are not
Year 2000 compliant. By year end 1998, we expect that the work of modifying or
replacing non-compliant systems will substantially be completed and expect a
comprehensive test of our Year 2000 compliance will be performed in the first
half of 1999. We are in the process of seeking assurances from third party
service providers that they are acting to address the Year 2000 issue with the
goal of avoiding any material adverse effect on services provided to Contract
Holders and on operations of the Investment Options. Any significant unresolved
difficulty related to the Year 2000 compliance initiatives could have a material
adverse effect on the ability to administer RIA and operate the Investment
Options. Assuming the timely completion of computer modifications by us and by
third-party service providers, there should be no material adverse effect on our
ability to perform these functions.
The Year 2000 issue may impact issuers of portfolio securities held by the
Investment Options to varying degrees. We are unable to predict what impact, if
any, the Year 2000 issue will have on issuers of portfolio securities held by
the Investment Options.
Copies of the Master Retirement Trust Agreement
We give a copy of the Master Retirement Trust and participation agreement to the
employer before the participation agreement is signed. It is recommended that
the contents of the Master Retirement Trust and participation agreement be fully
understood before the participation agreement is signed. Consultation with
independent financial counsel or tax counsel regarding the suitability of the
Master Retirement Trust and participation agreement is advisable, as we are not
permitted to give such advice.
Fiduciaries
We are registered as an investment adviser under the Investment Advisors Act of
1940, and we acknowledge that we are an investment manager and a fiduciary, as
defined in ERISA, with respect to employer plan assets that are allocated to the
Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Aggressive
Stock Funds under RIA.
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Acceptance
The employer or plan sponsor, as the case may be, is solely responsible for
determining whether RIA is a suitable funding vehicle and should, therefore,
carefully read the prospectus and installation materials before the
participation agreement is signed.
HRT and EQAT Voting Rights
As explained previously, contributions allocated to the Investment Funds of
Separate Account Nos. 51 and 66 are invested in shares of the corresponding
Portfolios of HRT or EQAT. Since we own the assets of the Separate Accounts, we
are the legal owner of the shares and, as such, have the right to vote on
certain matters. Among other things, we may vote:
o to elect each Trust's Board of Trustees,
o to ratify the selection of independent auditors for each Trust, and
o on any other matters described in each Trust's current prospectus or
requiring a vote by shareholders under the 1940 Act.
Because HRT is a Massachusetts business trust, and EQAT is a Delaware business
trust, annual meetings are not required. Whenever a shareholder vote is taken,
we will give employer trustees or participants for whom we maintain records, as
the case may be, the opportunity to instruct us how to vote the number of shares
attributable to their Contracts. If we do not receive instructions in time from
all shareholders, we will vote the shares of a Portfolio for which no
instructions have been received in the same proportion as we vote shares of that
Portfolio for which we have received instructions. We will also vote any shares
that we are entitled to vote directly because of amounts we have in an
Investment Fund in the same proportions that Contract Owners vote.
Each share of each Trust is entitled to one vote. Fractional shares will be
counted. Voting generally is on a Portfolio-by-Portfolio basis except that
shares will be voted on an aggregate basis when universal matters, such as
election of Trustees and ratification of independent auditors, are voted upon.
However, if the Trustees determine that shareholders in a Portfolio are not
affected by a particular matter, then such shareholders generally would not be
entitled to vote on that matter.
Separate Account Voting Rights
If actions relating to the Separate Accounts No. 51 and No. 66 require Contract
Owner approval, Contract Owners will be entitled to one vote for each
Accumulation Unit they have in the Investment Funds. We will cast votes
attributable to any amounts we have in the Investment Funds in the same
proportion as votes cast by Contract Owners.
Voting Rights of Others
Currently, we control each Trust. EQAT shares currently are sold only to our
separate accounts. HRT shares are held by other separate accounts of ours and by
insurance companies affiliated and unaffiliated with us. Shares held by these
separate accounts will probably be voted according to the instructions of the
owners of insurance polices and contracts issued by those insurance companies.
While this will dilute the effect of the voting instructions of employers,
trustees, or participants for whom we maintain records, we currently do not
foresee any disadvantages arising out of this. HRT's Board of Trustees intends
to monitor events in order to identify any material irreconcilable conflicts
that possibly may arise and to determine what action, if any, should be taken in
response. If we believe that HRT's response to any of those events
insufficiently protects our employers, trustees, or participants for whom we
maintain records, we will see to it that appropriate action is taken to protect
them.
Changes in Applicable Law
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
Our Rights
We reserve the right to take certain actions in connection with our operations
and the operations of the Funds as permitted by applicable law. If necessary, we
will seek approval by participants in RIA.
We have reserved all rights to our corporate name or any part of it. We may
allow our Funds and other entities to use our name but we may also withdraw this
right.
We may unilaterally amend or modify the Contracts or the Master Retirement Trust
without the consent of the employer or plan sponsor, as the case may be, in
order to keep the Contracts or the Master Retirement Trust in compliance with
law.
Legal Proceedings
Equitable Life and its affiliates are parties to various legal proceedings, none
of which, in our view, is likely to have a material adverse effect upon the
Separate Account, our ability to meet our obligations under RIA or the
distribution of Contracts.
Experts
The financial statements as of December 31, 1997 and for each of the two years
in the period then ended included in the SAI for Separate Account Nos. 13, 10,
4, 3 and 51, and the condensed financial information for each of the four years
for Separate Account Nos. 13, 10, 4 and 3, and for each of the three years for
Separate Account No. 51 in the
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period ended December 31, 1997 included in this prospectus and the financial
statements as of December 31, 1997 and for each of the three years in the period
then ended included in the SAI for Equitable Life have been so included in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
Where to Get Additional Information
We have filed with the SEC a registration statement relating to the Units and
the offering described in this prospectus and augmented with the information in
the related SAI. The registration statement, which is required by the Securities
Act of 1933, contains additional information that is not required in this
prospectus or SAI under the rules and regulations of the SEC. Copies of the
registration statement may be obtained from the SEC's main office in Washington,
D.C. upon payment of the applicable fee.
Changes in Funding Vehicle
A qualified retirement plan may ordinarily change the means of funding
retirement benefits. Persons contemplating such a change in order to participate
in RIA should carefully consider the relative advantages and disadvantages of
such a change, including, in particular, comparative cost factors and benefits
available under RIA and under existing investing vehicles. Such a change may
affect only future contributions or may include the transfer of funds previously
contributed. If funds already invested are transferred to us, they will normally
be accepted only in cash, making necessary liquidation of the assets accumulated
under the existing funding media. If a transfer is contemplated, it may be
advisable to study the terms of the existing funding vehicle for the employer
plan, with special reference to any liquidation charges or termination costs
that may be incurred.
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PART VII -- TAX AND ERISA CONSIDERATIONS
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Employer retirement plans that may qualify for tax-favored treatment are
governed by the provisions of the Internal Revenue Code (Code) and the Employee
Retirement Income Security Act (ERISA). The Code is administered by the Internal
Revenue Service (IRS). ERISA is administered primarily by the Department of
Labor (DOL).
Provisions of the Code and ERISA include requirements for various features
including:
o participation, vesting and funding;
o nondiscrimination;
o limits on contributions and benefits;
o distributions;
o penalties;
o duties of fiduciaries;
o prohibited transactions; and
o withholding, reporting and disclosure.
It is the responsibility of the employer, plan trustee and plan administrator to
satisfy the requirements of the Code and ERISA.
This prospectus does not provide detailed tax or ERISA information. The
following discussion briefly outlines the Code provisions relating to
contributions to and distributions from certain tax-qualified retirement plans,
although some information on other provisions is also provided. Various tax
disadvantages, including penalties, may result from actions that conflict with
requirements of the Code or ERISA, and regulations or other interpretations
thereof. In addition, Federal tax laws and ERISA are continually under review by
the Congress, and any changes in those laws, or in the regulations pertaining to
those laws, may affect the tax treatment of amounts contributed to tax-qualified
retirement plans or the legality of fiduciary actions under ERISA.
Certain tax advantages of tax-qualified retirement plans may not be available
under certain state and local tax laws. This outline does not discuss the effect
of any state or local tax laws. It also does not discuss the effect of Federal
estate and gift tax laws (or state and local estate, inheritance and other
similar tax laws). This outline assumes that the participant does not
participate in any other qualified retirement plan. Finally, it should be noted
that many tax consequences depend on the particular jurisdiction or
circumstances of a participant or beneficiary.
The provisions of the Code and ERISA are highly complex. For complete
information on these provisions, as well as all other Federal, state, local and
other tax considerations, qualified legal and tax advisers should be consulted.
Tax Aspects of Contributions to a Plan
Corporations, partnerships and self-employed individuals can establish qualified
plans for the working owners and their employees who participate in the plan.
Qualified plans established by partnerships and sole proprietorships are
frequently referred to as "Keogh" plans. Both employer and employee
contributions to these plans are subject to a variety of limitations, some of
which are discussed here briefly. See your tax adviser for more information.
Violation of contribution limits may result in disqualification and/or
imposition of monetary penalties. The trustee or plan administrator may make
contributions on behalf of the plan participants which are deductible from the
employer's Federal gross income. Employer contributions which exceed the amount
currently deductible are subject to a 10% penalty tax. There are special rules
for corporate plans and Keogh plans which are top heavy plans (i.e., more than
60% of the contributions or benefits are allocated to certain highly compensated
employees otherwise known as key employees).
The limits on the amount of contributions that can be made and/or forfeitures
that can be allocated to each participant in defined contribution plans is the
lesser of $30,000 or 25% of the compensation or earned income for each
participant. In 1998, the employer may not consider compensation in excess of
$160,000 in calculating contributions or benefits to the plan. This amount may
be adjusted for cost-of-living changes in future years. For self-employed
individuals, earned income is defined so as to exclude deductible contributions
made to all tax-qualified retirement plans, including Keogh plans, and takes
into account the deduction for one-half the individual's self-employment tax.
Deductions for aggregate contributions to profit-sharing plans may not exceed
15% of all participants' compensation.
Special limits on deductions for contributions to one or more defined
contribution plans and one or more defined benefit plans are in effect through
1999, but will be eliminated thereafter. Special limits on contributions apply
to anyone who participates in more than one qualified plan or who controls
another trade or business. In addition, there is an overall limit on the total
amount of contributions and benefits under all tax-qualified retirement plans in
which an individual participates.
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The deductible limits for corporate plans and Keogh plans which are defined
benefit plans are based on the minimum funding standard determined by the plan
actuary each year. No participant can receive a benefit which exceeds the lesser
of (i) $90,000 ($130,000 as indexed for inflation for the 1998 plan year) or
(ii) 100% of the participant's average compensation for the consecutive
three-year period which results in the highest such average. The $90,000 limit
is actuarially reduced for participants retiring prior to the social security
retirement age and actuarially increased for participants retiring after the
social security retirement age. Special grandfathering rules apply to certain
participants whose benefits exceed the $90,000 limit.
A qualified plan may allow the participant to direct the employer to make
contributions which will not be included in the employee's income (elective
deferrals) by entering into a salary reduction agreement with the employer under
Section 401(k) of the Code. The 401(k) plan, otherwise known as a cash or
deferred arrangement, must not allow withdrawals of elective deferrals and the
earnings thereon prior to the earliest of the following events: (i) attainment
of age 59 1/2, (ii) death, (iii) disability, (iv) certain business dispositions
and plan terminations or (v) termination of employment. In addition, in-service
withdrawals of elective deferrals (but not earnings after 1988) may be made in
the case of financial hardship.
A participant cannot elect to defer annually more than $7,000 ($10,000 as
indexed for inflation in 1998) under all salary reduction arrangements with all
employers in which the individual participates.
Effective for plan years beginning after December 31, 1997, the formula for
determining the overall limits on contributions includes compensation from the
employer in the form of elective deferrals and excludable contributions under
Code Section 457 or "EDC" plans and "cafeteria" plans (plans giving employees a
choice between cash or specified excludable heath and welfare benefits).
Effective for years beginning after December 31, 1997, employer matching
contributions to a 401(k) plan for self-employed individuals are treated the
same as employer matching contributions for employees. That is, they are not
subject to elective deferral limits.
A qualified plan must not discriminate in favor of highly compensated employees.
Two special nondiscrimination rules limit contributions and benefits for highly
compensated employees in the case of (1) a 401(k) plan and (2) any defined
contribution plan, whether or not a 401(k) plan, which provides for employer
matching contributions to employee after-tax contributions or elective
deferrals. Generally, these nondiscrimination tests require an employer to
compare the deferrals or the aggregate contributions, as the case may be, made
by the eligible highly compensated employees with those made by the non-highly
compensated employees, although alternative simplified tests will be available
in 1999. Highly compensated participants include five percent owners and
employees earning more than $80,000 for the prior year. (If desired the latter
group can be limited to employees who are in the top 20% of all employees based
on compensation.)
Certain 401(k) plans can adopt a "SIMPLE 401(k)" feature which will enable the
plan to meet nondiscrimination requirements without testing. The SIMPLE 401(k)
feature requires the plan to meet specified contribution, vesting and exclusive
plan requirements.
Tax Aspects of Distributions from a Plan
Amounts held under qualified plans are generally not subject to Federal income
tax until benefits are distributed to the participant or other recipient. In
addition, there will not be any tax liability for transfers of any part of the
value of an employer plan among the Investment Options.
The various types of benefit payments include withdrawals, annuity payments and
lump sum distributions. Each benefit payment made to the participant or other
recipient is generally fully taxable as ordinary income. An exception to this
general rule is made, however, to the extent a distribution is treated as a
recovery of after-tax contributions made by the participant.
In addition to income tax, the taxable portion of any distribution may be
subject to a 10% penalty tax. See "Penalty Tax on Premature Distributions" in
this section.
Income Taxation of Withdrawals
The amount of any partial distribution prior to the annuity starting date is
treated as ordinary income except to the extent the distribution is treated as a
withdrawal of after-tax contributions. Withdrawals from a qualified plan are
normally treated as pro rata withdrawals of after-tax contributions and earnings
on those contributions. If the plan allowed withdrawals prior to separation from
service as of May 5, 1986, however, all after-tax contributions made prior to
January 1, 1987 may be withdrawn tax free prior to withdrawing any taxable
amounts.
As discussed in this section in "Certain Rules Applicable to Plan Loans," taking
a loan or failing to repay an outstanding loan as required may, in certain
situations, be treated as a taxable distribution.
Income Taxation of Annuity Payments
In the case of a distribution in the form of an annuity, the amount of each
annuity payment is treated as ordinary income except where the participant has a
cost basis in the annuity.
The cost basis is equal to the amount of after-tax contributions, plus any
employer contributions that had to be included in gross income in prior years.
If the participant has a cost basis in the annuity, a portion of each payment
received will be excluded from gross income to reflect the return of the cost
basis. The remainder of each payment will be includable in gross income as
ordinary income. The
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excludable portion is based on the ratio of the participant's cost basis in the
annuity on the annuity starting date to the expected return, generally
determined in accordance with a statutory table, under the annuity as of such
date. The full amount of the payments received after the cost basis of the
annuity is recovered is fully taxable. If there is a refund feature under the
annuity, the beneficiary of the refund may recover the remaining cost basis as
payments are made. If the participant (and beneficiary under a joint and
survivor annuity) die prior to recovering the full cost basis of the annuity, a
deduction is allowed on the participant's (or beneficiary's) final tax return.
Income Taxation of Lump Sum Distributions
If benefits are paid in a lump sum, the payment may be eligible for the special
tax treatment accorded lump sum distributions. Under the five-year averaging
method (and in certain cases, favorable ten-year averaging and long-term capital
gain treatment), the tax on the distribution is calculated separately from taxes
on other income for that year. To qualify, the participant must have
participated in the plan for at least five years and the distribution must
consist of the entire balance to the credit of the participant. The distribution
must be made in one taxable year of the recipient and must be made (i) after the
participant has attained age 59 1/2 or (ii) on account of the participant's (a)
death, (b) separation from service (not applicable to self-employed individuals)
or (c) disability (applicable only to self-employed individuals). This provision
will be eliminated after December 31, 1999.
Eligible Rollover Distributions
Many types of distributions from qualified plans are "eligible rollover
distributions" that can be rolled over directly to another qualified plan or a
traditional individual retirement arrangement (IRA), or rolled over to another
plan or IRA within 60 days of receipt by the individual. Death benefits received
by a spousal beneficiary may only be rolled over into an IRA. To the extent a
distribution is rolled over, it remains tax deferred. Distributions not rolled
over directly, however, are subject to 20% mandatory withholding. See "Federal
Income Tax Withholding" in this section.
The taxable portion of most distributions will generally be an "eligible
rollover distribution" unless the distribution is one of a series of
substantially equal periodic payments made (not less frequently than annually)
(1) for the life (or life expectancy) of the participant or the joint lives (or
joint life expectancies) of the participant and his or her designated
beneficiary, or (2) for a specified period of ten years or more. Nondeductible
voluntary contributions may not be rolled over.
In addition, none of the following is treated as an eligible rollover
distribution:
o any distribution to the extent it is a required minimum distribution under
Section 401(a)(9) of the Code (see "Distribution Requirements and Limits"
below);
o certain corrective distributions in plans subject to Sections 401(k),
401(m) or 402(g) of the Code;
o certain loans that are treated as distributions under Section 72(p) of the
Code;
o P.S. 58 costs (incurred if the plan provides life insurance protection for
participants);
o dividends paid on employer securities as described in Section 404(k) of the
Code; and
o a distribution to a non-spousal beneficiary.
If a distribution is made to a participant's surviving spouse, or to a current
or former spouse under a qualified domestic relations order, the distribution
may be an eligible rollover distribution, subject to mandatory 20% withholding,
unless one of the exceptions described above applies.
If distributions eligible for rollover are in fact rolled over, the favorable
averaging rules discussed above in "Income Taxation of Lump Sum Distributions"
will not be available for any future distributions made before 2000.
Penalty Tax on Premature Distributions
An additional 10% penalty tax is imposed on all taxable amounts distributed to a
participant who has not reached age 59 1/2 unless the distribution falls within
a specified exception or is rolled over into an IRA or other qualified plan. The
specified exceptions are for (a) distributions made on account of the
participant's death or disability, (b) distributions (which begin after
separation from service) in the form of a life annuity or substantially equal
periodic installments over the participant's life expectancy (or the joint life
expectancy of the participant and the beneficiary), (c) distributions due to
separation from active service after age 55 and (d) distributions used to pay
certain extraordinary medical expenses.
Federal Income Tax Withholding
Mandatory Federal income tax withholding at a 20% rate will apply to all
"eligible rollover distributions" unless the participant elects to have the
distribution directly rolled over to another qualified plan or IRA. See the
description above of "Eligible Rollover Distributions."
With respect to distributions that are not eligible rollover distributions,
Federal income tax must be withheld on the taxable portion of pension and
annuity payments, unless the recipient elects otherwise. The rate of withholding
will depend on the type of distribution and, in certain cases, the amount of the
distribution. Special rules may apply to foreign recipients, or United States
citizens residing outside the United States. If a recipient does not have
sufficient income tax withheld, or make sufficient estimated income tax
payments, the recipient may incur penalties under the estimated income tax
rules. Recipients should consult their tax advisers to determine whether they
should elect out of withholding.
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Requests not to withhold Federal income tax must be made in writing prior to
receiving payments and submitted in accordance with the terms of the employer
plan. No election out of withholding is valid unless the recipient provides the
recipient's correct Taxpayer Identification Number and a U.S. residence address.
State Income Tax Withholding
Certain states have indicated that pension and annuity withholding will apply to
payments made to residents of such states. In some states a recipient may elect
out of state income tax withholding, even if Federal withholding applies. It is
not clear whether such states may require mandatory withholding with respect to
eligible rollover distributions that are not rolled over (as described in this
section under "Eligible Rollover Distributions"). Contact your tax adviser to
see how state withholding may apply to your payment.
Distribution Requirements and Limits
Distributions from qualified plans generally must commence no later than April 1
of the calendar year following the calendar year in which the participant
attains age 70 1/2 (or retires from the employer sponsoring the Plan if later).
Five percent owners of qualified plans must commence distribution after age
70 1/2 even if they are still working. Distributions can generally be made (1)
in a lump sum payment, (2) over the life of the participant, (3) over the joint
lives of the participant and his or her designated beneficiary, (4) over a
period not extending beyond the life expectancy of the participant or (5) over a
period not extending beyond the joint life expectancies of the participant and
his or her designated beneficiary. The minimum amount required to be distributed
in each year after minimum distributions are required to begin is described in
the Code, Treasury Regulations and IRS guidelines. If a designated beneficiary
is other than a participant's spouse, certain minimum incidental benefit
requirements also apply.
If the participant dies after required distribution has begun, payment of the
remaining interest under the plan must be made at least as rapidly as under the
method used prior to the participant's death. If a participant dies before
required distribution has begun, payment of the entire interest under the plan
must be completed within five years after death, unless payments to a designated
beneficiary begin within one year of the participant's death and are made over
the beneficiary's life or over a period certain which does not extend beyond the
beneficiary's life expectancy. If the surviving spouse is the designated
beneficiary, the spouse may delay the commencement of such payments up until the
date that the participant would have attained age 70 1/2. Distributions received
by a beneficiary are generally given the same tax treatment the participant
would have received if distribution had been made to the participant.
If there is an insufficient distribution in any year, a 50% tax may be imposed
on the amount by which the minimum required to be distributed exceeds the amount
actually distributed. Failure to have distributions made as the Code and
Treasury Regulations require may result in plan disqualification.
Spousal Requirements
In the case of many corporate and Keogh plans, if a participant is married at
the time benefit payments become payable, unless the participant elects
otherwise with written consent of the spouse, the benefit must be paid in the
form of a qualified joint and survivor annuity (QJSA). A QJSA is an annuity
payable for the life of the participant with a survivor annuity for the life of
the spouse in an amount which is not less than one-half of the amount payable to
the participant during his or her lifetime. In addition, most loans require that
a married participant's beneficiary must be the spouse, unless the spouse
consents in writing to the designation of a different beneficiary.
Certain Rules Applicable to Plan Loans
The following are Federal tax and ERISA rules that apply to loan provisions of
all employer plans. Employer plans may have additional restrictions. Employers
and participants should review these matters with their own tax advisers before
requesting a loan. There will not generally be any tax liability with respect to
properly made loans in accordance with an employer plan. A loan may be in
violation of applicable provisions unless it complies with the following
conditions:
o With respect to specific loans made by the plan to a plan participant, the
loan administrator determines the interest rate, the maximum term and all
other terms and conditions of the loan.
o In general, the term of the loan cannot exceed five years unless the loan
is used to acquire the participant's primary residence.
o All principal and interest must be amortized in substantially level
payments over the term of the loan, with payments being made at least
quarterly.
o The amount of a loan to a participant, when aggregated with all other loans
to the participant from all qualified plans of the employer, cannot exceed
the greater of $10,000 or 50% of the participant's nonforfeitable accrued
benefits, and cannot exceed $50,000 in any event. This $50,000 limit is
reduced by the excess (if any) of the highest outstanding loan balance over
the previous twelve months over the outstanding balance of plan loans on
the date the loan was made.
o For loans made prior to January 1, 1987 and not renewed, modified,
renegotiated or extended after December 31, 1986 the $50,000 maximum
aggregate loan balance is not required to be reduced, the quarterly
amortization requirement does not apply, and the term of a loan may exceed
five years if used to purchase the
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principal residence of the participant or a member of his or her family, as
defined in the Code.
o Only 50% of the participant's vested account balance may serve as security
for a loan. To the extent that a participant borrows an amount which should
be secured by more than 50% of the participant's vested account balance, it
is the responsibility of the trustee or plan administrator to obtain the
additional security.
o Loans must be available to all plan participants, former participants who
still have account balances under the plan, beneficiaries and alternate
payees on a reasonably equivalent basis.
o Each new or renewed loan must bear a reasonable rate of interest
commensurate with the interest rates charged by persons in the business of
lending money for loans that would be made under similar circumstances.
o Many plans provide that the participant's spouse must consent in writing to
the loan.
o Except to the extent permitted in accordance with the terms of a prohibited
transaction exemption issued by DOL, loans are not available (i) in a Keogh
(non-corporate plan to an owner-employee or a partner who owns more than
10% of a partnership or (ii) to 5% shareholders in an S corporation.
o If the loan does not qualify under the conditions above, the participant
fails to repay the interest or principal when due, or in some instances, if
the participant separates from service or the plan is terminated, the
amount borrowed or not repaid may be treated as a distribution. The
participant may be required to include as ordinary income the unpaid amount
due and a 10% penalty tax on early distributions may apply. The plan should
report the amount of the unpaid loan balance to the IRS as a distribution.
See "Tax Aspects of Distributions From a Plan" in this section.
o The loan requirements and provisions of RIA shall apply regardless of the
plan administrator's guidelines.
Impact of Taxes to Equitable Life
Under existing Federal income tax law, no taxes are payable on investment income
and capital gains of the Funds that are applied to increase the reserves under
the Contracts. Accordingly, Equitable Life does not anticipate that it will
incur any Federal income tax liability attributable to income allocated to the
variable annuity contracts participating in the Investment Funds and it does not
currently impose a charge for Federal income tax on this income when it computes
Unit values for the Investment Funds. If changes in Federal tax laws or
interpretations thereof would result in Equitable Life being taxed, then
Equitable Life may impose a charge against the Investment Funds (on some or all
Contracts) to provide for payment of such taxes.
Certain Rules Applicable to Plans Designed to Comply with Section 404(c) of
ERISA
Section 404(c) of ERISA, and the related DOL regulation, provide that if a plan
participant or beneficiary exercises control over the assets in his or her plan
account, plan fiduciaries will not be liable for any loss that is the direct and
necessary result of the plan participant's or beneficiary's exercise of control.
As a result, if the plan complies with Section 404(c) and the DOL regulation
thereunder, the plan participant can make and is responsible for the results of
his or her own investment decisions.
Section 404(c) plans must provide, among other things, that a broad range of
investment choices are available to plan participants and beneficiaries and must
provide such plan participants and beneficiaries with enough information to make
informed investment decisions. Compliance with the Section 404(c) regulation is
completely voluntary by the plan sponsor, and the plan sponsor may choose not to
comply with Section 404(c). The RIA Program provides employer plans with the
broad range of investment choices and information needed in order to meet the
requirements of the Section 404(c) regulation. If the plan is intended to be a
Section 404(c) plan, it is, however, the plan sponsor's responsibility to see
that the requirements of the DOL regulation are met. Equitable Life and its
Agents shall not be responsible if a plan fails to meet the requirements of
Section 404(c).
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PART VIII -- PARTICIPANT RECORDKEEPING SERVICES (OPTIONAL)
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Services Provided
Under the Participant Recordkeeping Services (PRS) program elected by the
employer or plan trustees, we:
o establish an individual participant account for each participant covered by
the employer plan based on data received from the employer or trustees;
o receive and deposit contributions on behalf of participants to individual
participant accounts;
o maintain for the employer records reflecting for each participant in the
employer plan the contributions, transfers, loan transactions, withdrawals
and investment experience and interest accrued, as applicable, on an
individual participant's proportionate values in the employer plan;
o provide to the employer for its individual participants' reports reflecting
the activity in the individual participant's proportionate interest in the
employer plan; and
o process transfers and distributions of the participant's portion of his or
her share of the employer plan assets among the Investment Options as
instructed by the employer.
The employer or plan trustees are responsible for providing Equitable Life with
required information and for complying with our procedures relating to the PRS
program. We will not be liable for errors in recordkeeping if the information
provided by the employer or plan trustee is not provided on a timely basis or is
incorrect.
The plan administrator retains full responsibility for the income tax
withholding and reporting requirements including required notices to the
participants of the employer plan, as set forth in the Code and applicable
Treasury Regulations.
Investment Options
The Employer must select the Guaranteed Interest Account when PRS is elected.
Fees
For this service we charge an annual fee of $25 per active participant paid in
twelve equal monthly installments of $2.08. The fee is deducted from the
individual participant's account at the end of each month by means of a
reduction of Units out of the Investment Options and a cash withdrawal from the
Guaranteed Interest Account. We retain the right to change the fee upon 30 days
notice to the employer. See Part II -- Charges and Fees.
Enrollment
The employer may enroll for PRS at the time the employer plan is established
with us under RIA or at any time thereafter upon approval by us, at our sole
discretion.
We have summarized the main features of PRS here, and participation in this
aspect of the RIA program is subject to the terms set forth in the participation
agreement (including any separate supplementary agreement) entered into between
us and the employer.
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STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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Page
<S> <C>
Part I -- Fund Information................................................................................ 2
General................................................................................................ 2
Restrictions and Requirements of the Alliance Bond, Alliance Balanced, Alliance Common Stock
and Alliance Aggressive Stock Funds.................................................................. 2
Certain Investments of the Alliance Bond and Alliance Balanced Funds................................... 2
How We Determine the Unit Value........................................................................ 4
Summary of Unit Values................................................................................. 5
Alliance Money Market Yield Information................................................................ 9
Brokerage Fees and Charges for Securities Transactions................................................. 10
Ongoing Operations Fee................................................................................. 11
Part II -- Management for the Alliance Bond, Alliance Balanced, Alliance Common Stock
and Alliance Aggressive Stock Funds and Equitable Life................................................. 12
Funds.................................................................................................. 12
Distribution........................................................................................... 12
Equitable Life......................................................................................... 12
Directors............................................................................................ 12
Officer-Directors.................................................................................... 13
Other Officers....................................................................................... 13
Part III -- Financial Statements.......................................................................... 14
Index.................................................................................................. 14
Financial Statements................................................................................... FSA-1
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</TABLE>
If you wish to obtain a free copy of the Statement of Additional Information,
send or fax this request form to:
Equitable Life -- RIA Service Office
Attn: SAI Request
200 Plaza Drive
Secaucus, NJ 07094-3689
Tel: (800) 967-4560
(201) 583-2302
(Business Days, 9 A.M. to 5 P.M. Eastern time)
Fax: (201) 583-2304, 2305, or 2306
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Please send me a copy of the Statement of Additional Information for RIA dated
May 1, 1998.
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Name
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Address
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City State Zip Code
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Client Number
52
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STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1998
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SEPARATE ACCOUNT UNITS OF INTEREST UNDER
GROUP ANNUITY CONTRACTS
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INVESTMENTS FUNDS
-----------------
<TABLE>
<CAPTION>
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POOLED SEPARATE ACCOUNTS SEPARATE ACCOUNT NO. 51 SEPARATE ACCOUNT NO. 66
<S> <C> <C>
o Alliance Bond, Separate Account No. 13 o Alliance Money Market o T. Rowe Price Equity Income
-- Pooled o Alliance Intermediate Government o EQ/Putnam Growth & Income Value
o Alliance Balanced, Separate Account Securities o Merrill Lynch Basic Value Equity
No. 10 -- Pooled o Alliance Quality Bond o MFS Research
o Alliance Common Stock, Separate o Alliance High Yield o T. Rowe Price International Stock
Account No. 4 -- Pooled o Alliance Growth & Income o Morgan Stanley Emerging Markets Equity
o Alliance Aggressive Stock, Separate o Alliance Equity Index o Warburg Pincus Small Company Value
Account No. 3 -- Pooled o Alliance Global o MFS Emerging Growth Companies
o Alliance International o EQ/Putnam Balanced
o Alliance Small Cap Growth o Merrill Lynch World Strategy
o Alliance Conservative Investors
o Alliance Growth Investors
</TABLE>
[LOGO] (TM) ----------
RETIREMENT
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INVESTMENT
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ACCOUNT(R)
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<TABLE>
<CAPTION>
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TABLE OF CONTENTS
PAGE
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<S> <C>
PART I-- FUND INFORMATION................................................................................. 2
General................................................................................................ 2
Restrictions and Requirements of the Alliance Bond, Alliance Balanced, Alliance Common Stock
and Alliance Aggressive Stock Funds.................................................................. 2
Certain Investments of the Alliance Bond and Alliance Balanced Funds................................... 2
How We Determine the Unit Value........................................................................ 4
Summary of Unit Values................................................................................. 5
Alliance Money Market Yield Information................................................................ 9
Brokerage Fees and Charges for Securities Transactions................................................. 10
Ongoing Operations Fee................................................................................. 11
PART II -- MANAGEMENT FOR THE ALLIANCE BOND, ALLIANCE BALANCED, ALLIANCE COMMON STOCK
AND ALLIANCE AGGRESSIVE STOCK FUNDS AND EQUITABLE LIFE................................................. 12
Funds.................................................................................................. 12
Distribution........................................................................................... 12
Equitable Life......................................................................................... 12
Directors............................................................................................ 12
Officer-Directors.................................................................................... 13
Other Officers....................................................................................... 13
PART III-- FINANCIAL STATEMENTS........................................................................... 14
Index.................................................................................................. 14
Financial Statements................................................................................... FSA-1
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</TABLE>
This Statement of Additional Information (SAI) is not a prospectus. It should be
read in conjunction with the prospectus for our Retirement Investment Account
(RIA), dated May 1, 1998 (PROSPECTUS), and any supplements.
Terms defined in the Prospectus have the same meaning in the SAI unless the
context otherwise requires.
You can obtain a copy of the Prospectus, and any supplements to the Prospectus,
from us free of charge by writing or calling the RIA Service Office listed on
the back of this SAI, or by contacting your Equitable Life Representative. Our
Home Office is located at 1290 Avenue of the Americas, New York, N.Y. 10104
(212) 554-1234.
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888-1155 (5/98) Copyright 1998 The Equitable Life Assurance Society of the
United States. All rights reserved.
Cat. No. 127660
<PAGE>
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PART I -- FUND INFORMATION
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GENERAL
In our Prospectus we discuss in more detail, among other things, the structure
of the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance
Aggressive Stock Funds, their investment objectives and policies, including
types of portfolio securities they may hold and levels of investment risks that
may be involved and investment management. We also summarize certain of these
matters with respect to the Investment Funds and their corresponding Portfolios.
See PART I -- RIA SUMMARY and PART III -- EQUITABLE LIFE AND ITS FUNDS in the
Prospectus.
Here we will discuss special restrictions, requirements and transaction expenses
that apply to the Alliance Bond, Alliance Balanced, Alliance Common Stock and
Alliance Aggressive Stock Funds, certain investments of the Alliance Bond Fund
and determination of the value of Units for all Funds, including some historical
information. Investment objectives and policies, as well as restrictions,
requirements and risks pertaining to the corresponding HRT and EQAT Portfolios
in which the Investment Funds invest are found in their respective Prospectuses
and SAIs.
RESTRICTIONS AND REQUIREMENTS OF THE ALLIANCE BOND, ALLIANCE BALANCED, ALLIANCE
COMMON STOCK AND ALLIANCE AGGRESSIVE STOCK FUNDS
Neither the Alliance Common Stock Fund nor the Alliance Balanced Fund will make
an investment in an industry if that investment would cause the Fund's holding
in that industry to exceed 25% of the Fund's assets.
The Alliance Bond Fund, Alliance Common Stock Fund and Alliance Aggressive Stock
Funds will not purchase or write puts or calls (options). The Alliance Balanced
Fund's investment policies do not prohibit hedging transactions such as through
the use of put and call options and stock index or interest rate futures.
However, the Alliance Balanced Fund currently has no plans to enter into such
transactions.
The following investment restrictions apply to the Alliance Bond, Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds. None of
those Funds will:
o trade in foreign exchange (except transactions incidental to the settlement
of purchases or sales of securities for a Fund and contracts for the purchase
or sale of a specific foreign currency at a future date at a price set at the
time of the contract);
o make an investment in order to exercise control or management over a company;
o underwrite the securities of other companies, including purchasing securities
that are restricted under the 1933 Act or rules or regulations thereunder
(restricted securities cannot be sold publicly until they are registered
under the 1933 Act), except as stated below;
o make short sales, except when the Fund has, by reason of ownership of other
securities, the right to obtain securities of equivalent kind and amount that
will be held so long as they are in a short position;
o trade in commodities or commodity contracts (except the Alliance Balanced
Fund is not prohibited from entering into hedging transactions through the
use of stock index or interest rate futures);
o purchase real estate or mortgages, except as stated below. The Funds may buy
shares of real estate investment trusts listed on stock exchanges or reported
on NASDAQ;
o have more than 5% of its assets invested in the securities of any one
registered investment company. A Fund may not own more than 3% of a
registered investment company's outstanding voting securities. The Fund's
total holdings of registered investment company securities may not exceed 10%
of the value of the Fund's assets;
o purchase any security on margin or borrow money except for short-term credits
necessary for clearance of securities transactions;
o make loans, except loans through the purchase of debt obligations or through
entry into repurchase agreements; or
o invest more than 10% of its total assets in restricted securities, real
estate investments, or portfolio securities not readily marketable.
CERTAIN INVESTMENTS OF THE ALLIANCE BOND AND ALLIANCE BALANCED FUNDS
The following are brief descriptions of certain types of investments which may
be made by the Alliance Bond and Alliance Balanced Funds and certain risks and
investment techniques.
MORTGAGE PASS-THROUGH SECURITIES. The Alliance Bond and Alliance Balanced Funds
may invest in mortgage pass-through securities, which are securities
representing interests in pools of mortgages. Principal and interest payments
made on the mortgages in the pools are passed through to the holder of such
securities. Payment of principal and interest on some mortgage pass-through
securities (but not the market value of the securities themselves) may be
guaranteed by the full faith and credit
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<PAGE>
of the U.S. Government (in the case of securities guaranteed by the Government
National Mortgage Association, or "GNMA"), or guaranteed by agencies or
instrumentalities of the U.S. Government (in the case of securities guaranteed
by the Federal National Mortgage Association ("FNMA") or the Federal Home Loan
Mortgage Corporation ("FHLMC") which are supported only by discretionary
authority of the U.S. Government to purchase the agency's obligations). Mortgage
pass-through securities created by non-governmental issuers (such as commercial
banks, savings and loan institutions, private mortgage insurance companies,
mortgage bankers, and other secondary market issuers) may be supported by
various forms of insurance or guarantees, including individual loan, title,
pool, and hazard insurance, and letters of credit, which may be issued by
governmental entities, private insurers or the mortgage poolers.
COLLATERALIZED MORTGAGE OBLIGATIONS. The Alliance Bond and Alliance Balanced
Funds may invest in collateralized mortgage obligations ("CMOs"). CMOs are debt
securities collateralized by underlying mortgage loans or pools of mortgage
pass-through securities guaranteed by GNMA, FHLMC or FNMA and are generally
issued by limited purpose finance subsidiaries of U.S. Government
instrumentalities. CMOs are not, however, mortgage pass-through securities.
Rather, they are pay-through securities, i.e., securities backed by the cash
flow from the underlying mortgages. Investors in CMOs are not owners of the
underlying mortgages, which serve as collateral for such debt securities, but
are simply owners of a debt security backed by such pledged assets. CMOs are
typically structured into multiple classes, with each class bearing a different
stated maturity and having different payment streams. Monthly payments of
principal, including prepayments, are first returned to investors holding the
shortest maturity class; investors holding longer maturity classes receive
principal payments only after the shorter class or classes have been retired.
ASSET-BACKED SECURITIES. The Alliance Bond and Alliance Balanced Funds may
purchase asset-backed securities that represent either fractional interests or
participation in pools of leases, retail installment loans or revolving credit
receivables held by a trust or limited purpose finance subsidiary. Such
asset-backed securities may be secured by the underlying assets (such as
Certificates for Automobile Receivables) or may be unsecured (such as Credit
Card Receivable Securities). Depending on the structure of the asset-backed
security, monthly or quarterly payments of principal and interest or interest
only are passed through like mortgage pass-through securities or paid through
(like CMOs) to certificate holders. Asset-backed securities may be guaranteed up
to certain amounts by guarantees, insurance or letters of credit issued by a
financial institution affiliated or unaffiliated with the originator of the
pool.
Underlying automobile sales contracts and credit card receivables are, of
course, subject to prepayment (although to a lesser degree than mortgage
pass-through securities), which may shorten the securities' weighted average
life and reduce their overall return to certificate holders. Certificate holders
may also experience delays in payment if the full amounts due on underlying
loans, leases or receivables are not realized because of unanticipated legal or
administrative costs of enforcing the contracts or because of depreciation or
damage to the collateral (usually automobiles) securing certain contracts, or
other factors. The value of these securities also may change because of changes
in the market's perception of the creditworthiness of the servicing agent for
the pool, the originator of the pool, or the financial institution providing
credit support enhancement for the pool. If consistent with its investment
objective and policies, the Alliance Bond and Alliance Balanced Funds may invest
in other asset-backed securities that may be developed in the future.
ZERO COUPON BONDS. The Alliance Bond and Alliance Balanced Funds may invest in
zero coupon bonds. Such bonds may be issued directly by agencies and
instrumentalities of the U.S. Government or by private corporations. Zero coupon
bonds may originate as such or may be created by stripping an outstanding bond.
Zero coupon bonds do not make regular interest payments. Instead, they are sold
at a deep discount from their face value. Because a zero coupon bond does not
pay current income, its price can be very volatile when interest rates change.
REPURCHASE AGREEMENTS. In repurchase agreements, the Alliance Bond or Alliance
Balanced Fund buys securities from a seller, usually a bank or brokerage firm,
with the understanding that the seller will repurchase the securities at a
higher price at a future date. During the term of the repurchase agreement the
Fund retains the securities subject to the repurchase agreement as collateral
securing the seller's repurchase obligation, continually monitors on a daily
basis the market value of the securities subject to the agreement and requires
the seller to deposit with the Fund collateral equal to any amount by which the
market value of the securities subject to the repurchase agreement falls below
the resale amount provided under the repurchase agreement. We evaluate the
creditworthiness of sellers with whom we enter into repurchase agreements. Such
transactions afford an opportunity for the Fund to earn a fixed rate of return
on available cash at minimal market risk, although the Fund may be subject to
various delays and risks of loss if the seller is unable to meet its obligation
to repurchase. The Funds currently treat repurchase agreements maturing in more
than seven days as illiquid securities.
DEBT SECURITIES SUBJECT TO PREPAYMENT RISKS. Mortgage pass-through securities
and certain collateralized mortgage obligations, asset-backed securities and
other debt instruments in which the Alliance Balanced Fund may
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<PAGE>
invest are subject to prepayments prior to their stated maturity. It is usually
not possible to accurately predict the rate at which prepayments will be made,
which rate may be affected, among other things, by changes in generally
prevailing market interest rates. If prepayments occur, the Fund suffers the
risk that it will not be able to reinvest the proceeds at as high a rate of
interest as it had previously been receiving. Also, the Fund will incur a loss
to the extent that prepayments are made for an amount that is less than the
value at which the security was then being carried by the Fund. Moreover,
securities that may be prepaid tend to increase in value less during times of
declining interest rates, and to decrease in value more during times of
increasing interest rates, than do securities that are not subject to
prepayment.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Alliance Bond and Alliance
Balanced Funds may purchase and sell securities on a when-issued or delayed
delivery basis. In these transactions, securities are purchased or sold by a
Fund with payment and delivery taking place in the future in order to secure
what is considered to be an advantageous price or yield to the Fund at the time
of entering into the transaction. However, the market value of such securities
at the time of settlement may be more or less than the purchase price then
payable. When a Fund engages in when-issued or delayed delivery transactions,
the Fund relies on the other party to consummate the transaction. Failure to
consummate the transaction may result in the Fund missing the opportunity of
obtaining a price or yield considered to be advantageous. When-issued and
delayed delivery transactions are generally expected to settle within three
months from the date the transactions are entered into, although the Fund may
close out its position prior to the settlement date. A Fund will sell on a
forward settlement basis only securities it owns or has the right to acquire.
FOREIGN CURRENCY FORWARD CONTRACTS. The Alliance Balanced Fund may enter into
contracts for the purchase or sale of a specific foreign currency at a future
date at a price set at the time of the contract. Generally, such forward
contracts will be for a period of less than three months. The Fund will enter
into such forward contracts for hedging purposes only. These transactions will
include forward purchases or sales of foreign currencies for the purpose of
protecting the dollar value of securities denominated in a foreign currency or
protecting the dollar equivalent of interest or dividends to be paid on such
securities. Forward contracts are traded in the inter-bank market, and not on
organized commodities or securities exchanges. Accordingly, the Fund is
dependent upon the good faith and creditworthiness of the other party to the
transaction, as evaluated by the Fund's Manager. To the extent inconsistent with
any restrictions in the SAI concerning the Fund's trading in foreign exchange,
this paragraph will control.
HEDGING TRANSACTIONS. The Alliance Balanced Fund may engage in hedging
transactions which are designed to protect against anticipated adverse price
movements in securities owned or intended to be purchased by the Fund. When
interest rates go up, the market value of outstanding debt securities declines
and vice versa. In recent years the volatility of the market for debt securities
has increased significantly, and market prices of longer-term obligations have
been subject to wide fluctuations, particularly as contrasted with those of
short-term instruments. The Fund will take certain risks into consideration when
determining which, if any, options or financial futures contracts it will use.
If the price movements of hedged portfolio securities are in fact favorable to
the Fund, the hedging transactions will tend to reduce and may eliminate the
economic benefit to the Fund which otherwise would result. Also, the price
movements of options and futures used for hedging purposes may not correlate as
anticipated with price movements of the securities being hedged. This can make a
hedge transaction less effective than anticipated and could result in a loss.
The options and futures markets can sometimes become illiquid and the exchanges
on which such instruments are traded may impose trading halts or delays on the
exercise of options and liquidation of futures positions in certain
circumstances. This could in some cases operate to the Fund's detriment.
HOW WE DETERMINE THE UNIT VALUE
In our Prospectus, we discuss how employer plan assets are put into and taken
out of the Funds by the purchase and redemption of Units under the Contracts,
respectively. See PART III -- EQUITABLE LIFE AND ITS FUNDS in the Prospectus.
Here we will discuss how we determine the value of Units.
When contributions are invested in the Funds, the number of Units outstanding
attributable to each Fund is correspondingly increased; and when amounts are
withdrawn from one of these Funds, the number of Units outstanding attributable
to that Fund is correspondingly decreased.
We calculate Unit values at the end of each Business Day. For the Alliance Bond,
Alliance Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds,
the Unit values reflect investment performance and investment management and
financial accounting fees. We determine the respective Unit values for these
Funds by multiplying the Unit value for the preceding Business Day by the net
investment factor for that subsequent day. We determine the net investment
factor as follows:
o First, we take the value of the Fund's assets at the close of business on the
preceding Business Day.
o Next, we add the investment income and capital gains, realized and
unrealized, that are credited to the assets of the Fund during the Business
Day for which the net investment factor is being determined.
4
<PAGE>
o Then, we subtract the capital losses, realized and unrealized, and investment
management and financial accounting fees charged to the Fund during that
Business Day.
o Finally, we divide this amount by the value of the Fund's assets at the close
of the preceding Business Day.
Prior to June 1, 1994, for the Alliance Bond, Alliance Balanced, Alliance Common
Stock and Alliance Aggressive Stock Funds, the investment management and
financial accounting fees were deducted monthly from employer plan balances in
these Funds.
Assets of the Alliance Bond, Alliance Balanced, Alliance Common Stock and
Alliance Aggressive Stock Funds are valued as follows:
o Common stocks and other equity-type securities listed on national securities
exchanges and certain over-the-counter issues traded on the NASDAQ system
are valued at the last sale price or, if no sale, at the latest available bid
price. Other unlisted securities reported on the NASDAQ system are valued at
inside (highest) quoted bid prices.
o Foreign securities not traded directly, or in ADR form in the United States
are valued at the last sale price in the local currency on an exchange in the
country of origin. Foreign currency is converted into dollars at current
exchange rates.
o United States Treasury securities and other obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities are valued
at representative quoted prices.
o Long-term (i.e., maturing in more than a year) publicly traded corporate
bonds are valued at prices obtained from a bond pricing service of a major
dealer in bonds when such prices are available; however, in circumstances
where it is deemed appropriate to do so, an over-the-counter or exchange
quotation may be used.
o Short-term debt securities maturing in 60 days or less are valued at
amortized cost, which approximates market value. Short-term debt securities
maturing in more than 60 days are valued at representative quoted prices. The
Funds can acquire short-term debt securities directly or through the
acquisition of units in our Separate Account No. 2A. See PART III --
EQUITABLE LIFE AND ITS FUNDS in the Prospectus.
o Convertible preferred stocks listed on national securities exchanges are
valued as of their last sale price or, if there is no last sale, at the
latest available bid price.
o Convertible bonds and unlisted convertible preferred stocks are valued at bid
prices obtained from one or more major dealers in such securities; where
there is a discrepancy between dealers, values may be adjusted based on
recent premium spreads to the underlying common stock.
o The unit value of Separate Account No. 2A is calculated each day the New York
Stock Exchange is open for trading by dividing (i) the value of the portfolio
securities and other assets of Separate Account No. 2A at the close of the
business on that day (before giving effect to amounts contributed or
withdrawn during that day), by (ii) the total number of units outstanding at
the close of business on the preceding day. Separate Account No. 2A invests
in short-term securities which mature in 60 days or less from the date of
purchase or are subject to a repurchase agreement requiring repurchase in 60
days or less. The assets of Separate Account No. 2A are valued as described
with respect to the Separate Accounts.
The Unit value for an Investment Fund of Separate Account Nos. 51 and 66 for any
Business Day together with any preceding non-Business Days (VALUATION PERIOD) is
equal to the Unit value for the preceding Valuation Period multiplied by the net
investment factor for that Investment Fund for that Valuation Period. The net
investment factor for a Valuation Period is:
(a/b) - c
where:
(a) is the value of the Investment Fund's shares of the corresponding Portfolio
at the end of the Valuation Period before giving effect to any amounts
allocated to or withdrawn from the Investment Fund for the Valuation
Period. For this purpose, we use the share value reported to us by the
relevant Trust. This share value is after deduction for investment advisory
fees and other expenses of the Trust.
(b) is the value of the Investment Fund's shares of the corresponding Portfolio
at the end of the preceding Valuation Period (after any amounts are
allocated or withdrawn for that Valuation Period).
(c) is the daily factor for the Separate Account Administrative Charge
multiplied by the number of calendar days in the Valuation Period.
Our investment officers and the Trust's investment adviser determine in good
faith the fair value of securities and other assets that do not have a readily
available market price in accordance with accepted accounting practices and
applicable laws and regulations.
See PART III -- EQUITABLE LIFE AND ITS FUNDS in the Prospectus.
SUMMARY OF UNIT VALUES
All of the Funds were established by us pursuant to the New York Insurance Law.
The Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance
Aggressive Stock Funds were established in 1981, 1979, 1969 and 1969,
respectively. We show in the tables below the Unit values of these Funds on the
last Business Day of each year since each Fund began operations. However,
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<PAGE>
Units in the Funds were not made available under RIA until subsequent dates.
Prior to June 1, 1994, the Unit values quoted for the Alliance Bond, Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds did not
reflect the deduction of the Investment Management and Financial Accounting Fee.
That fee was assessed by reducing the number of Units that the employer plan had
in these Funds. The Unit values shown for the periods included in the following
table through the last business day of December 1993 reflect the actual
performance of the Funds before the Investment Management and Financial
Accounting Fee had been reflected in their computation. The Investment
Management and Financial Accounting Fee is reflected in Unit values beginning
with the last business day of 1994.
We established the Alliance Growth Investors, Alliance Conservative Investors
and Alliance Global Investors Funds as Investment Funds of Separate Account No.
51 in 1993. The Alliance Money Market, Alliance Intermediate Government
Securities, Alliance Quality Bond, Alliance High Yield, Alliance Growth & Income
and Alliance Equity Index Funds were established as Investment Funds of Separate
Account No. 51 in 1994. The Alliance International Fund was established on
September 1, 1995 and the Alliance Small Cap Growth Fund was established in
early June 1997. The tables below set forth the Unit values as of the end of
each year since each Fund began operations.
The Investment Funds of Separate Account No. 66 will be available in early July
1998.
See GENERAL in this SAI. In computing the Unit values, no provisions have been
made for the effect of taxes on income and gains or upon distribution.
THE UNIT VALUES REFLECT THOSE CHARGES AND FEES AS DESCRIBED IN THE RIA
PROSPECTUS UNDER PART II. ALSO DESCRIBED IN PART II ARE CHARGES AND FEES WHICH
ARE PAID BY THE REDUCTION OF THE NUMBER OF UNITS CREDITED TO AN EMPLOYER PLAN
UNDER RIA.
The following Unit values are provided to demonstrate the changes for the period
shown.
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ALLIANCE BOND FUND
(SEPARATE ACCOUNT NO. 13 -- POOLED)
- --------------------------------------------------------------------------------
Last Business Last Business
Day of Fund Day of Fund
December Unit Value December Unit Value
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1981 $11.11 1990 $32.07
1982 14.18 1991 36.89
1983 15.15 1992 39.31
1984 17.36 1993 43.14
1985 20.85 1994 42.35*
1986 23.85 1995 48.91*
1987 24.35 1996 50.26*
1988 25.99 1997 54.09*
1989 29.59
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ALLIANCE BALANCED FUND
(SEPARATE ACCOUNT NO. 10 -- POOLED)
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Last Business Last Business
Day of Fund Day of Fund
December Unit Value December Unit Value
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1979 $11.17 1989 $ 54.84
1980 16.32 1990 54.75
1981 15.41 1991 77.72
1982 22.32 1992 75.90
1983 26.13 1993 85.85
1984 26.74 1994 78.77*
1985 33.66 1995 94.86*
1986 39.31 1996 105.62*
1987 37.40 1997 119.80*
1988 43.14
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* These Unit values reflect the deduction of the Investment Management and
Financial Accounting Fee.
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6
<PAGE>
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ALLIANCE COMMON STOCK FUND
(SEPARATE ACCOUNT NO. 4 -- POOLED)
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Last Business Last Business
Day of Fund Day of Fund
December Unit Value December Unit Value
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1969 $15.47 1984 $ 76.85
1970 15.87 1985 102.00
1971 20.18 1986 116.67
1972 25.40 1987 123.90
1973 23.46 1988 145.61
1974 17.06 1989 211.73
1975 21.94 1990 188.63
1976 26.01 1991 288.23
1977 23.79 1992 293.22
1978 26.56 1993 353.07
1979 35.21 1994 346.92*
1980 52.91 1995 457.41*
1981 51.22 1996 538.54*
1982 64.94 1997 683.56*
1983 78.26
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ALLIANCE AGGRESSIVE STOCK FUND
(SEPARATE ACCOUNT NO. 3 -- POOLED)
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Last Business Last Business
Day of Fund Day of Fund
December Unit Value December Unit Value
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1969 $ 8.69 1984 $ 32.41
1970 7.26 1985 38.45
1971 8.63 1986 39.27
1972 9.73 1987 38.53
1973 7.07 1988 39.48
1974 4.72 1989 58.31
1975 6.71 1990 63.79
1976 7.91 1991 120.00
1977 7.52 1992 116.98
1978 8.95 1993 135.42
1979 14.66 1994 129.95*
1980 23.81 1995 170.67*
1981 20.76 1996 209.06*
1982 27.45 1997 234.35*
1983 36.05
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* These Unit values reflect the deduction of the Investment Management and
Financial Accounting Fee.
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<PAGE>
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ALLIANCE MONEY MARKET FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
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1994 $102.65
1995 108.49
1996 114.22
1997 120.35
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ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
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1994 $ 98.94
1995 112.07
1996 116.24
1997 124.66
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ALLIANCE QUALITY BOND FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $ 99.83
1995 116.76
1996 122.96
1997 134.14
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ALLIANCE HIGH YIELD FUND
(SEPARATE ACCOUNT NO. 51)
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Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $ 98.99
1995 118.64
1996 145.72
1997 172.55
- --------------------------------------------------------------------------------
ALLIANCE GROWTH & INCOME FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $ 99.81
1995 123.78
1996 148.57
1997 188.22
- --------------------------------------------------------------------------------
ALLIANCE EQUITY INDEX FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- -------------------------------------------------------------------------------
1994 $101.71
1995 138.75
1996 169.72
1997 224.89
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<PAGE>
ALLIANCE GLOBAL FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $ 99.84
1995 118.56
1996 135.81
1997 151.41
- --------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1995 $104.60
1996 114.80
1997 111.24
- --------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1997 $114.18
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ALLIANCE CONSERVATIVE INVESTORS FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $ 99.83
1995 120.14
1996 126.33
1997 142.97
- --------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS FUND
(SEPARATE ACCOUNT NO. 51)
- --------------------------------------------------------------------------------
Last Business
Day of Fund
December Unit Value
- --------------------------------------------------------------------------------
1994 $ 99.52
1995 125.70
1996 141.48
1997 165.12
- --------------------------------------------------------------------------------
ALLIANCE MONEY MARKET YIELD INFORMATION
The Alliance Money Market Fund calculates yield information for seven-day
periods. The seven-day current yield calculation is based on a hypothetical
employer plan with one Unit at the beginning of the period. To determine the
seven-day rate of return, the net change in the Unit value is computed by
subtracting the Unit value at the beginning of the period from a Unit value,
exclusive of capital changes, at the end of the period.
The net change is then reduced by the average Ongoing Operations Fee factor
(explained below). This reduction is made to recognize the deduction of the
Ongoing Operations Fee which is not reflected in the Unit value. See ONGOING
OPERATIONS FEE in PART II -- CHARGES AND FEES of the Prospectus. Accumulation
Unit Values reflect all other accrued expenses of the Alliance Money Market
Fund.
The adjusted net change is divided by the Unit value at the beginning of the
period to obtain the adjusted base period rate of return. This seven-day
adjusted base period return is then multiplied by 365/7 to produce an annualized
seven-day current yield figure carried to the nearest one-hundredth of one
percent.
9
<PAGE>
The actual dollar amount of the Ongoing Operations Fee that is deducted from the
Alliance Money Market Fund will vary for each employer plan depending upon how
the plan's balance is allocated among the Investment Options. To determine the
effect of the Ongoing Operations Fee on the yield, we start with the total
dollar amount of the fees deducted from the Fund on the last Business Day of the
prior month. This amount is multiplied by 7/30.417 to produce an average Ongoing
Operations Fee factor which is used in all weekly yield computations for the
ensuing quarter. The average Ongoing Operations Fee factor and the Separate
Account Administrative Charge is then divided by the number of Alliance Money
Market Fund Units as of the end of the prior month, and the resulting quotient
is deducted from the net change in Unit value for the seven-day period.
The effective yield is obtained by modifying the current yield to give effect to
the compounding nature of the Alliance Money Market Fund's investments, as
follows: the unannualized adjusted base period return is compounded by adding
one to the adjusted base period return, raising the sum to a power equal to 365
divided by 7, and subtracting one from the result, i.e., effective yield = (base
period return + 1) 365/7-1.
The Alliance Money Market Fund yield will fluctuate daily. Accordingly, yields
for any given period are not necessarily representative of future results. In
addition, the value of Units of the Alliance Money Market Fund will fluctuate
and not remain constant.
The Alliance Money Market Fund yield reflects charges that are not normally
reflected in the yields of other investments and therefore may be lower when
compared with yields of other investments. Alliance Money Market Fund yields
should not be compared to the return on fixed-rate investments which guarantee
rates of interest for specified periods, such as the Guaranteed Interest Account
or bank deposits. The yield should not be compared to the yield of money market
funds made available to the general public because their yields usually are
calculated on the basis of a constant $1 price per share and they pay earnings
in dividends which accrue on a daily basis.
The Alliance Money Market Fund's seven-day current yield for the RIA Contracts
was 5.35% for the period ended December 31, 1997. The effective yield for that
period was 5.49%. Because these yields reflect the deduction of the Ongoing
Operations Fee and the Separate Account Administrative Charge, they are lower
than the corresponding yield figures for the Alliance Money Market Portfolio
which reflect only the deduction of Trust-level expenses.
BROKERAGE FEES AND CHARGES FOR SECURITIES TRANSACTIONS
We discuss in the Prospectus that we are the investment manager of the Alliance
Bond, Alliance Balanced, Alliance Common Stock and Alliance Aggressive Stock
Funds. As the investment manager of these Funds, we invest and reinvest the
assets of these Funds in a manner consistent with the policies described in the
Prospectus. In providing these services we currently use the personnel and
facilities of our majority-owned subsidiary, Alliance, for portfolio selection
and transaction services, including arranging the execution of portfolio
transactions. Alliance is also the investment manager for HRT. Information on
brokerage fees and charges for securities transactions for the Trust's
Portfolios of HRT and EQAT is provided in their respective prospectuses. See
PART III -- EQUITABLE LIFE AND ITS FUNDS -- INVESTMENT MANAGEMENT in the
Prospectus.
The Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance
Aggressive Stock Funds are charged for securities brokers commissions, transfer
taxes and other fees and expenses relating to their operation. Transactions in
equity securities for a Fund are executed primarily through brokers which
receive a commission paid by the Fund. Brokers are selected by Alliance.
Alliance seeks to obtain the best price and execution of all orders placed for
the portfolio of the Funds, considering all the circumstances. If transactions
are executed in the over-the-counter market Alliance will deal with the
principal market makers, unless more favorable prices or better execution is
otherwise obtainable. There are occasions on which portfolio transactions for
the Funds may be executed as part of concurrent authorizations to purchase or
sell the same security for certain other accounts or clients advised by
Alliance. Although these concurrent authorizations potentially can be either
advantageous or disadvantageous to the Funds, they are effected only when it is
believed that to do so is in the best interest of the Funds. When these
concurrent authorizations occur, the objective is to allocate the executions
among the accounts or clients in a fair manner.
We try to choose only brokers which we believe will obtain the best prices and
executions on securities transactions. Subject to this general requirement, we
also consider the amount and quality of securities research services provided by
a broker. Typical research services include general economic information and
analyses and specific information on and analyses of companies, industries and
markets. Factors in evaluating research services include the diversity of
sources used by the broker and the broker's experience, analytical ability and
professional stature.
The receipt of research services from brokers tends to reduce our expenses in
managing the Alliance Bond, Alliance Balanced, Alliance Common Stock and
Alliance Aggressive Stock Funds. This is taken into account when setting the
expense charges. Brokers who provide research services may charge somewhat
higher commissions than those who do not. However, we will select only brokers
whose commissions we believe are reasonable in all the circumstances.
10
<PAGE>
We periodically evaluate the services provided by brokers and prepare internal
proposals for allocating among those various brokers business for all the
accounts we manage or advise. That evaluation involves consideration of the
overall capacity of the broker to execute transactions, its financial condition,
its past performance and the value of research services provided by the broker
in servicing the various accounts advised or managed by us. Generally, we do not
tell brokers that we will try to allocate a particular amount of business to
them. We do occasionally let brokers know how their performance has been
evaluated.
Research information obtained by us may be used in servicing all clients or
accounts under our management, including our general account. Similarly, not all
research provided by a broker or dealer with which the Funds transact business
will necessarily be used in connection with those Funds.
Transactions for the Alliance Bond, Alliance Balanced, Alliance Common Stock and
Alliance Aggressive Stock Funds in the over-the-counter market are normally
executed as principal transactions with a dealer that is a principal market
maker in the security, unless a better price or better execution can be obtained
from another source. Under these circumstances, the Funds pay no commission.
Similarly, portfolio transactions in money market and debt securities will
normally be executed through dealers or underwriters under circumstances where
the Fund pays no commission.
When making securities transactions for the Alliance Bond, Alliance Balanced,
Alliance Common Stock and Alliance Aggressive Stock Funds that do not involve
paying a brokerage commission (such as the purchase of short-term debt
securities), we seek to obtain prompt execution in an effective manner at the
best price. Subject to this general objective, we may give orders to dealers or
underwriters who provide investment research. None of the Funds will pay a
higher price, however, and the fact that we may benefit from such research is
not considered in setting the expense charges.
In addition to using brokers and dealers to execute portfolio securities
transactions for clients or accounts we manage, we may enter into other types of
business transactions with brokers or dealers. These other transactions will be
unrelated to allocation of the Funds' portfolio transactions.
Our parent, the Holding Company, owns Donaldson, Lufkin & Jenrette Inc. (DLJ). A
DLJ subsidiary, Donaldson, Lufkin & Jenrette Securities Corporation (DLJ
SECURITIES CORP.), is one of the nation's largest investment banking and
securities firms. Another DLJ subsidiary, Autranet, Inc., is a securities broker
that markets independently originated research to institutions. Through the
Pershing Division of DLJ Securities Corp., DLJ supplies correspondent services,
including order execution, securities clearance and other 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 SAI and the Prospectus, the Alliance Bond, Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds may engage
in securities and other transactions with the above entities or may invest in
shares of the investment companies with which those entities have affiliations.
During 1996, there were no transactions effected through DLJ subsidiaries and
therefore no commissions were paid.
For the years ended December 31, 1997, 1996 and 1995, total brokerage
commissions for Separate Account No. 10 -- Pooled were $424,352, $931,317 and
$1,016,342, respectively; for Separate Account 4 -- Pooled were $3,698,148,
$5,682,578 and $6,044,623, respectively; and for Separate Account No. 3 --
Pooled were $1,876,011, $1,268,209 and $1,547,073, respectively. For 1996, total
brokerage commissions for Separate Account No. 13 -- Pooled were $0. For the
fiscal year ended December 31, 1997, commissions of $197,851, $1,279,938 and
$799,430 were paid to brokers providing research services to Separate Account
No. 10 -- Pooled, Separate Account No. 4 -- Pooled and Separate Account No. 3 --
Pooled, respectively, on portfolio transactions of $254,843,012, $2,255,341,604
and $958,618,139, respectively.
ONGOING OPERATIONS FEE
We determine the Ongoing Operations Fee based on the combined net balances of an
employer plan in all the Investment Options (including any outstanding loan
balances) at the close of business on the last Business Day of each month. For
employer plans that adopted RIA on or before February 9, 1986, we use the rate
schedule set forth below, and apply it to the employer plan balances at the
close of business on the last Business Day of the following month. For employer
plans that adopted RIA after February 9, 1986 we use the rate schedule set forth
in the Prospectus. See PART II -- CHARGES AND FEES in the Prospectus.
- -------------------------------------------------------------
COMBINED BALANCE MONTHLY
OF INVESTMENT OPTIONS RATE
- -------------------------------------------------------------
First $ 150,000 1/12 of 1.25%
Next $ 350,000 1/12 of 1.00%
Next $ 500,000 1/12 of 0.75%
Next $1,500,000 1/12 of 0.50%
Over $2,500,000 1/12 of 0.25%
- -------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
PART II -- MANAGEMENT FOR THE ALLIANCE BOND, ALLIANCE BALANCED, ALLIANCE
COMMON STOCK AND ALLIANCE AGGRESSIVE STOCK FUNDS AND EQUITABLE LIFE
- --------------------------------------------------------------------------------
FUNDS
In the Prospectus we give information about us, the Alliance Bond, Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds and how we,
together with Alliance, provide investment management for the investments and
operations of these Funds. See PART III -- EQUITABLE LIFE AND ITS FUNDS in the
Prospectus. The amounts of the investment management and financial accounting
fees we received from employer plans participating through registered Contracts
in the Alliance Balanced, Alliance Common Stock and Alliance Aggressive Stock
Funds in 1997 were $24,226, $75,951, and $32,585, respectively; 1996 were
$33,735, $64,279 and $26,432, respectively; in 1995 were $35,578, $55,579 and
$20,636, respectively. The amount of such fees received under the Alliance Bond
Fund in 1997, 1996 and 1995 were $559, $640 and $455, respectively.
DISTRIBUTION
EQ Financial Services, Inc. (EQF) performs all sales functions for the Separate
Accounts and may be deemed to be their principal underwriter under the 1940 Act
and is also the principal underwriter of the Trust. EQF is registered with the
SEC as a broker-dealer under the Securities Exchange Act of 1934 (EXCHANGE ACT)
and is a member of the National Association of Securities Dealers, Inc. EQF's
principal business address is 1755 Broadway, New York, New York 10019. The
contracts are distributed through Equitable Life's Representatives who are
registered representatives of EQF.
EQUITABLE LIF
We are managed by a Board of Directors. See PART III -- EQUITABLE LIFE AND ITS
FUNDS in the Prospectus. Our Directors, certain of our executive officers and
their principal occupations are set forth below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
NAME PRINCIPAL OCCUPATION
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
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
Denis Duverne Senior Vice President, International, AXA-UAP
William T. Esrey Chairman and Chief Executive Officer, Sprint Corporation
Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone-Poulenc, S.A.
Norman C. Francis President, Xavier University of Louisiana
Donald J. Greene Counselor-at-Law, Partner, LeBoeuf, Lamb, Greene & MacRae
John T. Hartley Director and retired Chairman and Chief Executive Officer, Harris Corporation
John H. F. Haskell, Jr. Director and Managing Director, SBC Warburg Dillon Read, Inc.
Mary R. (Nina) Henderson President, Bestfoods Grocery; Vice President, BESTFOODS
W. Edwin Jarmain President, Jarmain Group Inc.
G. Donald Johnston, Jr. Retired Chairman and Chief Executive Officer, JWT Group, Inc.
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 of the Board and Chief Executive Officer, American Cyanamid Company
Dave H. Williams Chairman and Chief Executive Officer, Alliance Capital Management, L.P.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
Unless otherwise indicated, the following persons have been involved in the
management of Equitable Life in various executive positions during the last five
years.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
OFFICER-DIRECTORS
NAME PRINCIPAL OCCUPATION
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Edward D. Miller Chairman of the Board and Chief Executive Officer; formerly, Senior Vice Chairman,
Chase Manhattan Corporation, and prior thereto, President and Vice Chairman, Chemical Bank
Stanley B. Tulin Vice Chairman of the Board and Chief Financial Officer; formerly, Chairman, Insurance
Consulting and Actuarial Practice, Coopers & Lybrand
Michael Hegarty President and Chief Operating Officer; formerly, Vice Chairman, Chase Manhattan
Corporation
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
NAME PRINCIPAL OCCUPATION*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Leon B. Billis Executive Vice President and Chief Information Officer
Jose Suquet Senior Executive Vice President and Chief Distribution Officer
Robert E. Garber Executive Vice President and General Counsel
Jerome S. Golden Executive Vice President; formerly with JG Resources and BT Variable
Peter D. Noris Executive Vice President and Chief Investment Officer; formerly, Vice
President / Manager, Insurance Company Investment Strategies Group,
Salomon Brothers, Inc.
Harvey Blitz Senior Vice President and Deputy Chief Financial Officer
Kevin R. Byrne Senior Vice President and Treasurer
Alvin H. Fenichel Senior Vice President and Controller
Paul J. Flora Senior Vice President and Auditor
Mark A. Hug Senior Vice President; formerly, Vice President, Aetna
Michael S. Martin Senior Vice President and Chief Marketing Officer
Douglas Menkes Senior Vice President and Coroporate Actuary; formerly with Milliman &
Robertson, Inc.
Anthony C. Pasquale Senior Vice President
Donald R. Kaplan Vice President and Chief Compliance Officer
Pauline Sherman Vice President, Secretary and Associate General Counsel
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Current positions listed are with Equitable Life unless otherwise specified.
13
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
PART III -- FINANCIAL STATEMENTS
INDEX
- -----------------------------------------------------------------------------------------------------------------------------
PAGE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SEPARATE ACCOUNT NOS. 13 (POOLED), Report of Independent Accountants--....................................... FSA-1
10 (POOLED), 4 (POOLED), 3 (POOLED)
AND 51 (POOLED)
- -----------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 13 (POOLED) Statement of Assets and Liabilities, December 31, 1997.................... FSA-2
------------------------------------------------------------------------------------
Statements of Operations and Changes in Net Assets for the Years
Ended December 31, 1997 and 1996.......................................... FSA-3
------------------------------------------------------------------------------------
Portfolio of Investments, December 31, 1997............................... FSA-4
- -----------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED) Statement of Assets and Liabilities, December 31, 1997.................... FSA-6
------------------------------------------------------------------------------------
Statements of Operations and Changes in Net Assets for the Years
Ended December 31, 1997 and 1996.......................................... FSA-7
------------------------------------------------------------------------------------
Portfolio of Investments, December 31, 1997............................... FSA-8
- -----------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED) Statement of Assets and Liabilities, December 31, 1997.................... FSA-25
------------------------------------------------------------------------------------
Statements of Operations and Changes in Net Assets for the Years
Ended December 31, 1997 and 1996.......................................... FSA-26
------------------------------------------------------------------------------------
Portfolio of Investments, December 31, 1997............................... FSA-27
- -----------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 3 (POOLED) Statement of Assets and Liabilities, December 31, 1997.................... FSA-32
------------------------------------------------------------------------------------
Statements of Operations and Changes in Net Assets for the Years
Ended December 31, 1997 and 1996.......................................... FSA-33
------------------------------------------------------------------------------------
Portfolio of Investments, December 31, 1997............................... FSA-34
- -----------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED) Statements of Assets and Liabilities, December 31, 1997................... FSA-38
------------------------------------------------------------------------------------
Statements of Operations and Changes in Net Assets for the Years
Ended December 31, 1997 and 1996.......................................... FSA-41
- -----------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NOS. 13 (POOLED), Notes to Financial Statements............................................. FSA-46
10 (POOLED), 4 (POOLED), 3 (POOLED)
AND 51 (POOLED)
- -----------------------------------------------------------------------------------------------------------------------------
THE EQUITABLE LIFE ASSURANCE Report of Independent Accountants-- ...................................... F-1
------------------------------------------------------------------------------------
SOCIETY OF THE UNITED STATES Consolidated Balance Sheets as of December 31, 1997 and 1996 ............. F-2
------------------------------------------------------------------------------------
Consolidated Statements of Earnings for the Years Ended
December 31, 1997, 1996 and 1995 ......................................... F-3
------------------------------------------------------------------------------------
Consolidated Statements of Shareholder's Equity for the Years
Ended December 31, 1997, 1996 and 1995 ................................... F-4
------------------------------------------------------------------------------------
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995 ......................................... F-5
------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements ............................... F-6
- -----------------------------------------------------------------------------------------------------------------------------
The financial statements of the Funds reflect fees, charges and other
expenses of the Separate Accounts applicable to Contracts under RIA as in
effect during the periods covered, as well as the expense charges made in
accordance with the terms of all other contracts participating in the
respective Funds.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
================================================================================
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED),
3 (POOLED) AND 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and the Contractowners of Separate Account Nos. 13, 10, 4 and 3
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities, including
the portfolio of investments, and the related statements of operations and
changes in net assets and the selected per unit data (included under Condensed
Financial Information in the prospectus of the Retirement Investment Account)
present fairly, in all material respects, the financial position of Separate
Account Nos. 13 (Pooled) (Alliance Bond Fund), 10 (Pooled) (Alliance Balanced
Fund), 4 (Pooled) (Alliance Common Stock Fund) and 3 (Pooled) (Alliance
Aggressive Stock Fund) of The Equitable Life Assurance Society of the United
States ("Equitable Life") at December 31, 1997 and each of their results of
operations, the changes in net assets for each of the two years in the period
then ended and the selected per unit data for the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and the selected per unit data (hereafter referred to as "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, 1997 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.
Price Waterhouse LLP
New York, New York
February 10, 1998
FSA-1
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 13 (POOLED)
(THE ALLIANCE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
Investments (Notes 2 and 3):
<S> <C>
Long-term debt securities-- at value (amortized cost: $109,988,701)...... $111,433,112
Participation in Separate Account No. 2A-- at amortized cost, which
approximates market value, equivalent to 3,783 units at $270.27........ 1,022,502
Receivables:
Interest................................................................. 1,352,890
Other.................................................................... 17,215
- ---------------------------------------------------------------------------------------------
Total assets........................................................... 113,825,719
- ---------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Custodian Payable........................................................ 12,825
Due to Equitable Life's General Account.................................. 1,447,671
Investment management fees payable....................................... 79
Accrued expenses............................................................ 13,118
- ---------------------------------------------------------------------------------------------
Total liabilities...................................................... 1,473,693
- ---------------------------------------------------------------------------------------------
NET ASSETS.................................................................. $112,352,026
=============================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-2
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 13 (POOLED)
(THE ALLIANCE BOND 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,
1997 1996
- ----------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
<S> <C> <C>
INVESTMENT INCOME (NOTE 2)-- Interest.................................. $ 8,163,837 $11,040,900
EXPENSES (NOTE 4)...................................................... (690,004 ) (970,909 )
- ---------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME.................................................. 7,473,833 10,069,991
- ---------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain (loss) from security transactions ....................... 1,189,685 (634,764 )
- ---------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year................................................... 694,679 6,646,163
End of year......................................................... 1,444,411 694,679
- ---------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation ........................ 749,732 (5,951,484 )
- ---------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................. 1,939,417 (6,586,248 )
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations...................... 9,413,250 3,483,743
- ---------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions.......................................................... 30,905,572 48,188,476
Withdrawals............................................................ (62,636,625 ) (130,604,690 )
- ---------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals... (31,731,053 ) (82,416,214 )
- ---------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS ................................................ (22,317,803 ) (78,932,471 )
NET ASSETS-- BEGINNING OF YEAR ........................................ 134,669,829 213,602,300
===============================================================================================================
NET ASSETS-- END OF YEAR............................................... $112,352,026 $134,669,829
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-3
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 13 (POOLED)
(THE ALLIANCE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- --------------------------------------------------------------------------------
LONG-TERM DEBT SECURITIES:
BUSINESS SERVICES
PRINTING, PUBLISHING & BROADCASTING (4.6%)
Turner Broadcasting System, Inc.
7.4%, 2004.................................. $5,000,000 $ 5,206,850
-------------
TOTAL BUSINESS SERVICES (4.6%)................. 5,206,850
-------------
CAPITAL GOODS
AEROSPACE (2.3%)
Raytheon Co.
6.75%, 2007................................. 2,525,000 2,572,950
-------------
TOTAL CAPITAL GOODS (2.3%)..................... 2,572,950
-------------
CONSUMER CYCLICALS
AUTO-RELATED (3.6%)
Enterprise Rent-A-Car Co.
6.95%, 2004................................. 4,000,000 4,057,040
-------------
TOTAL CONSUMER CYCLICALS (3.6%)................ 4,057,040
-------------
CREDIT-SENSITIVE
ASSET-BACKED (0.8%)
Premier Auto Trust
7.15% Series 95-A5, 1999.................... 929,373 930,238
-------------
BANKS (6.5%)
Chase Manhattan Corp.
8.625% Sub. Deb., 2002...................... 5,000,000 5,435,600
Long Island Savings Bank
7.0%, 2002.................................. 1,850,000 1,887,962
-------------
7,323,562
-------------
FINANCIAL SERVICES (3.9%)
Associates Corp. of North America
6.5%, 2002.................................. 4,300,000 4,341,323
-------------
U.S. GOVERNMENT (77.5%)
U.S. Treasury:
6.125% Note, 1998........................... 9,600,000 9,633,005
6.375% Note, 1999........................... 21,865,000 22,063,162
6.25% Note, 2001............................ 10,760,000 10,928,125
6.5% Note, 2002............................. 24,900,000 25,631,437
6.875% Note, 2006........................... 11,925,000 12,763,482
6.625% Note, 2007........................... 5,650,000 5,981,938
-------------
87,001,149
-------------
TOTAL CREDIT-SENSITIVE (88.7%)................. 99,596,272
-------------
TOTAL LONG-TERM DEBT SECURITIES (99.2%)
(Amortized Cost $109,988,701) .............. 111,433,112
-------------
FSA-4
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 13 (POOLED)
(THE ALLIANCE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Concluded)
- --------------------------------------------------------------------------------
VALUE
(NOTE 3)
- --------------------------------------------------------------------------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 3,783
units at $270.27 each (0.9%).......................... $ 1,022,502
--------------
TOTAL INVESTMENTS (100.1%)
(Amortized Cost $111,011,203) ........................ 112,455,614
OTHER ASSETS LESS LIABILITIES (-0.1%).................... (103,588)
--------------
NET ASSETS (100.0%)...................................... $112,352,026
==============
See Notes to Financial Statements.
FSA-5
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
ASSETS:
Investments (Notes 2 and 3):
<S> <C>
Common stocks-- at market value (cost: $108,824,778)..................... $124,460,867
Preferred stocks-- at market value (cost: $2,677,383).................... 3,236,238
Long-term debt securities-- at value (amortized cost: $110,232,563)...... 114,106,615
Participation in Separate Account No. 2A -- at amortized cost, which
approximates market value, equivalent to 38,544 units at $270.27....... 10,417,265
Receivables:
Securities sold.......................................................... 810,823
Interest................................................................. 1,517,146
Dividends................................................................ 238,861
Others................................................................... 24,341
- ---------------------------------------------------------------------------------------------
Total assets........................................................... 254,812,156
- ---------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Custodian payable........................................................ 159,644
Securities purchased..................................................... 110,274
Due to Equitable Life's General Account.................................. 11,079,033
Investment management fees payable....................................... 2,561
Accrued expenses............................................................ 204,725
- ---------------------------------------------------------------------------------------------
Total liabilities...................................................... 11,556,237
- ---------------------------------------------------------------------------------------------
NET ASSETS.................................................................. $243,255,919
=============================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-6
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED 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,
1997 1996
- ----------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
<S> <C> <C>
Interest............................................................... $ 9,248,201 $ 9,820,381
Dividends (net of foreign taxes withheld --
1997: $109,690 and 1996: $115,641).................................. 1,765,490 2,417,609
- ----------------------------------------------------------------------------------------------------------------
Total................................................................... 11,013,691 12,237,990
EXPENSES (NOTE 4)...................................................... (3,985,252) (4,691,514)
- ----------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME.................................................. 7,028,439 7,546,476
- ----------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from security and foreign currency transactions.......... 30,478,147 35,223,719
- ----------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of
investments and foreign currency transactions:
Beginning of year................................................... 24,115,275 34,125,491
End of year......................................................... 20,366,672 24,115,275
- ----------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation......................... (3,748,603) (10,010,216)
- ----------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........................ 26,729,544 25,213,503
- ----------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations...................... 33,757,983 32,759,979
- ----------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions.......................................................... 50,198,862 68,031,967
Withdrawals............................................................ (153,851,256) (161,825,766)
- ----------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals... (103,652,394) (93,793,799)
- ----------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS................................................. (69,894,411) (61,033,820)
NET ASSETS-- BEGINNING OF YEAR......................................... 313,150,330 374,184,150
================================================================================================================
NET ASSETS-- END OF YEAR............................................... $243,255,919 $313,150,330
================================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-7
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS (0.9%)
Akzo Nobel N.V. ................................ 600 $ 103,445
Bayer AG........................................ 4,000 148,416
Ciba Specialty Chemicals AG*.................... 900 107,172
Dow Chemical Co. ............................... 5,000 507,500
Dupont (E.I.) de Nemours & Co. ................. 12,100 726,756
Hitachi Chemical Co. Ltd. ...................... 31,000 183,959
Holliday Chemical Holdings PLC.................. 46,500 174,886
Kuraray Co. Ltd. ............................... 20,000 165,390
Monsanto Co. ................................... 1,800 75,600
Nippon Chemi-Con Corp. ......................... 12,000 27,841
Toagosei Co. Ltd. .............................. 29,000 40,858
Union Carbide Corp. ............................ 1,100 47,231
-----------
2,309,054
-----------
CHEMICALS -- SPECIALTY (0.1%)
NGK Insulators.................................. 18,000 159,877
-----------
METALS & MINING (0.7%)
Aluminum Co. of America......................... 9,600 675,600
Freeport-McMoran Copper & Gold, Inc. (Class B).. 14,000 220,500
Inco Ltd. ...................................... 900 15,300
Kaiser Aluminum Corp.* ......................... 36,100 318,131
Phelps Dodge Corp. ............................. 2,000 124,500
Steel Dynamics, Inc.* .......................... 20,900 334,400
Toho Titanium*.................................. 1,000 8,423
-----------
1,696,854
-----------
PAPER (0.2%)
Georgia-Pacific Corp. .......................... 1,300 78,975
Kimberly-Clark Corp. ........................... 2,200 108,488
KNP BT (Kon) N.V. .............................. 4,000 92,122
Nippon Paper Industries Co. .................... 2,000 7,841
UPM-Kymmene Oy.................................. 5,010 100,215
-----------
387,641
-----------
STEEL (0.1%)
Koninklijke Hoogovens N.V. ..................... 2,000 81,963
NatSteel Ltd. .................................. 41,000 55,461
Pohang Iron & Steel Co. Ltd. (ADR).............. 4,000 69,750
-----------
207,174
-----------
TOTAL BASIC MATERIALS (2.0%).................... 4,760,600
-----------
FSA-8
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.2%)
USA Waste Services, Inc.*....................... 14,800 $ 580,900
-----------
PRINTING, PUBLISHING & BROADCASTING (1.3%)
Carlton Communications PLC...................... 26,000 199,841
Gannett Co. .................................... 12,200 754,112
Liberty Media Group (Class A)*.................. 6,850 248,313
New Straits Times Press BHD..................... 13,000 16,110
New York Times Co. (Class A).................... 9,500 628,188
Nippon Television Network Corp. ................ 100 29,326
Reuters Holding PLC (ADR)....................... 7,200 477,000
Scripps (EW) Co. (Class A)...................... 11,600 561,875
Television Broadcasts Ltd. ..................... 1,000 2,852
Tokyo Broadcasting System, Inc. ................ 2,000 25,268
United News & Media PLC......................... 18,551 209,310
Viacom, Inc. (Class B)*......................... 1,400 58,012
-----------
3,210,207
-----------
PROFESSIONAL SERVICES (0.0%)
Asatsu, Inc. ................................... 700 10,077
Brisa-Auto Estradas de Portugal SA*............. 500 17,911
Meitec.......................................... 2,000 56,202
-----------
84,190
-----------
TRUCKING, SHIPPING (0.4%)
Bergesen Dy As (A Shares)...................... 9,450 222,956
CNF Transportation, Inc. ....................... 8,700 333,863
Frontline Ltd.*................................. 30,000 121,220
-----------
678,039
-----------
TOTAL BUSINESS SERVICES (1.9%).................. 4,553,336
-----------
CAPITAL GOODS
AEROSPACE (0.6%)
Boeing Co. ..................................... 22,500 1,101,094
British Aerospace............................... 9,901 283,102
Gulfstream Aerospace Corp.* .................... 3,200 93,600
-----------
1,477,796
-----------
BUILDING & CONSTRUCTION (0.4%)
Beazer Group PLC................................ 36,000 95,486
Bouygues........................................ 2,239 253,717
Daito Trust Construction Co. Ltd. .............. 7,500 45,770
Groupe GTM...................................... 1,931 129,942
Makita Corp. ................................... 17,000 162,710
National House Industrial Co. .................. 10,000 68,530
Sho Bond Corp. ................................. 1,500 27,106
Societe Technip................................. 1,400 147,711
Toda Corp. ..................................... 22,000 59,801
-----------
990,773
-----------
FSA-9
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
BUILDING MATERIALS & FOREST PRODUCTS (0.3%)
BPB PLC............................................ 20,500 $ 113,799
Fujikura Ltd. ..................................... 4,000 26,463
Holderbank Financiere Glaris AG.................... 275 224,336
Matsushita Electric Works Ltd. .................... 22,000 190,352
Nichiha Corp. ..................................... 1,000 6,110
Rugby Group PLC.................................... 50,000 112,090
------------
673,150
------------
ELECTRICAL EQUIPMENT (1.8%)
Daikin Industries Ltd. ............................ 29,000 109,250
General Electric Co. .............................. 49,900 3,661,413
Johnson Electric Holdings Ltd. .................... 50,400 145,041
Legrand SA......................................... 750 149,414
Mabuchi Motor Co. ................................. 200 10,153
Sumitomo Electric Industries....................... 11,000 149,923
------------
4,225,194
------------
MACHINERY (1.1%)
Allied Signal, Inc. ............................... 20,700 806,006
Cie Generale de Geophysique SA (ADR)*.............. 1,000 25,625
Fujitec Co. Ltd. .................................. 18,000 99,234
Ishikawajima Harima Heavy Industries Co. Ltd. ..... 20,000 29,862
KSB AG............................................. 500 109,783
Legris Industries SA............................... 4,390 152,448
Mitsubishi Heavy Industries Ltd. .................. 14,000 58,316
Nitta Corp. ....................................... 1,000 10,107
Rauma Oy........................................... 250 3,900
Schindler Holding AG Participating Certificate..... 35 36,456
Schindler Holding AG Registered.................... 100 107,378
Siebe PLC.......................................... 10,000 187,228
SMC Corp. ......................................... 400 35,222
Stork N.V. ........................................ 3,600 124,276
TI Group PLC....................................... 24,558 187,951
United Technologies Corp. ......................... 9,600 699,000
Valmet Oy*......................................... 6,200 85,562
------------
2,758,354
------------
TOTAL CAPITAL GOODS (4.2%)......................... 10,125,267
------------
CONSUMER CYCLICALS
AIRLINES (0.2%)
Singapore Airlines Ltd. ........................... 2,000 13,052
US Airways Group, Inc.*............................ 3,100 193,750
Virgin Express Holdings PLC (ADR)*................. 18,000 373,500
------------
580,302
-------------
FSA-10
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
APPAREL, TEXTILE (0.4%)
Tommy Hilfiger Corp. *........................ 9,800 $ 344,225
Nautica Enterprises, Inc.*.................... 8,300 192,975
Onward Kashiyama Co. Ltd. .................... 15,000 173,430
Reebok International Ltd. *................... 13,200 380,325
-----------
1,090,955
-----------
AUTO-RELATED (0.6%)
Circuit City Stores, Inc.-- CarMax Group*..... 19,000 171,000
Continental AG................................ 5,000 112,563
Federal-Mogul Corp. .......................... 5,400 218,700
Magna International, Inc. .................... 7,800 489,937
Minebea Co. Ltd. ............................. 2,000 21,440
NGK Spark Plug Co. ........................... 8,000 45,329
Republic Industries, Inc.*.................... 3,200 74,600
Sumitomo Rubber Industries, Inc. ............. 33,000 139,227
Toyoda Automatic Loom Works Ltd. ............. 14,000 257,274
-----------
1,530,070
-----------
AUTOS & TRUCKS (0.8%)
Bajaj Auto Ltd. (GDR)......................... 1,500 29,625
Chrysler Corp. ............................... 9,400 330,762
Ford Motor Co. ............................... 10,200 496,612
General Motors Corp. ......................... 8,000 485,000
Harley-Davidson, Inc. ........................ 18,500 506,438
Honda Motor Co. Ltd. ......................... 1,000 36,677
UMW Holdings BHD.............................. 10,000 7,585
Volkswagen AG................................. 200 111,729
-----------
2,004,428
-----------
FOOD SERVICES, LODGING (0.2%)
Accor SA...................................... 200 37,185
Choice Hotels Scandinavia ASA*................ 20,000 67,797
Compass Group PLC............................. 27,000 329,915
McDonald's Corp. ............................. 1,000 47,750
-----------
482,647
-----------
HOUSEHOLD FURNITURE, APPLIANCES (0.4%)
Hunter Douglas N.V. .......................... 4,000 140,057
Industrie Natuzzi Spa (ADR)................... 600 12,375
Moulinex*..................................... 3,000 74,121
Pioneer Electric Corp. ....................... 13,000 200,077
Sony Corp. ................................... 3,500 310,873
Sunbeam Corp. ................................ 6,100 256,963
-----------
994,466
-----------
FSA-11
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
LEISURE-RELATED (1.1%)
Berjaya Sports Toto BHD..................... 27,000 $ 69,071
Carnival Corp. (Class A).................... 9,100 503,913
Disney (Walt) Co. .......................... 14,033 1,390,144
EMI Group PLC............................... 1,000 8,610
Granada Group PLC........................... 16,700 256,993
Hoyts Cinemas Group......................... 10,000 17,597
Ladbroke Group PLC.......................... 51,864 224,872
NAMCO Ltd. ................................. 200 5,804
Nintendo Co. Ltd. .......................... 400 39,204
Nippon Broadcasting System.................. 1,000 39,510
Toei Co. Ltd. .............................. 2,000 7,274
------------
2,562,992
------------
PHOTO & OPTICAL (0.2%)
Eastman Kodak Co. .......................... 2,500 152,031
Fuji Photo Film Co. ........................ 5,000 191,424
Noritsu Koki Co. Ltd. ...................... 1,600 39,449
------------
382,904
------------
RETAIL -- GENERAL (2.3%)
Aldeasa SA*................................. 3,000 63,578
Boots Co. PLC............................... 14,500 210,278
British Airport Author PLC.................. 30,000 240,194
CompUSA, Inc.*.............................. 19,600 607,600
Dayton Hudson Corp. ........................ 10,300 695,250
Dickson Concepts International Ltd. ........ 31,000 45,206
Home Depot, Inc. ........................... 18,400 1,083,300
Kingfisher PLC.............................. 14,953 208,252
Kohl's Corp.*............................... 3,800 258,875
Kokuyo Co. Ltd. ............................ 3,000 51,685
Paris Miki, Inc. ........................... 800 8,576
Sato Corp. ................................. 1,300 22,098
Smith (W.H.) Group PLC...................... 3,000 19,240
Staples, Inc.*.............................. 9,000 249,750
Vendex International N.V. .................. 1,500 82,777
Wal Mart Stores, Inc. ...................... 42,200 1,664,262
------------
5,510,921
------------
TOTAL CONSUMER CYCLICALS (6.2%)............. 15,139,685
------------
CONSUMER NONCYCLICALS
BEVERAGES (2.1%)
Anheuser Busch, Inc. ....................... 8,400 369,600
Bass PLC.................................... 4,900 75,325
Coca-Cola Co. .............................. 40,600 2,704,975
Coca Cola Enterprises, Inc. ................ 1,600 56,900
Diageo PLC.................................. 11,000 100,898
Pepsico, Inc. .............................. 33,500 1,220,656
Scottish & Newcastle PLC.................... 19,500 235,550
Whitbread PLC............................... 18,500 268,438
------------
5,032,342
------------
FSA-12
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
CONTAINERS (0.2%)
Schmalbach Lubeca AG.................... 400 $ 66,704
Sealed Air Corp.*....................... 8,600 531,050
------------
597,754
------------
DRUGS (3.5%)
Astra AB (A Shares)..................... 6,000 104,000
Bristol-Myers Squibb Co. ............... 18,400 1,741,100
Daiichi Pharmaceutical Co. ............. 15,000 168,836
Genzyme Corporation*.................... 9,300 258,075
Lilly Eli & Co. ........................ 4,200 292,425
Merck KGAA.............................. 3,750 126,112
Merck & Co., Inc. ...................... 21,100 2,241,875
Novartis AG............................. 150 243,293
Orion-Yhtyma Oy (B Shares).............. 8,700 229,907
Pfizer, Inc. ........................... 23,840 1,777,570
Rohto Pharmaceutical Co. Ltd. .......... 3,000 19,296
Sankyo Co. Ltd. ........................ 1,000 22,588
Santen Pharmaceutical Co. Ltd. ......... 3,000 34,456
Schering Plough Corp. .................. 17,500 1,087,187
Taisho Pharmaceutical Co. .............. 1,000 25,498
Yamanouchi Pharmaceutical Co. Ltd. ..... 3,000 64,318
------------
8,436,536
------------
FOODS (1.1%)
Campbell Soup Co. ...................... 14,800 860,250
General Mills, Inc. .................... 2,000 143,250
Heinz (H.J.) Co. ....................... 2,500 127,031
Huhtamaki Oy Series I................... 2,200 90,840
Nabisco Holdings Corp. (Class A)........ 10,520 509,562
Orkla ASA 'A'........................... 1,890 162,732
Parmalat Finanziaria Spa................ 100,440 143,622
Tysons Foods, Inc. ..................... 27,000 553,500
Yakult Honsha Co. ...................... 1,000 5,253
------------
2,596,040
------------
HOSPITAL SUPPLIES & SERVICES (1.5%)
Abbott Laboratories..................... 10,700 701,519
Johnson & Johnson....................... 25,400 1,673,225
Medtronic, Inc. ........................ 16,400 857,925
PT Tempo Scan Pacific................... 40,000 3,091
United Healthcare Corp. ................ 8,400 417,375
------------
3,653,135
------------
RETAIL -- FOOD (0.6%)
Delhaize-Le Lion SA..................... 1,770 89,676
Familymart Co. ......................... 4,100 146,922
Kroger Co.*............................. 17,600 650,100
Promodes................................ 400 165,955
Seven-Eleven Japan Co. Ltd. ............ 1,000 70,750
Woolworths Ltd. ........................ 108,492 362,740
------------
1,486,143
------------
FSA-13
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES NOTE 3)
- --------------------------------------------------------------------------------
SOAPS & TOILETRIES (2.1%)
Avon Products, Inc. ............................. 10,200 $ 626,025
Colgate Palmolive Co. ........................... 11,200 823,200
Estee Lauder Cos. (Class A)...................... 7,000 360,063
Gillette Corp. .................................. 12,700 1,275,556
Procter & Gamble Co. ............................ 24,300 1,939,444
-----------
5,024,288
-----------
TOBACCO (0.9%)
Imperial Tobacco Group PLC....................... 1,700 10,721
Japan Tobacco, Inc. ............................. 23 163,078
Philip Morris Cos., Inc. ........................ 43,330 1,963,391
Seita............................................ 3,000 107,668
Swedish Match AB................................. 5,500 18,373
Tabacalera SA-A.................................. 1,500 121,546
-----------
2,384,777
-----------
TOTAL CONSUMER NONCYCLICALS (12.0%).............. 29,211,015
-----------
CREDIT-SENSITIVE
BANKS (3.9%)
Allied Irish Bank................................ 44,000 426,165
AMMB Holdings BHD................................ 14,000 9,179
AMMB Holdings BHD Rights-- Equity*............... 14,000 54
Banco Bilbao Vizcaya SA.......................... 6,000 194,080
Banc One Corp. .................................. 17,200 934,175
Banco Santander SA............................... 4,000 133,586
Bangkok Bank Public Ltd. ........................ 1,000 2,492
BankAmerica Corp. ............................... 1,800 131,400
Bank Dagang Nasional Indonesia Tbk............... 234,000 14,891
Bank of Tokyo-Mitsubishi Ltd. ................... 2,000 27,565
Banque National de Paris......................... 2,600 138,197
Barnett Banks, Inc. ............................. 9,600 690,000
BPI-SGPS SA*..................................... 1,200 29,177
Chase Manhattan Corp. ........................... 10,065 1,102,118
Citicorp......................................... 10,100 1,277,019
Corestates Financial Corp. ...................... 9,000 720,563
Credito Italiano Spa............................. 40,000 123,324
Dao Heng Bank Group Ltd. ........................ 5,000 12,485
Den Norske Bank ASA.............................. 40,000 188,746
Erste Bank Oesterreichischen Sparkassen AG*...... 1,120 55,700
First Union Corp. ............................... 17,500 896,875
Istituto Mobiliare Italiano...................... 12,000 142,428
Long-Term Credit Bank of Japan................... 44,000 70,413
Morgan (J.P.) & Co., Inc. ....................... 1,400 158,025
NationsBank Corp. ............................... 17,600 1,070,300
Philippine Commercial International Bank......... 1,000 2,840
Seventy-Seven Bank Ltd. ......................... 23,000 163,783
Shizuoka Bank Ltd. .............................. 1,000 10,720
Skandinaviska Enskilda Banken (Series A)......... 5,070 64,232
Societe Generale................................. 1,681 229,030
Sparbanken Sverige AB (A Shares)................. 3,000 68,262
FSA-14
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
BANKS (3.9%) (CONTINUED)
State Bank of India (GDR)....................... 4,800 $ 87,360
Suncorp-Metway Ltd.*............................. 14,866 37,302
Thai Farmers Bank Public Co.-- Warrants*......... 750 79
Toho Bank ....................................... 1,000 3,982
Wing Hang Bank Ltd. ............................. 31,000 87,611
Yamaguchi Bank................................... 14,000 171,516
-----------
9,475,674
-----------
FINANCIAL SERVICES (2.2%)
Aiful Corp.*..................................... 500 33,882
Associates First Capital Corp. .................. 6,000 426,750
Credit Saison Co. ............................... 2,000 49,311
Fleet Financial Group, Inc. ..................... 10,700 801,831
Green Tree Financial Corp. ...................... 9,100 238,306
Household International, Inc. ................... 5,300 676,081
Legg Mason, Inc. ................................ 5,000 279,688
MBNA Corp. ...................................... 18,175 496,405
Merrill Lynch & Co., Inc. ....................... 9,400 685,613
Morgan Stanley, Dean Witter, Discover & Co. ..... 14,100 833,662
Newcourt Credit Group, Inc.*..................... 2,500 82,745
Nichiei Co. Ltd. ................................ 100 10,643
Peregrine Investment Holdings Ltd. .............. 90,000 63,879
PMI Group, Inc. ................................. 7,500 542,344
Sanyo Shinpan Finance Co. Ltd. .................. 200 8,836
Takefuji Corp. .................................. 800 36,692
Worms Et Compagnie............................... 300 22,182
-----------
5,288,850
-----------
INSURANCE (3.1%)
American International Group, Inc. .............. 14,100 1,533,375
AMEV N.V. ....................................... 5,300 231,055
ASR Verzekeringsgroep N.V. ...................... 1,500 81,593
Assurances Generales de France................... 7,650 405,348
Catalana Occidente SA............................ 1,000 50,915
Corporacion Mapfre Cia International SA.......... 1,600 42,411
General Accident PLC............................. 8,000 139,797
Hartford Financial Services Group, Inc. ......... 7,400 692,362
Hartford Life, Inc. ............................. 8,400 380,625
ING Groep N.V. .................................. 5,000 210,579
Irish Life PLC................................... 20,000 113,539
PennCorp Financial Group, Inc. .................. 14,500 517,469
QBE Insurance Group Ltd. ........................ 37,750 169,937
Royal & Sun Alliance Insurance Group PLC......... 18,700 187,343
SunAmerica, Inc. ................................ 11,200 478,800
Travelers Group, Inc. ........................... 24,700 1,330,713
Travelers Property Casualty Corp. (Class A)...... 12,300 541,200
Trygg Hansa AB (B Shares)........................ 6,800 209,160
United Assurance Group PLC....................... 14,900 129,085
Willis Corroon Group PLC (ADR)................... 900 11,081
Zurich Versicherungs............................. 385 183,383
-----------
7,639,770
-----------
FSA-15
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES NOTE 3)
- --------------------------------------------------------------------------------
MORTGAGE-RELATED (0.5%)
Federal National Mortgage Association.............. 23,300 $1,329,556
-----------
REAL ESTATE (0.1%)
City Development Ltd. ............................. 1,000 4,628
Daibiru Corp. ..................................... 1,000 7,312
Sumitomo Realty & Development Co. Ltd. ............ 2,000 11,485
Unibail SA......................................... 1,000 99,859
-----------
123,284
-----------
UTILITY -- ELECTRIC (2.2%)
AES Corp.*......................................... 13,400 624,775
Baltimore Gas & Electric Co. ...................... 10,200 347,438
Carolina Power & Light Co. ........................ 4,800 203,700
Central & South West Corp. ........................ 21,500 581,844
Cia Paranaense de Energia-Copel (ADR).............. 10,000 136,875
Cinergy Corp. ..................................... 6,900 264,356
CMS Energy Corp. .................................. 12,400 546,375
Consolidated Edison, Inc. ......................... 6,400 262,400
Duke Power Co. .................................... 6,200 343,325
Edison International............................... 8,500 231,094
Energy Group PLC................................... 5,000 55,388
FPL Group, Inc. ................................... 3,800 224,912
Hong Kong Electric Holdings Ltd. .................. 34,000 129,217
Houston Industries, Inc. .......................... 11,600 309,575
Malakoff BHD....................................... 16,000 33,320
Manila Electric Co. ............................... 3,900 12,904
National Grid Group PLC............................ 1,000 4,767
Powergen PLC (ADR)................................. 20,600 268,968
Texas Utilities Co. ............................... 15,400 640,063
Veba AG............................................ 2,500 170,233
-----------
5,391,529
-----------
UTILITY -- GAS (0.3%)
Anglian Water PLC.................................. 10,000 133,030
ENRON Corp. ....................................... 6,000 249,375
Scottish Power PLC................................. 44,000 387,693
-----------
770,098
-----------
FSA-16
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
UTILITY -- TELEPHONE (1.3%)
Ameritech Corp. ...................................... 5,900 $ 474,950
AT&T Corp. ........................................... 13,500 826,875
BellSouth Corp. ...................................... 11,300 636,331
British Telecommunications PLC........................ 20,000 157,583
Cable & Wireless PLC.................................. 20,800 182,590
Philippine Long Distance Telephone Co. ............... 1,800 39,111
Sprint Corp. ......................................... 500 29,313
Telecom Italia Spa.................................... 27,777 177,402
Telefonica de Espana.................................. 8,000 228,330
Telekom Malaysia BHD.................................. 28,500 84,265
Teleport Communications Group, Inc. (Class A)*........ 5,200 285,350
------------
3,122,100
------------
TOTAL CREDIT-SENSITIVE (13.6%)........................ 33,140,861
------------
ENERGY
COAL & GAS PIPELINES (0.0%)
BG PLC*............................................... 36,500 18,283
OMV AG................................................ 300 41,476
------------
59,759
------------
OIL -- DOMESTIC (0.6%)
Apache Corp. ......................................... 14,500 508,406
Union Pacific Resources Group, Inc. .................. 17,600 426,800
USX-Marathon Group.................................... 18,100 610,875
------------
1,546,081
------------
OIL -- INTERNATIONAL (1.9%)
British Petroleum Co. PLC............................. 15,000 197,205
Elf Aquitaine......................................... 1,000 116,308
Exxon Corp. .......................................... 35,100 2,147,681
Gulf Canada Resources Ltd.*........................... 37,800 264,600
Gulf Indonesia Resources Ltd.*........................ 5,100 112,200
Mobil Corp. .......................................... 10,900 786,844
Repsol SA............................................. 2,750 117,281
Shell Transport & Trading Co. PLC..................... 18,000 130,518
Texaco, Inc. ......................................... 10,400 565,500
Total SA-B............................................ 1,000 108,831
------------
4,546,968
------------
OIL -- SUPPLIES & CONSTRUCTION (0.8%)
BJ Services Co.*...................................... 4,600 330,912
Canadian Fracmaster Ltd.*............................. 14,300 120,080
Dresser Industries, Inc. ............................. 15,400 645,837
Fugro N.V.*........................................... 3,000 91,432
Halliburton Co. ...................................... 12,100 628,444
Nabors Industries, Inc.*.............................. 3,700 116,319
Noble Drilling Corp.*................................. 4,300 131,688
------------
2,064,712
------------
FSA-17
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- -------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES NOTE 3)
- -------------------------------------------------------------------------------
RAILROADS (0.1%)
Union Pacific Corp. ........................... 200 $ 12,488
-----------
TOTAL ENERGY (3.4%)............................ 8,230,008
-----------
TECHNOLOGY
ELECTRONICS (2.1%)
Altera Corp.*.................................. 1,709 56,611
Applied Materials, Inc.*....................... 8,200 247,025
Cisco Systems, Inc.*........................... 28,150 1,569,362
Fujimi, Inc. .................................. 400 16,998
Hoya Corp. .................................... 1,000 31,394
Intel Corp. ................................... 27,786 1,951,966
Leitch Technology Corp.*....................... 1,000 30,090
Micronics Japan Co. Ltd. ...................... 2,200 37,902
National Semiconductor Corp.*.................. 7,900 204,906
Nikon Corp. ................................... 1,000 9,877
Rohm Co. Ltd. ................................. 1,000 101,838
Sankyo Engineering Co. ........................ 2,000 6,126
SMH AG......................................... 800 107,857
Solectron Corp.*............................... 6,700 278,469
TDK Corp. ..................................... 1,000 75,345
Tokyo Cathode Laboratory Co.* ................. 1,600 15,804
TOWA Corp. .................................... 100 2,075
Varitronix International Ltd. ................. 95,000 163,053
Xilinx, Inc.*.................................. 3,600 126,225
Yokogawa Electric Corp. ....................... 1,000 6,171
-----------
5,039,094
-----------
OFFICE EQUIPMENT (1.1%)
Barco N.V. .................................... 500 91,627
Canon, Inc. ................................... 1,000 23,277
Compaq Computer Corp. ......................... 13,575 766,139
Dell Computer Corp.* .......................... 3,900 327,600
Hewlett-Packard Co. ........................... 8,100 506,250
International Business Machines Corp. ......... 9,300 972,431
-----------
2,687,324
-----------
OFFICE EQUIPMENT SERVICES (1.2%)
Data Communication System Co. ................. 1,000 13,170
First Data Corp. .............................. 23,200 678,600
Fuji Soft ABC, Inc. ........................... 700 23,959
INES Corp. .................................... 1,000 7,734
Microsoft Corp.*............................... 16,325 2,110,006
Nippon System Development...................... 700 14,364
-----------
2,847,833
-----------
FSA-18
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS (2.4%)
ACC Corp.* ......................................... 1,000 $ 50,500
ADC Telecommunications, Inc.* ...................... 5,900 246,325
Asia Satellite Telecommunications Holdings Ltd. .... 34,000 58,137
Cox Communications, Inc. (Class A)*................. 14,400 576,900
DDI Corp. .......................................... 40 105,666
DSC Communications Corp.* .......................... 7,600 182,400
Energis PLC*........................................ 27,500 114,718
Intermedia Communications, Inc.*.................... 61 3,706
Lucent Technologies, Inc. .......................... 14,600 1,166,175
MCI Communications Corp. ........................... 20,300 869,094
Northern Telecom Ltd. .............................. 8,900 792,100
Powertel, Inc.*..................................... 10,300 172,525
PT Indosat.......................................... 73,000 135,382
PT Telekomunikasi Indonesia......................... 60,000 31,909
SK Telecom Co. Ltd. (ADR)*.......................... 19,360 125,840
Tellabs, Inc.*...................................... 4,600 243,225
Videsh Sanchar Nigam Ltd. (GDR)*.................... 4,800 66,864
Vodafone Group PLC.................................. 20,000 145,676
WorldCom, Inc.*..................................... 27,210 823,103
-------------
5,910,245
-------------
TOTAL TECHNOLOGY (6.8%)............................. 16,484,496
-------------
DIVERSIFIED
MISCELLANEOUS (1.1%)
BTR PLC............................................. 32,000 98,016
Cie Generale des Eaux............................... 1,583 220,939
Citic Pacific Ltd. ................................. 11,000 43,722
First Pacific Co. .................................. 75,289 36,435
Minnesota Mining & Manufacturing Co. ............... 2,100 172,331
Montedison Spa...................................... 150,000 134,713
Smith (Howard) Ltd. ................................ 8,000 66,426
Swire Pacific Ltd. (Class A)........................ 11,000 60,330
Tomkins PLC......................................... 14,000 65,300
Tyco International Ltd. ............................ 18,800 847,175
U.S. Industries, Inc. .............................. 19,050 573,881
Viad Corp. ......................................... 25,700 496,331
-------------
TOTAL DIVERSIFIED (1.1%)............................ 2,815,599
-------------
TOTAL COMMON STOCKS (51.2%)
(Cost $108,824,778).............................. 124,460,867
-------------
PREFERRED STOCKS:
BASIC MATERIALS
CHEMICALS (0.1%)
Henkel KGAA......................................... 2,500 156,337
-------------
TOTAL BASIC MATERIALS (0.1%)........................ 156,337
-------------
FSA-19
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.1%)
Republic Industries, Inc.
6.5% Exch. Conv. .............................. 7,800 $ 183,300
-----------
PRINTING, PUBLISHING & BROADCASTING (0.0%)
ProSieben Media AG*............................... 600 27,515
-----------
TRUCKING, SHIPPING (0.1%)
CNF Trust I
5.0% Conv. Series A............................ 2,900 165,300
-----------
TOTAL BUSINESS SERVICES (0.2%).................... 376,115
-----------
CAPITAL GOODS
AEROSPACE (0.1%)
Loral Space & Communications
6.0% Conv. .................................... 5,800 356,700
-----------
TOTAL CAPITAL GOODS (0.1%)........................ 356,700
-----------
CONSUMER CYCLICALS
AIRLINES (0.1%)
Continental Airlines Finance Trust
8.5% Conv. .................................... 2,800 288,050
-----------
RETAIL -- GENERAL (0.0%)
Hornbach Holding AG............................... 1,000 68,927
-----------
TOTAL CONSUMER CYCLICALS (0.1%)................... 356,977
-----------
CREDIT-SENSITIVE
UTILITY -- ELECTRIC (0.1%)
AES Trust
$2.6875 Conv. Series A......................... 3,600 258,300
-----------
TOTAL CREDIT-SENSITIVE (0.1%)..................... 258,300
-----------
ENERGY
OIL -- DOMESTIC (0.1%)
Devon Financing Trust
$3.25 Conv. ................................... 1,800 131,850
-----------
TOTAL ENERGY (0.1%)............................... 131,850
-----------
FSA-20
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
TECHNOLOGY
TELECOMMUNICATIONS (0.6%)
Intermedia Communications, Inc.:
7.0% Conv. .................................. 4,900 $ 200,900
7.0% Conv. Series D.......................... 2,600 106,600
Mobile Telecommunications
4.5% Conv. .................................. 3,600 120,600
Nextel Strypes Trust
7.25% Conv. ................................. 8,300 197,125
Nokia Oyj (A Shares)............................ 2,600 184,652
QualComm Financial Trust:
5.75% Conv. Series 144A...................... 5,500 257,469
5.75% Conv. ................................. 400 18,725
WorldCom, Inc.
8.0% Conv. .................................. 4,900 513,888
-----------
TOTAL TECHNOLOGY (0.6%)......................... 1,599,959
-----------
TOTAL PREFERRED STOCKS (1.3%)
(Cost $2,677,383)............................ 3,236,238
-----------
PRINCIPAL
AMOUNT
------
LONG-TERM DEBT SECURITIES:
BUSINESS SERVICES
PRINTING, PUBLISHING & BROADCASTING (1.9%)
Turner Broadcasting System, Inc.
8.375%, 2013................................. $4,000,000 4,488,080
-----------
PROFESSIONAL SERVICES (0.1%)
Career Horizons, Inc.
7.0% Conv., 2002............................. 120,000 249,600
Personnel Group of America
5.75% Conv., 2004............................ 75,000 85,125
-----------
334,725
-----------
TOTAL BUSINESS SERVICES (2.0%).................. 4,822,805
-----------
CAPITAL GOODS
AEROSPACE (0.1%)
Orbital Sciences Corp.
5.0% Conv., 2002............................. 105,000 134,138
-----------
BUILDING & CONSTRUCTION (0.0%)
Halter Marine Group, Inc.
4.5% Conv., 2004............................. 100,000 112,375
-----------
MACHINERY (0.1%)
DII Group, Inc.
6.0% Conv., 2002............................. 155,000 236,956
-----------
TOTAL CAPITAL GOODS (0.2%)...................... 483,469
-----------
FSA-21
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- --------------------------------------------------------------------------------
CONSUMER CYCLICALS
FOOD SERVICES, LODGING (0.2%)
Cendant Corp.
4.75% Conv., 2003........................ $ 315,000 $ 423,675
-----------
RETAIL -- GENERAL (0.1%)
U.S. Office Products Co.
5.5% Conv., 2001......................... 245,000 291,244
-----------
TOTAL CONSUMER CYCLICALS (0.3%)............. 714,919
-----------
CONSUMER NONCYCLICALS
DRUGS (0.2%)
MedImmune, Inc.:
7.0% Conv. Sub., 2003.................... 65,000 147,794
7.0% Conv., 2003......................... 100,000 227,375
Quintiles Transnational Corp.
4.25% Conv., 2000........................ 165,000 185,419
-----------
560,588
-----------
HOSPITAL SUPPLIES & SERVICES (0.2%)
FPA Medical Management, Inc.
6.5% Conv., 2001......................... 220,000 224,400
RES-Care, Inc.
6.0% Conv., 2004......................... 165,000 188,100
-----------
412,500
-----------
TOTAL CONSUMER NONCYCLICALS (0.4%).......... 973,088
-----------
CREDIT-SENSITIVE
BANKS (2.1%)
St. George Bank Ltd.
7.15%, 2005.............................. 4,850,000 4,996,567
Sumitomo Bank International
0.75% Conv., 2001........................ Yen 26,000,000 208,538
-----------
5,205,105
-----------
FINANCIAL SERVICES (1.8%)
Corp. Andina de Fomento
7.25%, 2007.............................. $4,000,000 4,071,624
RAC Financial Group, Inc.
7.25% Conv., 2003........................ 125,000 301,250
-----------
4,372,874
-----------
INSURANCE (2.3%)
John Hancock Mutual Life Insurance Co.
7.375%, 2024............................. 5,000,000 5,245,950
Penn Treaty American Corp.
6.25% Conv., 2003........................ 175,000 225,531
-----------
5,471,481
-----------
FSA-22
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- --------------------------------------------------------------------------------
MORTGAGE-RELATED (9.7%)
Federal Home Loan Mortgage Corp.
7.0%, 2011.................................... $ 8,408,930 $ 8,537,697
Federal National Mortgage Association:
6.5%, 2011.................................... 8,586,766 8,592,133
7.0%, 2026.................................... 6,398,518 6,442,508
------------
23,572,338
------------
U.S. GOVERNMENT (26.3%)
U.S. Treasury:
6.125% Note, 1998............................. 4,000,000 4,013,752
6.375% Note, 1999............................. 6,200,000 6,256,191
6.0% Note, 2000............................... 6,800,000 6,848,878
6.25% Note, 2001.............................. 10,775,000 10,943,359
6.5% Note, 2001............................... 11,400,000 11,681,443
6.5% Note, 2002............................... 6,590,000 6,783,581
6.875% Note, 2006............................. 7,050,000 7,545,707
6.125% Bonds, 2027............................ 9,810,000 10,079,775
------------
64,152,686
------------
TOTAL CREDIT-SENSITIVE (42.2%)................... 102,774,484
------------
ENERGY
COAL & GAS PIPELINES (0.1%)
Nabors Industries, Inc.
5.0% Conv., 2006.............................. 170,000 307,700
------------
OIL -- SUPPLIES & CONSTRUCTION (0.3%)
Diamond Offshore Drilling, Inc.
3.75% Conv. Sub. Note, 2007................... 175,000 231,656
Parker Drilling Corp.
5.5% Conv. Sub. Note, 2004.................... 150,000 160,781
Seacor Holdings, Inc.
5.375% Conv., 2006............................ 140,000 158,550
------------
550,987
------------
TOTAL ENERGY (0.4%).............................. 858,687
------------
FSA-23
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Concluded)
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- --------------------------------------------------------------------------------
TECHNOLOGY
ELECTRONICS (1.3%)
Altera Corp.
5.75% Conv. Sub. Note, 2002............... $225,000 $ 308,813
Baan Co.
4.5% Conv. Sub. Note, 2001................ 175,000 268,188
Integrated Process Equipment Corp.
6.25% Conv., 2004......................... 325,000 269,344
Level One Communications, Inc.
4.0% Conv., 2004.......................... 225,000 211,500
Photronics, Inc.
6.0% Conv., 2004.......................... 285,000 326,681
Quantum Corp.
5.0% Conv., 2003.......................... 55,000 99,825
Sanmina Corp.
5.5% Conv., 2002.......................... 205,000 496,869
SCI Systems, Inc.
5.0% Conv., 2006.......................... 255,000 474,937
Solectron Corp.
6.0% Conv., 2006.......................... 165,000 226,256
Wind River Systems, Inc.
5.0% Conv., 2002.......................... 210,000 224,700
Xilinx, Inc.
5.25% Conv., 2002......................... 285,000 275,737
-------------
3,182,850
-------------
TELECOMMUNICATIONS (0.1%)
Comverse Technology, Inc.:
5.75% Conv. Sub. Note, 2006............... 265,000 285,538
5.75% Conv., 2006......................... 10,000 10,775
-------------
296,313
-------------
TOTAL TECHNOLOGY (1.4%)...................... 3,479,163
-------------
TOTAL LONG-TERM DEBT SECURITIES (46.9%)
(Amortized Cost $110,232,563)............. 114,106,615
-------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 38,544 units
at $270.27 each (4.3%).................... 10,417,265
-------------
TOTAL INVESTMENTS (103.7%)
(Cost/Amortized Cost $232,151,989)........ 252,220,985
OTHER ASSETS LESS LIABILITIES (-3.7%)........ ( 8,965,066)
-------------
NET ASSETS (100.0%).......................... $243,255,919
============
*Non-income producing.
See Notes to Financial Statements.
FSA-24
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
ASSETS:
Investments (Notes 2 and 3):
<S> <C>
Common stocks-- at market value (cost: $1,945,635,407)................... $2,635,013,465
Preferred stocks-- at market value (cost: $1,742,250).................... 2,777,625
Long-term debt securities-- at value (amortized cost: $3,016,327)........ 2,728,125
Participation in Separate Account No. 2A --at amortized cost, which
approximates market value, equivalent to 100,276 units at $270.27...... 27,101,569
Cash ....................................................................... 64,818
Receivables:
Securities sold.......................................................... 15,688,292
Dividends................................................................ 1,062,061
- ---------------------------------------------------------------------------------------------
Total assets............................................................ 2,684,435,955
- ---------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Securities purchased..................................................... 6,071,076
Due to Equitable Life's General Account.................................. 32,755,106
Investment management fees payable....................................... 7,455
Accrued expenses............................................................ 525,753
Amount retained by Equitable Life in Separate Account No. 4 (Note 1)........ 1,095,138
- ---------------------------------------------------------------------------------------------
Total liabilities........................................................ 40,454,528
- ---------------------------------------------------------------------------------------------
NET ASSETS (NOTE 1):
Net assets attributable to participants' accumulations...................... 2,611,671,263
Reserves and other contract liabilities attributable to annuity benefits.... 32,310,164
- ---------------------------------------------------------------------------------------------
NET ASSETS.................................................................. $2,643,981,427
=============================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-25
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
<TABLE>
<CAPTION>
Statements of Operations and Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
- -------------------------------------------------------------------------------------------------------------
1997 1996
- -------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends (net of foreign taxes withheld --
<S> <C> <C>
1997: $2,138 and 1996: $62,998)................................... $ 13,385,197 $ 13,755,557
Interest............................................................. 845,517 292,364
- -------------------------------------------------------------------------------------------------------------
Total................................................................ 14,230,714 14,047,921
EXPENSES (NOTE 4).................................................... (19,783,932) (18,524,630)
- -------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS.................................................. (5,553,218) (4,476,709)
- -------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from security and foreign currency transactions........ 372,430,956 218,176,662
- -------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments
and foreign currency transactions:
Beginning of year................................................. 448,580,808 290,870,386
End of year....................................................... 690,125,231 448,580,808
- -------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation....................... 241,544,423 157,710,422
- -------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS...................... 613,975,379 375,887,084
- -------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations.................... 608,422,161 371,410,375
- -------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions........................................................ 546,890,479 552,427,638
Withdrawals.......................................................... (969,496,108) (590,972,941)
- -------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals. (422,605,629) (38,545,303)
- -------------------------------------------------------------------------------------------------------------
(Increase) Decrease in accumulated amount retained by Equitable Life in
Separate Account No. 4 (Note 1)................................... (360,863) 536,145
- -------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS............................................... 185,455,669 333,401,217
NET ASSETS-- BEGINNING OF YEAR....................................... 2,458,525,758 2,125,124,541
=============================================================================================================
NET ASSETS-- END OF YEAR............................................. $2,643,981,427 $2,458,525,758
=============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-26
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
COMMON STOCKS:
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.6%)
United States Filter Corp.*.................... 554,700 $ 16,606,331
-------------
PROFESSIONAL SERVICES (0.3%)
Corrections Corp. of America*.................. 185,000
6,856,562
-------------
TRUCKING, SHIPPING (0.2%)
Knightsbridge Tankers, Ltd. ................... 150,000 4,246,875
OMI Corp.*..................................... 264,000
2,425,500
-------------
6,672,375
-------------
TOTAL BUSINESS SERVICES (1.1%)................. 30,135,268
-------------
CONSUMER CYCLICALS
AIRLINES (9.0%)
America West Holdings Corp. (Class B)*......... 542,200 10,098,475
Continental Airlines, Inc. (Class B)*.......... 2,600,000 125,125,000
KLM Dutch Airlines............................. 280,000 10,570,000
Northwest Airlines Corp. (Class A)*............ 1,900,000 90,962,500
Southwest Airlines Co. ........................ 50,000
1,231,250
-------------
237,987,225
-------------
APPAREL, TEXTILE (0.2%)
Tommy Hilfiger Corp.*.......................... 100,000 3,512,500
Wolverine World Wide, Inc. .................... 91,000
2,058,875
-------------
5,571,375
-------------
AUTO-RELATED (6.3%)
Republic Industries, Inc.*..................... 7,100,000 165,518,750
-------------
FOOD SERVICES, LODGING (1.9%)
Extended Stay America, Inc.*................... 1,400,000 17,412,500
Host Marriott Corp.*........................... 1,675,000 32,871,875
Suburban Lodges of America, Inc.*.............. 70,000
931,875
-------------
51,216,250
-------------
HOUSEHOLD FURNITURE, APPLIANCES (0.8%)
Industrie Natuzzi Spa (ADR).................... 1,011,000 20,851,875
-------------
LEISURE-RELATED (1.3%)
Cendant Corporation*........................... 1,000,000 34,375,000
-------------
RETAIL-GENERAL (0.8%)
Circuit City Stores-- Circuit City Group....... 400,000 14,225,000
Limited, Inc. ................................. 300,000
7,650,000
-------------
21,875,000
-------------
TOTAL CONSUMER CYCLICALS (20.3%)............... 537,395,475
-------------
FSA-27
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
CONSUMER NONCYCLICALS
DRUGS (3.6%)
Centocor, Inc.*...................................... 1,230,700 $ 40,920,775
Geltex Pharmaceuticals, Inc.*........................ 700,000 18,550,000
Genzyme Corporation*................................. 100,000 2,775,000
IDEC Pharmaceuticals Corp.*.......................... 75,600 2,598,750
MedImmune, Inc.*..................................... 736,800 31,590,300
------------
96,434,825
------------
FOODS (0.2%)
Tysons Foods, Inc. .................................. 228,100
4,676,050
------------
TOBACCO (4.4%)
Loews Corp. ......................................... 1,100,000 116,737,500
------------
TOTAL CONSUMER NONCYCLICALS (8.2%)................... 217,848,375
------------
CREDIT-SENSITIVE
BANKS (0.2%)
Chase Manhattan Corp. ............................... 40,000
4,380,000
------------
FINANCIAL SERVICES (15.0%)
A.G. Edwards, Inc. .................................. 700,000 27,825,000
Green Tree Financial Corp. .......................... 54,200 1,419,362
Legg Mason, Inc. .................................... 1,200,031 67,126,734
MBNA Corp. .......................................... 4,800,000 131,100,000
Merrill Lynch & Co., Inc. ........................... 1,400,000 102,112,500
Morgan Stanley, Dean Witter, Discover & Co. ......... 1,000,000 59,125,000
PMI Group, Inc. ..................................... 100,000
7,231,250
------------
395,939,846
------------
INSURANCE (13.1%)
CNA Financial Corp.*................................. 1,700,000 217,175,000
IPC Holdings Ltd. ................................... 207,400 6,675,687
Life Re Corporation.................................. 721,000 47,000,188
NAC Re Corp. ........................................ 538,700 26,295,294
Travelers Group, Inc. ............................... 950,000 51,181,250
------------
348,327,419
------------
REAL ESTATE (0.4%)
Excel Realty Trust, Inc. ............................ 140,000 4,410,000
Imperial Credit Commercial Mortgage Investment Corp. 25,000 365,625
Imperial Credit Mortgage Holdings.................... 187,500 3,351,562
Novastar Financial, Inc. ............................ 75,000
1,185,938
------------
9,313,125
------------
UTILITY -- TELEPHONE (8.7%)
Telebras Sponsored (ADR)............................. 250,000 29,109,375
Telephone & Data Systems, Inc. ...................... 4,000,000 186,250,000
Teleport Communications Group, Inc. (Class A)*....... 300,000 16,462,500
------------
231,821,875
------------
TOTAL CREDIT-SENSITIVE (37.4%)....................... 989,782,265
------------
FSA-28
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
ENERGY
OIL -- DOMESTIC (0.0%)
Apache Corp. ................................... 15,000 $ 525,93
------------
OIL -- INTERNATIONAL (0.3%)
Gulf Canada Resources Ltd.*..................... 750,000 5,250,000
IRI International Corporation*.................. 150,000 2,100,000
Petroleo Brasileiro S.A. (ADR).................. 50,000 1,169,330
------------
8,519,330
------------
OIL -- SUPPLIES & CONSTRUCTION (15.3%)
Baker Hughes, Inc. ............................. 555,000 24,211,875
BJ Services Co.*................................ 15,000 1,079,063
Diamond Offshore Drilling, Inc. ................ 860,000 41,387,500
Dresser Industries, Inc. ....................... 170,000 7,129,375
Halliburton Co. ................................ 1,400,000 72,712,500
Lukoil Holdings-- Spons (ADR)................... 15,000 1,377,375
Lukoil Holdings-- Spons (ADR) (Pref. Shares).... 40,000 1,241,576
Nabors Industries, Inc.*........................ 435,000 13,675,312
Noble Drilling Corp.*........................... 1,300,000 39,812,500
Oceaneering International, Inc.* ............... 300,000 5,925,000
Parker Drilling Corp.*.......................... 5,500,000 67,031,250
Rowan Cos., Inc.*............................... 3,500,000 106,750,000
Schlumberger, Ltd. ............................. 270,000 21,735,000
------------
404,068,326
------------
TOTAL ENERGY (15.6%)............................ 413,113,594
------------
TECHNOLOGY
ELECTRONICS (2.7%)
Altera Corp.*................................... 100,000 3,312,500
DBT Online, Inc.*............................... 160,000 3,990,000
Networks Associates, Inc.*...................... 400,000 21,150,000
Sterling Commerce, Inc.*........................ 650,000 24,984,375
Teradyne, Inc.*................................. 290,000 9,280,000
U.S. Satellite Broadcasting Co., Inc.*.......... 40,000 317,500
Xilinx, Inc.*................................... 250,000 8,765,625
------------
71,800,000
------------
OFFICE EQUIPMENT SERVICES (0.1%)
CheckFree Holdings Corp.*....................... 100,000 2,700,000
------------
FSA-29
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS (14.1%)
ADC Telecommunications, Inc.*.................... 860,000 $ 35,905,000
American Satellite Network-- Rights*............. 70,000 0
Bell Canada International, Inc.*................. 25,000 381,250
Core Communications, Inc.*....................... 504,000 5,103,000
DSC Communications Corp.*........................ 450,000 10,800,000
MCI Communications Corp. ........................ 300,000 12,843,750
Millicom International Cellular S.A.*............ 1,515,000 57,001,875
Nextel Communications, Inc. (Class A)*........... 485,000 12,610,000
Nokia Corp.-- Sponsored (A Shares) (ADR)......... 260,000 18,200,000
Powertel, Inc.*.................................. 73,300 1,227,775
Tellabs, Inc.*................................... 100,000 5,287,500
United States Cellular Corp.*.................... 2,915,400 90,377,400
Vanguard Cellular Systems, Inc. (Class A)*....... 2,200,000 28,050,000
WorldCom, Inc.*.................................. 3,100,000 93,775,000
--------------
371,562,550
--------------
TOTAL TECHNOLOGY (16.9%)......................... 446,062,550
--------------
DIVERSIFIED
MISCELLANEOUS (0.2%)
Viad Corp. ...................................... 35,000 675,938
--------------
TOTAL DIVERSIFIED (0.2%)......................... 675,938
--------------
TOTAL COMMON STOCKS (99.7%)
(Cost $1,945,635,407)......................... 2,635,013,465
--------------
PREFERRED STOCKS:
CONSUMER CYCLICALS
AIRLINES (0.1%)
Continental Airlines Financial Trust
8.5% Conv. ................................... 27,000 2,777,625
--------------
TOTAL CONSUMER CYCLICALS (0.1%).................. 2,777,625
--------------
TOTAL PREFERRED STOCKS (0.1%)
(Cost $1,742,250)............................. 2,777,625
--------------
FSA-30
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Concluded)
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT (NOTE 3)
- --------------------------------------------------------------------------------
LONG-TERM DEBT SECURITIES:
TECHNOLOGY
TELECOMMUNICATIONS (0.1%)
United States Cellular Corp.
Zero Coupon Conv., 2015..........................$7,500,000 $ 2,728,125
---------------
TOTAL TECHNOLOGY (0.1%)............................. 2,728,125
---------------
TOTAL LONG-TERM DEBT SECURITIES (0.1%)
(Amortized Cost $3,016,327)...................... 2,728,125
---------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 100,276
units at $270.27 each (1.0%)..................... 27,101,569
---------------
TOTAL INVESTMENTS(100.9%)
(Cost/Amortized Cost $1,977,495,553)............. 2,667,620,784
OTHER ASSETS LESS LIABILITIES (-0.9)............... (22,544,219)
AMOUNT RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT NO. 4 (0.0%) (NOTE 1)........... (1,095,138)
---------------
NET ASSETS (100.0%)................................. $2,643,981,427
===============
Reserves attributable to participants' accumulations $2,611,671,263
Reserves and other contract liabilities attributable
to annuity benefits.............................. 32,310,164
---------------
NET ASSETS.......................................... $2,643,981,427
===============
*Non-income producing.
See Notes to Financial Statements.
FSA-31
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED)
(THE ALLIANCE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
ASSETS:
Investments (Notes 2 and 3):
<S> <C>
Common stocks-- at market value (cost: $397,187,129)................. $412,280,763
Participation in Separate Account No. 2A--at amortized cost, which
approximates market value, equivalent to 4 units at $270.27........ 1,200
Receivables:
Securities sold...................................................... 46,819,407
Dividends............................................................ 94,222
- ----------------------------------------------------------------------------------------
Total assets......................................................... 459,195,592
- ----------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Custodian payable.................................................... 345,277
Securities purchased................................................. 16,516,437
Due to Equitable Life's General Account.............................. 24,007,857
Investment management fees payable................................... 3,333
Accrued expenses........................................................ 159,701
- ----------------------------------------------------------------------------------------
Total liabilities.................................................... 41,032,605
========================================================================================
NET ASSETS.............................................................. $418,162,987
========================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-32
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED)
(THE ALLIANCE AGGRESSIVE STOCK 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,
- --------------------------------------------------------------------------------------------------------------
1997 1996
- --------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
<S> <C> <C>
Dividends.............................................................. $ 1,728,486 $ 888,868
Interest............................................................... 456,291 1,847,954
- --------------------------------------------------------------------------------------------------------------
Total.................................................................. 2,184,777 2,736,822
EXPENSES (NOTE 4)...................................................... (5,757,006) (5,268,842)
- --------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS.................................................... (3,572,229) (2,532,020)
- --------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from security and foreign currency transactions.......... 93,937,473 83,136,492
- --------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year................................................... 56,470,533 62,843,978
End of year......................................................... 15,093,634 56,470,533
- --------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation......................... (41,376,899) (6,373,445)
- --------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........................ 52,560,574 76,763,047
- --------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations...................... 48,988,345 74,231,027
- --------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions.......................................................... 229,831,666 226,778,696
Withdrawals............................................................ (304,183,884) (199,186,117)
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to contributions and (74,352,218) 27,592,579
withdrawals............................................................
- --------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS...................................... (25,363,873) 101,823,606
NET ASSETS-- BEGINNING OF YEAR......................................... 443,526,860 341,703,254
- --------------------------------------------------------------------------------------------------------------
NET ASSETS-- END OF YEAR............................................... $418,162,987 $443,526,860
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-33
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED)
(THE ALLIANCE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS -- SPECIALTY (6.0%)
Crompton & Knowles Corp. ...................... 494,300 $ 13,098,950
Cytec Industries, Inc.*........................ 251,100 11,786,006
--------------
24,884,956
--------------
STEEL (1.4%)
Ispat International N.V.*...................... 285,400 6,171,775
--------------
TOTAL BASIC MATERIALS (7.4%)................... 31,056,731
--------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (8.4%)
Culligan Water Technologies, Inc.*............. 59,800 3,004,950
Philip Services Corp.*......................... 264,900 3,807,937
United States Filter Corp.*.................... 648,900 19,426,444
USA Waste Services, Inc.*...................... 229,500 9,007,875
--------------
35,247,206
--------------
PRINTING, PUBLISHING & BROADCASTING (3.7%)
Sinclair Broadcast Group....................... 207,600 9,679,350
Young Broadcasting Corp. (Class A)*............ 145,300 5,630,375
--------------
15,309,725
--------------
PROFESSIONAL SERVICES (4.7%)
Cambridge Technology Partners, Inc.*........... 37,400 1,556,775
Century Business Services, Inc.*............... 292,000 5,037,000
Consolidation Capital Corp.*................... 435,600 8,848,125
CORESTAFF, Inc.*............................... 152,500 4,041,250
--------------
19,483,150
--------------
TRUCKING, SHIPPING (1.8%)
OMI Corp.*..................................... 824,800 7,577,850
--------------
TOTAL BUSINESS SERVICES (18.6%)................ 77,617,931
--------------
CAPITAL GOODS
AEROSPACE (1.3%)
Howmet International, Inc.*.................... 363,900 5,435,756
--------------
TOTAL CAPITAL GOODS (1.3%)..................... 5,435,756
--------------
CONSUMER CYCLICALS
AIRLINES (1.5%)
Continental Airlines, Inc. (Class B)*.......... 125,000 6,015,625
--------------
APPAREL, TEXTILE (4.4%)
Tommy Hilfiger Corp.*.......................... 136,200 4,784,025
Mohawk Industries, Inc.*....................... 187,100 4,104,506
Nautica Enterprises, Inc.*..................... 244,300 5,679,975
Unifi, Inc. ................................... 93,300 3,796,144
--------------
18,364,650
--------------
FSA-34
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED)
(THE ALLIANCE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
AUTOS & TRUCKS (2.4%)
Miller Industries, Inc.*........................... 941,300 $ 10,118,975
-------------
AUTO-RELATED (10.4%)
Budget Group, Inc.*................................ 252,600 8,730,488
Circuit City Stores, Inc.-- CarMax Group*.......... 362,700 3,264,300
Dollar Thrifty Automotive Group, Inc.*............. 196,800 4,034,400
Republic Industries, Inc.*......................... 968,800 22,585,150
United Rentals, Inc.*.............................. 37,000 714,562
US Rentals, Inc.*.................................. 182,800 4,295,800
-------------
43,624,700
-------------
FOOD SERVICES, LODGING (7.6%)
Extended Stay America, Inc.*....................... 342,300 4,257,356
Florida Panthers Holdings, Inc.*................... 201,500 3,475,875
Host Marriott Corp.*............................... 279,800 5,491,075
ITT Corporation*................................... 222,200 18,414,825
-------------
31,639,131
-------------
HOUSEHOLD FURNITURE, APPLIANCES (1.7%)
Furniture Brands International, Inc.*.............. 166,000 3,403,000
Industrie Natuzzi Spa (ADR)........................ 180,000 3,712,500
-------------
7,115,500
-------------
LEISURE-RELATED (6.3%)
Coach USA, Inc.*................................... 166,000 5,561,000
MGM Grand, Inc.*................................... 90,300 3,256,444
Promus Hotel Corp.*................................ 291,900 12,259,800
Regal Cinemas, Inc.*............................... 190,900 5,321,338
-------------
26,398,582
-------------
TOTAL CONSUMER CYCLICALS (34.3%)................... 143,277,163
-------------
CONSUMER NONCYCLICALS
DRUGS (6.5%)
Centocor, Inc.*.................................... 392,000 13,034,000
Genzyme Corporation*............................... 186,300 5,169,825
Jones Medical Industries, Inc. .................... 152,000 5,814,000
MedImmune, Inc.*................................... 77,700 3,331,388
-------------
27,349,213
-------------
HOSPITAL SUPPLIES & SERVICES (0.9%)
Dentsply International, Inc. ...................... 114,700 3,498,350
-------------
TOTAL CONSUMER NONCYCLICALS (7.4%)................. 30,847,563
-------------
CREDIT-SENSITIVE
BANKS (4.0%)
Astoria Financial Corp. ........................... 65,400 3,646,050
Dime Bancorp, Inc. ................................ 102,600 3,103,650
Friedman, Billings, Ramsey Group, Inc. (Class A)*.. 198,100 3,553,419
Mercantile Bankshares Corp. ....................... 92,300 3,611,237
Staten Island Bancorp, Inc.*....................... 146,800 3,073,625
-------------
16,987,981
-------------
FSA-35
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED)
(THE ALLIANCE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Continued)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (3.1%)
Imperial Credit Industries, Inc.*.................... 449,200 $ 9,208,600
Paine Webber, Inc. .................................. 104,400 3,608,325
------------
12,816,925
------------
INSURANCE (1.0%)
AFLAC, Inc. ......................................... 84,900 4,340,513
------------
MORTGAGE-RELATED (0.8%)
Resource America, Inc. .............................. 68,800 3,147,600
------------
REAL ESTATE (1.5%)
Imperial Credit Commercial Mortgage Investment Corp. 423,200 6,189,300
------------
UTILITY -- TELEPHONE (1.0%)
Telephone & Data Systems, Inc. ...................... 91,300 4,251,156
------------
TOTAL CREDIT-SENSITIVE (11.4%)....................... 47,733,475
------------
ENERGY
OIL -- INTERNATIONAL (1.0%)
Gulf Canada Resources, Ltd.*......................... 573,900 4,017,300
------------
OIL -- SUPPLIES & CONSTRUCTION (3.7%)
BJ Services Co.*..................................... 55,800 4,014,112
Diamond Offshore Drilling, Inc. ..................... 102,600 4,937,625
Nabors Industries, Inc.*............................. 72,200 2,269,788
Rowan Cos., Inc.*.................................... 132,900 4,053,450
------------
15,274,975
------------
RAILROADS (0.7%)
Wisconsin Central Transport Corp.*................... 139,300 3,256,138
------------
TOTAL ENERGY (5.4%).................................. 22,548,413
------------
TECHNOLOGY
ELECTRONICS (8.8%)
Altera Corp.*........................................ 105,400 3,491,375
Atmel Corp.*......................................... 116,500 2,162,531
Flextronics International, Ltd.*..................... 87,500 3,018,750
Hadco Corp. ......................................... 69,000 3,122,250
KLA-Tencor Corp.*.................................... 43,800 1,691,775
Lycos, Inc.*......................................... 62,100 2,569,388
Networks Associates, Inc.*........................... 142,900 7,555,837
Parametric Technology Corp.*......................... 69,700 3,302,037
Sterling Commerce, Inc.*............................. 153,900 5,915,531
Xilinx, Inc.*........................................ 111,900 3,923,494
------------
36,752,968
------------
OFFICE EQUIPMENT SERVICES (1.4%)
Comverse Technology, Inc.*........................... 154,100
6,009,900
------------
FSA-36
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 3 (POOLED)
(THE ALLIANCE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1997 (Concluded)
- --------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (NOTE 3)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS (2.6%)
ADC Telecommunications, Inc.*..................... 69,900 $ 2,918,325
American Satellite Network-- Rights*.............. 9,550 0
Metromedia International Group, Inc.*............. 418,700 3,977,650
Millicom International Cellular S.A.*............. 109,100 4,104,888
-------------
11,000,863
-------------
TOTAL TECHNOLOGY (12.8%).......................... 53,763,731
-------------
TOTAL COMMON STOCKS (98.6%)
(Cost $397,187,129) ........................... 412,280,763
-------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 4 units
at $270.27 each (0.0%)......................... 1,200
-------------
TOTAL INVESTMENTS (98.6%)
(Cost/Amortized Cost $397,188,329)............. 412,281,963
OTHER ASSETS LESS LIABILITIES (1.4%).............. 5,881,024
-------------
NET ASSETS (100.0%)............................... $418,162,987
=============
*Non-income producing.
See Notes to Financial Statements.
FSA-37
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and the Contractowners of Separate Account No. 51
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and changes in net assets and the selected per
unit data (included under Condensed Financial Information in the Prospectus of
the Retirement Investment Account) present fairly, in all material respects, the
financial position of the Alliance Money Market Fund, Alliance Intermediate
Government Securities Fund, Alliance Quality Bond Fund, Alliance High Yield
Fund, Alliance Growth & Income Fund, Alliance Equity Index Fund, Alliance Global
Fund, Alliance International Fund, Alliance Small Cap Growth Fund, Alliance
Conservative Investors Fund and Alliance Growth Investors Fund, separate
investment funds of The Equitable Life Assurance Society of the United States
("Equitable Life") Separate Account No. 51 at December 31, 1997 and the results
of each of their operations, the changes in each of their net assets for the
periods indicated and the per unit data for the periods presented, in conformity
with generally accepted accounting principles. These financial statements and
the selected per unit data (hereafter referred to as "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 Hudson River Trust at
December 31, 1997 with the transfer agent, provide a reasonable basis for the
opinion expressed above.
Price Waterhouse LLP
New York, New York
February 10, 1998
FSA-38
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
ALLIANCE
INTERMEDIATE
ALLIANCE GOVERNMENT ALLIANCE ALLIANCE
MONEY MARKET SECURITIES QUALITY BOND HIGH YIELD
FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in shares of The Hudson River Trust, at
value
(Cost: Alliance Money Market Portfolio -- $14,643,705;
Alliance Intermediate Government Securities
Portfolio -- $3,012,183;
Alliance Quality Bond Portfolio -- $3,514,218;
Alliance High Yield Portfolio-- $6,923,928) (Note 3). $14,532,599 $3,024,095 $3,576,119 $6,971,154
Receivable for The Hudson River Trust shares sold......... -- 5,983 15,708 15,316
Due from Equitable Life's General Account................. 150,482 -- -- --
- -------------------------------------------------------------------------------------------------------------------
Total assets.......................................... 14,683,081 3,030,078 3,591,827 6,986,470
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for The Hudson River Trust shares purchased....... 147,390 -- -- --
Due to Equitable Life's General Account................... -- 4,643 13,587 11,439
Accrued expenses.......................................... 3,092 1,340 2,123 3,877
- -------------------------------------------------------------------------------------------------------------------
Total liabilities..................................... 150,482 5,983 15,710 15,316
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS................................................ $14,532,599 $3,024,095 $3,576,117 $6,971,154
===================================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-39
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities (Continued)
December 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
GROWTH & INCOME EQUITY INDEX GLOBAL INTERNATIONAL
FUND FUND FUND FUND
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in shares of The Hudson River Trust, at value
(Cost: Alliance Growth & Income Portfolio -- $18,775,102;
Alliance Equity Index Portfolio -- $26,737,558;
Alliance Global Portfolio -- $42,992,687;
Alliance International Portfolio-- $5,047,802) (Note 3)... $20,789,405 $32,158,268 $45,811,460 $4,511,030
Receivable for The Hudson River Trust shares sold.............. 396,942 231,453 1,036,088 172,208
- --------------------------------------------------------------------------------------------------------------------------
Total assets............................................... 21,186,347 32,389,721 46,847,548 4,683,238
- --------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Due to Equitable Life's General Account........................ 387,153 217,819 1,018,843 169,303
Accrued expenses............................................... 9,789 13,634 20,778 2,905
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities.......................................... 396,942 231,453 1,039,621 172,208
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS..................................................... $20,789,405 $32,158,268 $45,807,927 $4,511,030
==========================================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-40
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities (Concluded)
December 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE
SMALL CAP CONSERVATIVE GROWTH
GROWTH INVESTORS INVESTORS
FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments in shares of The Hudson River Trust, at value
(Cost: Alliance Small Cap Growth Portfolio -- $2,372,476;
Alliance Conservative Investors Portfolio -- $11,011,168;
Alliance Growth Investors Portfolio-- $54,535,579) (Note 3)... $2,282,863 $11,457,159 $57,895,040
Receivable for The Hudson River Trust shares sold.................. -- 48,647 432,588
Due from Equitable Life's General Account.......................... 12,786 -- --
- ----------------------------------------------------------------------------------------------------------------
Total assets................................................... 2,295,649 11,505,806 58,327,628
- ----------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for The Hudson River Trust shares purchased................ 11,218 -- --
Due to Equitable Life's General Account............................ -- 47,280 410,786
Accrued expenses................................................... 1,568 5,723 23,602
- ----------------------------------------------------------------------------------------------------------------
Total liabilities.............................................. 12,786 53,003 434,388
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS......................................................... $2,282,863 $11,452,803 $57,893,240
================================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-41
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
ALLIANCE
INTERMEDIATE
ALLIANCE GOVERNMENT
MONEY MARKET FUND SECURITIES FUND
----------------------------- -----------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2) -- Dividends from
The Hudson River Trust ........................... $ 372,708 $ 149,324 $ 161,727 $ 76,943
EXPENSES (NOTE 4).................................... (39,743) (33,161) (25,703) (10,615)
- --------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME................................ 332,965 116,163 136,024 66,328
- --------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain from share transactions................ 13,278 4,681 13,927 10,495
Realized gain distribution from The Hudson River
Trust............................................. 964 -- -- --
- --------------------------------------------------------------------------------------------------------------
Net Realized Gain ................................... 14,242 4,681 13,927 10,495
- --------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year................................. (17,360) (6,582) (20,279) 18,629
End of year ...................................... (111,106) (17,360) 11,912 (20,279)
- --------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation....... (93,746) (10,778) 32,191 (38,908)
- --------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................... (79,504) (6,097) 46,118 (28,413)
- --------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations.... 253,461 110,066 182,142 37,915
- --------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions........................................ 19,472,948 8,894,077 2,503,359 1,778,541
Withdrawals.......................................... (8,813,256) (7,511,342) (1,924,964) (224,631)
- --------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to
contributions
and withdrawals................................... 10,659,692 1,382,735 578,395 1,553,910
- --------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS............................... 10,913,153 1,492,801 760,537 1,591,825
NET ASSETS-- BEGINNING OF YEAR....................... 3,619,446 2,126,645 2,263,558 671,733
- --------------------------------------------------------------------------------------------------------------
NET ASSETS-- END OF YEAR............................. $14,532,599 $3,619,446 $3,024,095 $2,263,558
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-42
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
ALLIANCE ALLIANCE
QUALITY BOND FUND HIGH YIELD FUND
-------------------------- -----------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2) -- Dividends from
The Hudson River Trust............................ $ 180,536 $ 112,200 $ 562,742 $ 257,366
EXPENSES (NOTE 4).................................... (22,848) (12,935) (50,152) (17,433)
- -----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME................................ 157,688 99,265 512,590 239,933
- -----------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain from share transactions................ 7,522 25,504 125,744 8,665
Realized gain distribution from The Hudson River Trust. -- -- 272,611 203,748
- -----------------------------------------------------------------------------------------------------------
Net Realized Gain.................................... 7,522 25,504 398,355 212,413
- -----------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year................................. (2,628) 50,623 (14,759) 25,269
End of year ...................................... 61,901 (2,628) 47,226 (14,759)
- -----------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation....... 64,529 (53,251) 61,985 (40,028)
- -----------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................... 72,051 (27,747) 460,340 172,385
- -----------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations.... 229,739 71,518 972,930 412,318
- -----------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions........................................ 1,383,212 1,481,796 2,995,942 3,479,819
Withdrawals.......................................... (392,114) (556,962) (1,643,900) (139,163)
- ------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to contributions
and withdrawals................................... 991,098 924,834 1,352,042 3,340,656
- ------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS............................... 1,220,837 996,352 2,324,972 3,752,974
NET ASSETS-- BEGINNING OF YEAR....................... 2,355,280 1,358,928 4,646,182 893,208
============================================================================================================
NET ASSETS-- END OF YEAR............................. $3,576,117 $2,355,280 $6,971,154 $4,646,182
============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-43
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
ALLIANCE ALLIANCE
GROWTH & INCOME FUND EQUITY INDEX FUND
---------------------------- --------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2) -- Dividends from
The Hudson River Trust........................... $ 157,368 $ 148,338 $ 364,650 $ 213,732
EXPENSES (NOTE 4)................................... (128,440) (66,828) (203,806) (97,167)
- ---------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME............................... 28,928 81,510 160,844 116,565
- ---------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain from share transactions............... 1,257,520 181,938 1,837,842 576,586
Realized gain distribution from The Hudson
River Trust...................................... 1,199,212 578,054 113,882 653,719
- ---------------------------------------------------------------------------------------------------------------
Net Realized Gain................................... 2,456,732 759,992 1,951,724 1,230,305
- ---------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year................................ 1,106,273 493,229 1,325,120 429,416
End of year ..................................... 2,014,303 1,106,273 5,420,710 1,325,120
- ---------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation................... 908,030 613,044 4,095,590 895,704
- ---------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS..... 3,364,762 1,373,036 6,047,314 2,126,009
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations... 3,393,690 1,454,546 6,208,158 2,242,574
- ---------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions....................................... 13,579,067 7,115,489 22,551,970 12,899,543
Withdrawals......................................... (7,440,674) (1,743,121) (13,004,853) (4,220,094)
- ----------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to contributions
and withdrawals.................................. 6,138,393 5,372,368 9,547,117 8,679,449
- ----------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS.............................. 9,532,083 6,826,914 15,755,275 10,922,023
NET ASSETS-- BEGINNING OF YEAR...................... 11,257,322 4,430,408 16,402,993 5,480,970
================================================================================================================
NET ASSETS-- END OF YEAR............................ $20,789,405 $11,257,322 $32,158,268 $16,402,993
================================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-44
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Concluded)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
ALLIANCE
SMALL CAP
ALLIANCE ALLIANCE GROWTH
GLOBAL FUND INTERNATIONAL FUND FUND
--------------------------- --------------------------- ------------
MAY 1, 1997*
YEAR ENDED YEAR ENDED TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2)
- --Dividends
from The Hudson River Trust........ $ 928,674 $ 697,045 $ 142,909 $ 47,717 $ 380
EXPENSES (NOTE 4).................... (450,382) (375,304) (48,357) (18,456) (5,893)
- ---------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS)......... 478,292 321,741 94,552 29,261 (5,513)
- ---------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Realized gain from share transactions 2,804,530 571,515 7,681 15,900 25,974
Realized gain distribution from
The Hudson River Trust............ 2,994,309 1,889,554 237,295 62,809 53,703
- ---------------------------------------------------------------------------------------------------------------------
Net Realized Gain ................... 5,798,839 2,461,069 244,976 78,709 79,677
- ---------------------------------------------------------------------------------------------------------------------
Unrealized appreciation
(depreciation) of investments:
Beginning of period............... 4,189,776 2,311,157 56,580 (227) --
End of period .................... 2,818,773 4,189,776 (536,772) 56,580 (89,613)
- ---------------------------------------------------------------------------------------------------------------------
Change in unrealized
appreciation/depreciation......... (1,371,003) 1,878,619 (593,352) 56,807 (89,613)
- ---------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS............ 4,427,836 4,339,688 (348,376) 135,516 (9,936)
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
attributable to operations........ 4,906,128 4,661,429 (253,824) 164,777 (15,449)
- ---------------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND
WITHDRAWALS:
Contributions........................ 17,302,173 22,444,295 3,591,241 3,895,137 2,741,544
Withdrawals.......................... (20,267,132) (11,827,050) (2,494,955) (437,133) (443,232)
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
attributable to contributions
and withdrawals................... (2,964,959) 10,617,245 1,096,286 3,458,004 2,298,312
- ---------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS............... 1,941,169 15,278,674 842,462 3,622,781 2,282,863
NET ASSETS-- BEGINNING OF PERIOD..... 43,866,758 28,588,084 3,668,568 45,787 --
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS-- END OF PERIOD........... $45,807,927 $43,866,758 $4,511,030 $3,668,568 $2,282,863
======================================================================================================================
</TABLE>
*Commencement of operations.
See Notes to Financial Statements.
FSA-45
<PAGE>
================================================================================
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Concluded)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
ALLIANCE ALLIANCE
CONSERVATIVE INVESTORS FUND GROWTH INVESTORS FUND
------------------------------ -----------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2) -- Dividends from
<S> <C> <C> <C> <C>
The Hudson River Trust....................... $ 480,979 $ 662,083 $ 1,344,234 $ 988,398
EXPENSES (NOTE 4)............................... (156,313) (188,556) (391,031) (300,959)
- -----------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME........................... 324,666 473,527 953,203 687,439
- -----------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain from share transactions........... 55,228 115,805 1,579,084 361,719
Realized gain distribution from The Hudson
River Trust.................................. 346,019 348,297 3,055,814 4,768,387
- -----------------------------------------------------------------------------------------------------------------
Net Realized Gain............................... 401,247 464,102 4,634,898 5,130,106
- -----------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year............................ (138,527) 304,939 1,130,615 2,480,800
End of year ................................. 445,991 (138,527) 3,359,461 1,130,615
- -----------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation.. 584,518 (443,466) 2,228,846 (1,350,185)
- -----------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS. 985,765 20,636 6,863,744 3,779,921
- -----------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable 1,310,431 494,163 7,816,947 4,467,360
to operations...................................
- -----------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions................................... 2,492,189 14,885,027 16,373,146 22,344,425
Withdrawals..................................... (5,233,231) (7,693,055) (12,914,616) (7,615,781)
- -----------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to
.....................contributions and withdrawals (2,741,042) 7,191,972 3,458,530 14,728,644
- -----------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS............... (1,430,611) 7,686,135 11,275,477 19,196,004
NET ASSETS-- BEGINNING OF YEAR.................. 12,883,414 5,197,279 46,617,763 27,421,759
=================================================================================================================
NET ASSETS-- END OF YEAR........................ $11,452,803 $12,883,414 $57,893,240 $46,617,763
=================================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-46
<PAGE>
================================================================================
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED),
3 (POOLED) AND 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Separate Account Nos. 13 (Pooled) (the Alliance Bond Fund), 10 (Pooled) (the
Alliance Balanced Fund), 4 (Pooled) (the Alliance Common Stock Fund), 3
(Pooled) (the Alliance Aggressive Stock Fund), and 51 (Pooled) (the Alliance
Money Market, Alliance Intermediate Government Securities, Alliance Quality
Bond, Alliance High Yield, Alliance Growth & Income, Alliance Equity Index,
Alliance Global, Alliance International, Alliance Small Cap Growth, Alliance
Conservative Investors and Alliance Growth Investors Funds) (the Funds) of
The Equitable Life Assurance Society of the United States (Equitable Life), a
wholly-owned subsidiary of The Equitable Companies Incorporated, were
established in conformity with the New York State Insurance Law. Pursuant to
such law, to the extent provided in the applicable contracts, the net assets
in the Funds are not chargeable with liabilities arising out of any other
business of Equitable Life. The excess of assets over reserves and other
contract liabilities amounting to $1,095,138 as shown in the Statement of
Assets and Liabilities in Separate Account No. 4 may be transferred to
Equitable Life's General Account. These financial statements reflect the
total net assets and results of operations for the Separate Account Nos. 13,
10, 4, 3 and 51. The Retirement Investment Program is one of the many
contract owners participating in these funds.
Separate Account No. 51 was established as of the opening of business on July
1, 1993. Retirement Investment Account participant contributions were first
allocated to the Separate Account on June 1, 1994.
Interests of retirement and investment plans for employees, managers and
agents of Equitable Life in Separate Account Nos. 10, 4 and 3 aggregated
$26,718,437 (11.0%), $384,471,790 (14.5%) and $124,230,736 (29.7%),
respectively, at December 31, 1997 and $25,996,744 (8.3%), $288,921,270
(11.8%) and $99,049,571 (22.3%), respectively, at December 31, 1996, of the
net assets in these Funds.
Equitable Life is the investment manager for the Funds. Alliance Capital
Management L.P. (Alliance) serves as the investment adviser to Equitable Life
with respect to the management of Separate Account Nos. 13, 10, 4 and 3 (the
Equitable Funds). Alliance is a publicly-traded limited partnership which is
indirectly majority-owned by Equitable Life.
Separate Account No. 51 has eleven investment funds which invest in shares of
corresponding portfolios of The Hudson River Trust (Trust). The Trust is an
open-end, diversified management investment company that invests the assets
of separate accounts of insurance companies. Alliance is the investment
adviser to the Trust.
Equitable Life and Alliance seek to obtain the best price and execution of
all orders placed for the portfolios of the Equitable Funds considering all
circumstances. In addition to using brokers and dealers to execute portfolio
security transactions for accounts under their management, Equitable Life and
Alliance may also enter into other types of business and securities
transactions with brokers and dealers, which will be unrelated to allocation
of the Equitable Funds' portfolio transactions.
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of financial
statements in accordance with GAAP requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from 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. For Separate
Account No. 51, realized gains and losses on investments include gains and
losses on redemptions of the Trust's shares (determined on the identified
cost basis) and capital gain distributions from the Trust. Dividends and
realized gain distributions from the Trust are recorded on ex-date.
Transactions denominated in foreign currencies are recorded at the rate
prevailing at the date of such transactions. Asset and liability accounts
that are denominated in a foreign currency are adjusted to reflect the
current exchange rate at the end of the period. Transaction gains or losses
resulting from changes in the exchange rate during the reporting period or
upon settlement of the foreign currency transactions are reflected under
"Realized and Unrealized Gain (Loss) on Investments" in the Statements of
Operations and Changes in Net Assets.
FSA-47
<PAGE>
================================================================================
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED),
3 (POOLED) AND 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
Futures and forward contracts are agreements to buy or sell a security for a
set price in the future. Initial margin deposits are made upon entering into
futures contracts and can be either in cash or treasury securities. Separate
Accounts (Accounts) may buy or sell futures contracts for the purpose of
protecting their Accounts' securities against anticipated future changes in
interest rates that might adversely affect the value of an Accounts'
securities or the price of securities that an Account intends to purchase at
a later date. During the period the futures and forward contracts are open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each trading day. Variation margin payments for
futures contracts are received or made, depending upon whether unrealized
gains or losses are incurred. When the contract is closed, the Accounts
record a realized gain or loss equal to the difference between the proceeds
from (or cost of) the closing transactions and the Accounts' basis in the
contract. Should interest rates move unexpectedly, the Accounts may not
achieve the anticipated benefits of the financial futures contracts and may
incur a loss. The use of futures and forward transactions involves the risk
of imperfect correlation in movements in the price of futures and forward
contracts, interest rates and the underlying hedged assets.
Futures and forward contracts involve elements of both market and credit risk
in excess of the amounts reflected in the Statement of Net Assets. The
contract amounts of these futures and forward contracts reflect the extent of
the Accounts' exposure to off-balance sheet risk. The Accounts bear the
market risk which arises from any changes in security values. The credit risk
for futures contracts is limited to failure of the exchange or board of trade
that acts as the counterparty of the Accounts' futures transactions. Forward
contracts are done directly with the counterparty and not through an exchange
and can be terminated only by agreement of both parties to the contract.
There is no daily margin settlement and the portfolio is exposed to the risk
of default by the counterparty.
Separate Account No. 10 may enter into forward currency contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its foreign
security holdings. A forward contract is a commitment to purchase or sell a
foreign currency at a future date at a negotiated forward rate. The gain or loss
arising from the difference between the original contracts and the closing of
such contracts is included in realized gains or losses from foreign currency
transactions. At December 31, 1997, Separate Account No. 10 had outstanding
forward currency contracts to buy/sell foreign currency as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Contract Cost on U.S. $ Unrealized
Amount Origination Currency Appreciation
(000's) Date Value (Depreciation)
------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10
-----------------------
Foreign Currency Buy Contracts:
------------------------------
<S> <C> <C> <C> <C>
Deutsche Marks, settling 01/02/98 2,460 $1,412,413 $1,367,426 $(44,987)
French Franc, settling 01/23/98 14,000 2,357,518 2,326,161 (31,357)
Japanese Yen, settling 120,000 934,258 918,836 (15,422)
02/27/98-04/14/98
Netherland Guilders, settling 01/02/98 2,400 1,224,221 1,183,582 (40,639)
Norwegian Krone, settling 01/23/98 4,500 625,142 610,169 (14,973)
Spanish Peseta, settling 01/23/98 120,000 800,267 787,344 (12,923)
Swedish Krona, settling 2,989 391,221 376,753 (14,468)
01/02/98-01/23/98
Foreign Currency Sale Contracts:
-------------------------------
Deutsche Marks, settling 01/02/98 2,460 1,378,731 1,367,427 11,304
French Franc, settling 01/23/98 14,000 2,366,844 2,326,161 40,683
Japanese Yen, settling 613,786 5,066,700 4,699,740 366,960
01/06/98-04/14/98
Netherland Guilders, settling 01/02/98 2,400 1,193,703 1,183,582 10,121
Norwegian Krone, settling 01/23/98 4,500 626,505 610,169 16,336
Spanish Peseta, settling 01/23/98 120,000 802,944 787,343 15,601
Swedish Krona, settling 01/02/98 2,500 330,029 315,152 14,877
----------
$301,113
==========
</TABLE>
FSA-48
<PAGE>
================================================================================
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED),
3 (POOLED) AND 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
Equitable Life's internal short-term investment account, Separate Account No.
2A, was established to provide a more flexible and efficient vehicle to
combine and invest temporary cash positions of certain eligible accounts
(Participating Funds) under Equitable Life's management. Separate Account No.
2A invests in debt securities maturing in sixty days or less from the date of
the acquisition. At December 31, 1997, the investments held in Separate
Account No. 2A consists of the following:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Amortized
Cost %
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial Paper, 5.70% - 6.75% due 01/02/98 through 02/12/98.......... $210,793,367 94.7 %
Bankers' Acceptances, 5.65% - 5.73% due 01/16/98 through 01/26/98...... 9,474,385 4.3
------------------------------------------------------------------------------------------------------------
Total Investments...................................................... 220,267,752 99.0
Other Assets Less Liabilities.......................................... 2,244,569 1.0
============================================================================================================
Net Assets of Separate Account No. 2A ................................. $222,512,321 100.0 %
============================================================================================================
Units Outstanding...................................................... 823,297
Unit Value............................................................. $270.27
</TABLE>
Participating Funds purchase or redeem units depending on each participating
account's excess cash availability or cash needs to meet its liabilities.
Separate Account No. 2A is not subject to investment management fees.
Short-term debt securities may also be purchased directly by the Equitable
Funds.
For 1997 and 1996, investment security transactions, excluding short-term
debt securities, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
---------------------------------- ----------------------------------
Stocks and U.S. Stocks and U.S.
Debt Government Debt Government
Securities and Agencies Securities and Agencies
--------------- --------------- ---------------- ------------
Fund
----
<S> <C> <C> <C> <C>
Alliance Bond:
1997....................... $ 37,104,183 $191,640,256 $ 63,408,606 $182,061,320
1996....................... 55,142,675 163,410,870 63,207,109 222,895,782
Alliance Balanced:
1997....................... 224,848,109 215,172,356 290,379,457 228,848,176
1996....................... 337,043,222 226,791,922 416,837,259 234,990,432
Alliance Common Stock:
1997....................... 1,569,991,103 -- 1,988,739,298 --
1996....................... 2,439,864,229 -- 2,487,456,851 --
Alliance Aggressive Stock:
1997....................... 780,418,511 -- 850,626,915 --
1996....................... 450,676,363 -- 434,241,789 --
</TABLE>
3. Investment securities for the Equitable Funds are valued as follows:
Stocks listed on national securities exchanges and certain over-the-counter
issues traded on the National Association of Securities Dealers, Inc.
automated quotation (NASDAQ) national market system are valued at the last
sale price, or, if there is no sale, at the latest available bid price.
Foreign securities not traded directly, or in American Depository Receipt
(ADR) form in the United States, are valued at the last sale price in the
local currency on an exchange in the country of origin. Foreign currency is
converted into its U.S. dollar equivalent at current exchange rates. Certain
Separate Accounts enter into forward foreign exchange contracts as a hedge
against either specific transactions or portfolio positions. The effect on
earnings of valuing the contracts is recorded from the date the Separate
Accounts enter into such contracts. Futures and forward contracts are valued
at their last sale price or, if there is no sale, at the latest available bid
price.
United States Treasury securities and other obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities are valued
at representative quoted prices.
Long-term (i.e., maturing in more than a year) publicly traded corporate
bonds are valued at prices obtained from a bond pricing service of a major
dealer in bonds when such prices are available; however, in circumstances
where Equitable Life and Alliance deem it appropriate to do so, an
over-the-counter or exchange quotation may be used.
FSA-49
<PAGE>
================================================================================
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED),
3 (POOLED) AND 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Concluded)
- --------------------------------------------------------------------------------
Convertible preferred stocks listed on national securities exchanges are
valued at their last sale price or, if there is no sale, at the latest
available bid price.
Convertible bonds and unlisted convertible preferred stocks are valued at bid
prices obtained from one or more major dealers in such securities; where
there is a discrepancy between dealers, values may be adjusted based on
recent premium spreads to the underlying common stock.
Other assets that do not have a readily available market price are valued at
fair value as determined in good faith by Equitable Life's investment
officers.
The value of the investments of the Funds of Separate Account No. 51 in the
corresponding Trust Portfolios is calculated by multiplying the number of
shares held by Separate Account No. 51 in each Portfolio of the Trust by the
net asset value per share of the Portfolio.
Separate Account No. 2A is valued daily at amortized cost, which approximates
market value. Short-term debt securities purchased directly by the Equitable
Funds which mature in 60 days or less are valued at amortized cost.
Short-term debt securities which mature in more than 60 days are valued at
representative quoted prices.
4. Charges and fees relating to the Funds are deducted in accordance with the
terms of the various contracts which participate in the Funds. These expenses
consist of asset management fees, administrative and sales-related fees, and
operating expenses, as specified in each contract. Depending upon the terms
of a contract, sales-related fees and operating expenses are paid (i) by a
reduction of an appropriate number of Fund Units or (ii) by a direct payment.
These charges and fees are recorded as expenses in the accompanying
Statements of Operations and Changes in Net Assets, and as an offsetting
contribution to the Funds from the contract holders. Asset management fee is
deducted in the daily unit values for the Equitable Funds. Administrative
charge for the investment funds of Separate Account No. 51 is deducted in the
daily unit value for each investment fund.
Investments in Separate Account No. 51 are also subject to the expenses
incurred in the underlying Portfolios of the Trust, which are reflected
through the Portfolios' net asset values.
5. No Federal income tax based on net income or realized and unrealized capital
gains was applicable to contracts participating in the Funds by reason of
applicable provisions of the Internal Revenue Code and no Federal income tax
payable by Equitable Life will affect such contracts. Accordingly, no Federal
income tax provision is required.
FSA-50
<PAGE>
February 10, 1998
Report of Independent Accountants
To the Board of Directors and Shareholders of
The Equitable Life Assurance Society of the United States
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, of shareholder's equity and of cash flows
present fairly, in all material respects, the financial position of The
Equitable Life Assurance Society of the United States and its subsidiaries
("Equitable Life") at December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of Equitable Life's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 2 to the consolidated financial statements, Equitable Life
changed its methods of accounting for long-duration participating life insurance
contracts and long-lived assets in 1996 and for loan impairments in 1995.
/s/ Price Waterhouse, LLP
- ---------------------------
Price Waterhouse LLP
New York, New York
February 10, 1998
F-1
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value............................. $ 19,630.9 $ 18,077.0
Mortgage loans on real estate............................................. 2,611.4 3,133.0
Equity real estate........................................................ 2,749.2 3,297.5
Policy loans.............................................................. 2,422.9 2,196.1
Other equity investments.................................................. 951.5 860.6
Investment in and loans to affiliates..................................... 731.1 685.0
Other invested assets..................................................... 624.7 25.4
----------------- -----------------
Total investments..................................................... 29,721.7 28,274.6
Cash and cash equivalents................................................... 300.5 538.8
Deferred policy acquisition costs........................................... 3,236.6 3,104.9
Amounts due from discontinued operations.................................... 572.8 996.2
Other assets................................................................ 2,685.2 2,552.2
Closed Block assets......................................................... 8,566.6 8,495.0
Separate Accounts assets.................................................... 36,538.7 29,646.1
----------------- -----------------
Total Assets................................................................ $ 81,622.1 $ 73,607.8
================= =================
LIABILITIES
Policyholders' account balances............................................. $ 21,579.5 $ 21,865.6
Future policy benefits and other policyholder's liabilities................. 4,553.8 4,416.6
Short-term and long-term debt............................................... 1,991.2 1,766.9
Other liabilities........................................................... 3,257.1 2,785.1
Closed Block liabilities.................................................... 9,073.7 9,091.3
Separate Accounts liabilities............................................... 36,306.3 29,598.3
----------------- -----------------
Total liabilities..................................................... 76,761.6 69,523.8
----------------- -----------------
Commitments and contingencies (Notes 10, 12, 13, 14 and 15)
SHAREHOLDER'S EQUITY
Common stock, $1.25 par value 2.0 million shares authorized, issued
and outstanding........................................................... 2.5 2.5
Capital in excess of par value.............................................. 3,105.8 3,105.8
Retained earnings........................................................... 1,235.9 798.7
Net unrealized investment gains............................................. 533.6 189.9
Minimum pension liability................................................... (17.3) (12.9)
----------------- -----------------
Total shareholder's equity............................................ 4,860.5 4,084.0
----------------- -----------------
Total Liabilities and Shareholder's Equity.................................. $ 81,622.1 $ 73,607.8
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee
income...................................................... $ 950.6 $ 874.0 $ 788.2
Premiums...................................................... 601.5 597.6 606.8
Net investment income......................................... 2,282.8 2,203.6 2,088.2
Investment (losses) gains, net................................ (45.2) (9.8) 5.3
Commissions, fees and other income............................ 1,227.2 1,081.8 897.1
Contribution from the Closed Block............................ 102.5 125.0 143.2
----------------- ----------------- -----------------
Total revenues.......................................... 5,119.4 4,872.2 4,528.8
----------------- ----------------- -----------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances.......... 1,266.2 1,270.2 1,248.3
Policyholders' benefits....................................... 978.6 1,317.7 1,008.6
Other operating costs and expenses............................ 2,203.9 2,075.7 1,775.8
----------------- ----------------- -----------------
Total benefits and other deductions..................... 4,448.7 4,663.6 4,032.7
----------------- ----------------- -----------------
Earnings from continuing operations before Federal
income taxes, minority interest and cumulative
effect of accounting change................................. 670.7 208.6 496.1
Federal income taxes.......................................... 91.5 9.7 120.5
Minority interest in net income of consolidated subsidiaries.. 54.8 81.7 62.8
----------------- ----------------- -----------------
Earnings from continuing operations before cumulative
effect of accounting change................................. 524.4 117.2 312.8
Discontinued operations, net of Federal income taxes.......... (87.2) (83.8) -
Cumulative effect of accounting change, net of Federal
income taxes................................................ - (23.1) -
----------------- ----------------- -----------------
Net Earnings.................................................. $ 437.2 $ 10.3 $ 312.8
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
Common stock, at par value, beginning and end of year......... $ 2.5 $ 2.5 $ 2.5
----------------- ----------------- -----------------
Capital in excess of par value, beginning and end of year..... 3,105.8 3,105.8 3,105.8
----------------- ----------------- -----------------
Retained earnings, beginning of year.......................... 798.7 788.4 475.6
Net earnings.................................................. 437.2 10.3 312.8
----------------- ----------------- -----------------
Retained earnings, end of year................................ 1,235.9 798.7 788.4
----------------- ----------------- -----------------
Net unrealized investment gains (losses), beginning of year... 189.9 396.5 (220.5)
Change in unrealized investment gains (losses)................ 343.7 (206.6) 617.0
----------------- ----------------- -----------------
Net unrealized investment gains, end of year.................. 533.6 189.9 396.5
----------------- ----------------- -----------------
Minimum pension liability, beginning of year.................. (12.9) (35.1) (2.7)
Change in minimum pension liability........................... (4.4) 22.2 (32.4)
-----------------
----------------- -----------------
Minimum pension liability, end of year........................ (17.3) (12.9) (35.1)
----------------- ----------------- -----------------
Total Shareholder's Equity, End of Year....................... $ 4,860.5 $ 4,084.0 $ 4,258.1
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
Net earnings.................................................. $ 437.2 $ 10.3 $ 312.8
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Interest credited to policyholders' account balances........ 1,266.2 1,270.2 1,248.3
Universal life and investment-type product
policy fee income......................................... (950.6) (874.0) (788.2)
Investment losses (gains)................................... 45.2 9.8 (5.3)
Change in Federal income tax payable........................ (74.4) (197.1) 221.6
Other, net.................................................. 169.4 330.2 80.5
----------------- ----------------- -----------------
Net cash provided by operating activities..................... 893.0 549.4 1,069.7
----------------- ----------------- -----------------
Cash flows from investing activities:
Maturities and repayments................................... 2,702.9 2,275.1 1,897.4
Sales....................................................... 10,385.9 8,964.3 8,867.1
Purchases................................................... (13,205.4) (12,559.6) (11,675.5)
(Increase) decrease in short-term investments............... (555.0) 450.3 (99.3)
Decrease in loans to discontinued operations................ 420.1 1,017.0 1,226.9
Sale of subsidiaries........................................ 261.0 - -
Other, net.................................................. (612.6) (281.0) (413.4)
----------------- ----------------- -----------------
Net cash used by investing activities......................... (603.1) (133.9) (196.8)
----------------- ----------------- -----------------
Cash flows from financing activities: Policyholders' account balances:
Deposits.................................................. 1,281.7 1,925.4 2,586.5
Withdrawals............................................... (1,886.8) (2,385.2) (2,657.1)
Net increase (decrease) in short-term financings............ 419.9 (.3) (16.4)
Additions to long-term debt................................. 32.0 - 599.7
Repayments of long-term debt................................ (196.4) (124.8) (40.7)
Payment of obligation to fund accumulated deficit of
discontinued operations................................... (83.9) - (1,215.4)
Other, net.................................................. (94.7) (66.5) (48.4)
----------------- ----------------- -----------------
Net cash used by financing activities......................... (528.2) (651.4) (791.8)
----------------- ----------------- -----------------
Change in cash and cash equivalents........................... (238.3) (235.9) 81.1
Cash and cash equivalents, beginning of year.................. 538.8 774.7 693.6
----------------- ----------------- -----------------
Cash and Cash Equivalents, End of Year........................ $ 300.5 $ 538.8 $ 774.7
================= ================= =================
Supplemental cash flow information
Interest Paid............................................... $ 217.1 $ 109.9 $ 89.6
================= ================= =================
Income Taxes Paid (Refunded)................................ $ 170.0 $ (10.0) $ (82.7)
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) ORGANIZATION
The Equitable Life Assurance Society of the United States ("Equitable
Life") is a wholly owned subsidiary of The Equitable Companies
Incorporated (the "Holding Company"). Equitable Life's insurance
business is conducted principally by Equitable Life and, prior to
December 31, 1996, its wholly owned life insurance subsidiary, Equitable
Variable Life Insurance Company ("EVLICO"). Effective January 1, 1997,
EVLICO was merged into Equitable Life, which continues to conduct the
Company's insurance business. Equitable Life's investment management
business, which comprises the Investment Services segment, is conducted
principally by Alliance Capital Management L.P. ("Alliance") and
Donaldson, Lufkin & Jenrette, Inc. ("DLJ"), an investment banking and
brokerage affiliate. AXA-UAP ("AXA"), a French holding company for an
international group of insurance and related financial services
companies, is the Holding Company's largest shareholder, owning
approximately 58.7% at December 31, 1997 (54.3% if all securities
convertible into, and options on, common stock were to be converted or
exercised).
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements are prepared in
conformity with generally accepted accounting principles ("GAAP") which
require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The accompanying consolidated financial statements include the accounts
of Equitable Life and its wholly owned life insurance subsidiary
(collectively, the "Insurance Group"); non-insurance subsidiaries,
principally Alliance, an investment advisory subsidiary, and, through
June 10, 1997, Equitable Real Estate Investment Management, Inc.
("EREIM"), a real estate investment management subsidiary which was sold
(see Note 5); and those partnerships and joint ventures in which
Equitable Life or its subsidiaries has control and a majority economic
interest (collectively, including its consolidated subsidiaries, the
"Company"). The Company's investment in DLJ is reported on the equity
basis of accounting. Closed Block assets and liabilities and results of
operations are presented in the consolidated financial statements as
single line items (see Note 6). Unless specifically stated, all
disclosures contained herein supporting the consolidated financial
statements exclude the Closed Block related amounts.
All significant intercompany transactions and balances have been
eliminated in consolidation other than intercompany transactions and
balances with the Closed Block and the discontinued operations (see Note
7).
The years "1997," "1996" and "1995" refer to the years ended December
31, 1997, 1996 and 1995, respectively.
Certain reclassifications have been made in the amounts presented for
prior periods to conform these periods with the 1997 presentation.
Closed Block
As of July 22, 1992, Equitable Life established the Closed Block for the
benefit of certain classes of individual participating policies for
which Equitable Life had a dividend scale payable in 1991 and which were
in force on that date. Assets were allocated to the Closed Block in an
amount which, together with anticipated revenues from policies included
in the Closed Block, was reasonably expected to be sufficient to support
such business, including provision for payment of claims, certain
expenses and taxes, and for continuation of dividend scales payable in
1991, assuming the experience underlying such scales continues.
F-6
<PAGE>
Assets allocated to the Closed Block inure solely to the benefit of the
holders of policies included in the Closed Block and will not revert to
the benefit of the Holding Company. No reallocation, transfer, borrowing
or lending of assets can be made between the Closed Block and other
portions of Equitable Life's General Account, any of its Separate
Accounts or any affiliate of Equitable Life without the approval of the
New York Superintendent of Insurance (the "Superintendent"). Closed
Block assets and liabilities are carried on the same basis as similar
assets and liabilities held in the General Account. The excess of Closed
Block liabilities over Closed Block assets represents the expected
future post-tax contribution from the Closed Block which would be
recognized in income over the period the policies and contracts in the
Closed Block remain in force.
Discontinued Operations
Discontinued operations consist of the business of the former Guaranteed
Interest Contract ("GIC") segment which includes the Group
Non-Participating Wind-Up Annuities ("Wind-Up Annuities") and the GIC
lines of business. An allowance was established for the premium
deficiency reserve for Wind-Up Annuities and estimated future losses of
the GIC line of business. Management reviews the adequacy of the
allowance each quarter and, during the 1997 and 1996 fourth quarter
reviews, the allowance for future losses was increased. Management
believes the allowance for future losses at December 31, 1997 is
adequate to provide for all future losses; however, the determination of
the allowance continues to involve numerous estimates and subjective
judgments regarding the expected performance of Discontinued Operations
Investment Assets. There can be no assurance the losses provided for
will not differ from the losses ultimately realized. To the extent
actual results or future projections of the discontinued operations
differ from management's current best estimates and assumptions
underlying the allowance for future losses, the difference would be
reflected in the consolidated statements of earnings in discontinued
operations. In particular, to the extent income, sales proceeds and
holding periods for equity real estate differ from management's previous
assumptions, periodic adjustments to the allowance are likely to result
(see Note 7).
Accounting Changes
In 1996, the Company changed its method of accounting for long-duration
participating life insurance contracts, primarily within the Closed
Block, in accordance with the provisions prescribed by SFAS No. 120,
"Accounting and Reporting by Mutual Life Insurance Enterprises and by
Insurance Enterprises for Certain Long-Duration Participating
Contracts". (See "Deferred Policy Acquisition Costs," "Policyholders'
Account Balances and Future Policy Benefits" and Note 6.)
The Company implemented SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," as of
January 1, 1996. SFAS No. 121 requires long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate the carrying value of such assets may
not be recoverable. Effective with SFAS No. 121's adoption, impaired
real estate is written down to fair value with the impairment loss being
included in investment gains (losses), net. Before implementing SFAS No.
121, valuation allowances on real estate held for the production of
income were computed using the forecasted cash flows of the respective
properties discounted at a rate equal to The Equitable's cost of funds.
The adoption of the statement resulted in the release of valuation
allowances of $152.4 million and recognition of impairment losses of
$144.0 million on real estate held for production of income. Real estate
which management has committed to disposing of by sale or abandonment is
classified as real estate held for sale. Valuation allowances on real
estate held for sale continue to be computed using the lower of
depreciated cost or estimated fair value, net of disposition costs.
Implementation of the SFAS No. 121 impairment requirements relative to
other assets to be disposed of resulted in a charge for the cumulative
effect of an accounting change of $23.1 million, net of a Federal income
tax benefit of $12.4 million, due to the writedown to fair value of
building improvements relating to facilities vacated in 1996.
In the first quarter of 1995, the Company adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan". Impaired loans
within SFAS No. 114's scope are to be measured based on the present
value of expected future cash flows discounted at the loan's effective
interest rate, at the loan's observable market price or the fair value
of the collateral if the loan is collateral dependent. The adoption of
this statement did not have a material effect on the level of the
allowances for possible losses or on the Company's consolidated
statements of earnings and shareholder's equity.
F-7
<PAGE>
New Accounting Pronouncements
In January 1998, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 132, "Employers' Disclosures about Pension and Other
Postretirement Benefits," which revises current note disclosure
requirements for employers' pension and other retiree benefits. SFAS No.
132 is effective for fiscal years beginning after December 15, 1997. The
Company will adopt the provisions of SFAS No. 132 in the 1998
consolidated financial statements.
In December 1997, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments". SOP
97-3 provides guidance for assessments related to insurance activities
and requirements for disclosure of certain information. SOP 97-3 is
effective for financial statements issued for periods beginning after
December 31, 1998. Restatement of previously issued financial statements
is not required. SOP 97-3 is not expected to have a material impact on
the Company's consolidated financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information". SFAS No. 131 establishes
standards for the way public business enterprises report information
about operating segments in annual and interim financial statements
issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major
customers. Generally, financial information will be required to be
reported on the basis used by management for evaluating segment
performance and for deciding how to allocate resources to segments. This
statement is effective for fiscal years beginning after December 15,
1997 and need not be applied to interim reporting in the initial year of
adoption. Restatement of comparative information for earlier periods is
required. Management is currently reviewing its definition of business
segments in light of the requirements of SFAS No. 131.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income". SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components in a full set of general purpose
financial statements. SFAS No. 130 requires an enterprise to classify
items of other comprehensive income by their nature in a financial
statement and display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in capital
in the equity section of a statement of financial position. This
statement is effective for fiscal years beginning after December 15,
1997. Reclassification of financial statements for earlier periods
provided for comparative purposes is required. The Company will adopt
the provisions of SFAS No. 130 in its 1998 consolidated financial
statements.
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities".
SFAS No. 125 specifies the accounting and reporting requirements for
transfers of financial assets, the recognition and measurement of
servicing assets and liabilities and extinguishments of liabilities.
SFAS No. 125 is effective for transactions occurring after December 31,
1996 and is to be applied prospectively. In December 1996, the FASB
issued SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125," which defers for one year the
effective date of provisions relating to secured borrowings and
collateral and transfers of financial assets that are part of repurchase
agreements, dollar-roll, securities lending and similar transactions.
Implementation of SFAS No. 125 did not have nor is SFAS No. 127 expected
to have a material impact on the Company's consolidated financial
statements.
Valuation of Investments
Fixed maturities identified as available for sale are reported at
estimated fair value. The amortized cost of fixed maturities is adjusted
for impairments in value deemed to be other than temporary.
Valuation allowances are netted against the asset categories to which
they apply.
F-8
<PAGE>
Mortgage loans on real estate are stated at unpaid principal balances,
net of unamortized discounts and valuation allowances. Valuation
allowances are based on the present value of expected future cash flows
discounted at the loan's original effective interest rate or the
collateral value if the loan is collateral dependent. However, if
foreclosure is or becomes probable, the measurement method used is
collateral value.
Real estate, including real estate acquired in satisfaction of debt, is
stated at depreciated cost less valuation allowances. At the date of
foreclosure (including in-substance foreclosure), real estate acquired
in satisfaction of debt is valued at estimated fair value. Impaired real
estate is written down to fair value with the impairment loss being
included in investment gains (losses), net. Valuation allowances on real
estate held for sale are computed using the lower of depreciated cost or
current estimated fair value, net of disposition costs. Depreciation is
discontinued on real estate held for sale. Prior to the adoption of SFAS
No. 121, valuation allowances on real estate held for production of
income were computed using the forecasted cash flows of the respective
properties discounted at a rate equal to the Company's cost of funds.
Policy loans are stated at unpaid principal balances.
Partnerships and joint venture interests in which the Company does not
have control or a majority economic interest are reported on the equity
basis of accounting and are included either with equity real estate or
other equity investments, as appropriate.
Common stocks are carried at estimated fair value and are included in
other equity investments.
Short-term investments are stated at amortized cost which approximates
fair value and are included with other invested assets.
Cash and cash equivalents includes cash on hand, amounts due from banks
and highly liquid debt instruments purchased with an original maturity
of three months or less.
All securities are recorded in the consolidated financial statements on
a trade date basis.
Net Investment Income, Investment Gains, Net and Unrealized Investment
Gains (Losses)
Net investment income and realized investment gains (losses)
(collectively, "investment results") related to certain participating
group annuity contracts which are passed through to the contractholders
are reflected as interest credited to policyholders' account balances.
Realized investment gains (losses) are determined by specific
identification and are presented as a component of revenue. Changes in
valuation allowances are included in investment gains or losses.
Unrealized investment gains and losses on fixed maturities available for
sale and equity securities held by the Company are accounted for as a
separate component of shareholder's equity, net of related deferred
Federal income taxes, amounts attributable to discontinued operations,
participating group annuity contracts and deferred policy acquisition
costs ("DAC") related to universal life and investment-type products and
participating traditional life contracts.
Recognition of Insurance Income and Related Expenses
Premiums from universal life and investment-type contracts are reported
as deposits to policyholders' account balances. Revenues from these
contracts consist of amounts assessed during the period against
policyholders' account balances for mortality charges, policy
administration charges and surrender charges. Policy benefits and claims
that are charged to expense include benefit claims incurred in the
period in excess of related policyholders' account balances.
F-9
<PAGE>
Premiums from participating and non-participating traditional life and
annuity policies with life contingencies generally are recognized as
income when due. Benefits and expenses are matched with such income so
as to result in the recognition of profits over the life of the
contracts. This match is accomplished by means of the provision for
liabilities for future policy benefits and the deferral and subsequent
amortization of policy acquisition costs.
For contracts with a single premium or a limited number of premium
payments due over a significantly shorter period than the total period
over which benefits are provided, premiums are recorded as income when
due with any excess profit deferred and recognized in income in a
constant relationship to insurance in force or, for annuities, the
amount of expected future benefit payments.
Premiums from individual health contracts are recognized as income over
the period to which the premiums relate in proportion to the amount of
insurance protection provided.
Deferred Policy Acquisition Costs
The costs of acquiring new business, principally commissions,
underwriting, agency and policy issue expenses, all of which vary with
and are primarily related to the production of new business, are
deferred. DAC is subject to recoverability testing at the time of policy
issue and loss recognition testing at the end of each accounting period.
For universal life products and investment-type products, DAC is
amortized over the expected total life of the contract group (periods
ranging from 15 to 35 years and 5 to 17 years, respectively) as a
constant percentage of estimated gross profits arising principally from
investment results, mortality and expense margins and surrender charges
based on historical and anticipated future experience, updated at the
end of each accounting period. The effect on the amortization of DAC of
revisions to estimated gross profits is reflected in earnings in the
period such estimated gross profits are revised. The effect on the DAC
asset that would result from realization of unrealized gains (losses) is
recognized with an offset to unrealized gains (losses) in consolidated
shareholder's equity as of the balance sheet date.
For participating traditional life policies (substantially all of which
are in the Closed Block), DAC is amortized over the expected total life
of the contract group (40 years) as a constant percentage based on the
present value of the estimated gross margin amounts expected to be
realized over the life of the contracts using the expected investment
yield. At December 31, 1997, the expected investment yield, excluding
policy loans, generally ranged from 7.53% grading to 7.92% over a 20
year period. Estimated gross margin includes anticipated premiums and
investment results less claims and administrative expenses, changes in
the net level premium reserve and expected annual policyholder
dividends. The effect on the amortization of DAC of revisions to
estimated gross margins is reflected in earnings in the period such
estimated gross margins are revised. The effect on the DAC asset that
would result from realization of unrealized gains (losses) is recognized
with an offset to unrealized gains (losses) in consolidated
shareholder's equity as of the balance sheet date.
For non-participating traditional life and annuity policies with life
contingencies, DAC is amortized in proportion to anticipated premiums.
Assumptions as to anticipated premiums are estimated at the date of
policy issue and are consistently applied during the life of the
contracts. Deviations from estimated experience are reflected in
earnings in the period such deviations occur. For these contracts, the
amortization periods generally are for the total life of the policy.
For individual health benefit insurance, DAC is amortized over the
expected average life of the contracts (10 years for major medical
policies and 20 years for disability income ("DI") products) in
proportion to anticipated premium revenue at time of issue.
Policyholders' Account Balances and Future Policy Benefits
Policyholders' account balances for universal life and investment-type
contracts are equal to the policy account values. The policy account
values represents an accumulation of gross premium payments plus
credited interest less expense and mortality charges and withdrawals.
F-10
<PAGE>
For participating traditional life policies, future policy benefit
liabilities are calculated using a net level premium method on the basis
of actuarial assumptions equal to guaranteed mortality and dividend fund
interest rates. The liability for annual dividends represents the
accrual of annual dividends earned. Terminal dividends are accrued in
proportion to gross margins over the life of the contract.
For non-participating traditional life insurance policies, future policy
benefit liabilities are estimated using a net level premium method on
the basis of actuarial assumptions as to mortality, persistency and
interest established at policy issue. Assumptions established at policy
issue as to mortality and persistency are based on the Insurance Group's
experience which, together with interest and expense assumptions,
include a margin for adverse deviation. When the liabilities for future
policy benefits plus the present value of expected future gross premiums
for a product are insufficient to provide for expected future policy
benefits and expenses for that product, DAC is written off and
thereafter, if required, a premium deficiency reserve is established by
a charge to earnings. Benefit liabilities for traditional annuities
during the accumulation period are equal to accumulated contractholders'
fund balances and after annuitization are equal to the present value of
expected future payments. Interest rates used in establishing such
liabilities range from 2.25% to 11.5% for life insurance liabilities and
from 2.25% to 13.5% for annuity liabilities.
During the fourth quarter of 1996, a loss recognition study of
participating group annuity contracts and conversion annuities ("Pension
Par") was completed which included management's revised estimate of
assumptions, such as expected mortality and future investment returns.
The study's results prompted management to establish a premium
deficiency reserve which decreased earnings from continuing operations
and net earnings by $47.5 million ($73.0 million pre-tax).
Individual health benefit liabilities for active lives are estimated
using the net level premium method and assumptions as to future
morbidity, withdrawals and interest. Benefit liabilities for disabled
lives are estimated using the present value of benefits method and
experience assumptions as to claim terminations, expenses and interest.
During the fourth quarter of 1996, the Company completed a loss
recognition study of the DI business which incorporated management's
revised estimates of future experience with regard to morbidity,
investment returns, claims and administration expenses and other
factors. The study indicated DAC was not recoverable and the reserves
were not sufficient. Earnings from continuing operations and net
earnings decreased by $208.0 million ($320.0 million pre-tax) as a
result of strengthening DI reserves by $175.0 million and writing off
unamortized DAC of $145.0 million related to DI products issued prior to
July 1993. The determination of DI reserves requires making assumptions
and estimates relating to a variety of factors, including morbidity and
interest rates, claims experience and lapse rates based on then known
facts and circumstances. Such factors as claim incidence and termination
rates can be affected by changes in the economic, legal and regulatory
environments and work ethic. While management believes its DI reserves
have been calculated on a reasonable basis and are adequate, there can
be no assurance reserves will be sufficient to provide for future
liabilities.
F-11
<PAGE>
Claim reserves and associated liabilities for individual DI and major
medical policies were $886.7 million and $869.4 million at December 31,
1997 and 1996, respectively. Incurred benefits (benefits paid plus
changes in claim reserves) and benefits paid for individual DI and major
medical policies (excluding reserve strengthening in 1996) are
summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Incurred benefits related to current year.......... $ 190.2 $ 189.0 $ 176.0
Incurred benefits related to prior years........... 2.1 69.1 67.8
----------------- ---------------- -----------------
Total Incurred Benefits............................ $ 192.3 $ 258.1 $ 243.8
================= ================ =================
Benefits paid related to current year.............. $ 28.8 $ 32.6 $ 37.0
Benefits paid related to prior years............... 146.2 153.3 137.8
----------------- ---------------- -----------------
Total Benefits Paid................................ $ 175.0 $ 185.9 $ 174.8
================= ================ =================
</TABLE>
Policyholders' Dividends
The amount of policyholders' dividends to be paid (including those on
policies included in the Closed Block) is determined annually by
Equitable Life's board of directors. The aggregate amount of
policyholders' dividends is related to actual interest, mortality,
morbidity and expense experience for the year and judgment as to the
appropriate level of statutory surplus to be retained by Equitable Life.
At December 31, 1997, participating policies, including those in the
Closed Block, represent approximately 21.2% ($50.2 billion) of directly
written life insurance in force, net of amounts ceded.
Federal Income Taxes
The Company files a consolidated Federal income tax return with the
Holding Company and its consolidated subsidiaries. Current Federal
income taxes are charged or credited to operations based upon amounts
estimated to be payable or recoverable as a result of taxable operations
for the current year. Deferred income tax assets and liabilities are
recognized based on the difference between financial statement carrying
amounts and income tax bases of assets and liabilities using enacted
income tax rates and laws.
Separate Accounts
Separate Accounts are established in conformity with the New York State
Insurance Law and generally are not chargeable with liabilities that
arise from any other business of the Insurance Group. Separate Accounts
assets are subject to General Account claims only to the extent the
value of such assets exceeds Separate Accounts liabilities.
Assets and liabilities of the Separate Accounts, representing net
deposits and accumulated net investment earnings less fees, held
primarily for the benefit of contractholders, and for which the
Insurance Group does not bear the investment risk, are shown as separate
captions in the consolidated balance sheets. The Insurance Group bears
the investment risk on assets held in one Separate Account, therefore,
such assets are carried on the same basis as similar assets held in the
General Account portfolio. Assets held in the other Separate Accounts
are carried at quoted market values or, where quoted values are not
available, at estimated fair values as determined by the Insurance
Group.
The investment results of Separate Accounts on which the Insurance Group
does not bear the investment risk are reflected directly in Separate
Accounts liabilities. For 1997, 1996 and 1995, investment results of
such Separate Accounts were $3,411.1 million, $2,970.6 million and
$1,963.2 million, respectively.
F-12
<PAGE>
Deposits to Separate Accounts are reported as increases in Separate
Accounts liabilities and are not reported in revenues. Mortality, policy
administration and surrender charges on all Separate Accounts are
included in revenues.
Employee Stock Option Plan
The Company accounts for stock option plans sponsored by the Holding
Company, DLJ and Alliance in accordance with the provisions of
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for
Stock Issued to Employees," and related interpretations. In accordance
with the opinion, compensation expense is recorded on the date of grant
only if the current market price of the underlying stock exceeds the
exercise price. See Note 21 for the pro forma disclosures for the
Holding Company, DLJ and Alliance required by SFAS No. 123, "Accounting
for Stock-Based Compensation".
3) INVESTMENTS
The following tables provide additional information relating to fixed
maturities and equity securities:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
----------------- ----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C> <C>
December 31, 1997
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 14,230.3 $ 785.0 $ 74.5 $ 14,940.8
Mortgage-backed.................... 1,702.8 23.5 1.3 1,725.0
U.S. Treasury securities and
U.S. government and
agency securities................ 1,583.2 83.9 .6 1,666.5
States and political subdivisions.. 673.0 6.8 .1 679.7
Foreign governments................ 442.4 44.8 2.0 485.2
Redeemable preferred stock......... 128.0 6.7 1.0 133.7
----------------- ----------------- ---------------- -----------------
Total Available for Sale............... $ 18,759.7 $ 950.7 $ 79.5 $ 19,630.9
================= ================= ================ =================
Equity Securities:
Common stock......................... $ 408.4 $ 48.7 $ 15.0 $ 442.1
================= ================= ================ =================
December 31, 1996
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 13,645.2 $ 451.5 $ 121.0 $ 13,975.7
Mortgage-backed.................... 2,015.9 11.2 20.3 2,006.8
U.S. Treasury securities and
U.S. government and
agency securities................ 1,539.4 39.2 19.3 1,559.3
States and political subdivisions.. 77.0 4.5 - 81.5
Foreign governments................ 302.6 18.0 2.2 318.4
Redeemable preferred stock......... 139.1 3.3 7.1 135.3
----------------- ----------------- ---------------- -----------------
Total Available for Sale............... $ 17,719.2 $ 527.7 $ 169.9 $ 18,077.0
================= ================= ================ =================
Equity Securities:
Common stock......................... $ 362.0 $ 49.3 $ 17.7 $ 393.6
================= ================= ================ =================
</TABLE>
F-13
<PAGE>
For publicly traded fixed maturities and equity securities, estimated
fair value is determined using quoted market prices. For fixed
maturities without a readily ascertainable market value, the Company has
determined an estimated fair value using a discounted cash flow
approach, including provisions for credit risk, generally based on the
assumption such securities will be held to maturity. Estimated fair
values for equity securities, substantially all of which do not have a
readily ascertainable market value, have been determined by the Company.
Such estimated fair values do not necessarily represent the values for
which these securities could have been sold at the dates of the
consolidated balance sheets. At December 31, 1997 and 1996, securities
without a readily ascertainable market value having an amortized cost of
$3,759.2 million and $3,915.7 million, respectively, had estimated fair
values of $3,903.9 million and $4,024.6 million, respectively.
The contractual maturity of bonds at December 31, 1997 is shown below:
<TABLE>
<CAPTION>
Available for Sale
------------------------------------
Amortized Estimated
Cost Fair Value
---------------- -----------------
(In Millions)
<S> <C> <C>
Due in one year or less................................................ $ 149.9 $ 151.3
Due in years two through five.......................................... 2,962.8 3,025.2
Due in years six through ten........................................... 6,863.9 7,093.0
Due after ten years.................................................... 6,952.3 7,502.7
Mortgage-backed securities............................................. 1,702.8 1,725.0
---------------- -----------------
Total.................................................................. $ 18,631.7 $ 19,497.2
================ =================
</TABLE>
Bonds not due at a single maturity date have been included in the above
table in the year of final maturity. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
The Insurance Group's fixed maturity investment portfolio includes
corporate high yield securities consisting of public high yield bonds,
redeemable preferred stocks and directly negotiated debt in leveraged
buyout transactions. The Insurance Group seeks to minimize the higher
than normal credit risks associated with such securities by monitoring
the total investments in any single issuer or total investment in a
particular industry group. Certain of these corporate high yield
securities are classified as other than investment grade by the various
rating agencies, i.e., a rating below Baa or National Association of
Insurance Commissioners ("NAIC") designation of 3 (medium grade), 4 or 5
(below investment grade) or 6 (in or near default). At December 31,
1997, approximately 17.85% of the $18,610.6 million aggregate amortized
cost of bonds held by the Insurance Group were considered to be other
than investment grade.
In addition to its holdings of corporate high yield securities, the
Insurance Group is an equity investor in limited partnership interests
which primarily invest in securities considered to be other than
investment grade.
Fixed maturity investments with restructured or modified terms are not
material.
F-14
<PAGE>
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Balances, beginning of year........................ $ 137.1 $ 325.3 $ 284.9
SFAS No. 121 release............................... - (152.4) -
Additions charged to income........................ 334.6 125.0 136.0
Deductions for writedowns and
asset dispositions............................... (87.2) (160.8) (95.6)
----------------- ---------------- -----------------
Balances, End of Year.............................. $ 384.5 $ 137.1 $ 325.3
================= ================ =================
Balances, end of year comprise:
Mortgage loans on real estate.................... $ 55.8 $ 50.4 $ 65.5
Equity real estate............................... 328.7 86.7 259.8
----------------- ---------------- -----------------
Total.............................................. $ 384.5 $ 137.1 $ 325.3
================= ================ =================
</TABLE>
At December 31, 1997, the carrying values of investments held for the
production of income which were non-income producing for the twelve
months preceding the consolidated balance sheet date were $12.6 million
of fixed maturities and $.9 million of mortgage loans on real estate.
At December 31, 1997 and 1996, mortgage loans on real estate with
scheduled payments 60 days (90 days for agricultural mortgages) or more
past due or in foreclosure (collectively, "problem mortgage loans on
real estate") had an amortized cost of $23.4 million (0.9% of total
mortgage loans on real estate) and $12.4 million (0.4% of total mortgage
loans on real estate), respectively.
The payment terms of mortgage loans on real estate may from time to time
be restructured or modified. The investment in restructured mortgage
loans on real estate, based on amortized cost, amounted to $183.4
million and $388.3 million at December 31, 1997 and 1996, respectively.
Gross interest income on restructured mortgage loans on real estate that
would have been recorded in accordance with the original terms of such
loans amounted to $17.2 million, $35.5 million and $52.1 million in
1997, 1996 and 1995, respectively. Gross interest income on these loans
included in net investment income aggregated $12.7 million, $28.2
million and $37.4 million in 1997, 1996 and 1995, respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1997 1996
------------------- -------------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses.................. $ 196.7 $ 340.0
Impaired mortgage loans without provision for losses............... 3.6 122.3
------------------- -------------------
Recorded investment in impaired mortgage loans..................... 200.3 462.3
Provision for losses............................................... (51.8) (46.4)
------------------- -------------------
Net Impaired Mortgage Loans........................................ $ 148.5 $ 415.9
=================== ===================
</TABLE>
Impaired mortgage loans without provision for losses are loans where the
fair value of the collateral or the net present value of the expected
future cash flows related to the loan equals or exceeds the recorded
investment. Interest income earned on loans where the collateral value
is used to measure impairment is recorded on a cash basis. Interest
income on loans where the present value method is used to measure
impairment is accrued on the net carrying value amount of the loan at
the interest rate used to discount the cash flows. Changes in the
present value attributable to changes in the amount or timing of
expected cash flows are reported as investment gains or losses.
F-15
<PAGE>
During 1997, 1996 and 1995, respectively, the Company's average recorded
investment in impaired mortgage loans was $246.9 million, $552.1 million
and $429.0 million. Interest income recognized on these impaired
mortgage loans totaled $15.2 million, $38.8 million and $27.9 million
($2.3 million, $17.9 million and $13.4 million recognized on a cash
basis) for 1997, 1996 and 1995, respectively.
The Insurance Group's investment in equity real estate is through direct
ownership and through investments in real estate joint ventures. At
December 31, 1997 and 1996, the carrying value of equity real estate
held for sale amounted to $1,023.5 million and $345.6 million,
respectively. For 1997, 1996 and 1995, respectively, real estate of
$152.0 million, $58.7 million and $35.3 million was acquired in
satisfaction of debt. At December 31, 1997 and 1996, the Company owned
$693.3 million and $771.7 million, respectively, of real estate acquired
in satisfaction of debt.
Depreciation of real estate is computed using the straight-line method
over the estimated useful lives of the properties, which generally range
from 40 to 50 years. Accumulated depreciation on real estate was $541.1
million and $587.5 million at December 31, 1997 and 1996, respectively.
Depreciation expense on real estate totaled $74.9 million, $91.8 million
and $121.7 million for 1997, 1996 and 1995, respectively.
4) JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information for real estate joint ventures
(29 and 34 individual ventures as of December 31, 1997 and 1996,
respectively) and for limited partnership interests accounted for under
the equity method, in which the Company has an investment of $10.0
million or greater and an equity interest of 10% or greater is as
follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
BALANCE SHEETS
Investments in real estate, at depreciated cost........................ $ 1,700.9 $ 1,883.7
Investments in securities, generally at estimated fair value........... 1,374.8 2,430.6
Cash and cash equivalents.............................................. 105.4 98.0
Other assets........................................................... 584.9 427.0
---------------- -----------------
Total Assets........................................................... $ 3,766.0 $ 4,839.3
================ =================
Borrowed funds - third party........................................... $ 493.4 $ 1,574.3
Borrowed funds - the Company........................................... 31.2 137.9
Other liabilities...................................................... 284.0 415.8
---------------- -----------------
Total liabilities...................................................... 808.6 2,128.0
---------------- -----------------
Partners' capital...................................................... 2,957.4 2,711.3
---------------- -----------------
Total Liabilities and Partners' Capital................................ $ 3,766.0 $ 4,839.3
================ =================
Equity in partners' capital included above............................. $ 568.5 $ 806.8
Equity in limited partnership interests not included above............. 331.8 201.8
Other.................................................................. 4.3 9.8
---------------- -----------------
Carrying Value......................................................... $ 904.6 $ 1,018.4
================ =================
</TABLE>
F-16
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures............. $ 310.5 $ 348.9 $ 463.5
Revenues of other limited partnership interests.... 506.3 386.1 242.3
Interest expense - third party..................... (91.8) (111.0) (135.3)
Interest expense - the Company..................... (7.2) (30.0) (41.0)
Other expenses..................................... (263.6) (282.5) (397.7)
----------------- ---------------- -----------------
Net Earnings....................................... $ 454.2 $ 311.5 $ 131.8
================= ================ =================
Equity in net earnings included above.............. $ 76.7 $ 73.9 $ 49.1
Equity in net earnings of limited partnerships
interests not included above..................... 69.5 35.8 44.8
Other.............................................. (.9) .9 1.0
-----------------
----------------- ---------------- -----------------
Total Equity in Net Earnings....................... $ 145.3 $ 110.6 $ 94.9
================= ================ =================
</TABLE>
5) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Fixed maturities................................... $ 1,459.4 $ 1,307.4 $ 1,151.1
Mortgage loans on real estate...................... 260.8 303.0 329.0
Equity real estate................................. 390.4 442.4 560.4
Other equity investments........................... 156.9 122.0 76.9
Policy loans....................................... 177.0 160.3 144.4
Other investment income............................ 181.7 217.4 273.0
----------------- ---------------- -----------------
Gross investment income.......................... 2,626.2 2,552.5 2,534.8
----------------- ---------------- -----------------
Investment expenses.............................. 343.4 348.9 446.6
----------------- ---------------- -----------------
Net Investment Income.............................. $ 2,282.8 $ 2,203.6 $ 2,088.2
================= ================ =================
</TABLE>
Investment gains (losses), net, including changes in the valuation
allowances, are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Fixed maturities................................... $ 88.1 $ 60.5 $ 119.9
Mortgage loans on real estate...................... (11.2) (27.3) (40.2)
Equity real estate................................. (391.3) (79.7) (86.6)
Other equity investments........................... 14.1 18.9 12.8
Sale of subsidiaries............................... 252.1 - -
Issuance and sales of Alliance Units............... - 20.6 -
Other.............................................. 3.0 (2.8) (.6)
----------------- ---------------- -----------------
Investment (Losses) Gains, Net..................... $ (45.2) $ (9.8) $ 5.3
================= ================ =================
</TABLE>
F-17
<PAGE>
Writedowns of fixed maturities amounted to $11.7 million, $29.9 million
and $46.7 million for 1997, 1996 and 1995, respectively, and writedowns
of equity real estate subsequent to the adoption of SFAS No. 121
amounted to $136.4 million and $23.7 million for 1997 and 1996,
respectively. In the fourth quarter of 1997, the Company reclassified
$1,095.4 million depreciated cost of equity real estate from real estate
held for the production of income to real estate held for sale.
Additions to valuation allowances of $227.6 million were recorded upon
these transfers. Additionally in the fourth quarter, $132.3 million of
writedowns on real estate held for production of income were recorded.
For 1997, 1996 and 1995, respectively, proceeds received on sales of
fixed maturities classified as available for sale amounted to $9,789.7
million, $8,353.5 million and $8,206.0 million. Gross gains of $166.0
million, $154.2 million and $211.4 million and gross losses of $108.8
million, $92.7 million and $64.2 million, respectively, were realized on
these sales. The change in unrealized investment gains (losses) related
to fixed maturities classified as available for sale for 1997, 1996 and
1995 amounted to $513.4 million, $(258.0) million and $1,077.2 million,
respectively.
For 1997, 1996 and 1995, investment results passed through to certain
participating group annuity contracts as interest credited to
policyholders' account balances amounted to $137.5 million, $136.7
million and $131.2 million, respectively.
On June 10, 1997, Equitable Life sold EREIM (other than its interest in
Column Financial, Inc.) ("ERE") to Lend Lease Corporation Limited ("Lend
Lease"), a publicly traded, international property and financial
services company based in Sydney, Australia. The total purchase price
was $400.0 million and consisted of $300.0 million in cash and a $100.0
million note maturing in eight years and bearing interest at the rate of
7.4%, subject to certain adjustments. Equitable Life recognized an
investment gain of $162.4 million, net of Federal income tax of $87.4
million as a result of this transaction. Equitable Life entered into
long-term advisory agreements whereby ERE will continue to provide
substantially the same services to Equitable Life's General Account and
Separate Accounts, for substantially the same fees, as provided prior to
the sale.
Through June 10, 1997 and the years ended December 31, 1996 and 1995,
respectively, the businesses sold reported combined revenues of $91.6
million, $226.1 million and $245.6 million and combined net earnings of
$10.7 million, $30.7 million and $27.9 million. Total combined assets
and liabilities as reported at December 31, 1996 were $171.8 million and
$130.1 million, respectively.
In 1996, Alliance acquired the business of Cursitor-Eaton Asset
Management Company and Cursitor Holdings Limited (collectively,
"Cursitor") for approximately $159.0 million. The purchase price
consisted of $94.3 million in cash, 1.8 million of Alliance's publicly
traded units ("Alliance Units"), 6% notes aggregating $21.5 million
payable ratably over four years, and substantial additional
consideration to be determined at a later date. The excess of the
purchase price, including acquisition costs and minority interest, over
the fair value of Cursitor's net assets acquired resulted in the
recognition of intangible assets consisting of costs assigned to
contracts acquired and goodwill of approximately $122.8 million and
$38.3 million, respectively. The Company recognized an investment gain
of $20.6 million as a result of the issuance of Alliance Units in this
transaction. On June 30, 1997, Alliance reduced the recorded value of
goodwill and contracts associated with Alliance's acquisition of
Cursitor by $120.9 million. This charge reflected Alliance's view that
Cursitor's continuing decline in assets under management and its reduced
profitability, resulting from relative investment underperformance, no
longer supported the carrying value of its investment. As a result, the
Company's earnings from continuing operations before cumulative effect
of accounting change for 1997 included a charge of $59.5 million, net of
a Federal income tax benefit of $10.0 million and minority interest of
$51.4 million. The remaining balance of intangible assets is being
amortized over its estimated useful life of 20 years. At December 31,
1997, the Company's ownership of Alliance Units was approximately 56.9%.
F-18
<PAGE>
Net unrealized investment gains (losses), included in the consolidated
balance sheets as a component of equity and the changes for the
corresponding years, are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Balance, beginning of year......................... $ 189.9 $ 396.5 $ (220.5)
Changes in unrealized investment gains (losses).... 543.3 (297.6) 1,198.9
Changes in unrealized investment losses
(gains) attributable to:
Participating group annuity contracts.......... 53.2 - (78.1)
DAC............................................ (89.0) 42.3 (216.8)
Deferred Federal income taxes.................. (163.8) 48.7 (287.0)
----------------- ---------------- -----------------
Balance, End of Year............................... $ 533.6 $ 189.9 $ 396.5
================= ================ =================
Balance, end of year comprises:
Unrealized investment gains on:
Fixed maturities............................... $ 871.2 $ 357.8 $ 615.9
Other equity investments....................... 33.7 31.6 31.1
Other, principally Closed Block................ 80.9 53.1 93.1
----------------- ---------------- -----------------
Total........................................ 985.8 442.5 740.1
Amounts of unrealized investment gains
attributable to:
Participating group annuity contracts........ (19.0) (72.2) (72.2)
DAC.......................................... (141.0) (52.0) (94.3)
Deferred Federal income taxes................ (292.2) (128.4) (177.1)
----------------- ---------------- -----------------
Total.............................................. $ 533.6 $ 189.9 $ 396.5
================= ================ =================
</TABLE>
6) CLOSED BLOCK
Summarized financial information for the Closed Block follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost,
$4,059.4 and $3,820.7)........................................... $ 4,231.0 $ 3,889.5
Mortgage loans on real estate........................................ 1,341.6 1,380.7
Policy loans......................................................... 1,700.2 1,765.9
Cash and other invested assets....................................... 282.7 336.1
DAC.................................................................. 775.2 876.5
Other assets......................................................... 235.9 246.3
----------------- -----------------
Total Assets......................................................... $ 8,566.6 $ 8,495.0
================= =================
Liabilities
Future policy benefits and policyholders' account balances........... $ 8,993.2 $ 8,999.7
Other liabilities.................................................... 80.5 91.6
----------------- -----------------
Total Liabilities.................................................... $ 9,073.7 $ 9,091.3
================= =================
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Premiums and other revenue......................... $ 687.1 $ 724.8 $ 753.4
Investment income (net of investment
expenses of $27.0, $27.3 and $26.7).............. 574.9 546.6 538.9
Investment losses, net............................. (42.4) (5.5) (20.2)
----------------- ---------------- -----------------
Total revenues............................... 1,219.6 1,265.9 1,272.1
----------------- ---------------- -----------------
Benefits and Other Deductions
Policyholders' benefits and dividends.............. 1,066.7 1,106.3 1,077.6
Other operating costs and expenses................. 50.4 34.6 51.3
----------------- ---------------- -----------------
Total benefits and other deductions.......... 1,117.1 1,140.9 1,128.9
----------------- ---------------- -----------------
Contribution from the Closed Block................. $ 102.5 $ 125.0 $ 143.2
================= ================ =================
</TABLE>
At December 31, 1997 and 1996, problem mortgage loans on real estate had
an amortized cost of $8.1 million and $4.3 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had an amortized cost of $70.5 million and $114.2 million,
respectively. At December 31, 1996, the restructured mortgage loans on
real estate amount included $.7 million of problem mortgage loans on
real estate.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 109.1 $ 128.1
Impaired mortgage loans without provision for losses................... .6 .6
---------------- -----------------
Recorded investment in impaired mortgages.............................. 109.7 128.7
Provision for losses................................................... (17.4) (12.9)
---------------- -----------------
Net Impaired Mortgage Loans............................................ $ 92.3 $ 115.8
================ =================
</TABLE>
During 1997, 1996 and 1995, the Closed Block's average recorded
investment in impaired mortgage loans was $110.2 million, $153.8 million
and $146.9 million, respectively. Interest income recognized on these
impaired mortgage loans totaled $9.4 million, $10.9 million and $5.9
million ($4.1 million, $4.7 million and $1.3 million recognized on a
cash basis) for 1997, 1996 and 1995, respectively.
Valuation allowances amounted to $18.5 million and $13.8 million on
mortgage loans on real estate and $16.8 million and $3.7 million on
equity real estate at December 31, 1997 and 1996, respectively. As of
January 1, 1996, the adoption of SFAS No. 121 resulted in the
recognition of impairment losses of $5.6 million on real estate held for
production of income. Writedowns of fixed maturities amounted to $3.5
million, $12.8 million and $16.8 million for 1997, 1996 and 1995,
respectively and writedowns of equity real estate subsequent to the
adoption of SFAS No. 121 amounted to $28.8 million for 1997.
In the fourth quarter of 1997, $72.9 million depreciated cost of equity
real estate held for production of income was reclassified to equity
real estate held for sale. Additions to valuation allowances of $15.4
million were recorded upon these transfers. Additionally, in the fourth
quarter, $28.8 million of writedowns on real estate held for production
of income were recorded.
Many expenses related to Closed Block operations are charged to
operations outside of the Closed Block; accordingly, the contribution
from the Closed Block does not represent the actual profitability of the
Closed Block operations. Operating costs and expenses outside of the
Closed Block are, therefore, disproportionate to the business outside of
the Closed Block.
F-20
<PAGE>
7) DISCONTINUED OPERATIONS
Summarized financial information for discontinued operations follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Mortgage loans on real estate........................................ $ 655.5 $ 1,111.1
Equity real estate................................................... 655.6 925.6
Other equity investments............................................. 209.3 300.5
Short-term investments............................................... 102.0 63.2
Other invested assets................................................ 41.9 50.9
----------------- -----------------
Total investments.................................................. 1,664.3 2,451.3
Cash and cash equivalents............................................ 106.8 42.6
Other assets......................................................... 253.9 242.9
----------------- -----------------
Total Assets......................................................... $ 2,025.0 $ 2,736.8
================= =================
Liabilities
Policyholders' liabilities........................................... $ 1,048.3 $ 1,335.9
Allowance for future losses.......................................... 259.2 262.0
Amounts due to continuing operations................................. 572.8 996.2
Other liabilities.................................................... 144.7 142.7
----------------- -----------------
Total Liabilities.................................................... $ 2,025.0 $ 2,736.8
================= =================
</TABLE>
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Investment income (net of investment
expenses of $97.3, $127.5 and $153.1)............ $ 188.6 $ 245.4 $ 323.6
Investment losses, net............................. (173.7) (18.9) (22.9)
Policy fees, premiums and other income............. .2 .2 .7
----------------- ---------------- -----------------
Total revenues..................................... 15.1 226.7 301.4
Benefits and other deductions...................... 169.5 250.4 326.5
Losses charged to allowance for future losses...... (154.4) (23.7) (25.1)
----------------- ---------------- -----------------
Pre-tax loss from operations....................... - - -
Pre-tax loss from strengthening of the
allowance for future losses...................... (134.1) (129.0) -
Federal income tax benefit......................... 46.9 45.2 -
----------------- ---------------- -----------------
Loss from Discontinued Operations.................. $ (87.2) $ (83.8) $ -
================= ================ =================
</TABLE>
The Company's quarterly process for evaluating the allowance for future
losses applies the current period's results of the discontinued
operations against the allowance, re-estimates future losses, and
adjusts the allowance, if appropriate. Additionally, as part of the
Company's annual planning process which takes place in the fourth
quarter of each year, investment and benefit cash flow projections are
prepared. These updated assumptions and estimates resulted in the need
to strengthen the allowance in 1997 and 1996, respectively.
In the fourth quarter of 1997, $329.9 million depreciated cost of equity
real estate was reclassified from equity real estate held for production
of income to real estate held for sale. Additions to valuation
allowances of $79.8 million were recognized upon these transfers.
Additionally, in the fourth quarter, $92.5 million of writedown on real
estate held for production of income were recognized.
Benefits and other deductions includes $53.3 million, $114.3 million and
$154.6 million of interest expense related to amounts borrowed from
continuing operations in 1997, 1996 and 1995, respectively.
F-21
<PAGE>
Valuation allowances amounted to $28.4 million and $9.0 million on
mortgage loans on real estate and $88.4 million and $20.4 million on
equity real estate at December 31, 1997 and 1996, respectively. As of
January 1, 1996, the adoption of SFAS No. 121 resulted in a release of
existing valuation allowances of $71.9 million on equity real estate and
recognition of impairment losses of $69.8 million on real estate held
for production of income. Writedowns of equity real estate subsequent to
the adoption of SFAS No. 121 amounted to $95.7 million and $12.3 million
for 1997 and 1996, respectively.
At December 31, 1997 and 1996, problem mortgage loans on real estate had
amortized costs of $11.0 million and $7.9 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had amortized costs of $109.4 million and $208.1 million,
respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 101.8 $ 83.5
Impaired mortgage loans without provision for losses................... .2 15.0
---------------- -----------------
Recorded investment in impaired mortgages.............................. 102.0 98.5
Provision for losses................................................... (27.3) (8.8)
---------------- -----------------
Net Impaired Mortgage Loans............................................ $ 74.7 $ 89.7
================ =================
</TABLE>
During 1997, 1996 and 1995, the discontinued operations' average
recorded investment in impaired mortgage loans was $89.2 million, $134.8
million and $177.4 million, respectively. Interest income recognized on
these impaired mortgage loans totaled $6.6 million, $10.1 million and
$4.5 million ($5.3 million, $7.5 million and $.4 million recognized on a
cash basis) for 1997, 1996 and 1995, respectively.
At December 31, 1997 and 1996, discontinued operations had carrying
values of $156.2 million and $263.0 million, respectively, of real
estate acquired in satisfaction of debt.
8) SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
Short-term debt...................................................... $ 422.2 $ 174.1
----------------- -----------------
Long-term debt:
Equitable Life:
6.95% surplus notes scheduled to mature 2005....................... 399.4 399.4
7.70% surplus notes scheduled to mature 2015....................... 199.7 199.6
Other.............................................................. .3 .5
----------------- -----------------
Total Equitable Life........................................... 599.4 599.5
----------------- -----------------
Wholly Owned and Joint Venture Real Estate:
Mortgage notes, 5.87% - 12.00% due through 2006.................... 951.1 968.6
----------------- -----------------
Alliance:
Other.............................................................. 18.5 24.7
----------------- -----------------
Total long-term debt................................................. 1,569.0 1,592.8
----------------- -----------------
Total Short-term and Long-term Debt.................................. $ 1,991.2 $ 1,766.9
================= =================
</TABLE>
F-22
<PAGE>
Short-term Debt
Equitable Life has a $350.0 million bank credit facility available to
fund short-term working capital needs and to facilitate the securities
settlement process. The credit facility consists of two types of
borrowing options with varying interest rates and expires in June 2000.
The interest rates are based on external indices dependent on the type
of borrowing and at December 31, 1997 range from 5.88% to 8.50%. There
were no borrowings outstanding under this bank credit facility at
December 31, 1997.
Equitable Life has a commercial paper program with an issue limit of
$500.0 million. This program is available for general corporate purposes
used to support Equitable Life's liquidity needs and is supported by
Equitable Life's existing $350.0 million bank credit facility. At
December 31, 1997, $50.0 million was outstanding under this program.
During 1996, Alliance entered into a $250.0 million five-year revolving
credit facility with a group of banks. Under the facility, the interest
rate, at the option of Alliance, is a floating rate generally based upon
a defined prime rate, a rate related to the London Interbank Offered
Rate ("LIBOR") or the Federal funds rate. A facility fee is payable on
the total facility. The revolving credit facility will be used to
provide back-up liquidity for Alliance's $250.0 million commercial paper
program, to fund commission payments to financial intermediaries for the
sale of Class B and C shares under Alliance's mutual fund distribution
system, and for general working capital purposes. At December 31, 1997,
Alliance had $72.0 million in commercial paper outstanding and there
were no borrowings under the revolving credit facility.
Long-term Debt
Several of the long-term debt agreements have restrictive covenants
related to the total amount of debt, net tangible assets and other
matters. The Company is in compliance with all debt covenants.
On December 18, 1995, Equitable Life issued, in accordance with Section
1307 of the New York Insurance Law, $400.0 million of surplus notes
having an interest rate of 6.95% scheduled to mature in 2005 and $200.0
million of surplus notes having an interest rate of 7.70% scheduled to
mature in 2015 (together, the "Surplus Notes"). Proceeds from the
issuance of the Surplus Notes were $596.6 million, net of related
issuance costs. Payments of interest on, or principal of, the Surplus
Notes are subject to prior approval by the Superintendent.
The Company has pledged real estate, mortgage loans, cash and securities
amounting to $1,164.0 million and $1,406.4 million at December 31, 1997
and 1996, respectively, as collateral for certain long-term debt.
At December 31, 1997, aggregate maturities of the long-term debt based
on required principal payments at maturity for 1998 and the succeeding
four years are $565.8 million, $201.4 million, $8.6 million, $1.7
million and $1.8 million, respectively, and $790.6 million thereafter.
9) FEDERAL INCOME TAXES
A summary of the Federal income tax expense in the consolidated
statements of earnings is shown below:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current.......................................... $ 186.5 $ 97.9 $ (11.7)
Deferred......................................... (95.0) (88.2) 132.2
----------------- ---------------- -----------------
Total.............................................. $ 91.5 $ 9.7 $ 120.5
================= ================ =================
</TABLE>
F-23
<PAGE>
The Federal income taxes attributable to consolidated operations are
different from the amounts determined by multiplying the earnings before
Federal income taxes and minority interest by the expected Federal
income tax rate of 35%. The sources of the difference and the tax
effects of each are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Expected Federal income tax expense................ $ 234.7 $ 73.0 $ 173.7
Non-taxable minority interest...................... (38.0) (28.6) (22.0)
Adjustment of tax audit reserves................... (81.7) 6.9 4.1
Equity in unconsolidated subsidiaries.............. (45.1) (32.3) (19.4)
Other.............................................. 21.6 (9.3) (15.9)
----------------- ---------------- -----------------
Federal Income Tax Expense......................... $ 91.5 $ 9.7 $ 120.5
================= ================ =================
</TABLE>
The components of the net deferred Federal income taxes are as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
--------------------------------- ---------------------------------
Assets Liabilities Assets Liabilities
--------------- ---------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C> <C>
Compensation and related benefits...... $ 257.9 $ - $ 259.2 $ -
Other.................................. 30.7 - - 1.8
DAC, reserves and reinsurance.......... - 222.8 - 166.0
Investments............................ - 405.7 - 328.6
--------------- ---------------- --------------- ---------------
Total.................................. $ 288.6 $ 628.5 $ 259.2 $ 496.4
=============== ================ =============== ===============
</TABLE>
The deferred Federal income taxes impacting operations reflect the net
tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes. The sources of these temporary differences
and the tax effects of each are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
DAC, reserves and reinsurance...................... $ 46.2 $ (156.2) $ 63.3
Investments........................................ (113.8) 78.6 13.0
Compensation and related benefits.................. 3.7 22.3 30.8
Other.............................................. (31.1) (32.9) 25.1
----------------- ---------------- -----------------
Deferred Federal Income Tax
(Benefit) Expense................................ $ (95.0) $ (88.2) $ 132.2
================= ================ =================
</TABLE>
The Internal Revenue Service (the "IRS") is in the process of examining
the Company's consolidated Federal income tax returns for the years 1989
through 1991. Management believes these audits will have no material
adverse effect on the Company's results of operations.
F-24
<PAGE>
10) REINSURANCE AGREEMENTS
The Insurance Group assumes and cedes reinsurance with other insurance
companies. The Insurance Group evaluates the financial condition of its
reinsurers to minimize its exposure to significant losses from reinsurer
insolvencies. Ceded reinsurance does not relieve the originating insurer
of liability. The effect of reinsurance (excluding group life and
health) is summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Direct premiums.................................... $ 448.6 $ 461.4 $ 474.2
Reinsurance assumed................................ 198.3 177.5 171.3
Reinsurance ceded.................................. (45.4) (41.3) (38.7)
----------------- ---------------- -----------------
Premiums........................................... $ 601.5 $ 597.6 $ 606.8
================= ================ =================
Universal Life and Investment-type Product
Policy Fee Income Ceded.......................... $ 61.0 $ 48.2 $ 44.0
================= ================ =================
Policyholders' Benefits Ceded...................... $ 70.6 $ 54.1 $ 48.9
================= ================ =================
Interest Credited to Policyholders' Account
Balances Ceded................................... $ 36.4 $ 32.3 $ 28.5
================= ================ =================
</TABLE>
Effective January 1, 1994, all in force business above $5.0 million was
reinsured. During 1996, the Company's retention limit on joint
survivorship policies was increased to $15.0 million. The Insurance
Group also reinsures the entire risk on certain substandard underwriting
risks as well as in certain other cases.
The Insurance Group cedes 100% of its group life and health business to
a third party insurance company. Premiums ceded totaled $1.6 million,
$2.4 million and $260.6 million for 1997, 1996 and 1995, respectively.
Ceded death and disability benefits totaled $4.3 million, $21.2 million
and $188.1 million for 1997, 1996 and 1995, respectively. Insurance
liabilities ceded totaled $593.8 million and $652.4 million at December
31, 1997 and 1996, respectively.
11) EMPLOYEE BENEFIT PLANS
The Company sponsors qualified and non-qualified defined benefit plans
covering substantially all employees (including certain qualified
part-time employees), managers and certain agents. The pension plans are
non-contributory. Equitable Life's benefits are based on a cash balance
formula or years of service and final average earnings, if greater,
under certain grandfathering rules in the plans. Alliance's benefits are
based on years of credited service, average final base salary and
primary social security benefits. The Company's funding policy is to
make the minimum contribution required by the Employee Retirement Income
Security Act of 1974 ("ERISA").
Components of net periodic pension cost (credit) for the qualified and
non-qualified plans are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Service cost....................................... $ 32.5 $ 33.8 $ 30.0
Interest cost on projected benefit obligations..... 128.2 120.8 122.0
Actual return on assets............................ (307.6) (181.4) (309.2)
Net amortization and deferrals..................... 166.6 43.4 155.6
----------------- ---------------- -----------------
Net Periodic Pension Cost (Credit)................. $ 19.7 $ 16.6 $ (1.6)
================= ================ =================
</TABLE>
F-25
<PAGE>
The funded status of the qualified and non-qualified pension plans is as
follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Actuarial present value of obligations:
Vested............................................................... $ 1,702.6 $ 1,672.2
Non-vested........................................................... 3.9 10.1
---------------- -----------------
Accumulated Benefit Obligation......................................... $ 1,706.5 $ 1,682.3
================ =================
Plan assets at fair value.............................................. $ 1,867.4 $ 1,626.0
Projected benefit obligations.......................................... 1,801.3 1,765.5
---------------- -----------------
Projected benefit obligations (in excess of) or less than plan assets.. 66.1 (139.5)
Unrecognized prior service cost........................................ (9.9) (17.9)
Unrecognized net loss from past experience different
from that assumed.................................................... 95.0 280.0
Unrecognized net asset at transition................................... 3.1 4.7
Additional minimum liability........................................... - (19.3)
---------------- -----------------
Prepaid Pension Cost.................................................. $ 154.3 $ 108.0
================ =================
</TABLE>
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of projected benefit
obligations were 7.25% and 4.07%, respectively, at December 31, 1997 and
7.5% and 4.25%, respectively, at December 31, 1996. As of January 1,
1997 and 1996, the expected long-term rate of return on assets for the
retirement plan was 10.25%.
The Company recorded, as a reduction of shareholders' equity, an
additional minimum pension liability of $17.3 million and $12.9 million,
net of Federal income taxes, at December 31, 1997 and 1996,
respectively, primarily representing the excess of the accumulated
benefit obligation of the qualified pension plan over the accrued
liability.
The pension plan's assets include corporate and government debt
securities, equity securities, equity real estate and shares of group
trusts managed by Alliance.
Prior to 1987, the qualified plan funded participants' benefits through
the purchase of non-participating annuity contracts from Equitable Life.
Benefit payments under these contracts were approximately $33.2 million,
$34.7 million and $36.4 million for 1997, 1996 and 1995, respectively.
The Company provides certain medical and life insurance benefits
(collectively, "postretirement benefits") for qualifying employees,
managers and agents retiring from the Company (i) on or after attaining
age 55 who have at least 10 years of service or (ii) on or after
attaining age 65 or (iii) whose jobs have been abolished and who have
attained age 50 with 20 years of service. The life insurance benefits
are related to age and salary at retirement. The costs of postretirement
benefits are recognized in accordance with the provisions of SFAS No.
106. The Company continues to fund postretirement benefits costs on a
pay-as-you-go basis and, for 1997, 1996 and 1995, the Company made
estimated postretirement benefits payments of $18.7 million, $18.9
million and $31.1 million, respectively.
F-26
<PAGE>
The following table sets forth the postretirement benefits plan's
status, reconciled to amounts recognized in the Company's consolidated
financial statements:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Service cost....................................... $ 4.5 $ 5.3 $ 4.0
Interest cost on accumulated postretirement
benefits obligation.............................. 34.7 34.6 34.7
Net amortization and deferrals..................... 1.9 2.4 (2.3)
----------------- ---------------- -----------------
Net Periodic Postretirement Benefits Costs......... $ 41.1 $ 42.3 $ 36.4
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Accumulated postretirement benefits obligation:
Retirees............................................................. $ 388.5 $ 381.8
Fully eligible active plan participants.............................. 45.7 50.7
Other active plan participants....................................... 56.6 60.7
---------------- -----------------
490.8 493.2
Unrecognized prior service cost........................................ 40.3 50.5
Unrecognized net loss from past experience different
from that assumed and from changes in assumptions.................... (140.6) (150.5)
---------------- -----------------
Accrued Postretirement Benefits Cost................................... $ 390.5 $ 393.2
================ =================
</TABLE>
Since January 1, 1994, costs to the Company for providing these medical
benefits available to retirees under age 65 are the same as those
offered to active employees and costs to the Company of providing these
medical benefits will be limited to 200% of 1993 costs for all
participants.
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefits obligation was 8.75% in 1997,
gradually declining to 2.75% in the year 2009 and in 1996 was 9.5%,
gradually declining to 3.5% in the year 2009. The discount rate used in
determining the accumulated postretirement benefits obligation was 7.25%
and 7.50% at December 31, 1997 and 1996, respectively.
If the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefits obligation as of December 31, 1997
would be increased 7%. The effect of this change on the sum of the
service cost and interest cost would be an increase of 8%.
12) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivatives
The Insurance Group primarily uses derivatives for asset/liability risk
management and for hedging individual securities. Derivatives mainly are
utilized to reduce the Insurance Group's exposure to interest rate
fluctuations. Accounting for interest rate swap transactions is on an
accrual basis. Gains and losses related to interest rate swap
transactions are amortized as yield adjustments over the remaining life
of the underlying hedged security. Income and expense resulting from
interest rate swap activities are reflected in net investment income.
The notional amount of matched interest rate swaps outstanding at
December 31, 1997 and 1996, respectively, was $1,353.4 million and
$649.9 million. The average unexpired terms at December 31, 1997 ranged
from 1.5 to 3.8 years. At December 31, 1997, the cost of terminating
outstanding matched swaps in a loss position was $10.9 million and the
unrealized gain on outstanding matched swaps in a gain position was
$38.9 million. The Company has no intention of terminating these
contracts prior to maturity. During 1996 and 1995, net gains of $.2
million and $1.4 million, respectively, were recorded in connection with
interest rate swap activity. Equitable Life has implemented an interest
rate cap program designed to hedge crediting rates on interest-sensitive
individual annuities contracts. The outstanding notional amounts at
F-27
<PAGE>
December 31, 1997 of contracts purchased and sold were $7,250.0 million
and $875.0 million, respectively. The net premium paid by Equitable Life
on these contracts was $48.5 million and is being amortized ratably over
the contract periods ranging from 1 to 5 years. Income and expense
resulting from this program are reflected as an adjustment to interest
credited to policyholders' account balances.
Substantially all of DLJ's activities related to derivatives are, by
their nature trading activities which are primarily for the purpose of
customer accommodations. DLJ enters into certain contractual agreements
referred to as derivatives or off-balance-sheet financial instruments
involving futures, forwards and options. DLJ's derivative activities
consist of writing over-the-counter ("OTC") options to accommodate its
customer needs, trading in forward contracts in U.S. government and
agency issued or guaranteed securities and in futures contracts on
equity-based indices, interest rate instruments and currencies and
issuing structured products based on emerging market financial
instruments and indices. DLJ's involvement in swap contracts and
commodity derivative instruments is not significant.
Fair Value of Financial Instruments
The Company defines fair value as the quoted market prices for those
instruments that are actively traded in financial markets. In cases
where quoted market prices are not available, fair values are estimated
using present value or other valuation techniques. The fair value
estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument,
including estimates of the timing and amount of expected future cash
flows and the credit standing of counterparties. Such estimates do not
reflect any premium or discount that could result from offering for sale
at one time the Company's entire holdings of a particular financial
instrument, nor do they consider the tax impact of the realization of
unrealized gains or losses. In many cases, the fair value estimates
cannot be substantiated by comparison to independent markets, nor can
the disclosed value be realized in immediate settlement of the
instrument.
Certain financial instruments are excluded, particularly insurance
liabilities other than financial guarantees and investment contracts.
Fair market value of off-balance-sheet financial instruments of the
Insurance Group was not material at December 31, 1997 and 1996.
Fair values for mortgage loans on real estate are estimated by
discounting future contractual cash flows using interest rates at which
loans with similar characteristics and credit quality would be made.
Fair values for foreclosed mortgage loans and problem mortgage loans are
limited to the estimated fair value of the underlying collateral if
lower.
Fair values of policy loans are estimated by discounting the face value
of the loans from the time of the next interest rate review to the
present, at a rate equal to the excess of the current estimated market
rates over the current interest rate charged on the loan.
The estimated fair values for the Company's association plan contracts,
supplementary contracts not involving life contingencies ("SCNILC") and
annuities certain, which are included in policyholders' account
balances, and guaranteed interest contracts are estimated using
projected cash flows discounted at rates reflecting expected current
offering rates.
The estimated fair values for variable deferred annuities and single
premium deferred annuities ("SPDA"), which are included in
policyholders' account balances, are estimated by discounting the
account value back from the time of the next crediting rate review to
the present, at a rate equal to the excess of current estimated market
rates offered on new policies over the current crediting rates.
F-28
<PAGE>
Fair values for long-term debt is determined using published market
values, where available, or contractual cash flows discounted at market
interest rates. The estimated fair values for non-recourse mortgage debt
are determined by discounting contractual cash flows at a rate which
takes into account the level of current market interest rates and
collateral risk. The estimated fair values for recourse mortgage debt
are determined by discounting contractual cash flows at a rate based
upon current interest rates of other companies with credit ratings
similar to the Company. The Company's carrying value of short-term
borrowings approximates their estimated fair value.
The following table discloses carrying value and estimated fair value
for financial instruments not otherwise disclosed in Notes 3, 6 and 7:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------------
1997 1996
--------------------------------- ---------------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
--------------- ---------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C> <C>
Consolidated Financial Instruments:
Mortgage loans on real estate.......... $ 2,611.4 $ 2,822.8 $ 3,133.0 $ 3,394.6
Other limited partnership interests.... 509.4 509.4 467.0 467.0
Policy loans........................... 2,422.9 2,493.9 2,196.1 2,221.6
Policyholders' account balances -
investment contracts................. 12,611.0 12,714.0 12,908.7 12,992.2
Long-term debt......................... 1,569.0 1,531.5 1,592.8 1,557.7
Closed Block Financial Instruments:
Mortgage loans on real estate.......... 1,341.6 1,420.7 1,380.7 1,425.6
Other equity investments............... 86.3 86.3 105.0 105.0
Policy loans........................... 1,700.2 1,784.2 1,765.9 1,798.0
SCNILC liability....................... 27.6 30.3 30.6 34.9
Discontinued Operations Financial
Instruments:
Mortgage loans on real estate.......... 655.5 779.9 1,111.1 1,220.3
Fixed maturities....................... 38.7 38.7 42.5 42.5
Other equity investments............... 209.3 209.3 300.5 300.5
Guaranteed interest contracts.......... 37.0 34.0 290.7 300.5
Long-term debt......................... 102.0 102.1 102.1 102.2
</TABLE>
13) COMMITMENTS AND CONTINGENT LIABILITIES
The Company has provided, from time to time, certain guarantees or
commitments to affiliates, investors and others. These arrangements
include commitments by the Company, under certain conditions: to make
capital contributions of up to $202.6 million to affiliated real estate
joint ventures; and to provide equity financing to certain limited
partnerships of $362.1 million at December 31, 1997, under existing loan
or loan commitment agreements.
Equitable Life is the obligor under certain structured settlement
agreements which it had entered into with unaffiliated insurance
companies and beneficiaries. To satisfy its obligations under these
agreements, Equitable Life owns single premium annuities issued by
previously wholly owned life insurance subsidiaries. Equitable Life has
directed payment under these annuities to be made directly to the
beneficiaries under the structured settlement agreements. A contingent
liability exists with respect to these agreements should the previously
wholly owned subsidiaries be unable to meet their obligations.
Management believes the satisfaction of those obligations by Equitable
Life is remote.
The Insurance Group had $47.4 million of letters of credit outstanding
at December 31, 1997.
F-29
<PAGE>
14) LITIGATION
Equitable Life recently agreed to settle, subject to court approval,
previously disclosed cases brought by persons insured under Lifetime
Guaranteed Renewable Major Medical Insurance Policies issued by
Equitable Life (the "Policies") in New York (Golomb et al. v. The
Equitable Life Assurance Society of the United States), Pennsylvania
(Malvin et al. v. The Equitable Life Assurance Society of the United
States), Texas (Bowler et al. v. The Equitable Life Assurance Society of
the United States), Florida (Bachman v. The Equitable Life Assurance
Society of the United States) and California (Fletcher v. The Equitable
Life Assurance Society of the United States). Plaintiffs in these cases
claimed that Equitable Life's method for determining premium increases
breached the terms of certain forms of the Policies and was
misrepresented. Plaintiffs in Bowler and Fletcher also claimed that
Equitable Life misrepresented to policyholders in Texas and California,
respectively, that premium increases had been approved by insurance
departments in those states and determined annual rate increases in a
manner that discriminated against policyholders in those states in
violation of the terms of the Policies, representations to policyholders
and/or state law. The New York trial court dismissed the Golomb action
with prejudice and plaintiffs appealed. In Bowler and Fletcher,
Equitable Life denied the material allegations of the complaints and
filed motions for summary judgment which have been fully briefed. The
Malvin action was stayed indefinitely pending the outcome of proceedings
in Golomb and in Fletcher the magistrate concluded that the case should
be remanded to California state court and Equitable Life appealed that
determination to the district judge. On December 23, 1997, Equitable
Life entered into a settlement agreement, subject to court approval,
which would result in the dismissal with prejudice of each of the five
pending actions and the resolution of all similar claims on a nationwide
basis.
The settlement agreement provides for the creation of a nationwide class
consisting of all persons holding, and paying premiums on, the Policies
at any time since January 1, 1988. An amended complaint will be filed in
the federal district court in Tampa, Florida (where the Florida action
is pending), that would assert claims of the kind previously made in the
cases described above on a nationwide basis, on behalf of policyholders
in the nationwide class, which consists of approximately 127,000 former
and current policyholders. If the settlement is approved, Equitable Life
would pay $14,166,000 in exchange for release of all claims for past
damages on claims of the type described in the five pending actions and
the amended complaint. Costs of administering the settlement and any
attorneys' fees awarded by the court to plaintiffs' counsel would be
deducted from this fund before distribution of the balance to the class.
In addition to this payment, Equitable Life will provide future relief
to current holders of certain forms of the Policies in the form of an
agreement to be embodied in the court's judgment, restricting the
premium increases Equitable Life can seek on these Policies in the
future. The parties estimate the present value of these restrictions at
$23,333,000, before deduction of any attorneys' fees that may be awarded
by the court. The estimate is based on assumptions about future events
that cannot be predicted with certainty and accordingly the actual value
of the future relief may differ. The parties to the settlement shortly
will be asking the court to approve preliminarily the settlement and
settlement class and to permit distribution of notice of the settlement
to policyholders, establish procedures for objections, an opportunity to
opt out of the settlements as it affects past damages, and a court
hearing on whether the settlement should be finally approved. Equitable
Life cannot predict whether the settlement will be approved or, if it is
not approved, the outcome of the pending litigations. As noted,
proceedings in Malvin were stayed indefinitely; proceedings in the other
actions have been stayed or deferred to accommodate the settlement
approval process.
A number of lawsuits have been filed against life and health insurers in
the jurisdictions in which Equitable Life and its subsidiaries do
business involving insurers' sales practices, alleged agent misconduct,
alleged failure to properly supervise agents, and other matters. Some of
the lawsuits have resulted in the award of substantial judgments against
other insurers, including material amounts of punitive damages, or in
substantial settlements. In some states, juries have substantial
discretion in awarding punitive damages. Equitable Life, Equitable
Variable Life Insurance Company ("EVLICO," which was merged into
Equitable Life effective January 1, 1997, but whose existence continues
for certain limited purposes, including the defense of litigation) and
The Equitable of Colorado, Inc. ("EOC"), like other life and health
insurers, from time to time are involved in such litigation. Among
litigations pending against Equitable Life, EVLICO and EOC of the type
referred to in this paragraph are the litigations described in the
following seven paragraphs.
F-30
<PAGE>
An action was instituted on April 6, 1995 against Equitable Life and its
wholly owned subsidiary, EOC, in New York state court, entitled Sidney
C. Cole, et al. v. The Equitable Life Assurance Society of the United
States and The Equitable of Colorado, Inc. The action is brought by the
holders of a joint survivorship whole life policy issued by EOC. The
action purports to be on behalf of a class consisting of all persons who
from January 1, 1984 purchased life insurance policies sold by Equitable
Life and EOC based upon allegedly uniform sales presentations and policy
illustrations. The complaint puts in issue various alleged sales
practices that plaintiffs assert, among other things, misrepresented the
stated number of years that the annual premium would need to be paid.
Plaintiffs seek damages in an unspecified amount, imposition of a
constructive trust, and seek to enjoin Equitable Life and EOC from
engaging in the challenged sales practices. In June 1996, the Court
issued a decision and order dismissing with prejudice plaintiffs' causes
of action for fraud, constructive fraud, breach of fiduciary duty,
negligence, and unjust enrichment, and dismissing without prejudice
plaintiffs' cause of action under the New York State consumer protection
statute. The only remaining causes of action are for breach of contract
and negligent misrepresentation. In April 1997, plaintiffs noticed an
appeal from the court's June 1996 order. Subsequently, Equitable Life
and EOC noticed a cross-appeal from so much of the June 1996 order that
denied their motion to dismiss. Briefing on the appeals is scheduled to
begin on February 23, 1998. In June 1997, plaintiffs filed their
memorandum of law and affidavits in support of their motion for class
certification. That memorandum states that plaintiffs seek to certify a
class solely on their breach of contract claims, and not on their
negligent misrepresentation claim. Plaintiffs' class certification
motion has been fully briefed by the parties and is sub judice. In
August 1997, Equitable Life and EOC moved for summary judgment
dismissing plaintiffs' remaining claims of breach of contract and
negligent misrepresentation. Defendants' summary judgment motion has
been fully briefed by the parties. On January 5, 1998, plaintiffs filed
a note of issue (placing the case on the trial calendar).
On May 21, 1996, an action entitled Elton F. Duncan, III v. The
Equitable Life Assurance Society of the United States was commenced
against Equitable Life in the Civil District Court for the Parish of
Orleans, State of Louisiana. The action originally was brought by an
individual who purchased a whole life policy from Equitable Life in
1989. In September 1997, with leave of the court, plaintiff filed a
second amended petition naming six additional policyholder plaintiffs
and three new sales agent defendants. The sole named individual
defendant in the original petition is also named as a defendant in the
second amended petition. Plaintiffs purport to represent a class
consisting of all persons who purchased whole life or universal life
insurance policies from Equitable Life from January 1, 1981 through July
22, 1992. Plaintiffs allege improper sales practices based on
allegations of misrepresentations concerning one or more of the
following: the number of years that premiums would need to be paid; a
policy's suitability as an investment vehicle; and the extent to which a
policy was a proper replacement policy. Plaintiffs seek damages,
including punitive damages, in an unspecified amount. In October 1997,
Equitable Life filed (i) exceptions to the second amended petition,
asserting deficiencies in pleading of venue and vagueness; and (ii) a
motion to strike certain allegations. On January 23, 1998, the court
heard argument on Equitable Life's exceptions and motion to strike.
Those motions are sub judice. Motion practice regarding discovery
continues.
On July 26, 1996, an action entitled Michael Bradley v. Equitable
Variable Life Insurance Company was commenced in New York state court,
Kings County. The action is brought by the holder of a variable life
insurance policy issued by EVLICO. The plaintiff purports to represent a
class consisting of all persons or entities who purchased one or more
life insurance policies issued by EVLICO from January 1, 1980. The
complaint puts at issue various alleged sales practices and alleges
misrepresentations concerning the extent to which the policy was a
proper replacement policy and the number of years that the annual
premium would need to be paid. Plaintiff seeks damages, including
punitive damages, in an unspecified amount and also seeks injunctive
relief prohibiting EVLICO from canceling policies for failure to make
premium payments beyond the alleged stated number of years that the
annual premium would need to be paid. EVLICO answered the complaint,
denying the material allegations. In September 1996, Equitable Life,
EVLICO and EOC made a motion to have this proceeding moved from Kings
County Supreme Court to New York County for joint trial or consolidation
with the Cole action. The motion was denied by the Court in Cole in
January 1997. Plaintiff then moved for certification of a nationwide
class consisting of all persons or entities who, since January 1, 1980,
were sold one or more life insurance products based on
misrepresentations as to the number of years that the annual premium
would need to be paid, and/or who were allegedly induced to purchase
additional policies from EVLICO using the cash value accumulated in
existing policies. Defendants have opposed this motion. Discovery and
briefing regarding plaintiff's motion for class certification are
ongoing.
F-31
<PAGE>
On December 12, 1996, an action entitled Robert E. Dillon v. The
Equitable Life Assurance Society of the United States and The Equitable
of Colorado, was commenced in the United States District Court for the
Southern District of Florida. The action is brought by an individual who
purchased a joint whole life policy from EOC in 1988. The complaint puts
in issue various alleged sales practices and alleges misrepresentations
concerning the alleged impropriety of replacement policies issued by
Equitable Life and EOC and alleged misrepresentations regarding the
number of years premiums would have to be paid on the defendants'
policies. Plaintiff alleges claims for breach of contract, fraud,
negligent misrepresentation, money had and received, unjust enrichment
and imposition of a constructive trust. Plaintiff purports to represent
two classes of persons. The first is a "contract class," consisting of
all persons who purchased whole or universal life insurance policies
from Equitable Life and EOC and from whom Equitable Life and EOC have
sought additional payments beyond the number of years allegedly promised
by Equitable Life and EOC. The second is a "fraud class," consisting of
all persons with an interest in policies issued by Equitable Life and
EOC at any time since October 1, 1986. Plaintiff seeks damages in an
unspecified amount, and also seeks injunctive relief attaching Equitable
Life's and EOC's profits from their alleged sales practices. In May
1997, plaintiff served a motion for class certification. In July 1997,
the parties submitted to the Court a joint scheduling report, joint
scheduling order and a confidentiality stipulation and order. The Court
signed the latter stipulation, and the others remain sub judice. Further
briefing on plaintiff's class certification motion will await entry of a
scheduling order and further class certification discovery, which has
commenced and is on-going. In January 1998, the judge assigned to the
case recused himself, and the case was reassigned. Defendants are to
serve their answer in February 1998.
On January 3, 1996, an amended complaint was filed in an action entitled
Frank Franze Jr. and George Busher, individually and on behalf of all
others similarly situated v. The Equitable Life Assurance Society of the
United States, and Equitable Variable Life Insurance Company, No.
94-2036 in the United States District Court for the Southern District of
Florida. The action was brought by two individuals who purchased
variable life insurance policies. The plaintiffs purport to represent a
nationwide class consisting of all persons who purchased variable life
insurance policies from Equitable Life and EVLICO since September 30,
1991. The amended complaint alleges that Equitable Life's and EVLICO's
agents were trained not to disclose fully that the product being sold
was life insurance. Plaintiffs allege violations of the Federal
securities laws and seek rescission of the contracts or compensatory
damages and attorneys' fees and expenses. Equitable Life and EVLICO have
answered the amended complaint, denying the material allegations and
asserting certain affirmative defenses. Motion practice regarding
discovery continues.
On January 9, 1997, an action entitled Rosemarie Chaviano, individually
and on behalf of all others similarly situated v. The Equitable Life
Assurance Society of the United States, and Equitable Variable Life
Insurance Company, was filed in Massachusetts state court making claims
similar to those in the Franze action and alleging violations of the
Massachusetts securities laws. The plaintiff purports to represent all
persons in Massachusetts who purchased variable life insurance contracts
from Equitable Life and EVLICO from January 9, 1993 to the present. The
Massachusetts action seeks rescission of the contracts or compensatory
damages, attorneys' fees, expenses and injunctive relief. Plaintiff
filed an amended complaint in April 1997. In July 1997, Equitable Life
served a motion to dismiss the amended complaint or, in the alternative,
for summary judgment. On September 12, 1997, plaintiff moved for class
certification. This motion is scheduled for hearing on February 18,
1998.
On September 11, 1997, an action entitled Pamela L. and James A. Luther,
individually and as representatives of all people similarly situated v.
The Equitable Life Assurance Society of the United States, The Equitable
Companies Incorporated, and Casey Cammack, individually and as agent for
The Equitable Life Assurance Society of the United States and The
Equitable Companies Incorporated, was filed in Texas state court. The
action was brought by holders of a whole life policy and the beneficiary
under that policy. Plaintiffs purport to represent a nationwide class of
persons having an ownership or beneficial interest in whole and
universal life policies issued by Equitable Life from January 1, 1982
through December 31, 1996. Also included in the purported class are
persons having an ownership interest in variable annuities purchased
from Equitable Life from January 1, 1992 to the present. The complaint
puts in issue the allegations that uniform sales presentations,
illustrations, and materials that Equitable Life agents used
misrepresented the stated number of years that premiums would need to be
paid and misrepresented the extent to which the policies at issue were
F-32
<PAGE>
proper replacement policies. Plaintiffs seek compensatory damages,
attorneys' fees and expenses. In October 1997, Equitable Life served a
general denial of the allegations against it. The same day, the Holding
Company entered a special appearance contesting the court's jurisdiction
over it. In November 1997, Equitable Life filed a plea in abatement,
which, under Texas law, stayed further proceedings in the case because
plaintiffs had not served a demand letter. Plaintiffs served a demand
letter upon Equitable Life and the Holding Company, the response to
which is due 60 days thereafter. Although the outcome of litigation
cannot be predicted with certainty, particularly in the early stages of
an action, the Company's management believes that the ultimate
resolution of the Cole, Duncan, Bradley, Dillon, Franze, Chaviano and
Luther litigations should not have a material adverse effect on the
financial position of the Company. The Company's management cannot make
an estimate of loss, if any, or predict whether or not any such
litigation will have a material adverse effect on the Company's results
of operations in any particular period.
On September 12, 1997, the United States District Court for the Northern
District of Alabama, Southern Division, entered an order certifying
James Brown as the representative of a class consisting of "[a]ll
African-Americans who applied but were not hired for, were discouraged
from applying for, or would have applied for the position of Sales Agent
in the absence of the discriminatory practices, and/or procedures in the
[former] Southern Region of The Equitable from May 16, 1987 to the
present." The second amended complaint in James W. Brown, on behalf of
others similarly situated v. The Equitable Life Assurance Society of the
United States, alleges, among other things, that Equitable Life
discriminated on the basis of race against African-American applicants
and potential applicants in hiring individuals as sales agents.
Plaintiffs seek a declaratory judgment and affirmative and negative
injunctive relief, including the payment of back-pay, pension and other
compensation. Although the outcome of any litigation cannot be predicted
with certainty, the Company's management believes that the ultimate
resolution of this matter should not have a material adverse effect on
the financial position of the Company. The Company's management cannot
make an estimate of loss, if any, or predict whether or not such matter
will have a material adverse effect on the Company's results of
operations in any particular period.
The U.S. Department of Labor ("DOL") is conducting an investigation of
Equitable Life's management of the Prime Property Fund ("PPF"). PPF is
an open-end, commingled real estate separate account of Equitable Life
for pension clients. Equitable Life serves as investment manager in PPF
and retains EREIM as advisor. Equitable Life agreed to indemnify the
purchaser of EREIM (which Equitable Life sold in June 1997) with respect
to any fines, penalties and rebates to clients in connection with this
investigation. In early 1995, the DOL commenced a national investigation
of commingled real estate funds with pension investors, including PPF.
The investigation appears to be focused principally on appraisal and
valuation procedures in respect of fund properties. The most recent
request from the DOL seems to reflect, at least in part, an interest in
the relationship between the valuations for those properties reflected
in appraisals prepared for local property tax proceedings and the
valuations used by PPF for other purposes. At no time has the DOL made
any specific allegation that Equitable Life or EREIM has acted
improperly and Equitable Life and EREIM believe that any such allegation
would be without foundation. While the outcome of this investigation
cannot be predicted with certainty, the Company's management believes
that the ultimate resolution of this matter should not have a material
adverse effect on the financial position of the Company. The Company's
management cannot make an estimate of loss, if any, or predict whether
or not this investigation will have a material adverse effect on the
Company's results of operations in any particular period.
On July 25, 1995, a Consolidated and Supplemental Class Action Complaint
("Complaint") was filed against Alliance North American Government
Income Trust, Inc. (the "Fund"), Alliance and certain other defendants
affiliated with Alliance, including the Holding Company, alleging
violations of Federal securities laws, fraud and breach of fiduciary
duty in connection with the Fund's investments in Mexican and Argentine
securities. The Complaint, which sought certification of a plaintiff
class of persons who purchased or owned Class A, B or C shares of the
Fund from March 27, 1992 through December 23, 1994, sought an
unspecified amount of damages, costs, attorneys' fees and punitive
damages. The principal allegations are that the Fund purchased debt
securities issued by the Mexican and Argentine governments in amounts
that were not permitted by the Fund's investment objective, and that
there was no shareholder vote to change the investment objective to
permit purchases in such amounts. The Complaint further alleged that the
decline in the value of the Mexican and Argentine securities held by the
Fund caused the Fund's net asset value to decline to the detriment of
the Fund's shareholders. On September 26, 1996, the United States
District Court for the Southern District of
F-33
<PAGE>
New York granted the defendants' motion to dismiss all counts of the
Complaint ("First Decision"). On October 11, 1996, plaintiffs filed a
motion for reconsideration of the First Decision. On November 25, 1996,
the court denied plaintiffs' motion for reconsideration of the First
Decision. On October 29, 1997, the United States Court of Appeals for
the Second Circuit issued an order granting defendants' motion to strike
and dismissing plaintiffs' appeal of the First Decision. On October 29,
1996, plaintiffs filed a motion for leave to file an amended complaint.
The principal allegations of the proposed amended complaint are that (i)
the Fund failed to hedge against the risks of investing in foreign
securities despite representations that it would do so, (ii) the Fund
did not properly disclose that it planned to invest in mortgage-backed
derivative securities and (iii) two advertisements used by the Fund
misrepresented the risks of investing in the Fund. On July 15, 1997, the
District Court denied plaintiffs' motion for leave to file an amended
complaint and ordered that the case be dismissed ("Second Decision").
The plaintiffs have appealed the Second Decision to the United States
Court of Appeals for the Second Circuit. While the ultimate outcome of
this matter cannot be determined at this time, management of Alliance
does not expect that it will have a material adverse effect on
Alliance's results of operations or financial condition.
On January 26, 1996, a purported purchaser of certain notes and warrants
to purchase shares of common stock of Rickel Home Centers, Inc.
("Rickel") filed a class action complaint against Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC") and certain other defendants
for unspecified compensatory and punitive damages in the U. S. District
Court for the Southern District of New York. The suit was brought on
behalf of the purchasers of 126,457 units consisting of $126,457,000
aggregate principal amount of 13 1/2% senior notes due 2001 and 126,457
warrants to purchase shares of common stock of Rickel issued by Rickel
in October 1994. The complaint alleges violations of federal securities
laws and common law fraud against DLJSC, as the underwriter of the units
and as an owner of 7.3% of the common stock of Rickel, Eos Partners,
L.P., and General Electric Capital Corporation, each as owners of 44.2%
of the common stock of Rickel, and members of the board of directors of
Rickel, including a DLJSC managing director. The complaint seeks to hold
DLJSC liable for alleged misstatements and omissions contained in the
prospectus and registration statement filed in connection with the
offering of the units, alleging that the defendants knew of financial
losses and a decline in value of Rickel in the months prior to the
offering and did not disclose such information. The complaint also
alleges that Rickel failed to pay its semi-annual interest payment due
on the units on December 15, 1995, and that Rickel filed a voluntary
petition for reorganization pursuant to Chapter 11 of the Bankruptcy
Code on January 10, 1996. DLJSC intends to defend itself vigorously
against all of the allegations contained in the complaint. Although
there can be no assurance, DLJ does not believe that the outcome of this
litigation will have a material adverse effect on its financial
condition. Due to the early stage of this litigation, based on the
information currently available to it, DLJ's management cannot make an
estimate of loss, if any, or predict whether or not such litigation will
have a material adverse effect on DLJ's results of operations in any
particular period.
In October 1995, DLJSC was named as a defendant in a purported class
action filed in a Texas State Court on behalf of the holders of $550.0
million principal amount of subordinated redeemable discount debentures
of National Gypsum Corporation ("NGC") canceled in connection with a
Chapter 11 plan of reorganization for NGC consummated in July 1993. The
named plaintiff in the State Court action also filed an adversary
proceeding in the U.S. Bankruptcy Court for the Northern District of
Texas seeking a declaratory judgment that the confirmed NGC plan of
reorganization does not bar the class action claims. Subsequent to the
consummation of NGC's plan of reorganization, NGC's shares traded for
values substantially in excess of, and in 1995 NGC was acquired for a
value substantially in excess of, the values upon which NGC's plan of
reorganization was based. The two actions arise out of DLJSC's
activities as financial advisor to NGC in the course of NGC's Chapter 11
reorganization proceedings. The class action complaint alleges that the
plan of reorganization submitted by NGC was based upon projections by
NGC and DLJSC which intentionally understated forecasts, and provided
misleading and incorrect information in order to hide NGC's true value
and that defendants breached their fiduciary duties by, among other
things, providing false, misleading or incomplete information to
deliberately understate the value of NGC. The class action complaint
seeks compensatory and punitive damages purportedly sustained by the
class. On October 10, 1997, DLJSC and
F-34
<PAGE>
others were named as defendants in a new adversary proceeding in the
Bankruptcy Court brought by the NGC Settlement Trust, an entity created
by the NGC plan of reorganization to deal with asbestos-related claims.
The Trust's allegations are substantially similar to the claims in the
State Court action. In court papers dated October 16, 1997, the State
Court plaintiff indicated that he would intervene in the Trust's
adversary proceeding. On January 21, 1998, the Bankruptcy Court ruled
that the State Court plaintiff's claims were not barred by the NGC plan
of reorganization insofar as they alleged nondisclosure of certain cost
reductions announced by NGC in October 1993. The Texas State Court
action, which had been removed to the Bankruptcy Court, has been
remanded back to the state court, which remand is being opposed by
DLJSC. DLJSC intends to defend itself vigorously against all of the
allegations contained in the complaints. Although there can be no
assurance, DLJ does not believe that the ultimate outcome of this
litigation will have a material adverse effect on its financial
condition. Due to the early stage of such litigation, based upon the
information currently available to it, DLJ's management cannot make an
estimate of loss, if any, or predict whether or not such litigation will
have a material adverse effect on DLJ's results of operations in any
particular period.
In November and December 1995, DLJSC, along with various other parties,
was named as a defendant in a number of purported class actions filed in
the U.S. District Court for the Eastern District of Louisiana. The
complaints allege violations of the federal securities laws arising out
of a public offering in 1994 of $435.0 million of first mortgage notes
of Harrah's Jazz Company and Harrah's Jazz Finance Corp. The complaints
seek to hold DLJSC liable for various alleged misstatements and
omissions contained in the prospectus dated November 9, 1994. On
February 26, 1997, the parties agreed to a settlement of these actions,
subject to the District Court's approval, which was granted on July 31,
1997. The settlement is also subject to approval by the U.S. Bankruptcy
Court for the Eastern District of Louisiana of proposed modifications to
a confirmed plan of reorganization for Harrah's Jazz Company and
Harrah's Jazz Finance Corp., and the satisfaction or waiver of all
conditions to the effectiveness of the plan, as provided in the plan.
There can be no assurance of the Bankruptcy Court's approval of the
modifications to the plan of reorganization, or that the conditions to
the effectiveness of the plan will be satisfied or waived. In the
opinion of DLJ's management, the settlement, if approved, will not have
a material adverse effect on DLJ's results of operations or on its
consolidated financial condition.
In addition to the matters described above, Equitable Life and its
subsidiaries and DLJ and its subsidiaries are involved in various legal
actions and proceedings in connection with their businesses. Some of the
actions and proceedings have been brought on behalf of various alleged
classes of claimants and certain of these claimants seek damages of
unspecified amounts. While the ultimate outcome of such matters cannot
be predicted with certainty, in the opinion of management no such matter
is likely to have a material adverse effect on the Company's
consolidated financial position or results of operations.
15) LEASES
The Company has entered into operating leases for office space and
certain other assets, principally data processing equipment and office
furniture and equipment. Future minimum payments under noncancelable
leases for 1998 and the succeeding four years are $93.5 million, $84.4
million, $70.2 million, $56.4 million, $47.0 million and $489.3 million
thereafter. Minimum future sub-lease rental income on these
noncancelable leases for 1998 and the succeeding four years are $7.3
million, $5.9 million, $3.8 million, $2.4 million, $.8 million and $2.9
million thereafter.
At December 31, 1997, the minimum future rental income on noncancelable
operating leases for wholly owned investments in real estate for 1997
and the succeeding four years are $247.0 million, $238.1 million, $218.7
million, $197.9 million, $169.1 million and $813.0 million thereafter.
F-35
<PAGE>
16) OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Compensation costs................................. $ 721.5 $ 704.8 $ 628.4
Commissions........................................ 409.6 329.5 314.3
Short-term debt interest expense................... 31.7 8.0 11.4
Long-term debt interest expense.................... 121.2 137.3 108.1
Amortization of policy acquisition costs........... 287.3 405.2 317.8
Capitalization of policy acquisition costs......... (508.0) (391.9) (391.0)
Rent expense, net of sub-lease income.............. 101.8 113.7 109.3
Cursitor intangible assets writedown............... 120.9 - -
Other.............................................. 917.9 769.1 677.5
----------------- ---------------- -----------------
Total.............................................. $ 2,203.9 $ 2,075.7 $ 1,775.8
================= ================ =================
</TABLE>
During 1997, 1996 and 1995, the Company restructured certain operations
in connection with cost reduction programs and recorded pre-tax
provisions of $42.4 million, $24.4 million and $32.0 million,
respectively. The amounts paid during 1997, associated with cost
reduction programs, totaled $22.8 million. At December 31, 1997, the
liabilities associated with cost reduction programs amounted to $62.0
million. The 1997 cost reduction program include costs related to
employee termination and exit costs. The 1996 cost reduction program
included restructuring costs related to the consolidation of insurance
operations' service centers. The 1995 cost reduction program included
relocation expenses, including the accelerated amortization of building
improvements associated with the relocation of the home office.
Amortization of DAC in 1996 included a $145.0 million writeoff of DAC
related to DI contracts.
17) INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
Equitable Life is restricted as to the amounts it may pay as dividends
to the Holding Company. Under the New York Insurance Law, the
Superintendent has broad discretion to determine whether the financial
condition of a stock life insurance company would support the payment of
dividends to its shareholders. For 1997, 1996 and 1995, statutory net
loss totaled $351.7 million, $351.1 million and $352.4 million,
respectively. No amounts are expected to be available for dividends from
Equitable Life to the Holding Company in 1998.
At December 31, 1997, the Insurance Group, in accordance with various
government and state regulations, had $19.7 million of securities
deposited with such government or state agencies.
F-36
<PAGE>
Accounting practices used to prepare statutory financial statements for
regulatory filings of stock life insurance companies differ in certain
instances from GAAP. The following reconciles the Insurance Group's
statutory change in surplus and capital stock and statutory surplus and
capital stock determined in accordance with accounting practices
prescribed by the New York Insurance Department with net earnings and
equity on a GAAP basis.
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Net change in statutory surplus and
capital stock.................................... $ 203.6 $ 56.0 $ 78.1
Change in asset valuation reserves................. 147.1 (48.4) 365.7
----------------- ---------------- -----------------
Net change in statutory surplus, capital stock
and asset valuation reserves..................... 350.7 7.6 443.8
Adjustments:
Future policy benefits and policyholders'
account balances............................... (31.1) (298.5) (66.0)
DAC.............................................. 220.7 (13.3) 73.2
Deferred Federal income taxes.................... 103.1 108.0 (158.1)
Valuation of investments......................... 46.8 289.8 189.1
Valuation of investment subsidiary............... (555.8) (117.7) (188.6)
Limited risk reinsurance......................... 82.3 92.5 416.9
Issuance of surplus notes........................ - - (538.9)
Postretirement benefits.......................... (3.1) 28.9 (26.7)
Other, net....................................... 30.3 12.4 115.1
GAAP adjustments of Closed Block................. 3.6 (9.8) 15.7
GAAP adjustments of discontinued operations...... 189.7 (89.6) 37.3
----------------- ---------------- -----------------
Net Earnings of the Insurance Group................ $ 437.2 $ 10.3 $ 312.8
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Statutory surplus and capital stock................ $ 2,462.5 $ 2,258.9 $ 2,202.9
Asset valuation reserves........................... 1,444.6 1,297.5 1,345.9
----------------- ---------------- -----------------
Statutory surplus, capital stock and asset
valuation reserves............................... 3,907.1 3,556.4 3,548.8
Adjustments:
Future policy benefits and policyholders'
account balances............................... (1,336.1) (1,305.0) (1,006.5)
DAC.............................................. 3,236.6 3,104.9 3,075.8
Deferred Federal income taxes.................... (370.8) (306.1) (452.0)
Valuation of investments......................... 783.5 286.8 417.7
Valuation of investment subsidiary............... (1,338.6) (782.8) (665.1)
Limited risk reinsurance......................... (254.2) (336.5) (429.0)
Issuance of surplus notes........................ (539.0) (539.0) (538.9)
Postretirement benefits.......................... (317.5) (314.4) (343.3)
Other, net....................................... 203.7 126.3 4.4
GAAP adjustments of Closed Block................. 814.3 783.7 830.8
GAAP adjustments of discontinued operations...... 71.5 (190.3) (184.6)
----------------- ---------------- -----------------
Equity of the Insurance Group...................... $ 4,860.5 $ 4,084.0 $ 4,258.1
================= ================ =================
</TABLE>
F-37
<PAGE>
18) BUSINESS SEGMENT INFORMATION
The Company has two major business segments: Insurance Operations and
Investment Services. Interest expense related to debt not specific to
either business segment is presented as Corporate interest expense.
Information for all periods is presented on a comparable basis.
Insurance Operations offers a variety of traditional, variable and
interest-sensitive life insurance products, disability income, annuity
products, mutual fund and other investment products to individuals and
small groups and administers traditional participating group annuity
contracts with conversion features, generally for corporate qualified
pension plans, and association plans which provide full service
retirement programs for individuals affiliated with professional and
trade associations. This segment includes Separate Accounts for
individual insurance and annuity products.
Investment Services provides investment fund management, primarily to
institutional clients. This segment includes the Company's equity
interest in DLJ and Separate Accounts which provide various investment
options for group clients through pooled or single group accounts.
Intersegment investment advisory and other fees of approximately $81.9
million, $127.5 million and $124.1 million for 1997, 1996 and 1995,
respectively, are included in total revenues of the Investment Services
segment. These fees, excluding amounts related to the GIC Segment of
$5.1 million, $15.7 million and $14.7 million for 1997, 1996 and 1995,
respectively, are eliminated in consolidation.
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Insurance operations............................... $ 3,684.2 $ 3,770.6 $ 3,614.6
Investment services................................ 1,455.1 1,126.1 949.1
Consolidation/elimination.......................... (19.9) (24.5) (34.9)
----------------- ---------------- -----------------
Total.............................................. $ 5,119.4 $ 4,872.2 $ 4,528.8
================= ================ =================
Earnings (loss) from continuing operations before Federal income taxes,
minority interest and cumulative effect of accounting change
Insurance operations............................... $ 250.3 $ (36.6) $ 303.1
Investment services................................ 485.7 311.9 224.0
Consolidation/elimination.......................... - .2 (3.1)
----------------- ---------------- -----------------
Subtotal..................................... 736.0 275.5 524.0
Corporate interest expense......................... (65.3) (66.9) (27.9)
----------------- ---------------- -----------------
Total.............................................. $ 670.7 $ 208.6 $ 496.1
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Insurance operations................................................... $ 68,305.9 $ 60,464.9
Investment services.................................................... 13,719.8 13,542.5
Consolidation/elimination.............................................. (403.6) (399.6)
---------------- -----------------
Total.................................................................. $ 81,622.1 $ 73,607.8
================ =================
</TABLE>
F-38
<PAGE>
19) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations for 1997 and 1996, are summarized
below:
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------------------------
March 31 June 30 September 30 December 31
----------------- ----------------- ------------------ ------------------
(In Millions)
<S> <C> <C> <C> <C>
1997
Total Revenues................ $ 1,266.0 $ 1,552.8 $ 1,279.0 $ 1,021.6
================= ================= ================== ==================
Earnings from Continuing
Operations before
Cumulative Effect
of Accounting Change........ $ 117.4 $ 222.5 $ 145.1 $ 39.4
================= ================= ================== ==================
Net Earnings (Loss)........... $ 114.1 $ 223.1 $ 144.9 $ (44.9)
================= ================= ================== ==================
1996
Total Revenues................ $ 1,176.5 $ 1,199.4 $ 1,198.4 $ 1,297.9
================= ================= ================== ==================
Earnings (Loss) from
Continuing Operations
before Cumulative Effect
of Accounting Change........ $ 94.8 $ 87.1 $ 93.2 $ (157.9)
================= ================= ================== ==================
Net Earnings (Loss)........... $ 71.7 $ 87.1 $ 93.2 $ (241.7)
================= ================= ================== ==================
</TABLE>
Net earnings for the three months ended December 31, 1997 includes a
charge of $212.0 million related to additions to valuation allowances on
and writeoffs of real estate of $225.2 million, and reserve
strengthening on discontinued operations of $84.3 million offset by a
reversal of prior years tax reserves of $97.5 million. Net earnings for
the three months ended December 31, 1996 includes a charge of $339.3
million related to writeoffs of DAC on DI contracts of $94.3 million and
reserve strengthenings on DI business of $113.7 million, Pension Par of
$47.5 million and Discontinued Operations of $83.8 million.
20) INVESTMENT IN DLJ
At December 31, 1997, the Company's ownership of DLJ interest was
approximately 34.4%. The Company's ownership interest will be further
reduced upon the issuance of common stock after the vesting of
forfeitable restricted stock units acquired by and/or the exercise of
options granted to certain DLJ employees. DLJ restricted stock units
represents forfeitable rights to receive approximately 5.2 million
shares of DLJ common stock through February 2000.
The results of operations of DLJ are accounted for on the equity basis
and are included in commissions, fees and other income in the
consolidated statements of earnings. The Company's carrying value of DLJ
is included in investment in and loans to affiliates in the consolidated
balance sheets.
F-39
<PAGE>
Summarized balance sheets information for DLJ, reconciled to the
Company's carrying value of DLJ, are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Assets:
Trading account securities, at market value............................ $ 16,535.7 $ 15,728.1
Securities purchased under resale agreements........................... 22,628.8 20,598.7
Broker-dealer related receivables...................................... 28,159.3 16,858.8
Other assets........................................................... 3,182.0 2,318.1
---------------- -----------------
Total Assets........................................................... $ 70,505.8 $ 55,503.7
================ =================
Liabilities:
Securities sold under repurchase agreements............................ $ 36,006.7 $ 29,378.3
Broker-dealer related payables......................................... 25,706.1 19,409.7
Short-term and long-term debt.......................................... 3,670.6 2,704.5
Other liabilities...................................................... 2,860.9 2,164.0
---------------- -----------------
Total liabilities...................................................... 68,244.3 53,656.5
DLJ's company-obligated mandatorily redeemed preferred
securities of subsidiary trust holding solely debentures of DLJ...... 200.0 200.0
Total shareholders' equity............................................. 2,061.5 1,647.2
---------------- -----------------
Total Liabilities, Cumulative Exchangeable Preferred Stock and
Shareholders' Equity................................................. $ 70,505.8 $ 55,503.7
================ =================
DLJ's equity as reported............................................... $ 2,061.5 $ 1,647.2
Unamortized cost in excess of net assets acquired in 1985
and other adjustments................................................ 23.5 23.9
The Holding Company's equity ownership in DLJ.......................... (740.2) (590.2)
Minority interest in DLJ............................................... (729.3) (588.6)
---------------- -----------------
The Company's Carrying Value of DLJ.................................... $ 615.5 $ 492.3
================ =================
</TABLE>
Summarized statements of earnings information for DLJ reconciled to the
Company's equity in earnings of DLJ is as follows:
<TABLE>
<CAPTION>
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Commission, fees and other income...................................... $ 2,356.8 $ 1,818.2
Net investment income.................................................. 1,652.1 1,074.2
Dealer, trading and investment gains, net.............................. 631.6 598.4
---------------- -----------------
Total revenues......................................................... 4,640.5 3,490.8
Total expenses including income taxes.................................. 4,232.3 3,199.5
---------------- -----------------
Net earnings........................................................... 408.2 291.3
Dividends on preferred stock........................................... 12.1 18.7
---------------- -----------------
Earnings Applicable to Common Shares................................... $ 396.1 $ 272.6
================ =================
DLJ's earnings applicable to common shares as reported................. $ 396.1 $ 272.6
Amortization of cost in excess of net assets acquired in 1985.......... (1.3) (3.1)
The Holding Company's equity in DLJ's earnings......................... (156.8) (107.8)
Minority interest in DLJ............................................... (109.1) (73.4)
---------------- -----------------
The Company's Equity in DLJ's Earnings................................. $ 128.9 $ 88.3
================ =================
</TABLE>
F-40
<PAGE>
21) ACCOUNTING FOR STOCK-BASED COMPENSATION
The Holding Company sponsors a stock option plan for employees of
Equitable Life. DLJ and Alliance each sponsor their own stock option
plans for certain employees. The Company has elected to continue to
account for stock-based compensation using the intrinsic value method
prescribed in APB No. 25. Had compensation expense for the Holding
Company, DLJ and Alliance Stock Option Incentive Plan options been
determined based on SFAS No. 123's fair value based method, the
Company's pro forma net earnings for 1997, 1996 and 1995 would have
been:
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C>
Net Earnings:
As Reported............................................. $ 437.2 $ 10.3 $ 312.8
Pro Forma............................................... $ 426.3 $ 3.3 $ 311.3
</TABLE>
The fair value of options granted after December 31, 1994, used as a
basis for the above pro forma disclosures, was estimated as of the date
of grants using the Black-Scholes option pricing model. The option
pricing assumptions for 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
Holding Company DLJ Alliance
------------------------------ ------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
-------------------- --------- ---------- ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividend yield.... 0.48% 0.80% 0.96% 0.86% 1.54% 1.85% 8.00% 8.00% 8.00%
Expected volatility 20.00% 20.00% 20.00% 33.00% 25.00% 25.00% 26.00% 23.00% 23.00%
Risk-free interest
rate............ 5.99% 5.92% 6.83% 5.96% 6.07% 5.86% 5.70% 5.80% 6.00%
Expected life..... 5 years 5 years 5 years 5 years 5 years 5 years 7.6 years 7.43 years 7.43 years
Weighted average
grant-date fair
value per option $12.25 $6.94 $5.90 $22.45 $9.35 $7.36 $4.36 $2.69 $2.24
</TABLE>
F-41
<PAGE>
A summary of the Holding Company, DLJ and Alliance's option plans is as
follows:
<TABLE>
<CAPTION>
Holding Company DLJ Alliance
----------------------------- ----------------------------- -----------------------------
Options Options Options
Outstanding Outstanding Outstanding
Weighted Weighted Weighted
Average Average Average
Shares Exercise Shares Exercise Units Exercise
(In Millions) Price (In Millions) Price (In Millions) Price
--------------- ------------- --------------- ------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of
January 1, 1995........ 6.8 $20.31 - 3.8 $15.46
Granted................ .4 $20.27 9.2 $27.00 1.8 $20.54
Exercised.............. (.1) $20.00 - (.5) $11.20
Expired................ (.1) $20.00 - -
Forfeited.............. (.3) $22.24 - (.3) $16.64
--------------- ------------- ---------------
Balance as of
December 31, 1995...... 6.7 $20.27 9.2 $27.00 4.8 $17.72
Granted................ .7 $24.94 2.1 $32.54 .7 $25.12
Exercised.............. (.1) $19.91 - (.4) $13.64
Expired................ - - -
Forfeited.............. (.6) $20.21 (.2) $27.00 (.1) $19.32
--------------- ------------- ---------------
Balance as of
December 31, 1996...... 6.7 $20.79 11.1 $28.06 5.0 $19.07
Granted................ 3.2 $41.85 3.2 $61.07 1.1 $36.56
Exercised.............. (1.6) $20.26 (.1) $32.03 (.6) $16.11
Forfeited.............. (.4) $23.43 (.1) $27.51 (.2) $21.28
--------------- ------------- ---------------
Balance as of
December 31, 1997...... 7.9 $29.05 14.1 $35.56 5.3 $22.82
=============== ============= ===============
</TABLE>
F-42
<PAGE>
Information about options outstanding and exercisable at December 31,
1997 is as follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------------- ------------------------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices (In Millions) Life (Years) Price (In Millions) Price
--------------------- ----------------- ----------------- --------------- ------------------- ----------------
Holding
Company
----------------------
<S> <C> <C> <C> <C> <C>
$18.125 -$27.75 4.8 5.84 $20.94 3.0 $20.41
$28.50 -$45.25 3.1 9.57 $41.84 - -
----------------- -------------------
$18.125 -$45.25 7.9 7.29 $29.05 3.0 $20.41
================= ================= =============== =================== ================
DLJ
----------------------
$27.00 -$35.99 10.9 8.0 $28.05 4.9 $27.58
$36.00 -$50.99 .8 9.3 $40.04 - -
$51.00 -$76.00 2.4 9.8 $67.77 - -
----------------- -------------------
$27.00 -$76.00 14.1 8.4 $35.56 4.9 $27.58
================= ================= ================ =================== =================
Alliance
----------------------
$ 6.0625 -$17.75 1.1 3.86 $13.20 1.0 $13.04
$19.375 -$19.75 .8 7.34 $19.39 .3 $19.39
$19.875 -$21.375 1.1 8.28 $20.13 .6 $20.19
$22.25 -$27.50 1.3 9.81 $23.81 .4 $23.29
$36.9375 -$37.5625 1.0 9.95 $36.95 - -
----------------- -------------------
$ 6.0625 -$37.5625 5.3 7.58 $22.82 2.3 $17.43
================= ================== ============== ====================== =============
</TABLE>
F-43
<PAGE>
================================================================================
[LOGO] (TM) ----------
RETIREMENT
----------
INVESTMENT
----------
ACCOUNT(R)
----------
SEPARATE ACCOUNT UNITS OF INTEREST
UNDER GROUP ANNUITY CONTRACTS
================================================================================
INVESTMENTS FUNDS
-----------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
POOLED SEPARATE ACCOUNTS SEPARATE ACCOUNT NO. 51 SEPARATE ACCOUNT NO. 66
<S> <C> <C>
o Alliance Bond, Separate Account No. 13 o Alliance Money Market o T. Rowe Price Equity Income
-- Pooled o Alliance Intermediate Government o EQ/Putnam Growth & Income Value
o Alliance Balanced, Separate Account Securities o Merrill Lynch Basic Value Equity
No. 10-- Pooled o Alliance Quality Bond o MFS Research
o Alliance Common Stock, Separate o Alliance High Yield o T. Rowe Price International Stock
Account No. 4 -- Pooled o Alliance Growth & Income o Morgan Stanley Emerging Markets Equity
o Alliance Aggressive Stock, Separate o Alliance Equity Index o Warburg Pincus Small Company Value
Account No. 3 -- Pooled o Alliance Global o MFS Emerging Growth Companies
o Alliance International o EQ/Putnam Balanced
o Alliance Small Cap Growth o Merrill Lynch World Strategy
o Alliance Conservative Investors
o Alliance Growth Investors
</TABLE>
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
---------------------------------------------------------
RIA SERVICE OFFICE:
Equitable Life
RIA Service Office
200 Plaza Drive
Secaucus, NJ 07094-3689
Tel.: (800) 967-4560
(201) 583-2302
(9 A.M. to 5 P.M. Eastern time)
Fax: (201) 583-2304, 2305, or 2306
(To obtain pre-recorded Fund unit values, use our toll-free number listed above)
ADDRESS FOR CONTRIBUTIONS ONLY:
Equitable Life
RIA/EPP
P.O. Box 13503
Newark, NJ 07188
EXPRESS MAIL ADDRESS FOR CONTRIBUTIONS ONLY:
First Chicago National Processing Center (FCNPC)
300 Harmon Meadow Boulevard
Attn: Box 13503
Secaucus, NJ 07094
================================================================================
<PAGE>
PART C
OTHER INFORMATION
-----------------
Item 28. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements included in Part B.
1. Separate Account Nos. 3 (Pooled), 4 (Pooled), 10 (Pooled) and
13 (Pooled) (The Aggressive Equity, Common Stock, Balanced and
Bond Funds):
- Report of Independent Accountants - Price Waterhouse
2. Separate Account No. 3 (Pooled):
- Statements of Assets and Liabilities, December 31, 1997
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1997
- Portfolio of Investments, December 31, 1997
3. Separate Account No. 4 (Pooled):
- Statements of Assets and Liabilities, December 31, 1997
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1997 and 1996
- Portfolio of Investments, December 31, 1997
4. Separate Account No. 10 (Pooled):
- Statement of Assets and Liabilities December 31, 1997
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1997 and 1996
- Portfolio of Investments, December 31, 1997
5. Separate Account No. 13 (Pooled):
- Statements of Assets and Liabilities, December 31, 1997
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1997 and 1996
- Portfolio of Investments, December 31, 1997
6. Separate Account No. 51 (Pooled)
--------------------------------
- Report of Independent Accountants - Price Waterhouse
- Statement of Assets and Liabilities, December 31, 1997
- Statements of Operations and Changes in Net Assets for the
Years Ended December 31, 1997 and 1996
7. Separate Account Nos. 3 (Pooled), 4 (Pooled), 10 (Pooled),
13 (Pooled) and 51 (Pooled): Notes to Financial Statements
8. The Equitable Life Assurance Society of the United States:
----------------------------------------------------------
- Report of Independent Accountants - Price Waterhouse
- Consolidated Balance Sheets, as of December 31,1997 and 1996
- Consolidated Statements of Earnings for the Years Ended
December 31, 1997, 1996 and 1995
C-1
<PAGE>
- Consolidated Statements of Shareholder's Equity for the Years
Ended December 31, 1997, 1996 and 1995
- Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995
- Notes to Consolidated Financial Statements
(b) Exhibits.
The following Exhibits are filed herewith:
1. Resolutions of the Board of Directors of The Equitable Life
Assurance Society of the United States ("Equitable")
authorizing the establishment of Separate Account Nos. 3, 4 and
10 and additional similar separate accounts, incorporated by
reference to Registration No. 2-91983 on Form N-3 of
Registrant, filed April 14, 1986.
2. Not Applicable.
3. Not Applicable.
4. (a) Investment Advisory Agreement between Equitable and
Equitable Investment Management Corporation dated
October 31, 1983, incorporated by reference to
Registration No. 2-91983 on Form N-3 of Registrant
filed on April 14, 1986.
(b) Investment Advisory and Management Agreement by and
between Alliance Capital Management L.P., Alliance
Corporate Finance Group Incorporated, an indirect
wholly owned subsidiary of Alliance, and The Equitable
Life Assurance Society of the United States,
previously filed with this Registration Statement No.
33-76028 on March 3, 1994.
(c) Distribution Agreement dated as of January 1, 1996, by
and between The Hudson River Trust and Equico
Securities, Inc. (now EQ Financial Consultants, Inc.),
previously filed with this Registration Statement No.
33-76028 on April 24, 1996.
(d) Sales Agreement, dated as of January 1, 1996, by and
among Equico Securities, Inc., Equitable, and Separate
Account A, Separate Account No. 301 and Separate
Account No. 51, previously filed with this
Registration Statement No. 33-76028 on April 24, 1996.
5. Not Applicable.
6. (a)1 Group Annuity Contract AC 5000 - 83T (No. 15,740)
between Equitable and United States Trust Company of
New York as Trustee under Retirement Investment
Account Master Retirement Trust, incorporated by
reference to Registration No. 2-91983 on Form N-3 of
Registrant filed April 14, 1986.
C-2
<PAGE>
(a)2 Riders 1, 2, 3, 4, 5, 6 and 7 to Group Annuity
Contract AC 5000 - 83T (No. 15,740) between Equitable
and United States Trust Company of New York as Trustee
under Retirement Investment Account Master Retirement
Trust, as executed, incorporated by reference to
Registration No. 2-91983 on Form N-3 of Registrant
filed April 28, 1988.
(a)3 Form of Rider 8 to Group Annuity Contract AC 5000 -
83T (No. 15,740) between Equitable and United States
Trust Company of New York as Trustee under Retirement
Investment Account Master Retirement Trust,
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed February 25, 1992.
(a)4 Form of Rider 9 to Group Annuity Contract AC 5000 -
83T between Equitable and United States Trust Company
of New York as Trustee under Retirement Investment
Account Master Retirement Trust, previously filed with
this Registration Statement No. 33-76028 on March 3,
1994.
(b)1 Group Annuity Contract AC 5000 - 83E (No. 15,739)
between Equitable and United States Trust Company of
New York as Trustee under Retirement Investment
Account Retirement Trust, incorporated by reference to
Registration No. 2-91983 on Form N-3 of Registrant
filed April 14, 1986.
(b)2 Riders l, 2, 3, 4, 5, 6 and 7 to Group Annuity
Contract AC 5000 - 83E (No. 15,739) between Equitable
and United States Trust Company of New York as Trustee
under Retirement Investment Account Retirement Trust,
as executed, incorporated by reference to Registration
No. 2-91983 on Form N-3 of Registrant filed April 14,
1986.
(b)3 Form of Rider 8 to Group Annuity Contract AC 5000 -
83E (No. 15,739) between Equitable and United States
Trust Company of New York, as Trustee under Retirement
Investment Account Master Retirement Trust,
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed February 25, 1992.
(b)4 Form of Rider 9 to Group Annuity Contract AC 5000 -
83E between Equitable and United States Trust Company
of New York, as Trustee under Retirement Investment
Account Master Retirement Trust, previously filed with
this Registration Statement No. 33-76028 on March 3,
1994.
(c)1 Retirement Investment Account Master Retirement Trust
effective as of January 1, 1979, incorporated by
reference to Registration No. 2-91983 on Form N-3 of
Registrant filed April 14, 1986.
(c)2 Amendment to the Retirement Investment Account Master
Retirement Trust effective July 1, 1984,incorporated
by
C-3
<PAGE>
reference to Registration No. 2-91983 on Form N-3 of
Registrant filed April 14, 1986.
(c)3 Revised Retirement Investment Account Master
Retirement Trust effective as of March 1, 1990,
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed April 27, 1990.
(c)4 Form of Restated Retirement Investment Account Master
Retirement Trust as submitted to the Internal Revenue
Service, incorporated by reference to Registration No.
2-91983 on Form N-3 of Registrant filed February 25,
1992.
7. (a) Retirement Investment Account Enrollment Forms -
Including Participation and Enrollment Agreements,
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed April 14, 1986.
(b)(1) Supplementary Agreement to Master Retirement Trust
Participation Agreement, incorporated by reference to
Registration No. 2-91983 on Form N-3 of Registrant
filed April 14, 1986.
(b)(2) Supplementary Agreement B to Master Retirement Trust
Participation Agreement (RIA Loans), incorporated by
reference to Registration No. 2-91983 on Form N-3 of
Registrant filed April 28, 1988.
(b)(3) Form of Supplementary Agreement A to Master
Retirement Trust Participation Agreement (RIA Partial
Funding), as amended, incorporated by reference to
Registration No. 2-91983 on Form N-3 of Registrant
filed April 30, 1991.
(b)(4) Form of Supplementary Agreement to Master Retirement
Trust Participation Agreement (The Bond Account),
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed February 25, 1992.
(c) Basic Installation Information Form, dated May, 1989,
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed April 24, 1992.
(d) RIA Installation Agreement, dated May, 1989,
incorporated by reference to Registration No. 2-91983
on Form N-3 of Registrant filed April 24, 1992.
C-4
<PAGE>
8 (a) Copy of the Restated Charter of Equitable, as amended
January 1, 1997, previously filed with this Registration
Statement No. 333-23019 on March 7, 1997.
(b) By-Laws of Equitable, as amended November 21, 1996,
previously filed with this Registration Statement No.
333-23019 on March 7, 1997.
9. Not Applicable.
10. Not Applicable.
11. Not Applicable.
12. Opinion and consent of Hope E. Rosenbaum-Werner, Vice President
and Counsel of Equitable, previously filed with this
Registration Statement No. 333-23019 on March 7, 1997.
13. (a) Consent of Price Waterhouse LLP.
(b) Powers of Attorney.
27. Financial Data Schedule.
C-5
<PAGE>
Item 29: Directors and Officers of Equitable.
Set forth below is information regarding the directors and principal
officers of Equitable. Equitable's address is 1290 Avenue of the Americas,
New York, New York 10104. The business address of the persons whose names are
preceded by an asterisk is that of Equitable.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------------------------ -------------------------- ----------------------------------------------------
<S> <C> <C>
DIRECTORS
- -----------
Francoise Colloc'h Director Senior Executive Vice President, Human Resources and
AXA-UAP Communications, AXA-UAP, and various positions with
23, Avenue Matignon AXA affiliated companies. Director, The Equitable
75008 Paris, France Companies Incorporated ("EQ").
Henri de Castries Director Senior Executive Vice President, Financial Services
AXA-UAP and Life Insurance Activities, AXA-UAP and various
23, Avenue Matignon positions with AXA affiliated companies; Director
75008 Paris, France and Chairman, EQ (April 1998 to present), and prior
thereto, Director and Vice Chairman (February 1996 to
March 1998); Director, Equitable Real Estate
Investment Management, Inc. ("Equitable Real Estate")
(until June 1997), Donaldson Lufkin & Jenrette
("DLJ") and Alliance Capital Management Corporation
("Alliance") (Director, France Telecom (until 1997)).
C-6
<PAGE>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------------------------ -------------------------- ----------------------------------------------------
Joseph L. Dionne Director Chairman and Chief Executive Officer, The
The McGraw-Hill Companies McGraw-Hill Companies; Director, EQ (Director,
1221 Avenue of the Americas Harris Corporation, Alexander & Alexander Services,
New York, NY 10020 Inc. (until 1997) and Ryder System, Inc.)
Denis Duverne Director Senior Vice President, AXA-UAP; Director, Alliance
AXA-UAP (since February 1996) and DLJ (since February 1997).
23, Avenue Matignon
75008 Paris, France
William T. Esrey Director Chairman and Chief Executive Officer, Sprint
Sprint Corporation Corporation; Director, EQ; (Director, Duke Energy
P.O. Box 11315 Corporation (formerly Panhandle Eastern Corporation),
Kansas City, MO 64112 Everen Capital Corporation, and General Mills, Inc.).
Jean-Rene Fourtou Director Chairman and Chief Executive Officer Rhone-Poulenc,
Rh.ne-Poulenc, S.A. S.A.; Director, EQ; (Director, Societe Generale,
25, Quai Paul Doumer Groupe Casino (until July 1997), Air France,
92408 Courvbevoie Cedex, Schneider S.A. and Groupe Pernod-Ricard (July 1997 to
France present); Member, Supervisory Board, AXA-UAP (January
1997 to present) and European Advisory Board of
Bankers Trust Company.)
Norman C. Francis Director President, Xavier University of Louisiana (Chairman,
Xavier University of Louisiana Liberty Bank and Trust, New Orleans, LA; Director,
7325 Palmetto Street First National Bank of Commerce, New Orleans, LA,
New Orleans, LA 70125 Piccadilly Cafeterias, Inc., and Entergy Corporation).
C-7
<PAGE>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------------------------ -------------------------- ----------------------------------------------------
Donald J. Greene Director Counselor-at-Law; Partner, LeBoeuf, Lamb, Greene &
LeBoeuf, Lamb, Greene & MacRae MacRae; Director, EQ.
125 West 55th Street
New York, NY 10019-4513
John T. Hartley Director Retired Chairman and Chief Executive Officer, Harris
Harris Corporation Corporation; Director, EQ; (Director, Harris
1025 NASA Boulevard Corporation and The McGraw-Hill Companies).
Melbourne, FL 32919
John H.F. Haskell, Jr. Director Director and Managing Director, SBC Warburg Dillon
SBC Warburg Dillon Read, Inc. Read, Inc.; Director, EQ; Chairman Supervisory
535 Madison Avenue Board, Dillon Read (France) Gestion; Director,
New York, NY 10028 Dillon Read Limited; (Director, Kaydon Corporation).
Mary R. (Nina) Henderson Director President, Bestfoods Grocery; Vice President,
Bestfoods Grocery BESTFOODS; (Director, Hunt Corporation).
BESTFOODS
International Plaza
700 Sylvan Avenue
Englewood Cliffs, NJ 07632-9976
W. Edwin Jarmain Director President, Jarmain Group, Inc.; also an officer or
Jarmain Group, Inc. director of several affiliated companies; Chairman,
121 King Street West FCA International, Ltd.; Director, EQ, DLJ, Anglo
Suite 2525 Canada General Insurance Company, AXA Insurance
Toronto, Ontario M5H 3T9, (Canada), AXA Pacific Insurance Company (formerly
Canada Boreal Property and Casualty Insurance Company);
Alternate Director, The National Mutual Life
Association of Australasia Limited (until 1998),
National Mutual Asia Limited and National Mutual
Insurance Company of Hong Kong)(February 1997 to
present).
G. Donald Johnston, Jr. Director Retired Chairman and Chief Executive Officer, JWT
184-400 Ocean Road Group, Inc. and J. Walter Thompson Company;
John's Island (Director, The McGraw-Hill Companies).
Vero Beach, FL 32963
C-8
<PAGE>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------------------------ -------------------------- ----------------------------------------------------
George T. Lowy Director Counselor-at-Law; Partner, Cravath, Swaine & Moore.
Cravath, Swaine & Moore (Director, Eramet (June 1995 to present)).
825 Eighth Avenue
New York, NY 10019
Didier Pineau-Valencienne Director Chairman and Chief Executive Officer, Schneider S.A.
Schneider S.A. and various positions with Schneider affiliated
64/70 Avenue Jean-Baptiste Clement companies; Chairman and Chief Executive Officer,
92646 Boulogne-Billancourt Cedex Square D; Director, EQ; Member, Supervisory Board,
France AXA-UAP (Janaury 1997 to present), prior thereto,
Director; Director, CGIP, Compagnie Industrielle de
Paris, (until 1996), Sema Group plc, Rhone-Poulenc,
and S.I.S.I.E. (until 1997); member of Supervisory
Board of Banque Paribas and Advisory Boards of
Bankers Trust Company, Booz Allen & Hamilton (USA)
and Banque de France).
George J. Sella, Jr. Director Retired Chairman, President and Chief Executive
P.O. Box 397 Officer, American Cyanamid Company; Director, EQ
Newton, NJ 07860 (Director, Bush, Boake, Allen, Inc., Coulter
Pharmaceutical (May 1997 to present), and Union Camp
Corporation).
Dave H. Williams Director Chairman and Chief Executive Officer, Alliance and
Alliance Capital Management various positions with Alliance affiliated
Corporation companies; Director, EQ.
1345 Avenue of the Americas
New York, NY 10105
C-9
<PAGE>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------------------------ -------------------------- ----------------------------------------------------
OFFICERS AND DIRECTORS
- ----------------------
*Michael Hegarty Director and President See Column 2; prior thereto Vice Chairman, Chase
(January 1998 to present) Manhattan Corporation (1996 to 1997); Director
and Chief Operating (January 1998 to present), Vice Chairman (April 1998
Officer (February 1998 to to present) and Chief Operating Officer (January 1998
present) to present), EQ; Senior Executive Vice President, EQ
(January 1998 to April 1998); Executive Vice
President, Chief Operating Officer and Director,
Equitable Investment Corporation ("EIC") (March 1998
to present), ACMC, Inc. ("ACMC") (March 1998 to
present) and Equitable Capital Management Corporation
("ECMC") (March 1998 to present).
*Edward D. Miller Director (August 1997 to See Column 2; prior thereto, Director, President and
present), Chairman of the Chief Executive Officer (August 1997); Senior Vice
Board (January 1998 to Chairman, Chase Manhattan Corporation (March 1996 to
present) and Chief April 1997); Director, President and Chief Executive
Executive Officer (August Officer, EQ (August 1997 to present); Director,
1998 to present) Alliance (August 1997 to present), DLJ (November 1997
to present), ECMC (March 1998 to present) and ACMC
(March 1998 to present); Director, Chairman,
President and Chief Executive Officer, EIC (March
1998 to present); (Director, KeySpan Energy
Corporation).
*Stanley B. Tulin Director and Vice See Column 2; prior thereto, Senior Executive
Chairman of the Board President and Chief Financial Officer (until February
(February 1998 to 1998); Executive Vice President (May 1996 to
present) and Chief present) and Chief Financial Officer (May 1997 to
Financial Officer (May present), EQ; Director, Alliance (July 1997 to present)
1996 to present) and DLJ (June 1997 to present); Director, Executive
Vice President and Chief Financial Officer, EIC (June
1997 to present); Director, Chairman, President and
Chief Executive Officer, ACMC (July 1997 to present)
and ECMC (July 1997 to present); Vice President, EQ
Advisors Trust ("EQAT") (March 1997 to present).
C-10
<PAGE>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------------------------ -------------------------- ----------------------------------------------------
OTHER OFFICERS
*Leon B. Billis Senior Executive Vice See Column 2; prior thereto, Senior Vice President
President and Chief (until February 1998) and Chief Information Officer;
Information Officer Vice President, Equitable Variable Life Insurance
Company ("EVLICO") (July 1996 to January 1997);
Director, J.M.R. Realty Services, Inc.
C-11
<PAGE>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------------------------ -------------------------- ----------------------------------------------------
*Harvey Blitz Senior Vice President and See Column 2; Senior Vice President, EQ; Director,
Deputy Chief Financial The Equitable of Colorado, Inc. ("Colorado");
Officer Director and Chairman, Frontier Trust Company
("Frontier"); Director, Equitable Distributors, Inc.
("EDI")(until to May 1996); Executive Vice President
(November 1996 to present) and Director, EQ Financial
Consultants, Inc. ("EQF"); Director and Senior Vice
President, EquiSource of New York, Inc. and its
subsidiaries ("EquiSource"); Director and Vice
President, EVLICO, (until January 1997); Director,
Equitable Realty Assets Corporation ("ERAC")
(December 1996 to March 1998); Vice President
and Chief Financial Officer, EQAT (since March 1997).
*Kevin R. Byrne Senior Vice President and See Column 2; prior thereto Vice President and
Treasurer Treasurer (until July 1997); Senior Vice President
and Treasurer, EQ; Treasurer, EVLICO (until January
1997), EquiSource, and Frontier; Director, ERAC
(until December 1996); President and Chief Executive
Officer (September 1997 to present), and prior
thereto, Vice President and Treasurer, Equitable
Casualty Insurance Company ("ECIC"); Director,
Chairman, President and Chief Executive Officer,
Equitable JV Holdings Corporation (August 1997 to
present); Director (since July 1997) and Senior Vice
President and Chief Financial Officer (April 1998 to
present), ACMC and ECMC; Treasurer, EIC (June 1997 to
present); Vice President and Treasurer, EQAT (March
1997 to present).
C-12
<PAGE>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------------------------ -------------------------- ----------------------------------------------------
*Alvin H. Fenichel Senior Vice President and See Column 2; Senior Vice President and Controller,
Controller EQ; Vice President and Controller, EVLICO (July 1996
to January 1997); Senior Vice President and Chief
Financial Officer, Colorado (March 1997 to present).
C-13
<PAGE>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------------------------ -------------------------- ----------------------------------------------------
*Paul J. Flora Senior Vice President and See Column 2; Vice President and Auditor, EQ; Vice
Auditor President and Auditor, EVLICO (May 1996 to January
1997).
*Jerome S. Golden Executive Vice President See Column 2; Chairman and Chief Executive Officer,
Equitable Distributors, Inc. ("EDI") (until December
1997).
*Mark A. Hug Senior Vice President See Column 2; prior thereto, Vice President, Aetna
(until April 1977).
*Robert E. Garber Executive Vice President See Column 2; Executive Vice President and General
and General Counsel Counsel, EQ.
*Donald R. Kaplan Vice President and Chief See Column 2; prior thereto, Vice President and
Compliance Officer and Acting Chief Compliance Officer (until November
Associate General Counsel 1996).
*Michael S. Martin Senior Vice President See Column 2; prior thereto, Senior Vice President
and Chief Marketing (until January 1997); Chairman and Chief Executive
Officer Officer, EQF; Vice President, EQAT (March 1997 to
present) and Hudson River Trust ("HRT") (until March
1998); Director, Equitable Underwriting and Sales
Agency (Bahamas), Ltd. (May 1996 to present) and
Colorado; Director, EquiSource.
*Douglas Menkes Senior Vice President and See Column 2; prior thereto, Consulting Actuary,
Corporate Actuary Milliman & Robertson, Inc. (until June 1997).
*Peter D. Noris Executive Vice President See Column 2; Executive Vice President and Chief
and Chief Investment Investment Officer, EQ; Executive Vice President, EQF
Officer (November 1996 to present); Director and Senior Vice
President, EVLICO (until January 1997); Director,
Alliance and Equitable Real Estate (July 1995 to June
1997); Director, EREIM Managers Corp. ("EMC") (July
1997 to present) and EREIM LP Corp. ("ELPC") (October
1997 to present); Trustee, HRT; Trustee, Chairman and
President, EQAT (March 1997 to present).
C-14
<PAGE>
PRINCIPAL OCCUPATION
NAME AND PRINCIPAL POSITIONS AND OFFICES (AND OTHER POSITIONS)
BUSINESS ADDRESS WITH EQUITABLE WITHIN PAST 2 YEARS
- ------------------------------------ -------------------------- ----------------------------------------------------
*Anthony C. Pasquale Senior Vice President See Column 2; Director, Chairman and Chief Operating
Officer, ECIC (since September 1997); Director,
Chairman and President, ERAC (until December 1996);
Director and President, FHJV Holdings, Inc. (until
December 1996); Director, Equitable Agri-Business,
Inc. (until June 1997).
*Pauline Sherman Vice President, Secretary See Column 2; Vice President, Secretary and Associate
and Associate General General Counsel, EQ.
Counsel
*Samuel B. Shlesinger Senior Vice President See Column 2; Director and Senior Vice President,
EVLICO (until January 1997); Chairman, President and
Chief Executive Officer, Colorado; Vice President,
EQAT (March 1997 to present); Director, ERAC
(December 1996 to March 1998).
*Richard V. Silver Senior Vice President and See Column 2; prior thereto, Senior Vice President
Deputy General Counsel and Associate General Counsel (until November 1996);
Vice President and Chief Compliance Officer (January
1995 to June 1996); Director, EQF; Senior Vice
President and General Counsel, EIC (June 1997 to
March 1998).
*Jose Suquet Senior Executive Vice See Column 2; prior thereto, Senior Executive Vice
President and Chief President and Chief Agency Officer (until December
Distribution Officer 1997); Executive Vice President, EQ (May 1996 to
present); Vice President, HRT (March 1998 to present);
Director, EVLICO (January 1995 to January 1997).
*Maureen K. Wolfson Vice President See Column 2.
</TABLE>
C-15
<PAGE>
Item 30. Persons Controlled by or Under Common Control with the Insurance
----------------------------------------------------------------
Company or Registrant
---------------------
Separate Account Nos. 3, 4, 10, 13, 51 and 66 of The Equitable
Life Assurance Society of the United States (the "Separate Accounts") are
separate accounts of Equitable. Equitable, a New York stock life insurance
company is a wholly owned subsidiary of The Equitable Companies Incorporated
(the "Holding Company"), a publicly traded company.
The largest stockholder of the Holding Company is AXA-UAP. At
December 31, 1997, AXA-UAP beneficially owned approximately 38.7% of the Holding
Company's outstanding common stock plus convertible preferred stock. Under its
investment arrangements with Equitable Life and the Holding Company, AXA-UAP is
able to exercise significant influence over the operations and capital structure
of the Holding Company and its subsidiaries, including Equitable life. AXA-UAP,
a French company, is the holding company for an international group of insurance
and related financial services companies.
C-16
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
The Equitable Companies Incorporated (l991) (Delaware)
Donaldson, Lufkin & Jenrette, Inc. (1993) (Delaware) (41.8%) (See Addendum
B(1) for subsidiaries)
The Equitable Life Assurance Society of the United States (1859) (New York
(a)(b)
The Equitable of Colorado, Inc. (l983) (Colorado)
EVLICO, INC. (1995) (Delaware)
EVLICO East Ridge, Inc. (1995) (California)
GP/EQ Southwest, Inc. (1995) (Texas) (5.885%)
Franconom, Inc. (1985) (Pennsylvania)
Frontier Trust Company (1987) (North Dakota)
Gateway Center Buildings, Garage, and Apartment Hotel, Inc. (inactive)
(pre-l970) (Pennsylvania)
Equitable Deal Flow Fund, L.P.
Equitable Managed Assets (Delaware)
EREIM LP Associates (99%)
EML Associates, L.P. (19.8%)
Alliance Capital Management L.P. (2.7% limited partnership interest)
ACMC, Inc. (1991) (Delaware)(s)
Alliance Capital Management L.P. (1988) (Delaware) (39.6% limited
partnership interest)
EVCO, Inc. (1991) (New Jersey)
EVSA, Inc. (1992) (Pennsylvania)
Prime Property Funding, Inc. (1993) (Delaware)
Wil Gro, Inc. (1992) (Pennsylvania)
Equitable Underwriting and Sales Agency (Bahamas) Limited (1993) (Bahamas)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-17
<PAGE>
The Equitable Companies Incorporated (cont.)
Donaldson Lufkin & Jenrette, Inc.
The Equitable Life Assurance Society of the United States (cont.)
Fox Run Inc. (1994) (Massachusetts)
STCS, Inc. (1992) (Delaware)
CCMI Corporation (1994) (Maryland)
FTM Corporation (1994) (Maryland)
HVM Corporation (1994) (Maryland)
Equitable BJVS, Inc. (1992) (California)
Equitable Rowes Wharf, Inc. (1995) (Massachusetts)
GP/EQ Southwest, Inc. (1995) (Texas) (94.132%)
Camelback JVS, Inc. (1995) (Arizona)
ELAS Realty, Inc. (1996) (Delaware)
100 Federal Street Realty Corporation (Massachusetts)
Prime Property Funding II, Inc. (1997) (Delaware)
Sarasota Prime Hotels, Inc. (1997) (Florida)
ECLL, Inc. (1997) (Michigan)
Equitable Holdings, LLC (1997) (New York) (into which
Equitable Holding Corporation was merged in 1997)
EQ Financial Consultants, Inc. (formerly Equico Securities, Inc.) (l97l)
(Delaware) (a) (b)
ELAS Securities Acquisition Corp. (l980) (Delaware)
100 Federal Street Funding Corporation (Massachusetts)
EquiSource of New York, Inc. (1986) (New York) (See Addendum A for
subsidiaries)
Equitable Casualty Insurance Company (l986) (Vermont)
EREIM LP Corp. (1986) (Delaware)
EREIM LP Associates (1%)
EML Associates (.02%)
Six-Pac G.P., Inc. (1990) (Georgia)
Equitable Distributors, Inc. (1988) (Delaware) (a)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-18
<PAGE>
The Equitable Companies Incorporated (cont.)
Donaldson Lufkin & Jenrette, Inc.
The Equitable Life Assurance Society of the United States (cont.)
Equitable Holdings, LLC (cont.)
Equitable JVS, Inc. (1988) (Delaware)
Astor/Broadway Acquisition Corp. (1990) (New York)
Astor Times Square Corp. (1990) (New York)
PC Landmark, Inc. (1990) (Texas)
Equitable JVS II, Inc. (1994) (Maryland)
EJSVS, Inc. (1995) (New Jersey)
Donaldson, Lufkin & Jenrette, Inc. (1985 by EIC; 1993 by EQ and
EHC) (Delaware) (34.4%) (See Addendum B(1) for subsidiaries)
JMR Realty Services, Inc. (1994) (Delaware)
Equitable Structured Settlement Corporation (1996) (Delaware)
Equitable Investment Corporation (l97l) (New York)
Stelas North Carolina Limited Partnership (50% limited partnership
interest) (l984)
Equitable JV Holding Corporation (1989) (Delaware)
Alliance Capital Management Corporation (l991) (Delaware) (b) (See
Addendum B(2) for subsidiaries)
Equitable Capital Management Corporation (l985) (Delaware) (b)
Alliance Capital Management L.P. (1988) (Delaware) (14.6% limited
partnership interest)
EQ Services, Inc. (1992) (Delaware)
EREIM Managers Corp. (1996) (Delaware)
ML/EQ Real Estate Portfolio, L.P.
EML Associates, L.P.
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-19
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
ADDENDUM A - SUBSIDIARY
OF EQUITABLE HOLDINGS, LLC
HAVING MORE THAN FIVE SUBSIDIARIES
--------------------------------------------
EquiSource of New York, Inc. (formerly Traditional Equinet Business Corporation
of New York) has the following subsidiaries that are brokerage companies to make
available to Equitable Agents within each state traditional (non-equity)
products and services not manufactured by Equitable:
EquiSource of Alabama, Inc. (1986) (Alabama)
EquiSource of Arizona, Inc. (1986) (Arizona)
EquiSource of Arkansas, Inc. (1987) (Arkansas)
EquiSource Insurance Agency of California, Inc. (1987) (California)
EquiSource of Colorado, Inc. (1986) (Colorado)
EquiSource of Delaware, Inc. (1986) (Delaware)
EquiSource of Hawaii, Inc. (1987) (Hawaii)
EquiSource of Maine, Inc. (1987) (Maine)
EquiSource Insurance Agency of Massachusetts, Inc. (1988) (Massachusetts)
EquiSource of Montana, Inc. (1986) (Montana)
EquiSource of Nevada, Inc. (1986) (Nevada)
EquiSource of New Mexico, Inc. (1987) (New Mexico)
EquiSource of Pennsylvania, Inc. (1986) (Pennsylvania)
EquiSource Insurance Agency of Utah, Inc. (1986) (Utah)
EquiSource of Washington, Inc. (1987) (Washington)
EquiSource of Wyoming, Inc. (1986) (Wyoming)
C-20
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
ADDENDUM B - INVESTMENT SUBSIDIARIES
HAVING MORE THAN FIVE SUBSIDIARIES
--------------------------------------------
Donaldson, Lufkin & Jenrette, Inc. has the following subsidiaries, and
approximately 150 other subsidiaries, most of which are special purpose
subsidiaries (the number fluctuates according to business needs):
Donaldson, Lufkin & Jenrette, Securities Corporation (1985) (Delaware)
(a) (b)
Wood, Struthers & Winthrop Management Corp. (1985) (Delaware) (b)
Autranet, Inc. (1985) (Delaware) (a)
DLJ Real Estate, Inc.
DLJ Capital Corporation (b)
DLJ Mortgage Capital, Inc. (1988) (Delaware)
Column Financial, Inc. (1993) (Delaware) (50%)
Alliance Capital Management Corporation (as general partner) (b)has the
following subsidiaries:
Alliance Capital Management L.P. (1988) (Delaware) (b)
Alliance Capital Management Corporation of Delaware, Inc. (Delaware)
Alliance Fund Services, Inc. (Delaware) (a)
Alliance Fund Distributors, Inc. (Delaware) (a)
Alliance Capital Oceanic Corp. (Delaware)
Alliance Capital Management Australia Pty. Ltd. (Australia)
Meiji - Alliance Capital Corp. (Delaware) (50%)
Alliance Capital (Luxembourg) S.A. (99.98%)
Alliance Eastern Europe Inc. (Delaware)
Alliance Barra Research Institute, Inc. (Delaware) (50%)
Alliance Capital Management Canada, Inc. (Canada) (99.99%)
Alliance Capital Management (Brazil) Llda
Alliance Capital Global Derivatives Corp. (Delaware)
Alliance International Fund Services S.A. (Luxembourg)
Alliance Capital Management (India) Ltd. (Delaware)
Alliance Capital Mauritius Ltd.
Alliance Corporate Finance Group, Incorporated (Delaware)
Equitable Capital Diversified Holdings, L.P. I
Equitable Capital Diversified Holdings, L.P. II
Curisitor Alliance L.L.C. (Delaware)
Curisitor Holdings Limited (UK) Alliance Capital Management
(Japan), Inc.
Alliance Capital Management (Asia) Ltd.
Alliance Capital Management (Turkey), Ltd. Cursitor
Alliance Management Limited (UK)
(a) Registered Broker/Dealer (b) Registered Investment Advisor
C-21
<PAGE>
AXA-UAP GROUP CHART
The information listed below is dated as of December 31, 1997; percentages
shown represent voting power. The name of the owner is noted when AXA-UAP
indirectly controls the company.
AXA-UAP INSURANCE AND REINSURANCE BUSINESS HOLDING
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA Assurances Iard France 100% by AXA France Assurance
AXA Assurances Vie France 100% by AXA France Assurance
AXA Courtage Iard France 97.4% by AXA France Assurance
and UAP Iard
AXA Courtage Vie France 100% by AXA France Assurance
Alpha Assurances Vie France 100% by AXA France Assurance
AXA Direct France 100%
Direct Assurances Iard France 100% by AXA Direct
Direct Assurance Vie France 100% by AXA Direct
AXA Tellit Versicherung Germany 50% owned by AXA Direct and
50% by CKAG
Axiva France 100% by AXA France Assurance
Juridica France 88.4% by UAP Iard, 10.9% by
AXA France Assurance
AXA Assistance France France 100% by AXA Assistance SA
Monvoisin Assurances France 99.9% by different companies
and Mutuals
Societe Beaujon France 100%
Lor Finance France 100%
Jour Finance France 100% by AXA Conseil Iard and
by AXA Assurances Iard
Financiere 45 France 99.8%
Mofipar France 100%
Compagnie Auxiliaire pour le France 99.8% by Societe Beaujon
Commerce and l'Industrie
C.F.G.A. France 99.96% owned by Mutuals and
Finaxa
AXA Global Risks France 100% owned by AXA France
Assurance, UAP Iard and
Mutuals
Argovie France 100% by Axiva and SCA Argos
C-22
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Astral Finance France 99.33% by AXA Courtage Vie
Argos France N.S.
AXA France Assurance France 100%
UAP Incendie Accidents France 100% by AXA France
Assurance
UAP Vie France 100% by AXA France
Assurance
UAP Collectives France 50% by AXA Assurances
Iard, 3.3% by AXA Conseil
Iard and 46.6% UAP Vie
Thema Vie France 30% by Axiva, 11.9% by
UAP Collectives, 10.9% by
UAP Iard and 46.8% by UAP Vie.
La Reunion Francaise France 49% by UAP Iard and 51% by
AXA Global Risks
UAP Assistance France 52% by UAP Incendie-Accidents
and 48% by UAP Vie
UAP International France 50.1% by AXA-UAP and 49.9% by
AXA Global Risks
Sofinad France 100%
AXA-Colonia Konzern AG (AXA-
CKAG) Germany 39.7% by Vinci BV, 25.6% by
Kolnische Verwaltungs and
5.5% by AXA-UAP
Finaxa Belgium Belgium 100%
AXA Belgium Belgium 27.1% by AXA-UAP and 72.6%
by Finaxa Belgium
De Kortrijske Verzekering Belgium 99.8% by AXA Belgium
Juris Belgium 100% owned by Finaxa Belgium
Royale Vendome Belgium 49% by AXA-UAP and 20.2% by
AXA Global Risks
Royale Belge Belgium 51.2% by Royale Vendome and
9.5% by different companies
of the Group
Royale Belge 1994 Belgium 97.9% by Royale Belge and 2%
by UAB
UAB Belgium 99.9% by Royale Belge
Ardenne Prevoyante Belgium 99.4% by Royale Belge
GB Lex Belgium 55% by Royale Belge, 25% by
Royale Belge 1994, 10% by
Juridica and 10% by AXA
Conseil Assurance
Royale Belge Re Belgium 99.9% by Royale Belge
Parcolvi Belgium 100% by Vinci Belgium
Vinci Belgium Belgium 99.5% by Vinci BV
Finaxa Luxembourg Luxembourg 100%
AXA Assurance IARD Luxembourg Luxembourg 99.9%
AXA Assurance Vie Luxembourg Luxembourg 99.9%
Royale UAP Luxembourg 100% by Royale Belge
Paneurolife Luxembourg 90% by different companies of
the AXA-UAP Group
Paneurore Luxembourg 90% by different companies of
the AXA-UAP Group
Crealux Luxembourg 100% by Royale Belge
Futur Re Luxembourg 100% by AXA Global Risks
General Re-CKAG Luxembourg 37.8% by AXA-CKAG and 12.1%
by Colonia Nordstern
Versicherung
Royale Belge Investissements Luxembourg 100% by Royale Belge
AXA Aurora Spain 30% owned by AXA-UAP and 40%
by UAP International
Aurora Polar SA de Seguros y Spain 99.4% owned by AXA Aurora
Reaseguros
Aurora Vida SA de Seguros y Spain 90% owned by Aurora Polar and
Reaseguros 5% by AXA-UAP
AXA Gestion de Seguros y Spain 99.1% owned by AXA Aurora
Reaseguros
Hilo Direct Seguros Spain 71.4% by AXA Aurora
Ayuda Legal Spain 59% owned by Aurora Polar,
29% by AXA Gestion and 12%
by Aurora Vida
UAP Iberica Spain 100% by UAP International
General Europea (GESA) Spain 100% by Societe Generale
d'Assistance
AXA Assicurazioni Italy 100%
Eurovita Italy 30% owned by AXA Assicurazioni
Gruppo UAP Italia (GUI) Italy 97% by UAP International and
3% by UAP Vie
UAP Italiana Italy 96% by AXA-UAP and 4% by GUI
UAP Vita Italy 62.2% by GUI and 37.8% by UAP
Vie
Allsecures Assicurazioni Italy 90% by GUI and 10% by UAP
Italiana
Allsecures Vita Italy 92.9% by GUI and 7% by AXA-UAP
Centurion Assicurazioni Italy 100% by GUI
AXA Equity & Law plc U.K. 100%
AXA Equity & Law Life U.K. 100% by SLPH
Assurance Society
AXA Insurance U.K. 100% owned by SLPH
AXA Global Risks U.K. 51% owned by AXA Global
Risks (France) and 49% by
AXA Courtage IARD
Sun Life and Provincial U.K. 71.6% by AXA-UAP and AXA
Holdings (SLPH) Equity & Law Plc
Sun Life Corporation Plc U.K. 100% by AXA Sun Life Holding
Sun Life Assurance U.K. 100% by AXA Sun Life Holding
UAP Provincial Insurance U.K. 100% by SLPH
English & Scottish U.K. 100% by AXA UK
Servco U.K. 100% by AXA Sun Life Holding
AXA Sun Life U.K. 100% by AXA Sun Life Holding
AXA Leven The Nether- 100% by AXA Equity & Law Life
lands Assurance Society
UAP Nieuw Rotterdam The Nether- 51% by Royale Belge, 38.9% by
Holding BV lands Gelderland BV and 4.1% by
AXA-UAP
UNIROBE Groep BV The Nether- 100% by UAP Nieuw Rotterdam
lands Holding BV
UAP Nieuw Rotterdam Verzkerigen The Nether- 100% by UAP Nieuw Rotterdam
lands Holding BV
UAP Nieuw Rotterdam Schade The Nether- 100% by UAP Nieuw Rotterdam
lands Verzekerigen
UAP Nieuw Rotterdam Leven The Nether- 100% by UAP Nieuw Rotterdam
lands Verzekerigen
UAP Nieuw Rotterdam Zorg The Nether- 100% by UAP Nieuw Rotterdam
lands Schade
Societe Generale d'Assistance The Nether- 51% by UAP Incendie-Accidents,
lands 29% by UAP Vie and 20% by
AXA-UAP
Gelderland BV The Nether- 100% by UAP Vie
lands
Royale Belge International The Nether- 100% by Royale Belge
lands Investissements
Vinci BV The Nether- 94.8% by AXA-UAP and 5.2% by
lands Parcolvi
AXA Portugal Companhia de Portugal 43.1% by different companies
Serguros SA of the AXA-UAP Group
AXA Portugal Companhia de Portugal 95.1% by UAP Vie and 7.5% UAP
Serguros de Vida SA International
Union UAP Switzerland 99.9% by UAP International
Union UAP Vie Switzerland 95% by UAP International
AXA Oyak Hayat Sigorta Turkey 60% owned by AXA-UAP
Oyak Sigorta Turkey 11% owned by AXA-UAP
Al Amane Assurances Morocco 52% by UAP International
AXA Canada Inc. Canada 100%
AXA Boreal Insurance Inc. Canada 100% owned by Gestion Fracapar
Inc
AXA Assurances Inc Canada 100% owned by AXA Canada Inc
C-23
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA Insurance Inc Canada 100% owned by AXA Canada Inc.
and AXA Assurance Inc
Anglo Canada General Insurance Canada 100% owned by AXA Canada Inc.
Cy
AXA Pacific Insurance Cy Canada 100% by AXA Boreal Insurance
Inc
AXA Boreal Assurances Canada 100% by AXA Boreal Insurance
Agricoles Inc Inc
AXA Life Insurance Japan 100%
Dongbu AXA Life Korea 50%
Insurance Co. Ltd.
Sime AXA Berhad Malaysia 30% owned by AXA-UAP and
AXA Reassurance
AXA Investment Holdings Pte Ltd Singapore 100%
AXA Insurance Singapore 100% owned by AXA Investment
Holdings Pte Ltd
AXA Insurance Hong Kong 100% owned by AXA Investment
Holdings Pte Ltd
AXA Life Insurance Hong Kong 100%
PT Asuransi AXA Indonesia Indonesia 80%
The Equitable Companies U.S.A. 58.7% of which AXA-UAP owns
Incorporated 42.0%, Financiere 45, 3.2%,
Lorfinance 6.4%, AXA Equity
& Law Life Association Society
4.1% and AXA Reassurance 3.0%
The Equitable Life Assurance U.S.A. 100% owned by The Equitable
Society of the United States Companies Incorporated
(ELAS)
National Mutual Holdings Ltd Australia 51% between AXA-UAP, 42.1%
and AXA Equity & Law Life
Assurance Society 8.9%
The National Mutual Life Australia 100% owned by National Mutual
Association of Australasia Ltd Holdings Ltd
National Mutual International Australia 100% owned by National Mutual
Pty Ltd Holdings Ltd
National Mutual (Bermuda) Ltd Australia 100% owned by National Mutual
International Pty Ltd
National Mutual Asia Ltd Australia 41% owned by National Mutual
Holdings Ltd, 20% by Datura
Ltd and 13% by National Mutual
Life Association of
Australasia
Australian Casualty & Life Ltd Australia 100% owned by National Mutual
Holdings Ltd
National Mutual Health Australia 100% owned by National Mutual
Insurance Pty Ltd Holdings Ltd
C-24
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
AXA Reassurance France 100% owned by AXA-UAP, AXA
Assurances Iard and AXA Global
Risks
AXA Re Finance France 79% owned by AXA Reassurance
AXA Cessions France 100%
AXA Re Asia Singapore 100% owned by AXA Reassurance
AXA Re U.K. Plc U.K. 100% owned by AXA Re U.K.
Holding
AXA Re U.K. Holding U.K. 100% owned by AXA Reassurance
AXA Re U.S.A. U.S.A. 100% owned by AXA America
AXA America U.S.A. 100% owned by AXA Reassurance
AXA Space U.S.A. 80% owned by AXA America
AXA Re Life U.S.A. 100% owned by AXA America
C.G.R.M. Monaco 100% owned by AXA Reassurance
C-25
<PAGE>
AXA-UAP FINANCIAL BUSINESS
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Compagnie Financiere de Paris France 97.2% (100% with Mutuals)
(C.F.P.)
AXA Banque France 98.7% owned by C.F.P.
AXA Credit France 65% owned by C.F.P.
AXA Gestion Interessement France 100% owned by AXA Investment
Managers
Sofapi France 100% owned by C.F.P.
Soffim France 100% owned by C.F.P.
Societe de Placements France 98.8% with Mutuals
Selectionnes S.P.S.
Presence et Initiative France 100% with Mutuals
Vamopar France 100% owned by Societe Beaujon
Financiere Mermoz France 100%
AXA Investment Managers France 100% by some AXA-UAP Group
companies
AXA Asset Management France 100% owned by AXA Investment
Partenaires Managers
AXA Investment Managers Paris France 100% owned by AXA Investment
Managers
AXA Asset Management France 99.6% owned by AXA Investment
Distribution Managers
UAP Gestione Financiere France 99.9 by AXA-UAP
Assurinvestissements France 50% by UAP Vie, 30% UAP
Collectives, 20% UAP
Incendie-Accidents
Banque Worms France 51% by CFP and 49% by
three UAP insurance companies
Colonia Bausbykasse Germany 97.8% by AXA-CKAG
Banque Ippa Belgium 99.9% by Royale Belge
Banque Bruxelles Lambert Belgium 9.3% by Royale Belge, 3.1%
Royale Belge 1994, 0.2% by
AXA Belgium
AXA Equity & Law Home Loans U.K. 100% owned by AXA Equity & Law
Plc
AXA Equity & Law Commercial U.K. 100% owned by AXA Equity & Law
Loans Plc Loans
Sun Life Asset Management U.K. 66.7% owned by SLPH and 33.4%
by AXA Asset Management Ltd.
C-26
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Alliance Capital Management U.S.A. 57.9% held by ELAS
Donaldson Lufkin & Jenrette U.S.A. 76.2% owned by Equitable
Holdings LLC and ELAS
National Mutual Funds Australia 100% owned by National
Management (Global) Ltd Mutual Holdings Ltd
National Mutual Funds USA 100% by National Mutual Funds
Management North America Management (Global) Ltd.
Holding Inc.
Cogefin Luxembourg 100% owned by AXA Belgium
ORIA France 100% owned by AXA Millesimes
AXA Oeuvres d'Art France 100% by Mutuals
AXA Cantenac Brown France 100%
AXA Suduiraut France 99.6% owned by AXA-UAP and
Societe Beaujon
C-27
<PAGE>
AXA-UAP REAL ESTATE BUSINESS
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Prebail France 100% owned by AXA Immobilier
Axamur France 100% by different companies
and Mutuals
Parimmo France 100% by different companies
and Mutuals
S.G.C.I. France 100% by different companies
and Mutuals
Transaxim France 100% owned by S.G.C.I. and
C.P.P.
Compagnie Parisienne de France 100% owned by S.G.C.I.
Participations (C.P.P.)
Monte Scopeto France 100% owned by C.P.P.
Matipierre France 100% by different companies
Securimo France 87.12% by different companies
and Mutuals
Paris Orleans France 100% by different companies
AXA Courtage Iard
Colisee Bureaux France 100% by different companies
and Mutuals
Colisee Premiere France 100% by different companies
and Mutuals
Colisee Laffitte France 100% by Colisee Bureaux
Fonciere Carnot Laforge France 100% by Colisee Premiere
Parc Camoin France 100% by Colisee Premiere
Delta Point du Jour France 100% owned by Matipierre
Paroi Nord de l'Arche France 100% owned by Matipierre
Falival France 100% owned by AXA Reassurance
Compagnie du Gaz d'Avignon France 100% owned by AXA Assurances
Iard
Ahorro Familiar France 44% owned by AXA Assurances
Iard, 1% by AXA Aurora Polar
and 1% by AXA Seguros
Fonciere du Val d'Oise France 100% owned by C.P.P.
Sodarec France 100% owned by C.P.P.
C-28
<PAGE>
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
Centrexpo France 99.3% owned by C.P.P.
Fonciere de la Ville du Bois France 99.6% owned by Centrexpo
Colisee Seine France 100% owned by different
companies
Translot France 100% owned by SGCI
Colisee Alpha France 100% owned by Colisee Bureaux
Colisee Silly France 100% owned by Colisee Bureaux
S.N.C. Dumont d'Urville France 100% owned by Colisee Premiere
Colisee Federation France 100% by SGCI
Colisee Saint Georges France 100% by SGCI
Drouot Industrie France 50% by SGCI and 50% by Axamur
Colisee Vauban France 99.6% by Matipierre
Fonciere Colisee France 100% by Matipierre and other
companies of the AXA-UAP Group
AXA Pierre S.C.I. France 97.6% owned by different
companies and Mutuals
AXA Millesimes France 85.4% owned by AXA-UAP and the
Mutuals
Chateau Suduirault France 100% owned by AXA Millesimes
Diznoko Hungary 95% owned by AXA Millesimes
Compagnie Fonciere Matignon France 100% by different companies
and Mutuals
Fidei France 20.7% owned by C.F.P. and
10.8% by Axamur
Fonciere Saint Sebastien France 99.9% by UAP Vie
Fonciere Vendome France 91% by different companies of
the Group
La Holding Vendome France 99.9% by AXA Global Risks
10, boulevard Haussmann France 69% by La Fonciere Vendome and
31% by AXA Conseil Iard
37-39 Le Peletier France 100% by AXA Courage Iard
Ugici France 100% by different companies of
the AXA-UAP Group of which
93.1% by UAP Vie
Ugicomi France 100% by different companies of
the AXA-UAP Group of which
63.8% by UAP Vie
Ugif France 100% by different companies of
the AXA-UAP Group of which
59.6% by UAP Vie and 32.6%
by UAP Collectives
Ugil France 93.9% by different companies
of the AXA-UAP Group of which
65.8% by UAP Vie
Ugipar France 100% by different companies
of the AXA-UAP Group of which
39.4% by UAP Vie, 35.4% by AXA
Courtage Iard and 20.8% by UAP
Collectives
AXA Immobiller France 100% by AXA UAP
Quinta do Noval Vinhos S.A. Portugal 99.6% owned by AXA Millesimes
C-29
<PAGE>
OTHER AXA-UAP BUSINESS
COMPANY COUNTRY VOTING POWER
- ------- ------- ------------
A.N.F. France 95.4% owned by Finaxa
Lucia France 20.6% owned by AXA Assurances
Iard and 8.6% by Mutuals
Schneider S.A. France 10.4%
C-30
<PAGE>
ORGANIZATION CHART OF EQUITABLE'S AFFILIATES
NOTES
-----
1. The year of formation or acquisition and state or country of incorporation
of each affiliate is shown.
2. The chart omits certain relatively inactive special purpose real estate
subsidiaries, partnerships, and joint ventures formed to operate or develop
a single real estate property or a group of related properties, and certain
inactive name-holding corporations.
3. All ownership interests on the chart are 100% common stock ownership except:
(a) The Equitable Companies Incorporated's 41.8% interest in Donaldson,
Lufkin & Jenrette, Inc. and Equitable Holdings LLC's 34.4% interest in same;
(b) as noted for certain partnership interests; (c) Equitable Life's ACMC,
Inc.'s and Equitable Capital Management Corporation's limited partnership
interests in Alliance Capital Management L.P.; and (d) as noted for certain
subsidiaries of Alliance Capital Management Corp. of Delaware, Inc..
4. The operational status of the entities shown as having been formed or
authorized but "not yet fully operational" should be checked with the
appropriate operating areas, especially for those that are start-up
situations.
5. The following entities are not included in this chart because, while they
have an affiliation with The Equitable, their relationship is not the
ongoing equity-based form of control and ownership that is characteristic of
the affiliations on the chart, and, in the case of the first entity,
it is under the direction of at least a majority of "outside" trustees:
The Equitable Funds
The Hudson River Trust
EQ Advisors Trust
Separate Accounts
6. This chart was last revised on April 1, 1998.
C-31
<PAGE>
Item 31. Number of Contractowners
------------------------
As of March 31, 1998 there were 2,484 owners of qualified and
non-qualified RIA Contracts offered by the registrant.
Item 32. Indemnification
---------------
(a) Indemnification of Principal Underwriter: to the extent
permitted by law of the State of New York and subject to all
applicable requirements thereof, Equitable undertook to
indemnify each of its directors and officers who is made or
threatened to be made a party to any action or proceeding,
whether civil or criminal, by reason of the fact that he,
his testator or intestate, is or was a director or officer
of Equitable.
(b) Undertaking: insofar as indemnification for liability
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
Item 33. Business and Other Connections of Investment Adviser
----------------------------------------------------
The Equitable Life Assurance Society of the United States
("Equitable Life") acts as the investment manager for Separate Account Nos. 3,
4, 10 and 13. In providing these services to the Separate Accounts,
Equitable Life uses the personnel and facilities of Alliance Capital Management
L.P. ("Alliance"), a publicly-traded limited partnership, that is indirectly
majority-owned by Equitable Life, to provide personnel and facilities for
portfolio selection and transaction services. Alliance recommends the securities
investments to be purchased and sold for Separate Account Nos. 3, 4, 10 and 13
and arranges for the execution of portfolio transactions. Alliance
coordinates related accounting and bookkeeping functions with Equitable Life.
Both Equitable Life and Alliance are registered investment advisers under the
Investment Advisers Act of 1940.
Information regarding the directors and principal officers of
Equitable is provided in Item 29 of this Part C and is incorporated herein by
reference.
C-32
<PAGE>
Set forth below is certain information regarding the directors and
principal officers of Alliance Capital Management Corporation. The business
address of the Alliance persons whose names are preceded by an asterisk is 1345
Avenue of the Americas, New York, New York 10105.
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ---------------- -------- -------------------
<S> <C> <C>
Directors
*Dave H. Willams Director, Chairman of See Column 2. Director
the Board and Chief - The Equitable Life
Executive Officer Assurance Society of the
United States
("Equitable Life") and
The Equitable Companies
Incorporated ("EQ").
Senior Executive Vice
President and Memeber of
Executive Committee -
AXA-UAP (January 1997 to
present).
Luis Javier Bastida Director Chief Financial Officer
Banco Bilbao Vizcaya and Member of the
Gran Via 1 Executive Committee -
Planta 16 48001 Banco Bilbao Vizcaya,
Bilbao, Spain S.A.
C-33
<PAGE>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ---------------- -------- -------------------
*Donald H. Brydon Director Chairman and Chief
Executive Officer -
AXA Investment Managers
S.A.
*Bruce W. Calvert Director, Vice Chairman, See Column 2.
and Chief Investment
Officer
C-34
<PAGE>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ---------------- -------- -------------------
*John D. Carifa Director, President and See Column 2.
Chief Operating Officer
Henri de Castries Director Senior Executive Vice
AXA-UAP President, Financial
23, Avenue Matignon Services and Life
75008, Paris, France Insurance Activities -
AXA-UAP and various
positions with AXA-UAP
affiliated companies;
Director, Vice Chairman
(February 1996 to April
1998), and Chairman
(April 1998 to present) -
EQ; Director - Equitable
Real Estate Investment
Management, Inc.
("Equitable Real
Estate")(June 1993 to
June 1997), Donaldson
Lufkin & Jenrette, Inc.
("DLJ"), and Equitable
Life.
Kevin C. Dolan Director Senior Vice President -
AXA-UAP AXA-UAP; Chief Executive
23, Avenue Matignon Officer - AXA Investment
75008, Paris, France Managers Paris;
Director, Alliance
Capital Management, L.P.
Denis Duverne Director Senior Vice President -
AXA-UAP AXA-UAP; Director -
23, Avenue Matignon Equitable Life (February
75008, Paris, France 1998 to present) and DLJ
(February 1997 to
present).
Alfred Harrison Director, Vice Chairman See Column 2.
Alliance Capital
Management L.P.
3600 Piper Jaffray Tower
Minneapolis, MN 55402
C-35
<PAGE>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ---------------- -------- -------------------
Jean-Pierre Hellebuyck Director Chairman - AXA
AXA - Gestion des Actifs Investment Managers S.A.;
40, rue de Colisee Chief Investment Officer
Paris, France 75008 - AXA-UAP; Director - AXA
Reassurance France, AXA
Reinsurance UK Plc, AXA
Reinsurance Company,
Equity & Law Plc, Equity
& Law Investment
Managers Ltd., Equity &
Law Fondsmanagement
GmbH, Europhenix
Management Company and
Societe Des Bourses
Francaises.
Benjamin D. Holloway Director Consultant to
Continental Companies Tishman/Speyer, Edward
3250 Mary Street Debartolo and The
Miami, Florida 33133 Continental Companies.
Director - Rockefeller
Center Properties, Inc.;
Chairman - Duke
University Management
Corporation.
Edward D. Miller Director Chairman (January 1998
The Equitable Life Assurance to present) and Chief
Society of the U.S. Executive Officer
1290 Avenue of the Americas (August 1997 to present)
New York, NY 10104 - Equitable Life and
prior thereto, President
(August 1997 to January
1998); Director,
President and Chief
Executive Officer - EQ
(all August 1997 to
present); Senior
Executive Vice President
and Member of Executive
Committee - AXA-UAP
(September 1997 to
present); Director - DLJ
(November 1997 to
present) and KeySpan
Energy Corporation;
Senior Vice Chairman -
Chase Manhattan
Corporation (March 1996
to April 1997).
C-36
<PAGE>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ---------------- -------- -------------------
Peter D. Noris Director Executive Vice President
The Equitable Life and Chief Investment
Assurance Society Officer - Equitable
of the U.S. Life and EQ; Director
1290 Avenue of the Americas and Senior Vice
New York, NY 10104 President - Equitable
Variable Life Insurance
Company (June 1995 to
January 1997); Director,
Equitable Real Estate
(July 1995 to June
1997).
C-37
<PAGE>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ---------------- -------- -------------------
*Frank Savage Director Chairman - Alliance
Capital Management
International;
Director - ACFG; Vice-
Chairman - ECMC;
Director - Lockheed
Martin Corporation, and
ARCO Chemical
Corporation and Qualcomm
Incorporated.
C-38
<PAGE>
POSITIONS AND PRINCIPAL OCCUPATION
NAME AND PRINCIPAL OFFICES WITH (AND OTHER POSITIONS)
BUSINESS ADDRESS ALLIANCE WITHIN PAST 2 YEARS
- ---------------- -------- -------------------
Stanley B. Tulin Director Director and Vice
The Equitable Life Chairman (both February
Assurance Society of 1998 to present) and
the U.S. Chief Financial Officer
1290 Avenue of the Americas (May 1996 to present) -
New York, NY 10104 Equitable Life, Senior
Executive Vice President
(May 1996 to February
1998); Executive Vice
President (May 1996 to
present) and Chief
Financial Officer (May
1997 to present) - EQ;
Director - DLJ (June
1997 to present).
*Reba White Williams Director Director of Special
Projects.
Robert B. Zoellick Director Professor - The U.S.
Fannie Mae Naval Academy (December
3900 Washington Avenue, NW 1997 to present);
Washington, DC 20016 Executive Vice President
- Federal National
Mortgage Association
(May 1993 to December
1997).
OFFICERS
*David R. Brewer, Jr. Senior Vice President See Column 2.
and General Counsel
*Robert H. Joseph, Jr. Senior Vice President & See Column 2.
Chief Financial Officer
</TABLE>
C-39
<PAGE>
Item 34. Principal Underwriters
----------------------
(a) EQ Financial Consultants, Inc. ("EQF") (formerly Equico
Securities, Inc.), a wholly-owned subsidiary of Equitable,
is the principal underwriter and depositor for its Separate
Account A, Separate Account No. 301, Separate Account I and
Separate Account FP. EQF's principal business address is
1290 Avenue of the Americas, New York, NY 10104.
(b) See Item 29 of this Part C, which is incorporated herein by
reference.
Item 35. Location of Accounts and Records
--------------------------------
The Equitable Life Assurance Society of the United States
135 West 50th Street
New York, New York 10020
1290 Avenue of the Americas
New York, New York 10104
200 Plaza Drive
Secaucus, New Jersey 07094
Item 36. Management Services
-------------------
Not applicable.
Item 37. Undertakings
------------
Although this is not an initial registration statement requiring
the undertakings pursuant to Item 37, the Registrant hereby undertakes the
following:
(a) to file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement
are never more than sixteen months old for so long as
payments under the variable annuity contracts may be
accepted;
(b) to include (1) as part of its applications to purchase any
contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional
Information, or (2) a postcard or similar written
communication affixed to or included in the prospectus that
the applicant can remove to send for a Statement of
Additional Information; and
(c) to deliver any Statement of Additional Information and any
financial statements required to be made available under
this form promptly upon written or oral request.
C-40
<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 amendment to the Registration Statement and has caused this amendment to
the Registration Statement to be signed on its behalf, in the City and State of
New York, on the 29th day of April, 1998.
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
(Depositor)
By: /s/ Maureen K. Wolfson
---------------------------
Maureen K. Wolfson
Vice President
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the date
indicated:
PRINCIPAL EXECUTIVE OFFICERS:
*Edward D. Miller Chairman of the Board, Chief Executive
Officer and Director
*Michael Hegarty President, Chief Operating Officer
and Director
PRINCIPAL FINANCIAL OFFICER:
*Stanley B. Tulin Chairman of the Board, Chief Financial
Officer and Director
PRINCIPAL ACCOUNTING OFFICER:
/s/ Alvin H. Fenichel Senior Vice President and Controller
- ---------------------
Alvin H. Fenichel
April 29, 1998
*DIRECTORS:
Francoise Colloc'h Donald J. Greene George T. Lowy
Henri de Castries John T. Hartley Edward D. Miller
Joseph L. Dionne John H.F. Haskell, Jr. Didier Pineau-Valencienne
Denis Duverne Michael Hegarty George J. Sella, Jr.
William T. Esrey Mary R. (Nina) Henderson Stanley B. Tulin
Jean-Rene Fourtou W. Edwin Jarmain Dave H. Williams
Norman C. Francis G. Donald Johnston, Jr.
*By: /s/ Maureen K. Wolfson
--------------------------
Maureen K. Wolfson
Attorney-in-Fact
April 29, 1998
C-41
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT NO. TAG VALUE
- ---------- ---------
<S> <C> <C> <C>
13. (a) Consent of Price Waterhouse. EX-99.13a CONSENT
(b) Powers of Attorney. EX-99.13b POW ATTY
27. Financial Data Schedule. EX-27
</TABLE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 1 to the Registration
Statement No. 333-23019 on Form N-3 (the "Registration Statement") of (1) our
reports dated February 10, 1998 relating to the financial statements of Separate
Account Nos. 13, 10, 4, 3 and 51 of The Equitable Life Assurance Society of the
United States for the year ended December 31, 1997, and (2) our report dated
February 10, 1998 relating to the consolidated financial statements of The
Equitable Life Assurance Society of the United States for the year ended
December 31, 1997, which reports appear in such Statement of Additional
Information, and to the incorporation by reference of our reports into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the 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 27, 1998
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 20th day of February, 1998
/s/ Francoise Colloc'h
----------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 2nd day of March, 1998
/s/ Henri de Castries
---------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Joseph L. Dionne
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Denis Duverne
-----------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ William T. Esrey
--------------------
William T. Esrey
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 23th day of February, 1998
/s/ Jean-Rene Fourtou
---------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Norman C. Francis
---------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Donald J. Greene
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ John T. Hartley
-------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ John H.F. Haskell, Jr.
--------------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 26th day of January, 1998
/s/ Michael Hegarty
-------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Mary R. (Nina) Henderson
----------------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 29th day of January, 1998
/s/ W. Edwin Jarmain
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 2nd day of February, 1998
/s/ G. Donald Johnston, Jr.
---------------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ George T. Lowy
------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Edward D. Miller
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 17th day of February, 1998
/s/ Didier Pineau-Valencienne
-----------------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 4th day of February, 1998
/s/ George J. Sella Jr.
-----------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Stanley B. Tulin
--------------------
59838
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or
director of The Equitable Life Assurance Society of the United States (the
"Company"), a New York stock life insurance company, hereby constitutes and
appoints Jerome S. Golden, Judy A. Faucett, Mark A. Hug, James D. Goodwin,
Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson,
Mildred Oliver, Mary P. Breen and each of them (with full power to each of them
to act alone), his or her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him or her and on his or her behalf and in
his or her name, place and stead, to execute and file any of the documents
referred to below relating to registrations under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with
respect to any insurance or annuity contracts or other agreements providing for
allocation of amounts to Separate Accounts of the Company, and related units or
interests in Separate Accounts: registration statements on any form or forms
under the Securities Act of 1933 and the Investment Company Act of 1940 and
annual reports on any form or forms under the Securities Exchange Act of 1934,
and any and all amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his, her or their substitutes being empowered
to act with or without the others, and to have full power and authority to do or
cause to be done in the name and on behalf of the undersigned each and every act
and thing requisite and necessary or appropriate with respect thereto to be done
in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
this 19th day of February, 1998
/s/ Dave H. Williams
--------------------
59838
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